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Dragon Announces 7ACA Production Achievement

Dragon Pharmaceutical Inc. today announced that its biotech method for 7ACA production has been successfully implemented on a new production line. Management believes this achievement validates the Company's research and development efforts to improve its manufacturing technology.

This technology would bring immediate benefits to production operations by increasing production efficiency and by eliminating the use of chemicals thus reducing our disposal costs and protecting the environment. Further, we believe that the overall adoption of the technology in our operations will reduce production costs which would enhance the Company's competitiveness in global market.

Environmental protection issues are always challenging to the chemical manufacturers. Investments in waste treatment can provide solutions to comply with discharging regulations, but result in relatively higher high costs. Our implementation of biotech technology can assist in reducing this environmental waste.

7ACA is a key product of the Company and the traditional chemical manufacturing process involves the use of expensive solvents, toxic and pollutant reactants such as methylene chloride, N,N-dimethylaniline and trimethylchlorosilicane, which lead to toxic wastes that are difficult to recycle and costly to be properly discharged. Moreover, it must be operated under severe temperature conditions (-40 degrees C to -60 degrees C) for complex chemical reactions, and thus result in high energy costs.

Under the biotech method, enzymes will be used to catalyze reactions, therefore eliminating the use of expensive solvents and toxic reagents, leading to a considerable reduction in the waste generation. In addition, the biotech process operates at moderate temperature which consumes less energy.

Dragon has been dedicated to this biotech project since mid 2006 and has gone through trials. Further, samples have been sent to customers with our customers giving us confirmative feedback as to quality. The first commercial production line has been put into operation in October 2007 with a capacity of 10 tons per month, thus Dragon's total annual capacity for 7ACA increases from 600 tons to 720 tons. The Company plans to adopt this technology for all its 7ACA production.

As encouraged by this achievement, Dragon, as it always does, views research and development as a vital driver of its business strategy and is actively engaged in other major R&D activities, such as cephalosporin C fermentation project. As fermentation technology is one of the key factors that affect the costs and quality of its products, Dragon has established long term collaborations with East China University of Science and Technology to improve fermentation yield. This project has been listed as a key project under China National High-tech R&D Program - one major task of which is to develop strategically important technologies for biological and pharmaceutical industries during China's 10th Five-year Plan period. Currently, project team members are already in the critical stage of raw materials substitution test, bacteria selection test and fermentation process optimization.

http://www.dragonpharma.com/

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