Presentation for mHealth Israel by Donald Tang, Managing Partner, Shanghai Creative Investments, May 25, 2016 in Tel Aviv. Overview of Chinese Healthcare System and Israel Startup Opportunity; China is An Extremely Large Health Care Market; Significant Demand over Supply; Extremely Weak Local R&D; In dire need to incorporate with high-end technologies; Major Changes are happening; SCI is helping the paradigm shifting; What an Israel Start-up can do?

1. Donald Tang
SCI Advanced Technology Fund
May 2016
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2. China is An Extremely Large Health Care Market
Significant Demand over Supply
Extremely Weak Local R&D
In dire need to incorporate with high-end
technologies
Major Changes are happening
SCI is helping the paradigm shifting
What an Israel Start-up can do?
Contents
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3.  Aging of Population
 Chronic Diseases
 “Two-Child-Policy”
 Overcrowded Public Hospitals
 High Net Worth Individuals
China is An Extremely Large Market
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4.  Definition: 10% of the overall population are 60 or above/7% of the overall
population are 65 or above
 China Census 2010: 13.26% and 8.87% Chinese are above 60 and 65
respectively.
 Until 2020, the aging population in China is going to reach 248 million,
17.17% of the whole population.
China will have the largest Aging Population
in the world by 2030
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5.  According to the data of 9 Chinese provinces
 Sickbed Rate:
 60 yrs ~ 69 yrs: 3.16%
 70 yrs ~ 79 yrs: 4.22%
 80 yrs: 4.3%
 Over 90% of people who are 60 or above have at least one chronic diseases.
 Hypertension: 31.3%
 Cataract: 44.3%
 Chronic Bronchitis: 16.4%
 Coronary Disease: 13%
Chronic Diseases became a major problem
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6. Type of Diseases Prevalence of illness
(10K)
Costs (100 million)
Cardiovascular and
Cerebrovascular
Diseases
29000 705
Cancer 271 907
Nerve System Disease 592 233
Genitourinary system
Disease
1111 916
Chronic Diseases became a major problem
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7. Major diseases that cause death in rural and
urban areas
41.90%
25.50%
12.40%
6.30%
13.90%
Urban Area
Cardiovascular Disease
Tumour
Respiratory Disease
44.80%
22.40%
11.50%
8.70%
12.60%
Rural Area
Cardiovascular Disease
Tumour
Respiratory Disease
Injure/Toxication
Other
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8. Cardiovascular Disease Death Rate
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9.  Neonatology
 New born will increase by 6
million every year due to the new
policy.
 Gynecology and Obstetrics
 Reproduction
 Prevalence of infertility in China
is 12.5% ~ 15%, which means
1/8 couple in China have
reproduction problems.
“Two-Child Policy”
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10.  The number of HNWIs and disposable income are growing fast.
Growth of Wealthy Population
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11.  In 2014, there are 7.8 billion hospital visits.
 It increased by 590 million and 1 billion compare to 2013 and 2012
respectively.
 Accommodation: 4.55/thousand people
 Doctor-Patient Ratio: 2.06/thousand people
Chinese Healthcare System – Hospitals , the
supply side
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12.  Public hospitals are extremely overcrowded!
 Public Sector
 Visiting Rate: 89.8%
 Accommodation Rate: 93.5%
Public VS Private – Overcrowded Public
Hospitals
Visiting Rate = visits in private or public/overall visits 12

13.  Private Sector:
 Visiting Rate: 10.6%
 Accommodation Rate: 60%
 Problems with private sector
 Mid-level income people cannot afford the price  needs public insurance 
choose public hospital
 Prices are equal among public sector  more confidence in public sector
 Private Hospital cannot provide full clinical service  rich people go to public
hospital too
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Public VS Private – Chinese people are less
willing to choose private hospitals

14. Number of Hospital Number of Beds per hospital
Level 3 hospital 1,728 600-2000
Level 2 hospital 6,667 200-500
Level 1 hospital 5,882 100-200
Hospital not ranked 9,578 50-100
Medical centers below
county level
56,370 20-30
Total No. 80,225
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 Total Population : 1.4 billion
 Population of Major cities: Shanghai 30 Million, Beijing 25M, Guangzhou
15M
 Number of Cities with more than 1 million people: 200 cities
Number of Hospital and Medical Centers in
China (2013)
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15. Medical devices: only small scale of local production
and very low market share locally and globally; slow
upgrading; very few original innovations.
Medicine: development of new drug not comparable
with developed countries
Critical diseases: survival rate of critical diseases is
low
Medical service: extreme complex medical system.
Technology is a Big Weaknesses (lack of
Advance Technologies)
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16. 16
 Per 1 million people, Japan owns 20 times more CT Scanner devices than China.
 The CT demand is quickly growing.
Number of CT per
million people from
2008 to 2013
0
2
4
6
8
10
12
2008 2009 2010 2011 2012 2013
6.7
7.5
8.3
9.2
10.6
11.6
Number of CT per million
people in 2006, across
countries
Example: Number of CT Scanner per million
people in China and other countries
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17. Number
of
Hospital
Number of CT
Owned per
hospital（2013）
Forecast of CT
to purchase
（2016E）
Demand of
CT in
China
Level 3 hospital 1,728 3 3.5 864
Level 2 hospital 6,667 1.4 2.19 5,266
Level 1 hospital 5,882 0.2 0.6 2,353
Hospital not
ranked
9,578 0.03 0.052 211
Medical centers
below county level
56,370 0.005 0.012 395
Total No. 80,225 9,089
 Drivers: Replacement of old devices , Increase of use CT,
Improvement of treatment tech
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Example: Demand of CT in 2014-2015 in all
levels of hospitals in China
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18.  By Department of Industry and Information: Total value of production of
the whole medical device industry in China in 2014: RMB 379.8 bn
(ILS235.4bn)
 By Trade Association’s Estimation : Total value of production around RMB
500 Billion (USD 90Billion).
1
8
Total Production of the Medical Device
Industry in China in 2014
Category Total Revenue
Growth
Annual
Medical Devices and
Equipment
RMB 213.6bn
(ILS132.43bn)
14.63%
Expendables and materials
RMB166.2bn
(ILS103.04bn)
15.48%

19. Major channels for medical devices are : Hospitals and Retail
pharmacies
 In 2013, 78.75% medical devices are sold through hospitals,
16.36% are sold through retail pharmacies, 4.69% through
other channels.
By Oct 2013, there are 177 online retail stores are certified by
the Chinese authorities. The sales value in 2013 was estimated
to be about RMB2.5 BN。
Profit Ratio of medical device companies are 22%.
Off-retailers has a profit ratio of 26%
On-line retailers has profit ratio of 3-4%
Sales Channel of Medical Devices in China
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20.  There is huge space for medical producers to grow in China.
2
0
Comparison of Medical Industry between
China and Developed Countries
USA/Japan/EU China
Healthcare Industry to GDP >10% <5%
Sales value of Devices to Drugs About 1:1 About 1:3~4
Global Market shares About 72% About 7~8%
Local Market Share (In China) 70% 30%
Concentration high Very Low

21. Privatization of public hospitals
Emergence of independent physician groups
Shifting of profit center: from drug to diagnosis and
surgeries
Increasing of specialized independent medical centers and
hospitals
Unified EMR (Electronic Medical Records)
Independent diagnosis centers (imaging, blood test)
Localization of productions medical devices
Upgrading to high-end devices
Extensive JVs with foreign startups with good technologies
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The Major Coming Changes in the China
Medical System

22. SCI is helping the
paradigm Changing!
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23.  Originally founded in 2006, SCI (Shanghai Creation Investment)
Management Co, Ltd. in Shanghai, China (“SCI” in below) is one of the
most active investment funds and IPO consulting companies in China.
 In the past 9 years, SCI successfully made investment in medical domains
and other sectors. SCI provided well recognized consulting services for
enterprises at different stage and under difference scenarios.
 SCI has made extensive researches in many fast growing industries,
including advanced equipment, automobile, consumer goods, medical, and
new material.
 By May 2016, SCI has successfully helped about 30 China and USA
enterprises in private financing, M&A, or public listing. The amount of
private equity financing is totaled at more than USD 500 Million.
Intro of SCI
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24. 24
Business of SCI
Private
Placement +
IPO Advisory
Direct
Investment
•Industry research
•Comparison of
companies
•Choice of IPO
market,
•Optimization of
the IPO
preparation.
•Due diligence
•Fund raising
Funds:
• Angel Stage
• Round A stage
Domains:
• Medical
• Advanced
Manufacturing
• New material
(Polymer)
Technology
Transfer
• For Technology
Founders
• For Technology
Requests

25.  Alltech Medical Systems
Alltech Medical Systems (“AMS”) is an international
medical imaging-tech and product supplier, which is
engaged in the R&D, manufacture, sale and relevant after-
sale service of high-end medical imaging diagnostic
equipment, such as superconducting magnetic resonance
imaging system with two major operation centers, one
locates in Cleveland, America and the other in Chengdu,
China.
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2006, Alltech Medical Systems, USA
Private Placement of USD35M

26.  FMI is committed to high-end high resolution diagnostic imaging
technology research, drug and molecular isotope detector for neurological
disorders with early detection and monitoring.
 FMI Medical Systems core technology and products are ScintStar 16 slice/
64 slice CT and PET/CT, 128 Slice CT, etc.
 FMI launched its first 16 slice CT in 2015 and first PETCT in China in
March 16. 2016
26
2010-2015, FMI Imaging Systems, USA
M&A of USD 10M + Private Placement of
USD35M
明峰医疗
中国第一家全球
第四家PETCT
整机生产商
并购顾问

27. 27
FMI launched its product of PETCT in China
on 20160316 in Hangzhou
The launching ceremony
 A very famous case of M&A and JV of medical
companies in China and USA
 No.4 in the whole world to own its own
complete IP as a PETCCT producer

28. 28
FMI launched its product of PETCT in China
on 20160316 in Hangzhou

29. 29
SCI helps the sales of CT scanners of FMI
 On Jan 20th, 2016, SCI called up meeting among
Stanford Medical Center, Chongqing Pharmaceutical
Holding and FMI Imaging, to plan to launch a JV
between CPH and FMI, for CT distribution.

30. Wolwo is an innovative pharmaceutical
producers , focusing anti-allegy drug for
dust mite.
SCI invest USD5MM in Wolwo.
Wolwo was listed in Growth Enterprise
Market of China on Jan 21st of 2014.
SCI liquidated all stocks on May 26th of
2015, with a return of 17X.
30
2011-Investment of USD5MM into Wolwo
Pharmaceutical

31.  Surgical Theater was found in 2010，based in Cleveland, Ohio, USA
 SNAP and Planning System obtained FDA in Feb 2013 and June 2014
 March 2015, SCI invested USD 2.6MM and August 2015, HTC invested
USD5MM. More investors are coming in.
31
201503 –Investment USD 2.6MM in to Surgical
Theater, Advanced 3D Navigation System in Surgery

32. SCI is building a medical Eco-system
32
SCI Tech
Funds
Innovative
Portfolio
Companies
Incubators
Distributors and
Marketing
Top Hospitals
and Doctors
Top Research
Organizations

33. 33
SCI is building a medical Eco-system --
working with top research organizations
Standford UCLA
Sandhill Road of Silicon Valley

34. 34
SCI is building a medical Eco-system -- SCI
Fund visits Israel 4 times a year
God’s places
Hebrew Univ Tel Aviv TV Medical Project

35. 35
SCI is building a medical Eco-system -- SCI
Advanced Technologies Exhibition Hall in
Shanghai (permanent display)

36. 36
SCI is building a medical Eco-system
(incubator in China)

37. 37
SCI is building a medical Eco-system
(incubator in China)

38. 38
SCI is well-received in USA media

39. Find the real investors and real advisors
What is real ? Find someone who :
understands medical technologies and loves technologies
helps clinical trials
helps regulatory applications
helps sales channels
helps you talking to Chinese top doctors
helps you build a JV
helps next financing
helps you get to a right place (corporate park or incubator in
China)
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Suggestions to Start-ups about going to China

40. Genuine Demand – not by hypothesis
Genuine innovation v.s. education of market ,
insurance, approval of sale price
3 milestones : R&D, Clinical Trial, Mass Production
Sales model : Direct V.S. Channel
Cost v.s. profit, be cautious to anything with less than
20% net profit
Fair valuation v.s. cooperation with stragetical
resources
General Suggestions to Medical Start-ups
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41. China is An Extremely Large Health Care Market
Significant Demand over Supply
Extremely Weak Local R&D
In dire need to incorporate with high-end
technologies
Major Changes are happening
SCI is helping the paradigm shifting
What an Israel Start-up can do?
Review of Contents
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42. Thank You!
Mr. Donald Tang
Managing Partner
SCI Advanced Tech Fund
donaldtang@scivc.com
+86-15901999998
SCI means Science & Tech
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43. Is the market too niche?
Is there any threats from replacement of other
technologies?
Is the target company a planform tech company or
only has one application?
Is there clearly logic in the execution of the
management?
Is the valuation fair enough?
Some General Suggestions to Medical
Investors
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