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Merrill Lynch Healthcare Day

June 22, 2010

Merrill Lynch Healthcare Day

June 22, 2010

Investor PresentationInvestor Presentation

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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Any

statements set forth in this presentation that are not historical facts may be forward-

looking statements that involve risks and uncertainties that could cause actual results to

differ materially from those in the forward-looking statements. Such factors include, but

are not limited to, the Company’s ability to market existing and new products, ability to

access capital for expansion, and changes from anticipated levels of sales, future national

or regional economic and competitive conditions, changes in relationships with customers,

dependence on our flagship product’s profits and other factors detailed from time to time

in the Company's filings with the United States Securities and Exchange Commission and

other regulatory authorities. The Company undertakes no obligation to publicly update or

revise any forward-looking statements, whether as a result of new information, future

events or otherwise. This presentation was developed by the Company, is intended solely

for informational purposes and is not to be construed as an offer to sell or the solicitation

of an offer to buy the Company’s stock. This presentation is based upon information

available to the public, as well as other information from sources which management

believes to be reliable, but is not guaranteed by CHBT as being accurate nor does it

purport to be complete. Opinions expressed herein are those of management as of the

date of publication and are subject to change without notice.

Safe Harbor StatementSafe Harbor Statement

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Investment HighlightsInvestment Highlights

The leading producer of probiotics in China Strong R&D with sustainable, competitive advantages

Over 9 years probiotics product history & proven record of profitability

Rising demand for China’s probiotic products driven by increasing consumption of dairy products and rapid growth in the animal feed market

Established large-scale production capacity and quality control to penetrate bulk additives market

Strong revenue and profit growth with high margins Revenue growth 39% CAGR FY06-FY10

FY10 revenue $81M and adjusted net income $28M

Guidance for 50% top line growth in FY2011

Proven high gross margin

Consistent positive free cash-flow in recent 3 years

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What are Probiotics? What are Probiotics?

Historical Context

Pasteur announced certain bacteria are necessary for human health

Metchnikoff received 1908 Nobel Prize for work linking the immune

system and intestinal bacteria

“Good” bacteria helps not only to stimulate digestive health, but may

stimulate a healthy immune system. - Gary Huffnagle, Ph.D.,

University of Michigan Health System.

Benefits of Probiotics

Improves health of G.I. tract

Stimulates immune system

Helps break down nutrients properly

Reduces creation of toxins

Reduces symptoms of lactose intolerance

Decreases prevalence of allergies in susceptible individuals

Reduces some risks associated with certain cancers

Nutritional Products

Pharma-ceuticals

Animal Feed

Additives

Dairy Products

Shining Probiotics

Food Additives

* Sample: Bifido Bacteria, one kind of probioticSource: www.usprobiotics.org

“Live microorganisms which when administered in adequate amounts confer a health benefit on the host

… can play an important role in immunological, digestive and respiratory functions and could have a

significant effect in alleviating infectious disease in children.” – WHO.

0

100

200

300

400

500

600

700

800

900

1950 1960 1970 1980 1990 2000 2010

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Global Probiotics Market Global Probiotics Market

World Market by 2014 - $31 Billion

13.53.5

5.2

9

Europe

Asia

USA

Others

Source: Marketsandmarkets, nutraingredients-usa.com DataMonitor, FoodNavigator.com, ap-foodtechnology.com Pubmed.org, and

Mgmt estimate

New markets are posting faster growth

Probiotic supplement sales in North America and Eastern Europe are currently reporting a growth rate of 25%

Significant increase in mainstream research on probiotics in recent years

Digestive health is ‘mainstream’

In 2008, nearly 59.9 million Americans complained of heartburn, and this figure is expected to rise to almost 73 million by 2013, amounting to nearly a quarter of the population

Global animal feed additives mkt is expected to reach US$15.4 B by 2010

Probiotics have been demonstrated to have an equivalent efficacy to synthetic antimicrobial growth promoters (AGP), which were banned completely in Europe since January 2006

History of Global Research Publications on Probiotics

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Chinese Market Chinese Market

Chinese affluence drives demand for health food

Demand for health food in China expected to reach $9.7 Billion by 2010

(Source: Pacific Bridge Medical)

Demand for Bulk Additive Probiotics increasing significantly

Chinese Bureau of Statistics forecasts tenfold increase in domestic

dairy consumption between 2007-2015, more demand for yogurt and baby formula

product

Estimated $58 Billion animal feed market in China

Favorable Government Policies on both food safety and antibiotics safety Requires Good Manufacturing Practice (GMP) and a step-by-step Hazard Analysis

Critical Control Point (HACCP) quality control system

Over-prescription of antibiotics in China

Gov’t is encouraging probiotics supplements to combat antibiotics abuse

China has limited probiotics production capacity

Current demand relies on imports from European manufacturers

3 dairy majors - Mengniu (HKSE: 2319), Yili (SHSE: 600887) and Bright (SHSE: 600597),

are actively and increasingly introducing probiotics in their value-add dairy products

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Segment Analysis Segment Analysis

0

1000

2000

3000

4000

5000

6000

7000

DairyProducts

AnimalFeed

NutritionalProducts

Other

CY 2006

CY 2010

Year Dairy Products

Animal Feed

Nutritional Products Other Totals (mt)

2006 2,000 1,000 100 300 3,400

2010 Est. 6,500 2,500 600 1,000 10,600

Chinese Probiotic Usage and Growth (Metric Tons)

Source: Domestic Probiotics Market Analysis and Forecast Report

by Beijing Leadership Management Consulting Co. Limited

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China-Biotics Overview China-Biotics Overview

Founded in 1999 and headquartered in Shanghai, with about 500 employees

The largest domestic probiotics supplier in China

Shining is one of the most recognized brands in Shanghai

Launched commercial production in the new 150 ton manufacturing facility in Feb. 2010 to target bulk market in both diary industry and animal feed industry

Proprietary technology powered by over 30 R&D staff with advanced academic degrees

Retail outlets in 13 cities

Over 30 signed bulk additive customers

Strong Organic Revenue Growth

CAGR=39%

(Millions USD)

21.930.6

42.3

54.2

81.4

FY06 FY07 FY08 FY09 FY10

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Strong R&D CapabilityStrong R&D Capability

Probiotics R&D Center

Research Areas: Advanced bacteria culturing and protection, genetically engineered drugs, drug delivery solutions

Over 30 members with Masters degrees or Ph.D.s

Close R&D partnerships with China’s top research programs in dairy science and technology at the Northeast Agricultural University

Dr. Kai Ma, Director of R&D - Ph.D. in Microbiology from the Institute of Microbiology of the

Chinese Academy of Sciences and a member of the “863” and “973” national strategic projects

for developing technology

Intellectual Property

4 approved patents and 8 pending

The largest domestic Enterprise Bacteria Center with over 500 types of bacteria strains

China-Biotics currently carries all of the 21 probiotics strains in the list recently approved by the

Ministry of Health. These probiotics strains are widely used in the Company's bulk additive products.

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Products in Retail Business Products in Retail Business

Shining Essence

Shining Signal

Shining Golden Shield

Shining EnergyFacilitates brain cell development

and increases alertness

Calms digestive system, enhances G.I. health and

protects / strengthens liver function

Reduces high blood pressure, high blood sugar

levels and hyperlipidemia

Enhances the body’s immune system

Sample Products Functions

Total 41 products with 11 active products in market

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Jilin

JiangsuShanghai

Zhejiang

Fujian

Retail Expansion StrategyRetail Expansion Strategy

Continue to develop and introduce new products to the marketplace

Leverage existing directly operated outlets in major cities

Strengthen and broaden distribution network by partnering with large wholesaler

Expand capacity of retail product production capacity 30% in 2H 2010

Continue to improve brand name and recognition

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Products in Bulk Business Products in Bulk Business

Additives for Dairy Product Essential to yogurt-based drinks

CAGR of 31% for yogurt segment growth from ’05 to ’10 in China

(estimated by McKinsey Research) Commonly added to infant formula milk powder

Improves digestion

Animal feeds $58 Billion per year animal feed market in China*

Large global market*Management estimate

Other Products Pharmaceuticals

Nutritional products

Other food additives

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Bulk Additive StrategyBulk Additive Strategy

Focus on dairy and animal feed industries, with

extension to nutritional and pharmaceutical products

Provide customized solutions and comprehensive

support, i.e. co-develop new yogurt formulas

Leverage our proprietary fermentation technology to

offer large volume, high-quality bulk powder

Extend business to international markets

Phase II capacity expansion: to increase total annual

capacity to 300 MT in Qingpu in 2011

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Expanded Customer Base(Bulk Additives)Expanded Customer Base(Bulk Additives)

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New Industry-Leading FacilityNew Industry-Leading Facility

The largest probiotics production plant in China

GMP certified highly automated production line with

maximum 60 workers even at full capacity utilization

Proprietary fermentation technology

Phase I = 150 MT annual production capacity

Commenced commercial production in Feb. 2010

Plan to ramp up to100MT run rate by March 2011

Phase II = 150 MT annual capacity

Coming online in 2011

Large scalability to lower production cost per unit and

achieve high gross margin

MT = metric tons

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Strong FinancialsStrong Financials

*Adjustment to exclude gain/loss related to the

change in fair value of convertible notes

CAGR=39%CAGR=35%

Strong Organic Revenue Growth Proven Earning Growth

8.4

10.9

14.216.9

27.8

FY06 FY07 FY08 FY09 FY10

21.930.6

42.3

54.2

81.4

FY06 FY07 FY08 FY09 FY10

Gross Profit (in millions)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

FY06 FY07 FY08 FY09 FY10

69.6%

69.8%

70.0%

70.2%

70.4%

70.6%

70.8%

71.0%

71.2%

Gross Profit Gross Margin

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Income Statement & Cashflow Income Statement & Cashflow

For Fiscal Years Ended March 31

14.2*

18.3

71%

FY2008

8.35

12.2

70%Gross profit %

Operating income

Adj. Net income 10.9

* gain or loss related to the change in fair value of convertible notes is not included

42.3 21.9Net sales 30.6

71%

14.9

FY2006($ in Million) FY2007 FY2009 FY2010

54.281.4

20.235.2

16.9* 27.8*

70%70%

19.4 7.0Operating Cash-Flow 10.023.128.2

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Balance SheetBalance Sheet

Cash and cash equivalents 70,824

Total assets 120,804

Total liabilities 55,408

Stockholder’s equity 65,396

Current assets 87,370

Current ratio 2.7

Current liabilities 32,336

79,979 41,897

26,992

93,792 44,580

3.0 2.0

26,896 20,670

49,396 20,670

44,395 23,910

64,310155,579

181,953

232,935

2.4

76,756*

76,756*

156,179

March 31 ($ in thousands)

2010 2009 2008 2007

*Reclassification of convertible note, embedded derivatives, and interest payable from non-current liabilities to current liabilities

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Mr. Jinan Song, Founder, Chairman and CEO

Founder and CEO since 1999

Bachelor’s degree in Polymers; Masters degree in politics and economics

Mr. Travis Cai, Chief Financial Officer

Over 10 years of financial management experience in financial institutions and US-listed companies MS from Stern School of Business at New York University and BS from Tsinghua University

Ms. Eva Yan, Chief Administration Officer

Management team member since 1999 with participation in formulating corporate development plans Implementing internal control procedures and business negotiations Master’s degree in Economic Law from Capital University of Economics and Business

Dr. Tom Gu, Vice President

Former director of the United States Federation for Culture Collections Standing member of the Expert Committee of the Shanghai Zhangjiang Bio-Pharmaceutical Base Ph.D. in molecular medicine from University of Arizona and BS in biochemistry from Jilin University

Key Management Key Management

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Investment HighlightsInvestment Highlights

The leading producer of probiotics in China Strong R&D with sustainable, competitive advantages

Over 9 years probiotics product history & proven record of profitability

Rising demand for China’s probiotic products driven by increasing consumption of dairy products and rapid growth in the animal feed market

Established large-scale production capacity and quality control to penetrate bulk additives market

Strong revenue and profit growth with high margins Revenue growth 39% CAGR FY06-FY10

FY10 revenue $81M and adjusted net income $28M

Guidance for 50% top line growth in FY2011

Proven high gross margin

Consistent positive free cash-flow in recent 3 years

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June 2010June 2010Thank YouThank You

China-Biotics Inc.

Travis Cai, Chief Financial Officer traviscai@chn-biotics.com

Grayling

Kevin Theiss (646) 284-9409 kevin.theiss@grayling.com

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Appendix: Reconciliation of Non-GAAP Financial DataAppendix: Reconciliation of Non-GAAP Financial Data

　 Three Months Ended March 31,

2010 2009

 Adjusted Net income Net Income Net Income

Adjusted Amount $8,773,196 $5,570,132

Adjustments 　 　

Non-cash gains (losses) from change in fair value of conv

ertible notes(5,889,000) 1,019,000

Amount per consolidated statement of operations 2,884,196 6,589,132　 Fiscal Year Ended March 31,

　2010 　 2009

Adjusted Net income Net Income Net Income

Adjusted Amount $27,784,961 $16,874,889

Adjustments 　 　

Non-cash gains (losses) from change in fair value of

convertible notes

(12,137,000) 3,902,000

Amount per consolidated statement of operations 15,647,961 19,966,889