AGM Chairmans Address 31.6.19

CHAIRMAN’S ADDRESS
The last 12 months has been one of the most testing periods in this
company’s recent history. The Medsafe Alert of February 2018 had a
catastrophic impact on sales of Arthrem in New Zealand. The Alert was
issued just after the company launched Arthrem in Australia and blunted
the impact of extensive television advertising in New South Wales.
There was also a significant impact on the launch and up take of Artevite
which occurred at the same time.

As noted in the Annual Report, sales in New Zealand plummeted with
total sales being 69% lower for the full year compared to the previous
year.

The directors noted in the half year report that plans to launch two new
products in mid-2018 have been shelved until conditions improved. No
such improvement has been noted.

Medsafe Prosecution
The servicing of a notice of prosecution of the company by the Ministry
of Health In February this year for nine alleged breaches of the
Medicines Act 1981 was not expected by the company. Two of the

charges related to selling an unlicensed medicine, being Arthrem, and
seven for breaches of advertising restrictions.

As noted in the Annual Report all of the company’s marketing material,
including point of sale material and bottle labels, was submitted to the
Therapeutic Goods Advertising Pre-Vetting Service (TAPS) for approval
prior to publication or printing. The use of TAPS is not a free service.
The company must pay for each and every item submitted for review
and, once approved, each item displays the TAPS approval number.

The use of TAPS is recommended by Medsafe for any party seeking to
sell or promote a therapeutic good or dietary supplement. Since the
notice of prosecution the company has submitted additional material to
TAPS for review and TAPS has refused to accept the work.

In view of the prosecution and the implications of being found guilty of
selling an unlicensed medicine, the directors have decided to keep
selling Arthrem in New Zealand but to refrain from any promotional
expenditure. If the company is found to have been selling an unlicensed
medicine then it is highly likely that the company cannot continue to sell
Arthrem.

The prosecution has meant a rethink of activities in Australia and,
despite Arthrem being available in almost 1,000 pharmacies, the view
is that there is considerable risk to the product and the brand. The
directors have decided to continue selling Arthrem but terminate
existing distribution arrangements in order to reduce costs.

Any consideration of new products and new markets has been
deferred until the prosecution has been resolved.

An initial court hearing has been set down for 20 June this year. The
company intends to defend the charges and it is likely that a full trial
will occur some months later. Hopefully the matter can be resolved by
year end.

The directors wish to acknowledge the support of shareholders
participating in the cash issue held in December 2018. In particular
our thanks go to the Brankin Trust, being the interests associated with
Mr Tom Brankin, a director of the company. The Brankin Trust is now
the largest shareholder in the company.

I wish to thank my co-directors for their considerable personal
commitment to the company during the year and to our management
team for their continued commitment through a very tough time.
Stephen Underwood

End.