Dragon Pharmaceutical Inc. Announces 2003 Fourth Quarter and Full Year Results

Dragon Pharmaceutical Inc. Announces 2003 Fourth Quarter and Full
Year Results 


VANCOUVER, April 22  /PRNewswire-FirstCall/ -- Dragon Pharmaceutical Inc. (TSX:
DDD;      OTC BB: DRUG) today announced results for the three-month and
twelve-month periods ending December 31, 2003.

  Highlights
  ----------
  -   Generated revenues of $3.65 million and a net loss of
      US$1.99 million, or $0.10 per share for the full year of 2003.
  -   Continued momentum in developing the International market:
      -  Launched rh-Erythropoietin ("EPO") into the Brazilian Market in
         addition to China, India, Egypt and Peru.
      -  Doubled revenues from international market outside of China.
  -   Received Market Approval for the Surgery indication and a new dosage
      presentation of 6000 IU from Chinese State Food and Drug
      Administration for the Chinese market.
  -   Doubled the production capacity of the Nanjing manufacturing facility
      to fulfill the demand from China and other developing markets.
  -   Entered into an Agreement with a European research institute to
      develop a high yield and proprietary EPO cell-line and production
      process technology for the European market.
  -   Appointed Mr. James Harris as the Vice President of International
      Sales and Marketing.
  -   Subsequent to the year-end:
      -  Entered into a Letter of Intent to merge with Oriental Wave
         Holding Limited to create a unique company that has diverse and
         proven product lines (biotech drugs, chemical drugs and chemical
         intermediate) with already sizable revenues from the tremendous
         Chinese market and the future of potential in the international
         market.
      -  Entered into an agreement with Suzhou Zhongkai Bio-Pharmaceuticals
         Company Limited to in-license the exclusive right to commercialize
         its Recombinant Human Granulocyte Colony Stimulating Factor
         ("rhG-CSF") product worldwide, excluding China.
      -  Entered into an agreement with Dr. Longbin Liu on the debt related
         to the Hepatitis B Vaccine project and reimbursement of certain
         research projects for Dragon to receive a total of $5.04 million.

  Financial Review
  ----------------

  Fourth Quarter of 2003
  ----------------------


During the quarter, the Company posted revenues of $0.82 million compared to
$1.18 million of 2002. Net loss from the quarter has been narrowed down to
$572,700 or $0.03 per share, improved from the net loss of $4.0 million, or
$0.20 per share in the fourth quarter in 2002.

  Full Year of 2003
  -----------------


The Company posted revenues of $3.65 million compared to $7.36 million of 2002
which included a one-time order of $3.7 million bulk EPO. Net loss for 2003 was
narrowed down to $1.99 million or $0.10 per share from a loss of $5.25 million
or $0.26 per share in 2002.

"Since 2002, the Company has streamlined our operations both in China and
internationally. As a result, we managed to reduce the operating cost
significantly, especially in the area of selling, general and administration
and continued to narrow the net loss from the operation. We will maintain our
efforts to achieve ongoing improvement on our cost structure by tight control
of expenses and more importantly, to implement necessary strategies to increase
our revenues by expanding into more markets for our EPO products as well as
increasing more product diversity," stated Dr. Alexander Wick, President and
CEO of Dragon.

  Sales and Marketing Review
  --------------------------


Sales in China and outside of China were $2.26 million and $1.39 million,
respectively for 2003 compared to $3.0 million and $0.7 million respectively
for 2002. In addition to Chinese and international sales in 2002, there was a
one-time order of $3.7 million for research purpose.

"We continue to achieve remarkable progress in international market by
launching our EPO into the Brazil market and doubling the international
revenues from 2002 even though we are a bit disappointed with the overall sales
in China which was affected by the outbreak of the Severe Acute Respiratory
Syndrome ("SARS") epidemic at the beginning of 2003. Our EPO products are sold
through hospitals in China and patients, including patients using EPO, avoided
going to the hospital in order to minimize the risks of contracting SARS at the
peak of the SARS epidemic which covered the first half of 2003," said Dr. Wick.
"The Company has implemented some necessary measures, including altering the
structure of the sales organization and sales model in China to ensure our
competitiveness in the market. We are also in the process of finding suitable
potential sales partners to complement our own sales network in China to make
sure we achieve the full potential in the Chinese market. On the international
front, we have achieved satisfactory progress in 2003 and we expect to continue
the momentum by obtaining additional market approval in 2004."

During the year, Dragon also received the approval from the Chinese State Food
and Drug Administration ("SFDA") for the use of EPO in surgical patients as
well as approval for a new dosage of 6000IU, which is used for this indication.

In early 2003, Dragon appointed Mr. James Harris III, a 22-year veteran in the
biotech and pharmaceuticals industry, as the Vice President of International
Sales and Marketing. Mr. Harris brings invaluable sales and marketing expertise
and experience of marketing Amgen's EPO and Granulocyte Colony Stimulating
Factor ("G-CSF").

  Operational Review
  ------------------


During the third quarter of 2003, Dragon signed a development agreement with a
European research institute to collaborate in developing a new cell line and
proprietary production process for a newly developed EPO product for the
European market. In addition, Dragon has completed an upgrade of its current
production facility in Nanjing, China, doubling the production capacity of its
roller bottle technology to fulfill demand from China and other developing
markets, which currently include India, Egypt, Brazil and Peru.

Subsequent to year end, Dragon announced that it has entered into an agreement
with Suzhou Zhongkai Bio-Pharmaceuticals Company Limited ("Zhongkai") to
in-license the exclusive right to commercialize its Recombinant Human
Granulocyte Colony Stimulating Factor ("rhG-CSF") product worldwide, excluding
China. "This is an excellent opportunity for both Dragon and Zhongkai. Under
the agreement, Dragon will leverage its regulatory approval knowledge and
expertise from launching its own EPO business internationally and will also
utilize its existing licensing partnerships developed over time around the
world to bring Zhongkai's rhG-CSF to the international market," said Dr. Wick.
"The competition is fierce in China with about 20 products already in the
market. As a result, we decided to partner with a leading producer in the
market and focusing on developing the international market outside of China.
This will bring much better economic value to Dragon without incurring
significant risk in research and developing an in-house product and the high
investment to bring the drug into the production." For details, please refer to
the press release on April 22, 2004 - "Dragon Announces Worldwide Licensing
Rights, excluding China, for Recombinant Human Granulocyte Colony Stimulating
Factor (rhG-CSF)".

Due to the availability of alternative products, the slow progress of the
research projects, and the desire to avoid any conflict of interest issues in
the future, Dragon has decided not to pursue the research projects with Dr. Liu
and his associated research partners on G-CSF, insulin and a patent project in
exchange for Dragon to receive $1.33 million reimbursement of expenses. In
addition, the 1 million warrants granted to Dr. Liu for the patent development
project will also be cancelled. Together with the $3.71 million of principal
and interest owing under the Hepatitis B vaccine project, Dr. Liu will pay
Dragon a total of $5.04 million, which will be due on December 31, 2004. Dr.
Liu has agreed to provide 2.6 million common shares of the Company, to be held
in escrow, as security for the amounts owing. It is a condition of the
agreement that 2.2 million common shares of the Company be placed in escrow by
June 30, 2004.

"The cancellation of the research partnership with Dr. Liu enables Dragon to
finally move on and disengage itself from any non-arm's length transactions and
potential conflict of interest in the future. Now, the Company can concentrate
on what is important to create better shareholders' value by focusing on growth
in both top and bottom lines. We believe that the event will prove to have a
positive impact on the Company in the long run especially as we are negotiating
diligently with Oriental Wave Holding Limited on a potential merger as
previously announced," said Dr. Wick.

  Letter of Intent to Merge with Oriental Wave
  --------------------------------------------


On March 24, 2004, Dragon announced that it has entered into a letter of intent
to combine with Oriental Wave Holding Ltd ("Oriental Wave") and its subsidiary
in a merger. Subject to a number of conditions and if the proposed merger is
consummated, the combined company will create a fully-integrated pharmaceutical
company with diverse and proven product lines and 3 existing cGMP manufacturing
facilities for biotech drugs, chemical generic drugs and chemical intermediate
(Active Pharmaceutical Ingredient or API) and the fourth facility for another
chemical intermediate, which is under final installation of equipment.

Oriental Wave is a privately held holding company of a China-based
pharmaceutical company, which is primarily engaged in the production of
chemical intermediates and active pharmaceutical ingredients, formulation,
marketing and sale of generic drugs. Oriental Wave currently has 2 Chinese SFDA
certified GMP production facilities on stream: a pharmaceutical facility with a
capacity of producing 1.6 billion tablets and capsules, 80 million injectables
and 10 million suppositories per year as well as a chemical plant with an
annual capacity of producing 30 tons clavulanic acid by a fermentation process.
A third facility with an annual capacity of producing 400 tons of 7-ACA, an
intermediate for Cephalosporin antibiotics, is under final installation of
equipments. In addition, Oriental Wave Group has a total of approximately 280
drug approvals from the SFDA of which about 35, mainly anti- infectious drugs,
were actively exploited in China in 2003.

For the year ended December 31, 2003, Oriental Wave's audited consolidated
revenues and earnings were US$26 million and US$7.5 million. 2003 revenues only
consisted of sales in China by Oriental Wave's Chemical Drug division because
the Clavulanic Acid facility of the Chemical Intermediate division commenced
production, operation and sales in January 2004 and the 7-ACA facility, which
is under final installation of equipment, is expected to start operation during
the third quarter of 2004. Such results from the two facilities of the Chemical
Intermediate division, together with the existing operation of the Chemical
Drug division, will be reflected in the full year financials of 2004.

"The proposed merger will be an important milestone for the history of Dragon
by transforming the Company into a serious player in the global pharmaceutical
industry with proven product lines (biotech drugs, chemical generic drugs and
chemical intermediate), significant infrastructure, operations and revenues
from the prominent Chinese market and a competitive edge to be successful in
the international market covering both developing and developed countries,"
said Dr. Wick.

If the proposed merger is consummated, it is anticipated that Dragon, the
surviving company, will continue to be a public company listed on the Toronto
Stock Exchange (Ticker: DDD) and quoted on the Over-the-counter Bulletin Board
(Ticker: DRUG). "Our listing status in both U.S. and Canada stock markets would
allow the combined company to access the North American capital market, where
there is tremendous investor interest in the generic drug sector as well as
company with material access to the significant Chinese market," said Dr. Wick.

Dragon's and Oriental Wave's proposed merger is conditioned upon a number of
events including entering into a definitive agreement which is currently being
negotiated by the parties. Both companies intend to conclude the negotiation as
soon as practical so as to start the regulatory process with the US Securities
and Exchange Commission and Toronto Stock Exchange.

For details, please refer to the press releases on March 24, 2004 - "Dragon
Announces a Proposed Merger with a Profitable, Fully-integrated Pharmaceutical
Company" and on April 13, 2004 - "Dragon Announces Update on the Letter of
Intent to Merge with Oriental Wave Holding Ltd."

  About Dragon Pharmaceutical
  ---------------------------


Dragon Pharmaceutical Inc. is an international biopharmaceutical company
headquartered in Vancouver, Canada, with a GMP production facility in Nanjing,
China. Dragon's EPO is currently approved to treat anemia due to renal failure
and for surgery patients in China, India, Brazil, Egypt and Peru. Additional
regulatory submissions are in progress throughout Central and Eastern Europe,
Asia, Latin America, the Middle East and Africa.

For greater detail, please refer to the Company's 10-KSB, which has been filed
with the U.S. Securities and Exchange Commission and the Ontario Securities
Commission. The full financial statements will also be available on Dragon's
website at http://www.dragonbiotech.com/. The Company's financial statements
comply with U.S. GAAP (Generally Accepted Accounting Principles) and all dollar
amounts are expressed in U.S. currency.

Forward Looking Statement:

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995: All statements, other than
historical facts, included in the foregoing press release are forward-looking
statements. These statements are based on management's beliefs and assumptions,
and on information currently available to management. Such forward-looking
statements include, but are not limited to, the continued growth in sales of
EPO and the development of new EPO uses, Dragon's ability to pursue sales in
non-patented countries and Dragon's ability to achieve rapid and low cost
product approval in China that Dragon will receive a new drug license in China,
and Dragon's research partners' ability to develop new applications for EPO.
Forward-looking statements are not guarantees of future performance. They
involve risk, uncertainties and assumptions including risks discussed under
"Risks Associated With Dragon Pharmaceuticals" in the Company's annual report
on Form 10-K, SEC File No.: 0- 27937, all of which are incorporated herein by
reference. The Company does not undertake the obligation to publicly revise
these forward-looking statements to reflect subsequent events or circumstances.

The foregoing may be deemed to be soliciting materials of Dragon in connection
with its Letter of Intent to merge with Oriental Wave announced on March 24,
2004. This disclosure is being made in connection with Regulation of Takeovers
and Security Holder Communications (Release Nos. 33-7760 and 34-42055) adopted
by the Securities and Exchange Commission ("SEC") and Rule 14a-12 under the
Securities Exchange Act of 1934, as amended. If a definitive agreement is
entered into, Dragon shareholders and other investors are urged to read the
proxy statement that Dragon will file with the SEC in connection with the
proposed merger because it will contain important information about Dragon,
Oriental Wave and related matters. Dragon and its directors and executive
officers may be deemed to be participants in Dragon's solicitation of proxies
from Dragon shareholders in connection with the proposed merger. Information
regarding the participants and their security holdings can be found in each of
Dragon's most recent proxy statement filed with and Form 10-KSB to be filed
with the SEC, which are or will be available from the SEC and Dragon as
described below, and the proxy statement when it is filed with the SEC. After
it is filed with the SEC, the proxy statement will be available for free, both
on the SEC web site (http://www.sec.gov/) and from Dragon as follows:

  Garry Wong
  Dragon Pharmaceutical, Inc
  1900-1055 West Hastings St., Vancouver, British Columbia, Canada V6E 2E9
  Tel: [phone]
  Fax: [phone]
  Email: 



In addition to the proposed proxy statement, Dragon files annual, quarterly and
special reports, proxy statements and other information with the SEC. You may
read and copy any reports, statements or other information filed by Dragon at
the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C.
20549 or at the SEC's other public reference rooms in New York and Chicago.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Dragon filings with the SEC are also available to the public
from commercial document-retrieval services and on the SEC's web site at
http://www.sec.gov/.

             SUMMARIZED CONSOLIDATED STATEMENT OF OPERATIONS
             -----------------------------------------------
                     For the Year Ended December 31


                   (in US$)            2003         2002(x)        2001
                   --------            ----         -------        ----
  Sales                              3,648,149     7,362,248     3,073,885
  Cost of sales                      1,184,896       978,637       583,878
  -------------------------------------------------------------------------
  Gross Profit                       2,463,253     6,383,611     2,490,007

  Selling, general and
   administrative expenses          (3,391,430)   (5,015,029)   (5,328,110)
  Depreciation of fixed assets
   and amortization of license
   and permit                         (743,080)     (736,361)     (597,042)
  Net write off of land-use right
   and fixed Assets                   (165,912)       (6,731)       (1,012)
  New market and EPO development
   expenses                           (216,560)     (200,109)     (316,290)
  Provision for doubtful accounts      (29,450)     (216,709)      (57,300)
  Loan interest expense                 (6,357)      (70,944)     (154,644)
  Stock-based compensation                   -       (18,760)      (51,975)
  -------------------------------------------------------------------------

  Operating income (loss)           (2,089,536)      118,968    (4,016,366)
  Development of insulin,
   G-CSF and rhTPO                           -    (2,100,000)            -
  Write-down of amount owing
   from related party -
   Hepatitis B Vaccine Project               -    (3,289,900)     (210,000)
  Interest income                      138,802       146,986       250,458
  -------------------------------------------------------------------------

  Loss before income taxes and
   minority interest                (1,950,734)   (5,123,946)   (3,975,908)
  Income taxes                          44,000       127,000             -
  -------------------------------------------------------------------------

  Loss before minority interest    (1,994,734)    (5,250,946)   (3,975,908)
  Minority interest                                        -       240,603
  -------------------------------------------------------------------------

  Net (loss) for the year          (1,994,734)    (5,250,946)   (3,735,305)
  (Loss) per share - basic and
   diluted                              (0.10)         (0.26)        (0.21)

  Weighted average number of
   common shares outstanding
  Basic and diluted                20,348,195     20,331,750    17,810,411
  -------------------------------------------------------------------------
  (x) including an one-time order of $3.7 million bulk EPO



                         SUMMARIZED CONSOLIDATED
                         -----------------------
                             BALANCE SHEETS
                             --------------
                            As at December 31


                                                     2003          2002
                                                     ----          ----
  ASSETS                                              US$           US$
  ------                                              ---           ---
  Current Assets
    Cash and short term securities                 3,126,667     4,935,766
    Accounts receivable                            1,265,676       949,045
    Inventories                                    1,090,464     1,208,277
    Prepaid and deposits                             139,595       154,551
  -------------------------------------------------------------------------
  Total current assets                             5,622,402     7,247,639
  Fixed assets                                     2,089,352     2,420,613
  Due from related party - Hepatitis B
   vaccine project                                       100           100
  Patent rights - related party                      500,000       500,000
  License and permit                               2,924,198     3,475,740
  -------------------------------------------------------------------------
  Total assets                                    11,136,052    13,644,092
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------


  LIABILITIES AND STOCKHOLDERS' EQUITY
  ------------------------------------
  Liabilities
  Current
    Bank loans                                             -       483,162
    Accounts payable and accrued Liabilities       1,428,257     1,525,404
    Management fees payable - Related parties              -             -
  -------------------------------------------------------------------------
  Total current liabilities                        1,428,257     2,008,566
  Minority interests                                       -             -

  Stockholders' Equity
  Share capital
    Authorized:  50,000,000 common shares at
     par value of $0.001 each
     Issued and outstanding: 20,334,000
     common shares (December 31,
     2001 - 20,331,000 common shares)                 20,462        20,334
  Additional paid in capital                      26,708,870    26,644,998
  Accumulated other comprehensive (loss)             (32,007)      (35,011)
  Accumulated deficit                            (16,989,530)  (14,994,795)
  -------------------------------------------------------------------------
  Total stockholders' equity                       9,707,795    11,635,526
  -------------------------------------------------------------------------
  Total liabilities and stockholders' equity      11,136,052    13,644,092
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------


DATASOURCE: Dragon Pharmaceuticals Inc.



CONTACT: Garry Wong, Dragon Pharmaceutical, Inc,

1900-1055 West Hastings St., Vancouver, British Columbia, Canada, V6E 2E9,

Tel: [phone], Fax: [phone], Email: 

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