Pacific Hospital Supply Co., Ltd 1Q2016 Company Report

Presented by Tina Wang Executive Assistant / Company Spokesperson

2

Our Milestone

1977 PAHSCO formed with a stock Capital of NT$ 1 Million

1980 Started the production & trading of central medical gas equipment

2001 Tong Lo Factories received ISO9001 & CE Certification

2002 Tong Lo (F0) received GMP Certification

2004 PAHSCO became a public listed company in the stock market

2005 Tong Lo (F0’) formed to expand the production of sterilize medical product

2006 The automatic warehousing system was officially implemented in August

1987

2010 Obtained 11,997m2 of production capacity and expanded Tong Lo (F3)

2009 Tong Lo (F1) constructed on November

2008

2011

Issued series of secured domestic convertible bonds & obtained 7,085 m2 of land

Implemented Oracle ERP systems

2012 Implemented BPM system

PAHSCO was Ranked Top 5% for Corporate Governance in 2014 & 2015 & has been awarded with Best Rankings for Information Transparency and Disclosure for 7 consecutive years since 2008.

2013

Tong Lo (F2) constructed & expanded the production of gas piping products

2014

Established a subsidiary company - Pacific Precision Technology Co., Ltd.

2015

Established mold department in the subsidiary company

Started to build a New Factory in the Tong Lo Science Park in January

Common Wealth Magazine (May,2016 edition)

Ranked PAHSCO • No. 1071 in Top 2000 Enterprise

• No. 48 Most Profitable Manufacturer • No. 10 in Precision Instrument Industry

• No. 325 for Sales Growth • No. 405 for After Tax Profit

Company News

Taichung Office

4 Factories in the Tong-Lo Industrial Park

Taipei Headquarter

Our Location

Miaoli

Taiwan

Future New Factory in the Tong-Lo Science Park

Sterilization Assembly

Company Integration

(1980) (1980)

Extrusion

6

Land Area Floor Area Number of Workers

25000 m²

Factories 33000 m² (Full capacity of 1.8B TWD Sales)

AS/RS 1650 m² (2400 storage spaces)

Dorm 2000 m² (150 people capacity)

--------------------- Total of 36650 m²

720 people

*As of 2016 Q1

Current Factories

7

New Factory

Land Buildings Capacity

49000 m²

Factory 44100 m² AS/RS 4500m²

(8100 storage spaces)

Dorm 6000m² (300 people capacity)

--------------------- Total of 54600 m²

12 Sterilizer 4.3B TWD sales

With full capacity

*Calculation base: Each sterilizes 30M TWD

per month

Our Certificate

-

50

100

150

200

250

300

350

400

450

Middle Eastand Africa

OtherEurope Asia Pacific

WesternEurope America

Global

8 14

72 91

155

340

11 16

92 99

187

405

9.8% 5.7%

8.4% 2.6%

6.6%

9

Introduction to Medical Product Industry and Future

Global Market for Medical Device and Equipment:

2012-2017 CAGR 6%

Source: BMI(2014); IEK(2014)

Market size in 2012 and 2017(e)

Unit：Billion (USD)

CAGR 6.0%

10

Introduction to Medical Product Industry and Future

Global Medical Product Market Share

U.S. 39.3%

Japan 9.1%

Germany 7.9%

China 5.5%

France 4.4%

Others 33.7%

2014 USD 340 B

Source: BMI Espicom(2015); IEK(2015)

Estimated percentage by Country

U.S. 39.9%

Japan 8.8%

Germany 7.6%

China 6.0%

France 4.2%

Others 33.6%

2015 (e) USD 357 B

11

Introduction to Medical Product Industry and Future

Global Medical Product Market Share

Estimated percentage by Category

Diagnostic Imaging Product 25.2%

Medical Disposal Devices 15.5%

Assistive Device 12.5%

Orthopodic and

Implantable Product 11.9%

Orthodontic Product

6.8%

Others 28.0%

2015 USD 357 B

Source: BMI(2015); IEK(2015)

Diagnostic Imaging Product 25.2%

Medical Disposal Devices 15.5%

Assistive Device 12.5%

Orthopodic and

Implantable Product 11.8%

Orthodontic Product

6.9%

Others 28.0%

2014 USD 340 B

12 Source: Frost & Sullivan, 2010

Unit: Billion(USD)

5.94

6.53

8.9

12.47

14.25

18.4

20.48

21.07

23.45

24.34

37.1

48.08

55.8

0 10 20 30 40 50 60

Cosmetic Surgery & Lifestyle Products

Neurology & Neuromuscular Devices

Intravenous & Infusion Devices

Urology & Gynecology Devices

Ophthalmic & Optical Devices

General Surgical Therapeutic Devices

Single Use Surgical & Disposables

Minimally Invasive Surgical Devices

Wound Care and Biomaterials

Others

Orthopedic and Prosthetic Devices

Anesthetic and Respiratory Devices

Cardiology and Thoracic Surgery

Introduction to Medical Product Industry and Future

Developed Countries

with Subcontract Manufacturing Focus

(ODM/OEM)

Emerging Countries

with Self-Branding Focus

(OBM)

US Japan Germany China Taiwan

Ove

rall In

de

x

Population (Million) 319 127 81 1364 23

Age

(0~14:15~64:65up) 19 : 67 : 14 13 : 61 : 26 13 : 66 : 21 17：74：9 13 : 74 : 13

Birth Rate：Death Rate 13 : 8 8 : 10 9 : 11 12 : 7 10 : 10

Fertility Rate 1.9 1.4 1.4 1.6 1.1

Life Expectancy at Birth 79 84 81 76 80

2014 GDP (Billion USD) 17,419 4,601 3,868 10,354 530

GDP per Capita(USD) 54,630 36,194 47,774 7,590 22,648

GDP Growth Rate 2.4% -0.1% 1.6% 7.3% 3.5%

Me

dic

al In

du

stry

Ind

ex

Health Expenditure per

Capita（USD） 9,403 3,703 5,477 420 2,479

Change of Health

Expenditure per Capita

(2011 ~ 2014)

3 ~ 5%

Steady

-17 ~ 2%

Fluctuated

-5% ~ 7%

Fluctuated

14 ~ 18%

Fast Growing

2 ~ 3%

Steady

Health Expenditure / GDP

(%) 17.1 10.2 11.3 5.5 6.6

Hospital Beds per 1000

persons (unit) 2.9 13.7 8.2 3.8 6.4

13

Overall Index of Geographic Areas

Source: World Bank(2014); IMF International Financial Statistics (IFS 2014); AmCham TW

14

Population Structure of Geographic Areas

Due to the worldwide low birth rates, the

population structure is aging

at a faster rate. Population of age above 65

Country Percentage of population above age 65 Period of time expected

7% 10% 14% 20% 30% 7%→14% 10%→20% 20%→30%

Taiwan 1993 2005 2017 2025 2040 24 20 15

Singapore 2000 2010 2016 2023 2034 16 13 11

South Korea 2000 2007 2017 2026 2040 17 19 14

Japan 1970 1985 1994 2005 2024 24 20 19

China 2001 2016 2026 2036 - 25 20 -

United States 1942 1972 2015 2034 - 73 62 -

Germany 1932 1952 1972 2009 2036 40 57 27

UK 1929 1946 1975 2026 - 46 80 -

Italy 1927 1966 1988 2007 2036 61 41 29

Switzerland 1887 1948 1972 2015 - 85 67 -

France 1864 1943 1979 2020 - 115 77 -

Source： 1. Council for Economic Planning and Development

2.United Nations, World Population Prospects：The 2006 Revision.

15

Our Major Exporting Regions

Taiwan 17.8%

Other Asia 10.8%

China 11.0%

North America

9.6%

Other Europe

8.2%

Germany 5.8%

Middle East & Others 7.2%

Latin America

4.7%

PAHSCO 2014

Japan

24.9%

Taiwan 18.5%

Other Asia 12.5%

China 12.0%

North America

9.1%

Other Europe

9.3%

Germany 7.1%

Middle East & Others 6.2%

Latin America

4.4%

PAHSCO 2015

Japan

20.9%

16

Our Major Exporting Regions

Taiwan 20.0%

China 16.3%

Other Asia 12.9%

North America

7.8%

Other Europe

8.1%

Germany 3.8%

Middle East & Others 8.2%

Latin America

3.8%

PAHSCO 1Q2015

Japan

19.1%

Taiwan 17.0%

China 12.9%

Other Asia 11.8%

North America

6.4%

Other Europe

9.5%

Germany 5.6%

Middle East & Others 7.2%

Latin America

4.7%

PAHSCO 1Q2016

Japan

24.9%

17

85% 90% 95% 100%

2010

2011

2012

2013

2014

2015

1Q2015

1Q2016

90.5%

91.0%

90.5%

90.9%

90.90%

90.40%

91.4%

94.3%

5.00%

5.9%

6.9%

7.0%

7.00%

8.50%

7.9%

5.4%

2.9%

3.1%

2.6%

2.1%

2.10%

1.10%

0.7%

0.3%

Medical Device Medical Equipment Piping System

Percentage of Product Categories

18

Tubes, 27%

CSS, 24%

Bags, 13%

Others,

22%

Wound

Drainage

System, 9%

Bottles, 3%

Respiratory

, 2%

Disposable Medical Device

Closed Suction System (CSS) Sales Revenue:363 Million(NTD) % of Product TR: 24% (2nd )

Tubes Sales Revenue:412 Million(NTD) % of Product TR: 27% (1st )

Bags Sales Revenue:189 Million(NTD) % of Product TR: 13% (3rd)

Wound Drainage System Sales Revenue:129 Million(NTD) % of Product TR: 9%

PAHSCO 2014

19

Tubes, 26%

CSS, 25%

Bags, 12%

Others,

24%

Wound

Drainage

System, 8%

Bottles, 3%

Respiratory

, 2%

Disposable Medical Device

Closed Suction System (CSS) Sales Revenue:399 Million(NTD) % of Product TR: 25% (2nd )

Tubes Sales Revenue:418 Million(NTD) % of Product TR: 26% (1st )

Bags Sales Revenue:193 Million(NTD) % of Product TR: 12% (3rd)

Wound Drainage System Sales Revenue:130 Million(NTD) % of Product TR: 8%

PAHSCO 2015

20

Tubes, 30%

CSS, 21%

Bags, 12%

Others,

23%

Wound

Drainage

System, 8%

Bottles, 3%

Respiratory

, 3%

Disposable Medical Device

Closed Suction System (CSS) Sales Revenue:77 Million(NTD) % of Product TR: 21% (2nd )

Tubes Sales Revenue:109 Million(NTD) % of Product TR: 30% (1st )

Bags Sales Revenue:45 Million(NTD) % of Product TR: 12% (3rd)

PAHSCO 1Q2015

Wound Drainage System Sales Revenue:29 Million(NTD) % of Product TR: 8%

21

Tubes, 25%

CSS, 29%

Bags, 11%

Others,

22%

Wound

Drainage

System, 9%

Bottles, 2%

Respiratory

, 2%

Disposable Medical Device

Tubes Sales Revenue:111 Million(NTD) % of Product TR: 25% (2nd )

Closed Suction System (CSS) Sales Revenue:129 Million(NTD) % of Product TR: 29% (1st )

Bags Sales Revenue:50 Million(NTD) % of Product TR: 11% (3rd)

PAHSCO 1Q2016

Wound Drainage System Sales Revenue:41 Million(NTD) % of Product TR: 9%

22

Sales Distribution (By Domestic & Export)

Domestic 17.8%

Export 82.2%

PAHSCO 2014

PAHSCO 1Q2015

Domestic 20.0%

Export 80.0%

PAHSCO 1Q2016

Domestic 17.0%

Export 83.0%

1980 2002 2015

Export 0% 5% 82%

Domestic 100% 95% 18%

23

Sales Distribution (By Customer Type)

OBM 47.6%

OEM/ODM

52.4% OBM

50.8%

OEM/ODM 49.2%

PAHSCO 2014 PAHSCO 2015

PAHSCO 1Q2015

OBM 56.7%

OEM/ODM 43.3%

PAHSCO 1Q2016

OBM 50.6%

OEM/ODM 49.4%

24

Sales Distribution (By Currency Type)

JPY

17%

TWD

20%

CNY

16%

Euro

5%

PAHSCO 1Q2015

USD

42%

JPY

18%

TWD

17%

CNY

13%

Euro

5%

PAHSCO 1Q2016

USD

47%

JPY

22%

TWD

18%

CNY

11%

Euro

5%

PAHSCO 2014

USD

44% JPY

16%

TWD

19%

CNY

12%

Euro

5%

PAHSCO 2015

USD

48%

25

Sales by Quarter

Unit: Thousand (NTD)

YEAR 2008 2009 2010 2011 2012 2013 2014 2015 2016

Q1 222,680 246,505 299,794 325,890 342,607 357,542 371,812 363,487 452,010

Q2 221,649 282,752 319,461 372,298 341,626 382,503 362,975 353,704

Q3 240,016 294,085 310,737 342,243 369,016 351,901 376,479 439,502

Q4 276,562 311,086 318,310 303,188 385,459 351.950 395,398 464,871

Total 960,906 1,134,428 1,248,302 1,343,619 1,438,708 1,443,896 1,506,664 1,621,564 452,010

Growth 15.4% 18.1% 10.0% 7.7% 7.1% 0.4% 4.4% 7.6% 24.4%

Gross Margin

33.3% 39.4% 41.1% 38.7% 39.2% 37.5% 36.1% 36.9% 39.9%

26

Financial Information

ITEM 2008 2009 2010 2011 2012 2013 2014 2015 1Q15 1Q16

EPS 3.53 4.24 5.44 5.39 4.77 4.88 4.95 5.32 1.03 1.57

ROE % 22.23 22.71 27.85 22.62 20.28 19.49 18.55 18.18 3.62 5.01

ROA % 14.00 16.15 22.02 18.93 16.75 16.06 15.33 14.32 3.03 3.80

Net Profit

Margin 17.60 20.69 27.27 24.06 21.90 22.29 21.70 21.66 18.70 22.98

Net Cash

per Share 7.20 8.00 9.84 10.44 12.40 12.64 11.82 6.81 11.52 6.28

* Ignore the evaluation loss of financial liabilities

*2010Pay-out: $3 Cash Dividend and $1.12 Stock Dividend presented at the Shareholders’ Meeting.

*2011Pay-out: $3 Cash Dividend and $1.00Stock Dividend presented at the Shareholders’ Meeting.

*2012Pay-out: $4 Cash Dividend presented at the Shareholders’ Meeting .

*2013Pay-out: $2.5 Cash Dividend presented at the Shareholders’ Meeting.

*2014Pay-out: $2.5 Cash Dividend presented at the Shareholders’ Meeting.

*2015Pay-out: $2.5 Cash Dividend will be presented at the Shareholders’ Meeting on June 15th, 2016.

27

Medical Device Market Size in China

Market size Market growth rate Unit: Million (USD)

Source: BMI Espicom(2015); 工研院IEK(2015)

CAGR 14.8%

28

Revenue

(NTD) 2008 2009 2010 2011 2012 2013 2014 2015 1Q15 1Q16

Total 9.6 11.3 12.5 13.4 14.4 14.4 15.1 16.2 3.6 4.5

China 0.49 0.73 0.83 1.15 1.30 1.43 1.65 1.94 0.59 0.58

% 5.1 % 6.5 % 6.7 % 8.5 % 9.0 % 9.9% 11.0% 12% 16.3% 12.9%

0.49 0.73 0.83

1.15 1.30

1.43 1.65

1.94

0.59 0.58

2008 2009 2010 2011 2012 2013 2014 2015 1Q20151Q2016

Unit: Thousand (NTD)

14%

-1.6% 50%

13%

38%

Our Sales in China

10%

yoy

15%

29

Areas covered

Total

Areas *31 Provinces

+ Taiwan

+ Hong Kong

+ Macau

34

2014

Covered *T1: 11

*T1 + T2: 150

20

2015

Covered *T1: 13

*T1 + T2: 180

23

2016

Target

Areas

6 provinces

• Sichuan • Sandong • Fujian • Hubei • Hunan • Chongqing

Our Distribution in China

30

Thank you

for your attention & patience!

*For your information, PAHSCO presentation will be updated quarterly on the official website: http://www.pahsco.com.tw/investment-23