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Acquisition of the Largest Erythropoietin (“EPO”) Producer in China

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Dragon Pharmaceutical Inc. is pleased to announce that its subsidiary, Sanhe Kailong Biopharmaceutical Co., Ltd. (“Kailong”), has entered into an agreement to acquire a 75% interest in Nanjing Huaxin Biopharmaceutical Ltd. (“Huaxin”) of China. This strategic agreement provides Dragon with both the drug license and production permit for the manufacture and marketing of EPO in China.

Kailong will contribute a new vector technology to Huaxin that will allow Huaxin to produce EPO at lower costs and with significantly increased production. Huaxin was the first company to receive an EPO drug license from the Ministry of Health and the first to realize commercial production of the drug in China. It now produces approximately 500,000 doses of EPO, making it the largest domestic producer.

Huaxin has a group of high-tech professional employees, advanced equipment and facilities for biotech research, production and testing, and sales offices in 16 major cities in China. As part of the joint venture agreement, the Company has formed a strategic alliance and partnership with Nanjing Medical (Group) Ltd. (“NMC”). NMC is a Shanghai Stock Exchange-listed company and is one of the largest pharmaceutical enterprises in China. NMC brings extensive experience and expertise in the marketing and distribution of pharmaceutical products in China to the partnership.

The forgoing 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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