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Progress Report on Commercial Production

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Dragon Pharmaceutical Inc.  is pleased to announce that Nanjing Huaxin (“Huaxin”) has purchased new bioreactors and that the preparations for commercial production with its high yield EPO cell line are proceeding well. Huaxin is currently working toward increasing the annual EPO production capacity up to a level of 5 million doses while significantly reducing the direct production cost.

The Chinese Medical Association (¡§CMA¡¨), at its September meeting, decided in principle to endorse Huaxin’s EPO as one of the “Recommended Medicines of the CMA”. After final endorsement, Huaxin will be permitted to print the name of the CMA on all packaging and prescription booklets. CMA only endorses the highest quality pharmaceutical products in China. The sales and acceptance of Huaxin¡¦s EPO will be positively affected by the endorsement.

The Company is also pleased to announce that Huaxin’s marketing network has been expanded considerably. Mr. Minghu Luo, the former head of marketing at the largest biotech company in China and a subsidiary of San Francisco based Hambrecht and Quist Investment Corp., was appointed as Huaxin’s Vice President Marketing. The expanded marketing network now covers all major metropolitan areas of China and Huaxin is now the largest EPO provider for several key cities such as Beijing. Sales of Huaxin’s EPO have increased significantly since the implementation of the new marketing network.

In addition, Huaxin has appointed a Marketing Manager and an Associate Marketing Manager. Both held previous appointments as marketing executives at the Chinese subsidiaries of several pharmaceutical companies including Bristol-Meyers Squibb, Merck, and SmithKline Beecham.

Dragon Pharmaceuticals is a biopharmaceutical company with the vision to become a leading biotechnology company in China through research, development, production, and marketing of bio-drugs. To further its goal, the Company acquired a 75% interest in Nanjing Huaxin Biotech Ltd. in Nanjing, China.

The foregoing includes forward looking statements and readers should not place undue reliance on such forward looking statements, which only reflect the view of management as of the date hereof. The Company does not undertake the obligation to publicly revise these forward looking statements to reflect subsequent events or circumstances.

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