Merrill Lynch Healthcare Day

1
Investor Presentation

• Merrill Lynch Healthcare Day
• June 22, 2010

2
Safe Harbor Statement

• 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 Companys 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 products 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 Companys
  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.

3
Investment Highlights
The leading producer of probiotics in China

• Strong RD with sustainable, competitive
  advantages
• Over 9 years probiotics product history proven
  record of profitability
• Rising demand for Chinas 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

4
What are Probiotics?
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.

• 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

Sample Bifido Bacteria, one kind of
probiotic
Source www.usprobiotics.org
5
Global Probiotics Market

• 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 US15.4 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
Source Marketsandmarkets, nutraingredients-usa.co
m DataMonitor, FoodNavigator.com,
ap-foodtechnology.com Pubmed.org, and Mgmt
estimate
6
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
• Govt 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

7
Segment Analysis
Chinese Probiotic Usage and Growth (Metric Tons)
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
Source Domestic Probiotics Market Analysis and
Forecast Report by Beijing
Leadership Management Consulting Co. Limited
8
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 RD
  staff with advanced academic degrees
• Retail outlets in 13 cities
• Over 30 signed bulk additive customers

Strong Organic Revenue Growth
CAGR39
(Millions USD)
9
Strong RD Capability

• Probiotics RD 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 RD partnerships with Chinas top research
  programs in dairy science and technology at the
  Northeast Agricultural University
• Dr. Kai Ma, Director of RD - 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.

10
Products in Retail Business
Total 41 products with 11 active products in
market


11
Retail 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

12
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

13
Bulk 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

14
Expanded Customer Base (Bulk Additives)
15
New 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
16
Strong Financials
Strong Organic Revenue Growth
Proven Earning Growth
CAGR39
CAGR35
Adjustment to exclude gain/loss related to the
change in fair value of convertible notes
17
Income Statement Cashflow
( in Million)
FY2008
FY2006
FY2007
FY2009
FY2010
42.3
21.9
Net sales
30.6
54.2
81.4
70
70
71
70
Gross profit
71
18.3
12.2
Operating income
14.9
20.2
35.2
14.2
10.9
8.35
Adj. Net income
16.9
27.8
19.4
7.0
Operating Cash-Flow
10.0
23.1
28.2
gain or loss related to the change in fair
value of convertible notes is not included
For Fiscal Years Ended March 31
18
Balance Sheet
March 31
( in thousands)
2010 2009 2008
2007
Cash and cash equivalents
70,824
26,992
64,310
155,579
181,953
Current assets
87,370
79,979
41,897
Total assets
120,804
93,792
44,580
232,935
2.7
2.0
Current ratio
3.0
2.4
32,336
Current liabilities
26,896
20,670
76,756
Total liabilities
55,408
49,396
20,670
76,756
Stockholders equity
44,395
23,910
65,396
156,179
Reclassification of convertible note, embedded
derivatives, and interest payable from
non-current liabilities to current liabilities
19
Key Management

• Mr. Jinan Song, Founder, Chairman and CEO
• Founder and CEO since 1999
• Bachelors 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
• Masters 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

20
Investment Highlights
The leading producer of probiotics in China

• Strong RD with sustainable, competitive
  advantages
• Over 9 years probiotics product history proven
  record of profitability
• Rising demand for Chinas 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

20
21
Thank You

• June 2010

22
Appendix Reconciliation of Non-GAAP Financial
Data
Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31,
2010 2010 2009 2009
 Adjusted Net income Net Income Net Income Net Income Net Income
Adjusted Amount 8,773,196 8,773,196 5,570,132 5,570,132
Adjustments
Non-cash gains (losses) from change in fair value of convertible notes (5,889,000) (5,889,000) 1,019,000 1,019,000
Amount per consolidated statement of operations 2,884,196 2,884,196 6,589,132 6,589,132
Fiscal Year Ended March 31, 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