Dragon Announces Annual Production Output Capacity

Dragon Pharmaceutical has increased its annual production capacity for its core products 7ACA and Clavulanic Acid by 30% and 56% respectively in order to meet increasing demand from its customers.

Meanwhile, two new products Ceftazidime and Cefalexin, which were commercially launched in January 2008, have been added to Dragon's product portfolio.

In October 2007, Dragon successfully adopted an enzymatic process to its production of 7ACA. The enzymatic process is an environmentally friendly technology and the company is now in the process of converting its entire production to incorporate this innovative technology. Once fully implemented, Dragon expects to further increase its manufacturing capacity from the current 600 tons to 780 tons yearly. The process will lower production costs by approximately 10% and additionally will reduce the amount of capital investment pertaining to environmental issues.

Annual production capacity of Clavulanic Acid has also been increased from 50 tons to 78 tons as a result of the addition of a new 120 ton capacity fermentor. As the first and largest producer of Clavulanic Acid in China, Dragon's sales have increased dramatically, rising from 16 tons in 2005 to 39 tons in 2007.

With a core business strategy to become a leading vertically integrated antibiotic drugs manufacturer, the company will continuously broaden its product portfolio. In January 2008, Dragon successfully launched two new products, Ceftazidime and Cefalexin, to the Chinese market. Given the high demand for these drugs in the Chinese market, these two products are expected to become Dragon's growth driver in the coming years.

Ceftazidime is a third-generation cephalosporin antibiotic, a downstream product for 7ACA, and has broad-spectrum activity against Gram-positive and Gram-negative bacteria. Since Ceftazidime is effective against bacteria resistant to Ampicillin and other cephalosporin drugs, the demand in Chinese market has been increasing dramatically, with an average annual growth rate of 200% in the past few years. The Company's production output of Ceftazidime in crude powder form is projected to be 100 tons in 2008 and most of the product will be supplied to a long-term customer.

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