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TRADITIONAL CHINESE MEDICINE ANNO 2009

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Creating customized pills with user-defined ingredients to be taken as the only daily food supplement.

THE CONCEPT

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Customization

Targets the committed user

Involving the consumer

Creative Man

Chinese historyTradition

Mysticism

Adding valueBranding product

Dream Society

TWO KEY FEATURES

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• No stockpiling of customized wares.• We keep a library of TCM, which are mixed to form the

desired product one the customer has filed an order – much like is known from the concept of ”late brewing”.

PRODUCTION

GENERIC LIBRARYCUSTOMIZED USER

PRODUCT

MARKET ANALYSISDefine the Scandinavian market:• Population: 25 millions• Demographics: 15 milion people at the range of 15 – 74, estimates that

30-40% of population in the 15-74 age bracket use food supplements regularly and 60% occasionally.

• HDP: $ 35 000 per capita• Political rectrictions: None• Other factors: strong ecological and nature feeling

OUR COMPETITORSFinvita

• Based in Finland, but operating on Scandinavia and UK markets

• They offer more than 40 natural products, aminoacids, oily preparations and cosmetics, some of them from plants

• They seem to be renowned on the market

Dansk Droge

• Based in Denmark , operating on all 3 markets just about to expand

• In their portfolio have natural and ecological oils, pills, tablets, powder

• Smaller than Finvita

COMPARISON• Our weaknesses• We are not first movers• They have already steady

clientele• We have no reputation• The market is really competitive

• Our strenghts• Innovative idea of connecting

Chinese philosophy with customers needs is new on the market

• Customer chooses what he wants• We attack huge segment of the

market• The Interest in Chinese or new way

of thinking tends to increase every year

• We provide option for those who do not believe in traditional medicine

• No further research needed• It is afforadable

HOW DO WE WANT TO GET CUSTOMERS

• In order to target the big segment of the target we need to provide big portfolio in order to satisfy customers´ needs.

• In order to succeed we need to have successful marketing campaigne

• Advertise on THE INTERNET• Advertise on TV (quick effective shots) and radio• Advertise in specific magazines as fitness, women magazines, health…• Advertise as well as personal presentations in fitness centrums, cafe

rooms, orient shops and restaurants, female meetings or waiting rooms at the doctors.

Orders and payment will be taken by filling in on the internet, proceeded to the manufacturing centre and delivered to the customer through independent delivery service.

WHAT OUR COMPETITORS WILL DO?

• They can interfere their own marketing campaings• They can come up with something similar or broaden

their portfolio• They can reduce the costs for the certain amount of

time in order to get back control of the market• They will ask for cooperation (Dansk Droge maybe)• They will try to buy us (Finvita maybe)They will act upon our success during our marketing

campaigne!

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PATENTS• These medicines are not "patented" in the traditional sense of the word. No one

has exclusive rights to the formula. Instead, "patent" refers to the standardization of the formula. All Chinese patent medicines of the same name will have the same proportions of ingredients

• Patents are scarce and extremely specific. It’s very unlikely that they will interfere with our business.

• Example: Hair Tonic– U.S. Classification– 424/74; 424/195.1

LAW RESTRICTIONS• Food supplements are food products, even though they may look like and be used

in the same way as medicinal products.• Food supplements include products for the intake of vitamins, minerals, fibre and

fatty acids and various herbal products. The ingredients used must not have medicinal effects and they must not have been approved for medicinal use.

• The natural product business has categorized food supplements in the following way:

• Vitamins and minerals• Products containing plants or plant extracts• Fibre and weight control products• Lecithin and fatty acid products• Algae products• Bee products• Sports nutrients• Other food supplements

LAW RESTRICTION-II• Food Suppplements• Food Product• Vitamins in sufficiently low

concentration• Administered by the

’Fødevaredirektorat’• Demands:

• Expiring dates• Components on the label• Hygiene

• Natural Medicaments• Medicinal product • Governed by the

’Lægemiddelstyrelse’• Demands

• TCM library already approved• Production origins• Inspection af processing plant• Relaxed demands for proof of effect

Food Act (23/2006)

• Ministry of Trade and Industry Decree on Food Supplements(571/2003), based on the EU Directive on food supplements(2002/46/EC)

o Ministry of Trade and Industry Degree 672/2007 on revision of Degree onFood Supplement 7§ (Given on 1st June 2007, in force on 1st August 2007)

• Ministry of Agriculture and Forestry Decree on chargeable goods andservices produced by the Finnish Food Safety Authority (296/2006)

• Decree on Special Products 349/1989, repealed by GovernmentDecree 570/2003

LAW RESTRICTION-III

BUDGET • Investment and cost:

– Development cost EUR 2.000.000– Purchase of ingredients for 3 years EUR 710.000– Packages for 3 years EUR 50.000– Logistics for 3 years EUR 80.000– Marketing campaign EUR 600.000– Salaries for 3 years EUR 450.000– Business expenses for 3 years EUR 310.000(FF approval, travelling, rent)

Summary EUR 4.200.000

HOW DO WE WANT TO GET MONEY?

• Business investors (from anywhere)• Business angels • Banks• Our own money

SALES FORECAST AND RETURNMENT

• If assumed we target 5 % of our segment within first three years (750.000 people buy our product at least once)

• If assumed that price of basic package is EUR 25 (nett profit out of it EUR 5)

• EUR 25 x 750.000 = EUR 18.750.000 (Gross profit)• EUR 5 x 750.000 = EUR 3.750.000 (Nett profit)• How many do we need to sell to return our investment if

assumed that 20 EUR per package? This is a competitive price. 210.000 for 3 years….70 000 packages per year!

WHAT ARE THE RISKS ON THE WAY TO OUR SUCCESS?• Lasting or even deepening of the economy crisis (we would

need to wait for some indicators at first e.g. Stock exchange rates)

• Loss of key ingredient suppliers in China, India…• Extremely high price for petrol (probably not in next 3 years)• Some authority restrictions on our market(probably not)• Embargo on our supplier country (can happen)• Exchange rate EUR x Jian, Ruppia…• Unsufficient marketing campaign

OUR FUTURE VISION

• To expand to other countries• When our resume is publicly known and we have money we can buy small competitors• We can build relationships with our customer and publish books, pictures about Chinese

culture• To have fun and buy a house in Bahamas and invite everyone from innovation course for

a party

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• A food business actor who manufactures a food supplement or commissions its manufacture or imports a food supplement must submit a written notification of the food supplement to the Food Safety Authority when starting operations.

• A notification is also required if the characteristic ingredients in the product’s composition change or if the product is withdrawn from the market.

• The Food Safety Authority considers the notification requirement fulfilled when the notification is received by the Authority including appendix and all

information required.