Pacific Hospital Supply Co., Ltd 1Q2017 Company Report

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 in 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 from 2014 to 16 & 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.

2016

Established mold department in the subsidiary company

New Factory constructed at Tong Lo Science Park in December

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

3 Factories in the Tong-Lo Industrial Park

Taipei Headquarter

Our Location

Miaoli

Taiwan

New Factory at Tong-Lo Science Park

Kaohsiung Office

5

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

697 people (2016)

Current Factories

6

New Factory

Land Buildings Capacity

50000 m²

Factory 44100 m² AS/RS 4500m²

(8100 storage spaces)

Dorm 6000m² (380 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%

8

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%

9

Introduction to Medical Product Industry and Future

Global Medical Product Market Share

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 USD 357 B

Estimated percentage by Category

Diagnostic Imaging Product 25.2%

Medical Disposal Devices 15.5%

Assistive Device 12.5%

Orthopodic &

Implantable Product 11.9%

Orthodontic Product

6.8%

Others 28.0%

2015 USD 357 B

10 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

11

Market of Aging Population

Due to global low birth rate, the population

structure is aging at a fast rate. % of health

expenditure increased as people aged.

Age % of health expenditure

<25 3.4%

25~34 5.4%

35~44 6.5%

45~54 6.8%

55~64 8.8%

>65 13.4%

*Source: Franklin Templeton(2016); Council for Economic Panning and Development(2008); United Nations(2006)

U.S. Europe China Japan

12

1950~70

Period

1980~2010

Period

2010

Period

Childhood Adulthood Elder

WWII Baby Boom: 1946~1964 U.S births increased rapidly Aging Boom: 2011~2029 Baby boomers start to enter age of 65

Global Population of Children vs. Elders (%)

Under 5

It is estimated global population age over 65 will surpass age under 5 after 2020 and the difference will continue to grow.

Market of Aging Population

*Source: Franklin Templeton(2016); United States Census Bureau (2016); United Nations(2013)

Over65

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

Our Major Exporting Regions

Taiwan 17.3% China

11.5%

Other Asia 11.4%

North America

7.4%

Latin America

5.1%

Germany 6.3%

Other Europe 10.3%

Middle East & Others 5.7%

PAHSCO 2016

Japan

25%

Taiwan 18.5%

Other Asia 12.5%

China 12.0%

North America

9.1%

Latin America

4.4%

Germany 7.1%

Other Europe

9.3%

Middle East & Others 6.2%

PAHSCO 2015

Japan

20.9%

15

Our Major Exporting Regions

Taiwan 18.1%

China 11.9% Other Asia

11.6% North America

6.1%

Latin America

5.6%

Germany 8.0%

Other Europe 11.5%

Middle East & Others 5.9%

PAHSCO 1Q2017

Japan

21.3%

Taiwan 17.0%

China 12.9%

Other Asia 11.8%

North America

6.4%

Latin America

4.7%

Germany 5.6%

Other Europe

9.5%

Middle East & Others 7.2%

PAHSCO 1Q2016

Japan

24.9%

16

85% 90% 95% 100%

2010

2011

2012

2013

2014

2015

2016

1Q2017

90.5%

91.0%

90.5%

90.9%

90.90%

90.40%

92.9%

93.4%

5.00%

5.9%

6.9%

7.0%

7.00%

8.50%

6.8%

6.4%

2.9%

3.1%

2.6%

2.1%

2.10%

1.10%

0.3%

0.2%

Medical Device Medical Equipment Piping System

Percentage of Product Categories

17

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% (4th)

PAHSCO 2015

18

Tubes, 26%

CSS, 25%

Bags, 12%

Others,

23%

Wound

Drainage

System,

10%

Bottles, 2%

Respiratory

, 2%

Disposable Medical Device

Closed Suction System (CSS) Sales Revenue:427 Million(NTD) % of Product TR: 25% (2nd )

Tubes Sales Revenue:434 Million(NTD) % of Product TR: 26% (1st )

Bags Sales Revenue:204 Million(NTD) % of Product TR: 12% (3rd)

PAHSCO 2016

Wound Drainage System Sales Revenue:162 Million(NTD) % of Product TR: 10% (4th)

19

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%

20

Tubes, 26%

CSS, 27%

Bags, 10%

Others,

23%

Wound

Drainage

System,

11%

Bottles, 2%

Respiratory

, 2%

Disposable Medical Device

Closed Suction System (CSS) Sales Revenue:115 Million(NTD) % of Product TR: 27% (1st )

Tubes Sales Revenue:109 Million(NTD) % of Product TR: 26% (2nd )

Wound Drainage System Sales Revenue:45 Million(NTD) % of Product TR: 11% (3rd)

PAHSCO 1Q2017

Bags Sales Revenue:42 Million(NTD) % of Product TR: 10% (4th)

21

Sales Distribution (By Domestic & Export)

PAHSCO 2015

Domestic 18.5%

Export 81.5%

PAHSCO 2016

Domestic 17.3%

Export 82.7%

1980 2002 2016

Export 0% 5% 83%

Domestic 100% 95% 17%

22

Sales Distribution (By Customer Type)

OBM 50.8%

OEM/ODM 49.2%

PAHSCO 2015 PAHSCO 2016

OBM 48.3%

OEM/ODM 51.7%

OEM/ODM OBM Total

789M 816M 1.6B TWD

OEM/ODM OBM Total

871M 812M 1.7B TWD

23

Sales Distribution (By Customer Type)

OBM 50.6%

OEM/ODM 49.4%

PAHSCO 1Q2016 PAHSCO 1Q2017

OBM 50.4%

OEM/ODM 49.6%

OEM/ODM OBM Total

223M 228M 451M TWD

OEM/ODM OBM Total

210M 214M 424M TWD

24

Sales Distribution (By Currency Type)

JPY

18%

TWD

17%

CNY

12%

Euro

5%

PAHSCO 2016

USD 48%

JPY

16%

TWD

19%

CNY

12%

Euro

5%

PAHSCO 2015

USD 48%

25

Sales Distribution (By Currency Type)

JPY

18%

TWD

18%

CNY

11%

Euro

5%

PAHSCO 1Q2017

USD 49%

JPY

18%

TWD

17%

CNY

13%

Euro

4%

PAHSCO 1Q2016

USD 47%

26

Sales by Quarter

Unit: Thousand (NTD)

YEAR 2009 2010 2011 2012 2013 2014 2015 2016 2017

Q1 246,505 299,794 325,890 342,607 357,542 371,812 363,487 452,010 424,871

Q2 282,752 319,461 372,298 341,626 382,503 362,975 353,704 452,428

Q3 294,085 310,737 342,243 369,016 351,901 376,479 439,502 419,800

Q4 311,086 318,310 303,188 385,459 351.950 395,398 464,871 365,426

Total 1,134,428 1,248,302 1,343,619 1,438,708 1,443,896 1,506,664 1,621,564 1,689,664 424,871

Growth 18.1% 10.0% 7.7% 7.1% 0.4% 4.4% 7.6% 4.2% -6.0%

Gross Margin

39.4% 41.1% 38.7% 39.2% 37.5% 36.1% 36.9% 36.5% 32.6%

27

Financial Information

ITEM 2009 2010 2011 2012 2013 2014 2015 2016

1Q

2016

1Q

2017

EPS 4.24 5.44 5.39 4.77 4.88 4.95 5.32 5.04 1.57 0.92

ROE % 22.71 27.85 22.62 20.28 19.49 18.55 18.18 15.80 5.01 2.74

ROA % 16.15 22.02 18.93 16.75 16.06 15.33 14.32 11.13 3.80 1.83

Net Profit

Margin 20.69 27.27 24.06 21.90 22.29 21.70 21.66 19.69 22.98 14.34

Net Cash

per Share 8.00 9.84 10.44 12.40 12.64 11.82 6.81 - 6.28 -

* Ignore the evaluation loss of financial liabilities

*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 presented at the Shareholders’ Meeting.

*2016Pay-out: $2.5 Cash Dividend presented at the Shareholders’ Meeting.

28

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%

29

Revenue

(NTD) 2009 2010 2011 2012 2013 2014 2015 2016 1Q2016 1Q2017

PAHSCO

Total

(Billion) 1.13 1.25 1.34 1.44 1.44 1.51 1.62 1.69 0.45 0.43

China

(Million) 73 83 115 130 143 165 194 194 58 51

% 6.5 % 6.7 % 8.5 % 9.0 % 9.9% 11.0% 12% 11.5% 12.9% 11.9%

73 83

115 130

143 165

194 194

2009 2010 2011 2012 2013 2014 2015 2016

Unit: Million (NTD)

38%

-0.4%

14% 13%

Our Sales in China

10%

yoy

15% 18%

-13%

30

Areas covered

Total

Areas *31 Provinces

+ Taiwan

+ Hong Kong

+ Macau

34

Areas

Covered

23

Tier 1

Distributor

12

2017

Target

Areas

8 Provinces

• Fujian • Sichuan

• Shanghai • Henan • Sandong

• Tibet • Oinghai • Yunnan

Our Distribution in China

31

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