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November 2008

November 2008

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November 2008

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  1. November 2008

  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 are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand, increased competition, changes in the scope or timing of the Company’s projects, slowdown in the demand for glucose series products and starch products, uncompetitive levels of research and development, failure to obtain regulatory approvals, and other information detailed from time to time in the Company’s filings and future filings with the United States Securities and Exchange Commission. The forward-looking statements contained in this presentation are made only as of this date, the recent results may not be indicative of future results, and the Company is under no obligation to revise or update these forward-looking statements.

  3. Company Overview • Market leader of pharmaceutical grade glucose with about 40% market share in China • 1 of only 3 companies licensed to produce dextrose monohydrate glucose in China • Leading glucose and cornstarch products manufacturer supplying the pharmaceutical and food and beverage industries • Rapid growth – FY2008 versus FY2007, Revenues grew 76% to $90.87 Million & Net Income grew 46% to $10.41 Million • Well positioned to benefit from further expansion of Chinese pharmaceutical industry • Rural health care reform is expected to enhance growth of pharmaceutical products • Major operating subsidiary in Weifang, Shandong Province • “The hub of chemical industry in China” • Second largest corn producing province in China with an expected 18.49 million metric tons of corn production in 2008, as corn is our main raw materials

  4. What is Pharmaceutical Grade Glucose? • A sugar with higher standards for purity and quality than glucose used in the food industry • The most common pharmaceutical glucose are Dextrose Monohydrate and Dextrose Anhydrous • Dextrose Monohydrate is widely used as a standard medical procedure for restorative and nutritional purposes • Dextrose solution is recommended for subcutaneous injection as a restorative medium after major operations or as a nutritive measure in debilitating diseases such as fever, cold and diarrhea etc.

  5. Favorable Industry Outlook • In China, pharmaceutical grade glucose is widely used as part of surgical procedures and as a standard health treatment. It is supported by the Chinese Government-subsidized Medical Insurance Plan • Improving rural area healthcare is a priority of the Chinese government – the Chinese government-subsidized rural healthcare system is creating greater demand for pharmaceutical products • Rising disposable net income per capita is generating greater demand for healthcare services • China has approximately 50 types of transfusion products with an estimated annual per capita consumption of around 5 bottles. Most of the consumption is for Dextrose Monohydrate • The number of medical transfusion providers in China increased from approximately 100 in 2002 to 389 in 2007. The domestic sales grew from 2 billion bottles in 2002 to 7 billion bottles in 2007

  6. Robust Growth of China’s Pharmaceutical Industry 2007E-2011E CAGR of Expenditure on Pharmaceutical Products per Capita Expenditure on Pharmaceutical Productsper Capita in 2006 … and is expected to grow fastest among other major countries in the next five years China’s expenditure on pharmaceutical products per capita is still lagging behind other countries… Source: 2006 data from the PRC National Bureau of Statistics; 2007E to 2011E projected data from Frost & Sullivan This data has not been independently verified and is subject to change

  7. Strong Product Lines & Sales Growth • Glucose • Dextrose Monohydrate • Dextrose Anhydrous • Dextrose Monohydrate Oral • Industrial Glucose • Corn Starches • Pharmaceutical • Food & Beverage • Others • Germ • Fibers • Protein Powders • Dextrin FY04-08 CAGR 46% Revenue Breakdown

  8. Shengtai Core Competence • Market Leader and Preferred Supplier • Largest domestic producer of pharmaceutical grade glucose in China with about 40% of market share • Modern Production Facilities • Vertically integrated business model • In-house cornstarch production facility • Capacity and productivity improvement in existing glucose facility • New glucose facility to significantly increase production capacity • High Product Quality • GMP certified from China SFDA • Strong and Loyal Customer Base • 430+ customers combined domestically and internationally for glucose products • Extensive Distribution Network • Coverage in all provinces not including Tibet • Exporting to 70 countries and growing

  9. Production Process Convert Emulsion Cornstarch Add in Glucoamylase Filter Discolor Ion exchange Inspissations Crystallization and separation Glucose Clean and Dry

  10. Quality Control • Fully certified for GMP, ISO9002 and HACCP international quality standards • Most products globally certified HALAL, KOSHER and IP GMO • Chinese EPA compliant • Output conforming to pharmaceutical glucose product specifications is maintained at 100% • Stringent condition controlled warehouse • All year temperature under 86 degree F and humidity under 80% • Three-Tier quality control system • Workshop team • Production team • Management accountability

  11. Distribution Channels and Target Market Strong distribution • Four marketing offices • Coverage in all provinces not including Tibet • Exporting to 70 countries including developed countries such as Japan, Singapore, Korea, Australia & emerging markets such as Russia and India Target Customers • Pharmaceutical companies • Medical supply companies • Food and beverage companies Domestic Market Shandong Chengdu Hangzhou Nanchang Guangzhou Representative Office Chinese Operation Headquarter

  12. Growing Customer Base • Growing base of over 1,000 total customers in China and abroad • High-quality pharmaceutical grade products certified for product reliability • Strong referrals from large reputable customers including Shanghe and Kelun which are the largest transfusion suppliers in China • Excellent customer service and support; On-time deliveries • Good AR collection with DSO for FY2008 at 30 days

  13. Key Corporate Milestones • Invested for growth and reshaped business through major capital investments • Accomplishments in two years Started operation in new glucose facility Completed new glucose facility GMP certificate received Began trial production from new glucose plant 2Q FY09 Began construction of the new glucose plant 1Q FY09 Listed on OTCBB Completed financing US $17.5M July 08 Completed new cornstarch facility 1Q FY08 4Q FY07 2Q FY07

  14. Vertically Integrated Cornstarch Production • Production facility completed in October 2006 • Located in Shandong province, the second largest corn producing province in China • Stable supply of high-quality raw materials for glucose • Strategically located near its own glucose production plants which lowers transportation cost • Maximum annual production capacity of 240,000 tons, able to expand production up to 300,000 tons per year • Achieves economies-of-scale • Additional revenue opportunities by selling excess cornstarch • Power & Gas plant on site • Lower cost and stable supply of electricity and gas to all factories including both cornstarch and glucose facilities

  15. Glucose Production Facilities • Extant glucose production facility: • Annual production capacity 60,000 tons • Capable of increasing capacity by 30,000 tons, if necessary • New glucose production facility: • Construction completed at the end of July 2008 with annual production capacity of 120,000 tons of pharmaceutical glucose and other glucose products • Launched trial production in July 2008 • GMP certification received at the end of September 2008 • Started operation in Oct. 2008 and expect full- scale production by calendar year end 2009

  16. Growth Strategy To Expand Its Leading Market Position As a Premiere Supplier of Pharmaceutical Grade Glucose and Other Refined, Starch Based Products • Increase volume of sales to existing customers • Continue emphasis on higher-margin pharmaceutical grade products • Leveraging strong brand name and proactively pursuing new business opportunities through referrals • Aggressively target new high-growth overseas markets: • Applying for safety certifications from regulatory agencies • Build awareness by attending trade shows and increasing its online presence • Unlock production capacity bottleneck to lower overall costs through increases in operating efficiencies

  17. Summary Income Statement (12 Months Ended June 30)

  18. Balance Sheet Highlights

  19. Strong Revenue and Net Income Growth 5 Years ended June 30, Revenue Growth 5 Years ended June 30, Net Income Growth FY04-08 CAGR 113% FY04-08 CAGR 46%

  20. Key Management and Board Member Mr. Qingtai Liu President and Chief Executive Officer • Chief Executive Officer and President of Weifang Shengtai since 1999 • Recognized by the Weifang City Government office as a Leading Technology Innovator and a Distinguished Pharmaceutical Production Director • Deputy to the People’s Conference of both Weifang City and Changle County • Formerly head of Science and Technology of Changle Power Factory • Bachelor of Electrical Engineering Degree from Shandong Technical University Ms. Yiru Melody Shi Chief Financial Officer • Former audit manager for Kabani & Co., Inc. • Channel Program Manager at Sun Microsystems • Financial analyst at Hewlett Packard China • MBA, University of California, Irvine, • Certified Public Accountant (US) Mr. Chris W. Wang Independent Director, Chairman of Audit Committee • Chief Financial Officer, Fushi Copperweld (NASDAQ: FSIN) • Executive VP of Redwood Capital, Inc., • MBA in Finance and Corporate Accounting, University of Rochester

  21. Equity Snapshot

  22. Investment Summary • Leading Positions • 40% domestic market share of pharmaceutical grade glucose • Strong existing customer base • One of only three companies licensed by the Chinese government to produce dextrose monohydrate glucose in China • Strategic Strengths • Strong growth opportunities in favorable markets • Focus on pharmaceutical grade glucose to take advantage of growth opportunity in China’s healthcare market • Clear long-term growth strategy • Vertically integrated business model • Strategic location and modern plants • Solid Track Record • Consistently maintain high product quality • Solid revenue and net income growth • Improving Financial Outlook • Improving balance sheet • Solid cash generation • Low maintenance Cap-X

  23. Contact Information Grayling Global Eddie Cheung Tel: +1 (646) 284-9414 Shengtai Pharmaceutical, Inc. Yiru Melody Shi, CFO Tel: +1 (949) 468-7078

  24. Thank You! November, 2008