U.S. - China medical devices 2015: California MEETS CHANGZHOU

June, 17th 2015

California Meets Changzhou • The U.S. and China as well as California & Changzhou have

strong medical device industries, which offer mutual benefits to each other.

China Medical Device Industry: Meet Changzhou

China and California Medical Device Products: Industry Products

Industry Products• Computerized tomography (CT)• Equipment X-ray• Equipment Ultrasound • Equipment Magnetic resonance imaging (MRI)• Equipment Endoscopes • Medical nuclear equipment Laser medical equipment• Electronic medical Equipment • Gamma-ray medical Equipment

China and California Medical Device Products: Industry Activities

Industry Activities• Ultrasound equipment • Laser equipment Medical Cryo-therapy • Apparatus Medical electronic equipment • Medical extracorporeal circulation apparatus• Blood purification • Equipment Analytical Instrument of clinical inspection • Diagnosis reagents MRI • Radionuclide equipment • High energy radiation equipment

Changzhou Medical Device Industry

• “Jiangsu Province, where Changzhou belongs, has 31,000+ healthcare institutions, and its number of hospitals ranks second in China; its annual healthcare expenditure reached RMB154.3 billion, ranking third in the country. With a solid industrial base, it is China's most important hub for medical device industry.” -MEDITEXPO 2015 UBM China-

Changzhou Medical Device Industry

• Changzhou is the largest production base of orthopedics equipment, medical supplies, IVD diagnosis and rehabilitation equipment.

• Changzhou has China's only national level medical device innovation base, and is home to Changzhou International Medical Equipment City, which combines the operations a number of medical centers including: the Exhibition Center, Information Center, Commerce and Dealing Center, Logistics Center and the industrial center.

• Centers currently in development in Changzhou include, centers for Academia and Research, and a Product Quality/ Inspection Center.

Source: MEDITEXPO 2015 UBM China

Manufacturing of Medical Devices in China: 2014 Market Research Report • The revenue created from China’s medical device sector has increased over

the last two years, and is trending to continue to grow over the next five year outlook period (from 2015-2020).

• China’s 2014 medical device stats (Based on 5-year-plan. 2009-2014)

• Revenue (2014): 12 billion • Annual Growth (2009-2014): 18.8% Growth

Employment (2014): 71,283Businesses (Medical Device Manufacturing Businesses): 275

• The next 5-year-plan measuring China’s medical device stats will be from (2015-2020)

*STATS BASED ONIBIS World’s Medical Device Manufacturing market research report •

Manufacturing of Medical Devices in China: 2014 Market Research Report

• “The Chinese Medical Device Manufacturing industry is set to generate $12.5 billion in 2014, up 15.8% from 2013. Industry revenue has been growing at an annualized rate of 18.8% over the five years through 2014, stimulated by the increasing purchasing power of hospitals, improvements in living standards and therefore demand for medical diagnoses, technology upgrades in hospitals, requirements for higher quality products and the development of China's western regions.” -IBIS World’s Medical Device Manufacturing market research report 2014-

China’s Medical Device Sales in RMB Over 10 Years (2001-2013)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

500

1000

1500

2000

2500

179 207 247 295352

434535

659

812

1200

1470

1700

2120

10 Million RMB (UNIT)

2001-2013 Medical Device Sales in China

China’s Medical Device Import Growth% in U.S. Dollars from 2009-2015

2009 2010 2011 2012 20130

20

40

60

80

100

120

140

160

Chart Title

Total Import ($10 Million USD)

30.34%

36.82%

14.56%

20.07%

40%

35%

30%

25%

20%

15%

10%

5%

0%

Yearly Growth Rate (%)

17.04%

U.S. Medical Device Industry: Meet California

•California has proven itself to be the biomedical hub for the United States.

California: An Innovation Landmark • “California’s successful biomedical industry is

the end result of an extensive innovation pipeline. This ecosystem begins in the state’s outstanding academic centers and research institutes, continues with an entrepreneurial, start-up culture that rewards risk-takers and culminates with successful companies that produce hundreds of new drugs, diagnostics and devices.” – California’s Biomedical Industry Report 2015 -

U.S. Medical Device Industry• From 2009 to 2013, California had the highest bio-medical

employment, and one of the highest employment growth percentages of any state.

• From 2012 to 2014, California gained more money in Life Sciences Venture Capital Investments, than any other state over that three year period.

• In 2013 and 2014, California was the top state to receive funding from the the National Institute of Health (NIH).

TRENDING PATTERNS: 4-Year-Cycle Medical Device Employment growth by state from 2009-2013 (Dataset)

Medical Device and Biopharmaceutical Employment by state, 2009-2013

2013 Ranking by Employment

Employees, Change from 2009 Employment growth, 2009-2013

1.) California 199,795 (5,015) 4% Growth

2.) New Jersey 41,089 (-8,371) -17% Decrease

3.) New York 38,883 (-1,827) -4% Decrease

4.) Indiana 35,967 (-2,247) -6% Decrease

5.) Pennsylvania 35,956 (-4,605) -11% Decrease

6) Illinois 32,309 (-72) 0% (No Increase or Decrease)

7.) Minnesota 31,680 (-1,385) -4% Decrease

8.) Massachusetts 31,449 (-235) -1% Decrease

9.) North Carolina 30,911 (1,371) 5% Growth

10.) Florida 27,090 (-1,799) -6% Decrease

11.) Texas 25,702 (393) 2% Growth

12.) Michigan 21,457 (1,864) 10% Growth

13.) Ohio 17,235 (1,198) 7% Growth

14.) Utah 16,605 (2,954) 19% Growth

15.) Wisconsin 15,951 (905) 6% Growth

Trending Patterns (Continued) Top 10 states for Life Sciences Venture Capital Investment (2012-2014*) *2014 data based on projection from first two quarters

California Massachusetts Connecticut Pennsylvania Texas Washington Illinois Minnesota Michigan New York 0

0.5

1

1.5

2

2.5

3

3.5

4

Top 10 States for Life Sciences Venture Capital Investment

2012-2014*

2014*20132012Bi

llion

s ($)

Venture Capital Investment in Medical Devices by stage, U.S. and California, 2012-2014*

• Data was collected from 2012 through the second quarter of the 2014 calendar year, showing Venture Capital Investments made in California’s medical device sector.

• The development of these investments was measured in four stages: The start up/seed stage, the early stage, the expansion stage and the later stage.

Venture Capital Investment in Medical Devices by stage, U.S. and California, 2012-2014**2014 data based on projection from first two quarters

2012 2013 2014*0

10

20

30

40

50

60

70

80

90

Start Up/Seed Stage: California Venture Capital Investments for Medical Devices 2012-2014*

CaliforniaU.S.

Millions ($)

Venture Capital Investment in Medical Devices by stage, U.S. and California, 2012-2014**2014 data based on projection from first two quarters

2012 2013 2014*0

100

200

300

400

500

600

700

800

Early Stage: California Venture Capital Investments for Medical Devices 2012-2014*

CaliforniaU.S.

Millions ($)

Venture Capital Investment in Medical Devices by stage, U.S. and California, 2012-2014**2014 data based on projection from first two quarters

2012 2013 2014*0

100

200

300

400

500

600

700

800

Expansion Stage: California Venture Capital Investments for Medical Devices 2012-2014*

California

U.S.

Millions ($)

Venture Capital Investment in Medical Devices by stage, U.S. and California, 2012-2014**2014 data based on projection from first two quarters

2012 2013 2014*0

0.2

0.4

0.6

0.8

1

1.2

Later Stage: California Venture Capital Investments for Medical Devices 2012-2014*

CaliforniaU.S.

Billions ($)

A pioneer in the Biomedical Industry: California’s National Institute of Health (NIH• “California’s life sciences industry is built

on, and fueled by, world-class universities and ground-breaking biomedical research. According to the Shanghai Index, California has 11 of the world’s top 100 schools. New York is the next closest with five.” -California’s Biomedical Industry Report 2015 -

Data Trends from National Institute of Health (NIH) in 2013-2014*

OhioIllin

ois

Washingto

n

Marylan

dTex

as

North Caro

lina

Pennsyl

vania

New Yo

rk

Massach

usetts

Californ

ia0

0.5

1

1.5

2

2.5

3

3.5

Top 10 States Receiving NIH Funding

2013

2014*

Billions ($)

California: Medical Devices, Instruments and Diagnostics

• In California, based upon the calendar year of 2013, employees working for medical device, instrument, and diagnostic companies made an average annual salary of $86,901. California’s Biomedical Industry Report 2015-

• Total wages for all of California’s employees working for medical device, instrument and diagnostic companies in the same calendar year (2013) was $6.49B. -California’s Biomedical Industry Report 2015-

U.S. - China medical devices 2015: California MEETS CHANGZHOU

Thank you!SivaYam, CPA, CFAU.S.-China Chamber of Commerce www.usccc.org312-368-9038SivaYam@usccc.org

Citations• www.turbosquid.com585 × 600Search by image• www.orbitz.com

• www.pwc.com/us/pharma• www.pwc.com/us/medtech• • Bureau of Labor Statistics Quarterly Census of Employment and Wages; 2007 Economic Census• PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report based on data from

Thomson Reuters • National Institutes of Health• IMPLAN modeling system• NSF/NIH/USED/USDA/NEH/NASA• Survey of Earned Doctorates, 2012• Shanghai Ranking Consultanc • BioPharm Insight; IND filed through Phase III, Sept. 5, 2014 http://www.ibisworld.com/industry/china/medical-device-manufacturing.html• http://me.psytreasure.com/library/apps/Your_Handshake_Style_Reavels_Your_Personality/fi.jpg• http://www.internationalmeetingsreview.com/files/imr/nodes/2012/94131/Shangri-LaHotelChangzhou.jpg• http://www.prnewswire.com/news-releases/meditexpo-jiangsu-2015-is-to-help-medical-device-companies-

explore-business-opportunities-in-wider-markets-300076493.html

Companies In Attendance• FDI Strategies, LLC is a cross-border growth

company focused on assisting in growth for businesses between the US and China. FDI manages new market set up, acquisitions and corporate oversight and growth for clients in both countries.

• Grant Thornton is one of the world’s leading organizations of independent audit, tax and advisory firms. Grant Thornton works with a broad range of publicly and privately held companies, government agencies, financial institutions, and civic and religious organizations.

• Uptake Medical is focused on treating serious lung disease, in particular emphysema and lung cancer, using a targeted vapor ablation therapy known as InterVapor, a simple 15 minute endoscopic procedure. The Company is currently completing a randomized control trial for emphysema and a first-in-human study for lung cancer in Europe and Australia.

Companies In Attendance• ARxIUM was formed in 2015 when Intelligent

Hospital Systems, Inc. acquired AutoMed Technologies, Inc. ARxIUM delivers best-in-class technology and unparalleled expertise focused on helping pharmacies of all sizes improve safety, productivity and efficiency.

• Kinamed Inc. is a privately held company that that develops, manufactures, and sells specialty orthopedic and neurosurgery implants and instruments. We have a presence in China in the Neurosurgery segment of our business and would like to develop an effective channel for our orthopedic devices.

• Knobbe, Martens, Olson & Bear, LLP has over 275 lawyers and scientists nationwide and dedicates its practice to all aspects of intellectual property law, including litigation. Knobbe Martens serves a diverse group of clients from multinational corporations to emerging businesses of all stages.

Companies In Attendance• Eigen is a high tech medical device

manufacturing that focuses on using imaging as a diagnostic tool for better cancer detection. We have over 40 years of experience in image innovations with over 45 patents.

• LEYE Investment identifies and manages capital investment on attractive opportunities. Our two affiliates Q8 Partners focuses on Management Consulting and IP Consulting; and Serene Innovations specializes in the development and manufacturing of communication products for seniors and for people with special needs.

• MD3 Medevice connects innovative medical device technologies to global markets. We specialize in product development/product refinement, Clinical development, establishing clinical relevance, and global distribution network development.

Companies In Attendance• Amicus Capital Partners is a private equity

firm that invests exclusively in middle market companies within the healthcare industry. Members of our team are healthcare insiders, with extensive experience within the biopharmaceutical, health IT, health services, and medical device verticals.

• ENG Investment Group is a financial brokerage and investment management, investment banking company.

• The Velocity Orthopedics team develops, manufacturers and markets orthopedic surgical instruments and devices worldwide. We are dedicated to providing premium quality products using innovative techniques that deliver affordable health care solutions to our customers

Companies In Attendance• The International Medical Group, (IMG)

based Indianapolis, Indiana; has provided international medical coverage for over twenty years. We primarily cover diplomats, executives, tourists, exchange students and commercial ship captains / crew in more than (100) countries.