The Wonder

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					   “The Wonder” –

Start Business in China

   SABPA, San Diego,
    March 26th, 2005

2004/2005 GDP Outlook
China: Real Economic Growth

        Source: Goldman Sachs Annual data, 2004 are forecasts
CRO Market
 CRO Market: Revenue Forecasts (Asia),

                     Revenues                                  Growth Rate Year
                     ($ Billion)                               (%)
1998                 1.08                                      ---
1999                 1.02                                      -5.8
2000                 1.14                                      12.1
2001                 1.28                                      12.2
2002                 1.44                                      12.4
2003                 1.62                                      12.5
2004                 1.83                                      12.7
2005                 2.07                                      13.0

Compound Annual Growth Rate (1999-2006): 12.7%

        Note: All figures are rounded; the base year is 2001. Source: Frost & Sullivan
CRO Market: Comparison of Current and Potential CRO Service Revenues

                 All figures are rounded; the base year is 2001. Source: Frost & Sullivan
CRO Market: Percent of Revenues by Geographic Location (World),
Total Biotechnology Market: Revenue Forecasts (Asia Pacific),
Total Biotechnology Market: Revenue Forecasts (Asia Pacific),
Where is China 5 years from now?

 Going back to China is a hot topic among overseas
 Chinese these years. It is as hot as the topics of
 going aboard in the previous years(洋插队). It is
 due to the booming economy in China and the big
 changes in the country. I have many close friends
 who just came back to Shanghai. This is what I heard
 and what I saw...

Going back to China(回乡知青)……
My wife and I are both Chinese living in the U.S. We are planning to move
to shanghai early next year. When I talked with my family about the move,
they all said it's a very bad idea. They said to live comfortably in Shanghai
you have to at least earn 500,000 RMB yearly. Also, unlike in the U.S.
people in China usually work harder and with a lot of overtime. I) Is it really
true that you have to earn that much? II) How does people with average
income manage their life then? III) How do you think about it? …………..

The work hard and overtime part really scares me. I don't mind work hard
but to be forced to work hard will be another story. Here I work as a
software engineer in a small company in a small collage town. Life is really
slow and peaceful. ……when do you go to work, how late will you come
home, is your boss pushy, are you coworkers work abnormally hard, how
do you spend you weed ends, evenings, Do you write all your post at work?

                                               Nov. 11, 2004
 China Strengths
Competitiveness – China can provide competition by as much as
  50% or more! This has made China a very attractive location for
  A) Highly Educated Scientific Pool –
    China has many western educated Ph.D. level scientists
    Very large number of local resources
    Many talented chemists and researchers trained for specific
      areas-such as organic synthesis…
  B) Lots of Manufacturing Capacity – Government has privatized
  most manufacturing making an abundance of capacity available

  C) Large Low Cost Labor Pool – average $15K versa
China Strengths
D)   Manufacturing Friendly Environmental Laws – waste
recycle/disposal is much cheaper!
E) Business Friendly Conditions – China is encouraging
growth in this area by providing tax breaks and government
grants to help build plants
F) Government has launched a number of incentive policies
to support the Bio/Pharm Industry
G) Low cost raw materials – Many of today’s raw materials
come from China. By producing VAP in China, manufacturing
will have additional saving on transportation, tax etc.
China Weakness?
Management Skill – To build biotech enterprises,
  individuals who combine management acumen with
  understanding of biotech or pharma are required.

    Strongly influences the market understanding-
     most crucial in doing business with west
China Weakness?
Lack of funding – limit the size to compete with
  large foreign corporations. Therefore, this leads to
  three areas Chinese companies have to face:
    Generic compounds only
    Receive a large contract, before the facility build
    Smaller projects
China Weakness?
Communication – Although many people are
  learning English, very few people currently are
  fluent. So, communication is an issue.
 China Weakness?
IPR – Weaker IP protection. Post WTO entry, China
  will have to adhere to international guidelines on
  patent protection. The country has already put in
  place the laws required, but has to go a long way as
  far as enforcement is concerned.
China Weakness?
Enforceability of Contract – It is very difficult to
  enforce a contract. Their legal system is opening up
  since becoming part of the WTO. Still, there are few
  remedies available for a westerner for breach of
 China Weakness?
Quality – cGMP is somewhat different from western
  GMP. In China they worry about the quality of the
  “final” product, not the process. This requires
  training to implement quality throughout the process.
China Weakness?
Tools - Much of the instrumentation and laboratory
  tools used in the west are just not sufficiently
  placed in China
    Most importantly, to get a new project accessed,
     some of the specialty chemicals are not readily
     available, therefore delay the process/project
     OR even lead to loss the project
    Catch the wagons…
 Set up whole owned Chinese Company
 Set up a US based company, then JV with another Chinese
 Present one’s IP or proprietary technology and JV with other
  Chinese Companies:
     FT commitment
     PT commitment
 Present one’s IP or proprietary technology and apply funding
  from Chinese government:
     FT commitment
     PT commitment
 Join other wagons...
Executive Summary-1

• What can I accomplish?
• How am I going to get it done?
   – FT?
   – PT?
   – NT?
• What resources will make me successful?
   – can my wife tolerate <RMB 1.0 million life?
   – I had special connection so I can get free money?
   – ???
Executive Summary-2

•   Mission
•   Technology
•   Management
•   Key personal
•   Facility
•   Market
    Executive Summary-3
• Do not engage in length discussion
• Do not give up “principles”
• Do not over-estimate your ability
• Understand JV’s point and make own point clear early on
• Make sure your new venture lasts >24months
• Make sure you pick right executives and their contracts in
  place day 1, particularly for GM & CFO.
• Make sure whom you are hiring
• Attend as much company activities as possible
• Make sure you set up company operation policy early on
      Chinese Peptide Company
               No. 69, 12th Street
Hangzhou Economic & Technological Development Zone
             Hangzhou 310018, China
               Our Mission
 To develop and optimize manufacturing processes
  for the production of peptide related biochemical to
  the customers worldwide
 To focus on customer needs and to provide products
  that satisfy the distinct requirements of each client
 To conduct our business with honesty, integrity, and
  accountability at all levels
 To create a safe workplace where employees are
  compliant with all environmental laws
 To be the market-leader by leveraging our presence
  worldwide and by utilizing advanced technologies in
  product and process development
 Develop CPC peptide based therapeutics.
CPC Management

•CEO-   Shawn Lee

     •Ph.D., M.D. Akida Univ, Japan. launched 7 drugs (including
         recombinant proteins, synthetic peptides) in China

    •Ph.D. Columbia Univ. 20+ years peptide experience in US

    •MBA. Trained and worked in Singapore
IP position
         Patent Pending on its HTP Synthesis

         Patent Pending on Its Oncology Drug Platform

         Proprietary Peptide Synthesis Technology

         Proprietary Formulation Technology
                        Chinese Peptide Company
                               No. 69, 12th Street
                Hangzhou Economic & Technological Development Zone
                             Hangzhou 310018, China
                              Tel: 86-571-89737011

We work hard…
Azco Offices

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Wish You The Best Of Success!

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