대한뉴팜

Daehan New Pharm Co., Ltd. Analysis of Financial Results (January–September 2009)1. Increase in Product Sales (Unit: Million KRW) Jan–Sep 2009 Jan–Sep 2008 YoY Change Products 29,054 27,307 1,747 (6.4%) Merchandise 598 4,644 -4,046 (-87.1%) Total 29,652 31,951 -2,299 (-7.2%) - The company discontinued its Avent cosmetics business as of mid-2009.- As a result, sales of merchandise decreased significantly due to the discontinuation of the business, while product sales increased by 6.4% compared to the same period of the previous year.2. Significant Improvement in Operating Profit (Unit: Million KRW) Jan–Sep 2009 Jan–Sep 2008 YoY Change Change (%) Operating Profit 4,215 (14.2%) 1,492 (4.7%) 2,723 182.4% Non-operating Income 3,614 8,416 -4,802 Non-operating Expenses 5,555 3,887 1,668 Ordinary Profit 2,274 (7.7%) 6,021 (18.8%) -3,747 -62.2% (1) Operating profit rose sharply from KRW 1.5 billion (margin 4.7%) in 2008 to KRW 4.2 billion (margin 14.2%) in 2009, an increase of 182% year-on-year.1) Profit-oriented Management and Rebuilding of Business Model- Pursued strict profit-oriented management focused on cost reduction and profit maximization.- Developed a new business model: shifted from direct sales to pharmacies and hospitals to a distribution system through general and exclusive wholesalers, enabling cost savings through shorter logistics cycles and faster collection of accounts receivable, thereby improving liquidity.2)ion and Concentration of Product Portfolio- Enhanced sales and profitability by focusing on highly profitable products.- The number of items decreased from around 400 in 2008 to about 130 high-profit items by the end of September 2009.3) Cost Reduction- Company-wide cost-saving measures reduced expenses by approximately KRW 2.4 billion compared to the same period of the previous year.(2) Ordinary profit recorded KRW 2.3 billion (margin 7.7%) in 2009, down from KRW 6.0 billion (margin 18.8%) in 2008.(Unit: Million KRW) Jan–Sep 2009 Jan–Sep 2008 YoY Change Foreign Exchange Gains 730 8,294 -7,564 Foreign Exchange Losses 1,210 220 990 - An exchange loss occurred due to the depreciation of the Korean won on the USD 25 million loan receivable.- Ordinary profit declined by approximately KRW 3.7 billion (62.2%) year-on-year, primarily due to this foreign exchange loss, which was only a book loss without any actual cash outflow.3. Improvement in Financial Structure1) Liquidity Enhancement(Unit: Million KRW) End-Sep 2009 End-2008 Remarks Current Assets 44,593 38,959 Current Liabilities 24,952 34,802 Current Ratio 178.7% 111.9% - Current ratio improved from 111.9% at the end of September 2008 to 178.7% at the end of September 2009, an increase of 66.8 percentage points.2) Improvement in Debt Ratio(Unit: Million KRW) End-Sep 2009 End-2008 Remarks Liabilities 34,148 42,049 Assets 80,731 77,064 Debt Ratio 42.3% 54.6% - Debt ratio improved from 54.6% at the end of September 2008 to 42.3% at the end of September 2009, a decrease of 12.3 percentage points.3) Improvement in Asset Composition and Soundness(Unit: Million KRW) End-Sep 2009 End-2008 YoY Change Remarks Long-term Loans Receivable 30,993 41,498 -10,505 Total Assets 114,879 119,113 -4,234 Ratio to Total Assets (%) 27.0% 34.8% -7.9% - Collected USD 8 million in long-term loans on June 30, 2009, leading to a significant reduction in outstanding long-term receivables.- Collected USD 750,000 in interest on July 1, 2009.- The ratio of long-term loans to total assets improved from 34.8% at the end of September 2008 to 27.0% in the current period, a reduction of 7.9 percentage points.

Daehan New Pharm Accelerates Development of Tamiflu Generic (Oseltamivir Capsules) Daehan New Pharm Co., Ltd. (CEO Bae Gun-woo) has begun full-scale development of a generic version of “Tamiflu,” the antiviral medication for H1N1 influenza, under the product name Daehan New Pharm Oseltamivir Capsules. The company explained that, given the growing public anxiety over H1N1 influenza and the rapid increase in infections and fatalities, this initiative is intended as a precautionary measure in anticipation of a potential compulsory license in the future. To this end, the company signed a clinical testing agreement with BioSuntech Co., Ltd., a certified clinical research institution, for the Tamiflu generic, and submitted a bioequivalence study plan to the Korea Food and Drug Administration on the 3rd. Earlier, in August, Daehan New Pharm also signed a five-year supply contract with PharmSwell Bio Co., Ltd., which has the capability to manufacture the active pharmaceutical ingredient (API) for the H1N1 treatment — oseltamivir phosphate, the raw material for Tamiflu.

Daehan New Pharm Signs Exclusive Contract to Sell “Vital Oxide,” a Disinfectant Registered with the U.S. EPA KOSDAQ-listed Daehan New Pharm Co., Ltd. (CEO Bae Gun-woo) announced that it has signed an exclusive sales agreement for “Vital Oxide,” a sterilizing and disinfecting agent developed by U.S.-based Vital Technologies and registered with the U.S. Environmental Protection Agency (EPA). As public concern over the H1N1 influenza virus continues to grow and the number of infections rises exponentially, clinical tests conducted by U.S. ATS Labs confirmed that Vital Oxide eliminates 99.9% of the H1N1 virus. One of the key features of Vital Oxide is that it uses nano-technology to stabilize chlorine dioxide. Through oxidation by oxygen atoms in the chlorine dioxide, the product achieves 99.9% sterilization against Gram-positive and Gram-negative bacteria, including Staphylococcus aureus and E. coli. The disinfecting efficacy of the product has been verified through sterilization testing conducted by the Korea Testing & Research Institute (KTR). Unlike most conventional hand sanitizers that rely on alcohol and are only effective for bacterial removal, Vital Oxide also provides sterilization against bacteria and the H1N1 virus. Moreover, it has been certified by the National Sanitation Foundation (NSF) as a food-surface sanitizer, reflecting its extremely low toxicity and high level of safety. Daehan New Pharm plans to introduce Vital Oxide next month as a multipurpose product designed for hand sanitization and H1N1 infection prevention.

On August 20, Daehan New Pharm Co., Ltd. announced that its project for the development of alternative antibiotics had beened as part of the Technology Innovation Development Program organized by the Small and Medium Business Administration. The company has secured government funding of 560 million won over two years and plans to jointly develop alternative antibiotics with Sungkyunkwan University by 2011. As a condition for participation in the project, the company was required to attract matching investment from a third-party institution. Accordingly, Daehan New Pharm decided to issue convertible bonds without security totaling 560 million won, with Woori Bank designated as the underwriting institution. The company emphasized that this financing decision is unrelated to its current financial condition, and that there are no issues affecting its liquidity or financial stability.

Daehan New Pharm Co., Ltd. First Half Financial Results Analysis1. Slight Increase in Sales (Unit: million KRW) 2009 First Half 2008 First Half Increase/Decrease % Pharmaceuticals 15,334 12,452 2,882 23.1% Veterinary Medicine 4,268 6,318 -2,050 -32.4% Subtotal 19,602 18,770 832 4.4% Cosmetics 24 2,038 -2,014 -98.8% - Discontinuation of Avent business at the end of the first half of this year.- Excluding the discontinued business (Cosmetics), sales of Pharmaceuticals and Veterinary Medicine rose slightly by 4.4% compared to the previous year.2. Significant Improvement in Operating Profit (Unit: million KRW) 2009 First Half 2008 First Half Increase/Decrease Increase/Decrease % Amount Profit Margin Amount Profit Margin Pharmaceuticals 2,170 14.2% 326 2.6% 1,844 565.6% Veterinary Medicine 539 12.6% 54 0.9% 485 898.1% Subtotal 2,709 13.8% 380 2.0% 2,329 612.9% - Operating profit in 2009 was 2.7 billion KRW, profit margin improved significantly to 13.8% (2008 operating profit was 0.38 billion KRW, profit margin 2.0%).1) Organizational and Workforce Restructuring (Unit: million KRW)- Reduced workforce from 270 employees on June 30, 2008 to 174 employees on June 30, 2009, a cut of 96 employees.- Labor costs reduced by approximately 700 million KRW compared to the same period last year. 2009 First Half 2008 First Half Increase/Decrease Salaries 3,334 3,934 -600 Employee Benefits 427 525 -98 Total 3,761 4,459 -698 2) Management Focused on Profitability and Rebuilding Business Model- Pursuit of strictly profitability-oriented management resulting in cost reduction and profit increase.- New Business Model- Shifted from direct sales to pharmacies and hospitals to logistics and sales agency through comprehensive wholesalers (9 companies) and general distributors, leading to shorter distribution terms and earlier accounts receivable collection, thereby reducing costs and improving cash flow.3) Focus andion of Products- Focused on profitable products to increase sales and profitability.- From about 400 products in 2008 to around 130 highly profitable products as of the end of June 2009.4) Cost Reduction- Company-wide cost savings reduced expenses by about 400 million KRW compared to the same period last year.3. Improvement in Financial Structure1) Liquidity Improvement (Unit: million KRW) 2009 First Half 2008 First Half Notes Current Assets 41,34738,959 Current Liabilities 26,16034,802 Liquidity Ratio 158.1%111.9% 2) Debt Ratio Improvement (Unit: million KRW) 2009 First Half End of 2008 Notes Debt 31,516 42,049 Assets 80,666 77,064 Debt Ratio 39.1% 54.6% 3) Improvement in Asset Composition (Unit: million KRW) 2009 First Half End of 2008 Increase/Decrease Notes Investment Assets 32,118 41,497 -9,379 Long-term Loans Percentage of Total Assets 28.6% 34.8% -6.2% - Recovered 8 million USD of long-term loans as of June 30, 2009, greatly reducing long-term loans.- Asset composition ratio improved from 34.8% in the same period last year to 28.6% in this term, a 6.2% improvement.4. Outlook for the Second Half (Unit: million KRW)- Based on the intensification of profitability-focusedion and concentration strategy and establishment of a new business model, continuous increases in sales and profits are expected in the second half.- Second half sales are expected to reach 21 billion KRW and operating profit 3.3 billion KRW.- For the full year, sales are projected at 40.6 billion KRW, operating profit at 6 billion KRW, with a target operating profit margin of 15%. 2009 First Half 2009 Second Half Annual Total Sales 19,602 21,000 40,602 Operating Profit 2,709 3,300 6,009 Operating Profit Margin 13.8% 15.7% 14.8%

Daehan New Pharm Exports Large-Animal Anthelmintics to the Netherlands Daehan New Pharm Co., Ltd. exported large-animal anthelmintic products to the Netherlands, one of the leading advanced countries in Europe, on July 28. The company has recently focused on developing new export markets for veterinary medicines, expanding beyond Ethiopia and Japan to newly emerging regions such as Iraq and Taiwan. Kepro B.V., the Dutch partner company, is a global veterinary pharmaceutical manufacturer and marketing firm with branches not only in Europe but also across the Middle East, Africa, and South America. Daehan New Pharm successfully passed Kepro’s preliminary factory quality inspection (EU-GMP) and expects stable and continuous export growth in the future. The company has been actively expanding into overseas markets, achieving export sales of USD 5.5 million (approximately 5 billion KRW) in 2007, USD 5.8 million (approximately 6.4 billion KRW) in 2008, and an expected USD 7.3 million (approximately 8 billion KRW) this year, showing consistent export growth.

Daehan New Pharm announced on July 29 that it had filed two patents, including one for the antihypertensive drug lacidipine. Lacidipine is an antihypertensive that is taken once a day, convenient to take, and has low tolerance. It is exclusively sold in Korea by the foreign company GlaxoSmithKline (GSK) with annual sales of about 20 billion won. Daehan New Pharm has completed the bioequivalence test for lacidipine and plans to launch it in November 2009. Daehan New Pharm expects to capture 25% of the lacidipine formulation market in 2010, expecting additional sales of around 5 billion won. Daehan New Pharm has also developed and launched "Stopping," a preventative and adjunctive treatment for pig diarrhea, which is a fatal disease in pigs, and has completed a patent application for this treatment adjunct. The market for preventative and adjunctive pig diarrhea treatments for pig farms is estimated to be about 10 billion won, and it is expected that exclusive supply will be possible in the domestic market, where there are currently no specific pig diarrhea adjunctive treatments.

Daehan New Pharm’s operating profit soars in the first quarter Daehan New Pharm announced on the 14th that during the first quarter of 2009, the company recorded sales of 8.8 billion won, operating profit of 920 million won, and net profit of 1.46 billion won. The operating profit and net profit represented year-on-year increases of 900% and 155%, respectively. The sharp rise in operating profit was driven by exports, which reached 2 billion won—an increase of 187% compared to 1.1 billion won in the same period of the previous year. The remarkable growth in exports was attributed to the company’s years of effort to develop overseas markets, which have now borne fruit with a rapid increase in exports to new markets such as Russia and the CIS region. This performance reflects that Daehan New Pharm’s finished pharmaceutical products have met various international quality standards, bringing them closer to global quality benchmarks.

Daehan New Pharm Co., Ltd. launched VenomMaster, a non-antibiotic treatment for bovine mastitis, in October this year, and DCS682, a non-antibiotic growth promoter for pigs and chickens, in November. VenomMaster utilizes bee venom, which contains anti-inflammatory, antibacterial, and immune-boosting properties. Developed as a treatment for mastitis, a common infection among dairy cows in Korea, it is the first veterinary pharmaceutical product of its kind to be introduced domestically. The product was commercialized by applying Daehan New Pharm’s advanced pharmaceutical technology to research data accumulated over many years by the Rural Development Administration’s National Institute of Agricultural Sciences. According to reports from major domestic broadcasters (KBS, MBC, YTN, EBS), VenomMaster demonstrated more than 80% treatment efficacy for mastitis cases without the use of antibiotics. The domestic market for bovine mastitis treatment is estimated to exceed 10 billion won annually, and VenomMaster is expected to secure over 30% of that market in 2009. DCS682 was jointly developed with the Industry-Academic Cooperation Foundation of Chosun University as part of a project organized by the Agricultural R&D Promotion Center (ARPC) under the Ministry for Food, Agriculture, Forestry and Fisheries. The domestic market for growth-promoting antibiotics is estimated to exceed 20 billion won per year, and DCS682, as a growth-promoting antibiotic alternative, is projected to capture more than 30% of this market in 2009. Due to growing antimicrobial resistance concerns, the use of antibiotics as growth promoters in compound feed is scheduled to be legally restricted starting in 2009 (according to MIFAFF Notice No. 2007-83). Advanced countries such as those in Europe and the United States have already implemented similar bans, leading to the development of eco-friendly growth promoters and non-antibiotic immune enhancers. Against this backdrop, Daehan New Pharm’s new products are expected to align with the current well-being trend and grow into major “cash cow” items for the company.