U.S. Securities and Exchange Commission
                             Washington, D.C. 20549


                                    Form 10-Q



         [X]     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                 EXCHANGE ACT OF 1934

                 For the quarterly period ended June 30, 2002

                 Commission file number   0-27937


                           DRAGON PHARMACEUTICAL INC.
        (Exact name of small business issuer as specified in its charter)



              Florida                                     65-0142474
  (State or other jurisdiction of              (IRS Employer Identification No.)
   incorporation or organization)



                      1055 West Hastings Street, Suite 1900
                           Vancouver, British Columbia
                                 Canada V6E 2E9
                    (Address of principal executive offices)

                                 (604) 669-8817
                           (Issuer's telephone number)


                  (Former address if changed since last report)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X No


Number of shares of common stock outstanding as of June 30, 2002: 20,331,000



<PAGE>



Part 1.  Financial Information
Item 1.  Financial Statements


<PAGE>







DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Consolidated Balance Sheets
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
<S>                                                                                               <C>                        <C>


                                                                                               June 30,               December 31,
                                                                                                   2002                      2001

ASSETS

Current
  Cash and short term securities                                                    $         3,612,284       $         9,446,084
  Accounts receivable                                                                           961,063                 1,309,686
  Inventories                                                                                 1,177,735                 1,095,860
  Prepaid and deposits                                                                          223,076                   140,340


Total current assets                                                                          5,974,158                11,991,970

Fixed assets                                                                                  2,580,677                 2,534,609

Hepatitis B vaccine project - related party                                                   3,290,000                 3,790,000

Refundable investment deposits - related party                                                        -                   372,000

Patent rights - related party                                                                   500,000                         -

Licence and permit                                                                            3,752,207                 3,316,458


Total assets                                                                        $        16,097,042       $        22,005,037


LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Current
  Bank loans                                                                        $           652,465       $         2,887,345
  Accounts payable and accrued liabilities                                                    1,239,372                 1,318,938
  Management fees payable - related parties                                                      95,833                   234,000


Total current liabilities                                                                     1,987,670                 4,440,283


Minority interests                                                                                    -                   688,539


Commitments (Note 13)

Stockholders' Equity

Share capital
  Authorized:  50,000,000 common shares at
    par value of $0.001 each
  Issued and outstanding:  20,331,000 common shares
    (December 31, 2001 - 20,331,000)                                                             20,331                    20,331

Additional paid in capital                                                                   26,624,741                26,624,741

Accumulated other comprehensive (loss)                                                         (29,106)                  (25,008)

Accumulated deficit                                                                        (12,506,594)               (9,743,849)

Total stockholders' equity                                                                   14,109,372                16,876,215

Total liabilities and stockholders' equity                                          $        16,097,042       $        22,005,037


The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>


DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Consolidated Statements of Stockholders' Equity
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)

<TABLE>
<CAPTION>
<S>                                            <C>                <C>            <C>         <C>          <C>               <C>


                                                                                                     Accumulated
                                                                               Compre-                     other            Total
                                                               Additional      hensive                   Compre-            Stock
                                           Common Stock           paid-in       income        Deficit    hensive          holders'
                                         Shares     Amount        capital       (loss)    accumulated     income           equity

Balance, December 31, 2000             16,700,000 $ 16,700   $ 20,000,897           -   $ (6,008,544)  $ (25,588)    $ 13,983,465

Exercise of stock options for cash        131,000      131         65,369           -               -           -          65,500

Issuance of common stock pursuant
to a private placement at $2.00 per
 share, net of share issuance costs
 of $490,000 in September               3,500,000    3,500      6,506,500           -               -            -      6,510,000

Other comprehensive income
 - foreign currency translation                 -        -              -         580               -          580            580

Comprehensive (loss)
 - net (loss) for the year                      -        -              -  (3,735,305)     (3,735,305)           -    (3,735,305)

Stock option compensation                       -        -         51,975           -                -           -         51,975


Comprehensive (loss)                                                       (3,734,725)



Balance, December 31, 2001             20,331,000  $ 20,331  $ 26,624,741                $ (9,743,849)    $(25,008)    $16,876,215


</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>



DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Consolidated Statements of Stockholders' Equity
(Expressed in U.S. Dollars)
((Unaudited - Prepared by Management)

<TABLE>
<CAPTION>
<S>                                  <C>          <C>          <C>              <C>            <C>          <C>                <C>


                                                                                                       Accumulated
                                                                              Compre-                        other            Total
                                                           Additional         hensive                      compre-            Stock
                                      Common Stock            paid-in          income        Deficit       hensive          holders'
                                   Shares        Amount       capital          (loss)    accumulated        income           equity


Balance, December 31, 2001       20,331,000    $ 20,331   $ 26,624,741              -   $ (9,743,849)   $ (25,008)     $ 16,876,215

Other comprehensive income
 - foreign currency translation           -           -              -         (4,098)             -       (4,098)          (4,098)

Comprehensive (loss)
 - net (loss) for the year                -           -              -     (2,762,745)    (2,762,745)           -       (2,762,745)


Comprehensive (loss)                                                     $ (2,766,843)



Balance, June 30, 2002            20,331,000   $ 20,331   $  26,624,741                 $(12,506,594)   $ (29,106)   $ (14,109,372)


</TABLE>

The accompanying notes are an integral part of these financial statements.




<PAGE>


DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Consolidated Statement of Operations
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
<S>                                                              <C>                <C>              <C>                <C>


                                                             Three Months      Three Months       Six Months         Six Months
                                                                 Ended             Ended             Ended             Ended
                                                               June 30,          June 30,          June 30,           June 30,
                                                                 2002              2001              2002               2001


Sales                                                            $ 1,026,159        $  602,341        $2,398,966        $ 1,266,755

Cost of sales                                                        174,465           155,726           364,989            302,647


Gross profit                                                         851,694           446,615         2,033,977            964,108

Selling, general and
  administrative expenses                                        (1,316,578)       (1,288,609)       (2,413,037)        (2,414,416)

Depreciation of fixed assets and
  amortization of licence and
  permit and land-use right                                        (180,449)         (154,515)         (362,107)          (308,329)

Net write off of land-use right and fixed assets                           -                 -           (1,225)                  -

Research expenses                                                (1,015,796)          (26,537)       (1,771,368)           (66,737)

New market development                                             (109,735)             9,709         (162,323)           (90,171)

Provision for doubtful debts                                        (54,693)          (42,000)          (80,549)           (78,825)

Loan interest expense                                               (15,605)          (38,313)          (56,015)           (72,306)

Stock-based compensation                                                   -                 -                 -           (51,975)


Operating loss                                                   (1,841,162)       (1,093,650)       (2,812,647)        (2,118,651)

Interest income                                                       16,295            54,985            49,902            120,243


Loss before minority interest                                    (1,824,867)       (1,038,665)       (2,762,745)        (1,998,408)

Minority interest                                                          -            65,952                 -            169,512


Net (loss) for the period                                       $(1,824,867)       $ (972,713)       (2,762,745)       $(1,828,896)


(Loss) per share
      Basic and diluted                                           $   (0.09)        $   (0.06)        $   (0.14)         $   (0.11)


Weighted average number of
  common shares outstanding
      Basic and diluted                                           20,331,000        16,717,657        20,331,000         16,717,657


The accompanying notes are an integral part of these financial statements.

</TABLE>


<PAGE>



DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Consolidated Statement of Cash Flows
Six Months Ended June 30, 2002 and 2001
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)

<TABLE>
<CAPTION>
<S>                                                                                       <C>                       <C>

                                                                                          2002                     2001


Cash flows from (used in) operating activities
   Net (loss) for the period                                                       $     (2,762,745)        $    (1,828,896)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
     - stock-based compensation expense                                                            -                  51,975
     - depreciation of fixed assets and amortization of
          licence and permit and land-use right                                              362,107                 308,329
     - minority interests                                                                          -               (169,512)
     - net write off of land-use right and fixed assets                                        1,225                       -
     - provision for doubtful debts                                                           80,549                  78,825
  Changes in non-cash working capital items:
     - accounts receivable                                                                   240,074                 135,148
     - inventories                                                                          (81,875)               (288,852)
     - prepaid expenses and deposits                                                        (82,736)               (156,330)
     - accounts payable and accrued liabilities                                             (79,566)               (150,995)
     - management fees payable - related parties                                           (138,167)                       -


                                                                                         (2,461,134)             (2,020,308)


Cash flows used in investing activities
  Purchase of fixed assets                                                                 (133,444)               (275,875)
  (Increase) decrease in restricted funds                                                  2,449,955               (692,342)
  Acquisition of Patent rights                                                             (500,000)                       -
  Acquisition of balance of Huaxin                                                       (1,400,000)                       -
  Refundable investment deposits                                                             400,000                       -
  Recovery from Hepatitis B Vaccine Project                                                  500,000                       -


                                                                                           1,316,511               (968,217)


Cash flows from financing activities
  Loan proceeds                                                                          (2,234,880)               1,106,696
  Proceeds from issuance of shares                                                                                    65,500
  Proceeds from shares subscribed and allotted
    in prior period, net of issuance costs                                                         -                       -
  Funds contributed by minority shareholders                                                       -                       -


                                                                                         (2,234,880)               1,172,196


Foreign exchange (gain) loss on cash
  held in foreign currency                                                                   (4,342)                 (1,221)


Increase (decrease) in cash and
  and cash equivalents                                                                   (3,383,845)             (1,817,550)

Cash and cash equivalents, beginning of period                                             6,306,129               4,092,702


Cash and cash equivalents, end of period                                           $       2,922,284        $      2,275,152


The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>


DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)

1.   Nature of Business

     The Company was formed on August 22, 1989 as First Geneva  Investments Inc.
     under the laws of the State of  Florida.  The  Company  changed its name to
     Dragon  Pharmaceuticals  Inc.  on  August  31,  1998.  Pursuant  to a share
     exchange  agreement,  dated July 29, 1998, the Company acquired 100% of the
     issued and outstanding shares of Allwin Newtech Ltd.  ("Allwin") by issuing
     7,000,000  common shares of the Company.  This transaction is accounted for
     as a reverse acquisition.

     Allwin  was  incorporated  under  the laws of  British  Virgin  Islands  on
     February  10,  1998.  Pursuant  to  a  Sino-Foreign   Co-operative  Company
     Contract,  dated April 18, 1998, Allwin and a Chinese  corporation formed a
     limited  liability  company  under the Chinese law,  named as Sanhe Kailong
     Bio-pharmaceutical Co., Ltd. ("Kailong"), located in Hebei Province, China.
     Allwin has a 95%  interest  in Kailong.  Pursuant  to another  Sino-foreign
     Co-operative  Company  Contract,  dated July 27, 1999, Allwin completed the
     acquisition of a 75% interest in Nanjing Huaxin Bio-pharmaceutical Co. Ltd.
     ("Huaxin"). In January 2002, the Company acquired the balance of Huaxin for
     $1,400,000.  Kailong is inactive  and Huaxin is in the business of research
     and development,  production and sales of pharmaceutical products in China.
     Allwin Biotrade Inc. ("Biotrade) was incorporated under the laws of British
     Virgin   Islands  on  June  6,  2000  for  the  purpose  of  marketing  and
     distributing    biopharmaceutical    products    outside   China.    Dragon
     Pharmaceuticals (Canada) Inc. ("Dragon Canada") was incorporated in British
     Columbia,  Canada on September 15, 2000 for the purpose of researching  and
     developing new biopharmaceutical products.


2.   Significant Accounting Policies

     (a)  Basis of Consolidation

          These  consolidated  financial  statements include the accounts of the
          Company and its subsidiaries,  Allwin,  Kailong,  Huaxin, Biotrade and
          Dragon Canada.  All inter-company  transactions and balances have been
          eliminated.

     (b)  Principles of Accounting

          These  financial  statements  are stated in US  Dollars  and have been
          prepared in accordance with accounting  principles  generally accepted
          in the United States of America.

     (c)  Fixed Assets

          Depreciation is based on the estimated  useful lives of the assets and
          is computed using the straight-line method.



<PAGE>
DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)



2.   Significant Accounting Policies (continued)

          Fixed assets are recorded at cost.  Depreciation  is provided over the
          following useful lives:

                    Motor vehicle                       10 years
                    Lab equipment                       8 years
                    Office equipment and furniture      5 years
                    Leasehold improvements              Term of lease (10 years)
                    Production equipment                10 years

     (d)  Foreign Currency Transactions

          The parent  company,  Allwin,  Kailong,  Huaxin,  Biotrade  and Dragon
          Canada  maintain  their   accounting   records  in  their   functional
          currencies (i.e., U.S. dollars, U.S. dollars,  Renminbi Yuan, Renminbi
          Yuan, U.S. dollars and Canadian dollars respectively).  They translate
          foreign currency  transactions  into their functional  currency in the
          following manner.

          At the transaction date, each asset, liability, revenue and expense is
          translated  into the  functional  currency by the use of the  exchange
          rate in effect at that date.  At the period end,  monetary  assets and
          liabilities are translated  into the functional  currency by using the
          exchange rate in effect at that date. The resulting  foreign  exchange
          gains and losses are included in operations.

     (e)  Foreign Currency Translations

          Assets and liabilities of the foreign  subsidiaries  (whose functional
          currency is Renminbi  Yuan or Canadian  dollars) are  translated  into
          U.S.  dollars at exchange  rates in effect at the balance  sheet date.
          Revenue and expenses are translated at average exchange rate. Gain and
          losses from such translations are included in stockholders' equity, as
          a component of other comprehensive income.

     (f)  Accounting Estimates

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that  affect  the  reported  amounts  of assets  and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial  statements and the reported amounts of revenues
          and expenses during the reporting period.  Actual results could differ
          from those estimates.

     (g)  Advertising Expenses

          The Company  expenses  advertising  costs as  incurred.  There were no
          advertising  expenses  incurred by the Company during the period ended
          June 30, 2002 and 2001.



<PAGE>

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)


2.   Significant Accounting Policies (continued)

     (h)  Income Taxes

          The Company has adopted  Statement of Financial  Accounting  Standards
          ("SFAS") No. 109,  "Accounting  for Income Taxes",  which requires the
          Company  to  recognize  deferred  tax  liabilities  and assets for the
          expected  future tax  consequences of events that have been recognized
          in the  Company's  financial  statements  or  tax  returns  using  the
          liability  method.  Under this method,  deferred tax  liabilities  and
          assets are determined based on the temporary  differences  between the
          financial   statements  and  tax  bases  of  assets  and   liabilities
          usingenacted tax rates in effect in the years in which the differences
          are expected to reverse.

     (i)  Comprehensive Income

          The  Company  has  adopted  SFAS  No.  130,  "Reporting  Comprehensive
          Income",  which  establishes  standards  for  reporting and display of
          comprehensive  income,  its components and accumulated  balances.  The
          Company  is   disclosing   this   information   on  its  Statement  of
          Stockholders'  Equity.  Comprehensive  income  comprises equity except
          those  resulting  from  investments  by owners  and  distributions  to
          owners. SFAS No. 130 did not change the current accounting  treatments
          for components of comprehensive income.

     (j)  Financial Instruments and Concentration of Risks

          Fair value of financial  instruments  are made at a specific  point in
          time,  based on  relevant  information  about  financial  markets  and
          specific financial  instruments.  As these estimates are subjective in
          nature,  involving uncertainties and matters of significant judgement,
          they cannot be determined with  precision.  Changes in assumptions can
          significantly affect estimated fair values.

          The  carrying  value  of cash  and cash  equivalents,  term  deposits,
          accounts  receivable,   bank  loans,   accounts  payable  and  accrued
          liabilities  approximate  their fair value  because of the  short-term
          nature of these  instruments.  The  Company  places  its cash and cash
          equivalents  with high  credit  quality  financial  institutions.  The
          Company  occasionally  maintains  balances in a financial  institution
          beyond the  insured  amount.  As of June 30,  2002,  the  Company  had
          deposits of $690,000 above insured limits.

          The Company is operating in China,  which may give rise to significant
          foreign currency risks from  fluctuations and the degree of volatility
          of  foreign  exchange  rates  between  U.S.  dollars  and the  Chinese
          currency  RMB.  Financial  instruments  that  potentially  subject the
          Company to  concentration  of credit risk consist  principally of cash
          and trade receivables, the balances of which are stated on the balance
          sheet.  The Company places its cash in high credit  quality  financial
          institutions.  Concentration  of  credit  risk with  respect  to trade
          receivables  are limited due to the Company's  large number of diverse
          customers  in  different  locations  in China.  The  Company  does not
          require collateral or other security to support financial  instruments
          subject to credit risk.



<PAGE>

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)


2.   Significant Accounting Policies (continued)

     (k)  Licence and Permit

          Licence  and  permit,  in  relation  to the  production  and  sales of
          pharmaceutical  products in China,  is  amortized  on a  straight-line
          basis over ten years.

          The carrying  value of licence and permit is reviewed by management at
          least annually and impairment  losses, if any, are recognized when the
          expected  non-discounted  future operating cash flows derived from the
          related product  licence  acquired are less than the carrying value of
          such licence and permit.  In the event of  impairment  in the value of
          the licence and permit,  the  discounted  cash flows method is used to
          arrive at the estimated fair value of such licence and permit.

     (l)  Cash and Cash Equivalents

          Cash equivalents usually consist of highly liquid investments that are
          readily convertible into cash with maturities of three months or less.
          As at June 30, 2002, cash equivalents consist of commercial papers and
          redeemable term deposits.

     (m)  Inventories

          Inventories are stated at the lower of cost and replacement  cost with
          respect  to raw  materials  and the  lower of cost and net  realizable
          value with respect to finished goods.  Cost includes direct  material,
          direct labour and  overheads.  Cost is calculated  using the first-in,
          first-out  method.  Net realizable  value  represents the  anticipated
          selling price less further costs for completion and distribution.

     (n)  Revenue Recognition

          Sales revenue is recognized upon the delivery of goods to customers.

     (o)  Stock-based Compensation

          The Company  adopted the  disclosure-only  provisions  of Statement of
          Financial  Accounting  Standards No. 123 (SFAS 123),  "Accounting  for
          Stock-based Compensation".  SFAS 123 encourages, but does not require,
          companies to adopt a fair value based method for  determining  expense
          related to stock-based compensation.  The Company continues to account
          for stock-based  compensation  issued to employees and directors using
          the intrinsic value method as prescribed under  Accounting  Principles
          Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees"
          and related Interpretations.

     (p)  Loss Per Share

          Loss per share is computed using the weighted average number of shares
          outstanding  during the  period.  The  Company  adopted  SFAS No. 128,
          "Earnings  per  share".  Diluted  loss per share is equal to the basic
          loss per share because common stock equivalents  consisting of options
          to acquire  3,702,000 common shares and warrants to acquire  3,200,000
          common shares that are outstanding at June 30, 2002 are anti-dilutive,
          however, they may be dilutive in future.



<PAGE>
DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)


2.   Significant Accounting Policies (continued)

     (q)  New Accounting Pronouncements

          In  June  2001,  the  Financial   Accounting  Standards  Board  issued
          Statement  of  Financial  Accounting  Standards  No.  141 (SFAS  141),
          Business  Combinations.  SFAS 141 applies to all business combinations
          initiated  after June 30,  2001.  The SFAS 141 applies to all business
          combinations  accounted  for using the  purchase  method for which the
          date of  acquisition  is July 1, 2001, or later.  The adoption of SFAS
          141 will not have an impact on the Company's financial statements.

          In  June  2001,  the  Financial   Accounting  Standards  Board  issued
          Statement  of  Financial  Accounting  Standards  No.  142 (SFAS  142),
          Goodwill and Other Intangible  Assets.  The provisions of SFAS 142 are
          required to be applied  starting  with fiscal  years  beginning  after
          December 15, 2001 with earlier application permitted for entities with
          fiscal years  beginning  after March 15, 2001  provided that the first
          interim  financial  statements  have not been previously  issued.  The
          Statement  is required to be applied at the  beginning of the entity's
          fiscal  year and to be applied to all  goodwill  and other  intangible
          assets  recognized  in its  financial  statements  to that  date.  The
          adoption  of SFAS  142  will  not  have  an  impact  on the  Company's
          financial statements.

          In August  2001,  the  Financial  Accounting  Standards  Board  issued
          Statement of Financial  Accounting Standards No. 143 (SFAS 143), Asset
          Retirement Obligations.  SFAS 143 establishes accounting standards for
          recognition  and  measurement  of a liability  for the costs of assets
          retirement obligations. Under SFAS 143, the costs of retiring an asset
          will be recorded as a liability when the retirement  obligation arises
          and will be  amortized  to  expense  over the life of the  asset.  The
          adoption  of SFAS  143  will  not  have  an  impact  on the  Company's
          financial statements.

          In October,  2001,  the Financial  Accounting  Standards  Board issued
          Statement  of  Financial  Accounting  Standards  No.  144 (SFAS  144),
          Accounting for the Impairment or Disposal of Long-lived  Assets.  SFAS
          144 supersedes  SFAS 121,  Accounting for the Impairment of Long-lived
          Assets and  Long-lived  Assets to be Disposed  Of, and APB Opinion 30,
          Reporting  the  Results  of  Operations  -  Reporting  the  Effects of
          Disposal of a Segment of a Business,  and  Extraordinary,  Unusual and
          Infrequently  Occurring  Events and  Transactions,  for  segments of a
          business to be disposed  of. SFAS 144 is  effective  for fiscal  years
          beginning  after  December 15, 2001. The adoption of SFAS 144 will not
          have an impact on the Company's financial statements



<PAGE>


DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)

<TABLE>
<CAPTION>
<S>                                                                                      <C>              <C>


3.     Restricted Funds


                                                                                       June 30,        December 31,
                                                                                           2002                2001


         Term deposits held as collateral against bank loans                          $ 690,000         $ 3,139,955
         Cash and cash equivalents                                                    2,922,284           6,306,129



         Cash and short term securities                                             $ 3,612,284         $ 9,446,084



4.     Accounts Receivable


                                                                                       June 30,         December 31,
                                                                                           2002                 2001


         Trade receivable                                                          $  1,083,259         $  1,225,455

         Allowance for doubtful accounts                                              (206,567)             (97,982)

                                                                                        876,692            1,127,473

         Other receivable                                                                84,371              182,213

                                                                                     $  961,063          $ 1,309,686



5.     Inventories


                                                                                       June 30,         December 31,
                                                                                           2002                 2001


         Raw materials                                                               $  116,788             $173,687

         Finished goods                                                                 158,417              179,871

         Work in progress                                                               902,530              742,302

                                                                                    $ 1,177,735           $1,095,860

</TABLE>



<PAGE>
DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)


6.   Fixed Assets
<TABLE>
<CAPTION>
<S>                                                              <C>                 <C>                   <C>


                                                                              June 30, 2002

                                                                                  Accumulated            Net book
                                                                Cost              depreciation             value


         Motor vehicles                                         $140,430                $39,705            $100,725
         Office equipment and furniture                          374,168                115,959             258,209
         Leasehold improvements                                1,010,306                275,739             734,567
         Production and lab equipment                          2,090,998                603,822           1,487,176


                                                             $ 3,615,902             $1,035,225          $2,580,677




                                                                            December 31, 2001

                                                                                 Accumulated             Net book
                                                                Cost             depreciation             value


         Motor vehicles                                         $100,329                $31,657             $68,672
         Office equipment and furniture                          267,104                 85,935             181,169
         Leasehold improvements                                  990,940                221,652             769,288
         Production and lab equipment                          2,020,137                504,657           1,515,480


                                                              $3,378,510               $843,901          $2,534,609

</TABLE>

     For the six months  ended June 30,  2002,  depreciation  expenses  totalled
     $146,489 (2001-$79,881). The majority of fixed assets are located in China.


7.   Hepatitis B Vaccine Project - Related Party
<TABLE>
<CAPTION>
<S>                                                                                     <C>              <C>


                                                                                      June 30,         December 31,
                                                                                          2002                 2001


         Hepatitis B Vaccine Project                                                $4,000,000           $4,000,000

         Less : Repayment                                                             (500,000)                   -
                    Valuation allowance                                               (210,000)            (210,000)


                                                                                    $3,290,000           $3,790,000

</TABLE>

     (a)  Pursuant to an  agreement  dated  October 6, 2000,  the  Company  paid
          $4,000,000  for the  acquisition  of  certain  assets  and  technology
          relating to the  production of Hepatitis B vaccine.  The vendor of the
          transaction  is a  company  named  Alphatech  Bioengineering  Limited,
          incorporated in Hong Kong, and one of the two shareholders of which is
          a director and senior officer of the Company.



<PAGE>
DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)


7.     Hepatitis B Vaccine Project - Related Party (continued)

       (b)    Pursuant to an amended agreement dated June 5, 2001, in the event
              that the Company failed to find a joint venture partner, establish
              a production facility for the vaccine project or sell the project
              to a third party within nine months from the date of this amended
              agreement, Dr. Longbin Liu, a senior officer and director of the
              Company and one of the shareholders of Alphatech, demands to
              repurchase the project from the Company. The repurchase price will
              be $4.0 million payable as follows:

              (i)  $500,000 at the date of repurchase; and

              (ii) the  balance to  be paid within  eighteen  (18) months of the
                   date  of  repurchase  with  interest  at  6% per  annum.  The
                   interest  will be accrued  from six months after  the date of
                   repurchase.

               The  Company  decided  not to  pursue  the  Project  and Dr.  Liu
               demanded to repurchase the Project on the agreed terms.


8.   Refundable Investment deposits - Related Party
<TABLE>
<CAPTION>
<S>                                                         <C>    <C>


                                                                                      June 30,         December 31,
                                                                                          2002                 2001


         Guanzhou Recomgen Biotech Co. Ltd.
         - Tissue Plasminogen Activator ("TPA") Project                                     -              $400,000

         Less:  Valuation allowance                                                         -               (28,000)


                                                                                            -              $372,000

</TABLE>

     During the year 2000,  the  Company  paid  $400,000  to  Guanzhou  Recomgen
     Biotech Co. Ltd. ("Guanzhou  Recomgen"),  a company  incorporated in China,
     for the  funding of its TPA  research  and  development  programs  with the
     intention of acquiring the technology. Guanzhou Recomgen is controlled by a
     senior  officer and a director of the Company.  The Company  decided not to
     proceed with the funding and the  acquisition  due to financial  market and
     economic conditions and the $400,000 was repaid in January 2002.


9.   Patent Rights - Related Party

     Pursuant to an agreement dated January 14, 2002, the Company entered into a
     Patent Development Agreement with the President and a company controlled by
     the  President  entitling  the Company to acquire  one patent  filed in the
     United  States  related  to  the  discovery  of  a  new  gene  or  protein.
     Consideration for the right to acquire the patent was payment of US$500,000
     and the  issuance  of warrants to acquire  1,000,000  common  shares of the
     Company  at a price of $2.50  per share  for a period  of five  years.  The
     patent may be  acquired  prior to January 14,  2005 at no  additional  cost
     other than the reasonable legal costs of obtaining the patent.




<PAGE>
DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)


10.    Bank Loans
<TABLE>
<CAPTION>
<S>                                                                             <C>            <C>


                                                                                         June 30,       December 31,
                                                                                             2002               2001

         RMB 7,800,000, bearing interest at 5.265% per annum and due on January
         31, 2003. The loan is secured by the term deposit.                                 $   -           $942,312

         RMB 4,000,000, bearing interest at 5.265% per annum and due on August
         20, 2002.  The loan is secured by the term deposit.                              483,307            483,238

         RMB 1,400,000 bearing interest at 5.265% per annum and due on July 26,
         2002.  The loan is secured by the term deposit.                                  169,158            169,133

         RMB 2,300,000 bearing interest at 5.265% per annum and due on January
         18, 2002. The loan is secured by the term deposit.                                     -            277,862

         RMB 3,150,000 bearing interest at 5.265% per annum and due on April 4,
         2002.  The loan is secured by the term deposit.                                        -            380,550

         RMB 3,700,000 bearing interest at 5.265% per annum and due on June 19,
         2002.  The loan is secured by the term deposit.                                        -            446,995

         RMB 1,555,000 bearing interest at 5.265% per annum and due on January
         31, 2003. The loan is secured by the term deposit.                                     -            187,255

         Total                                                                           $652,465         $2,887,345

</TABLE>

     The weighted  average interest rate was 5.265% and 5.32% for the six months
     ended June 30, 2002 and 2001.




<PAGE>
DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)


11.  Income Taxes

     (a)  Kailong and Huaxin are subject to income taxes in China on its taxable
          income  as  reported  in  its  statutory  accounts  at a tax  rate  in
          accordance   with  the  relevant   income  tax  laws   applicable   to
          Sino-foreign equity joint venture  enterprises.  However,  pursuant to
          the same  income tax laws,  Kailong  and Huaxin are fully  exempt from
          income tax for five years starting from their first profit-making year
          followed by a 15% corporation tax rate for the next three years.

          Allwin is not subject to income taxes.

          As at June 30,  2002,  the parent  company,  Kailong  and Huaxin  have
          estimated   losses,   for  tax   purposes,   totalling   approximately
          $7,790,000,  which  may be  applied  against  future  taxable  income.
          Accordingly,  there is no tax  expense  charged  to the  Statement  of
          Operations  for the six  months  ended  June 30,  2002 and  2001.  The
          potential  tax  benefits  arising  from  these  losses  have  not been
          recorded  in the  financial  statements.  The  Company  evaluates  its
          valuation allowance requirements on an annual basis based on projected
          future operations.  When circumstances change and this causes a change
          in  management's  judgement  about the  realizability  of deferred tax
          assets,  the  impact  of the  change  on the  valuation  allowance  is
          generally reflected in current income.

     (b)  The  tax  effect  of  temporary  differences  that  give  rise  to the
          Company's deferred tax asset (liability) are as follows:
<TABLE>
<CAPTION>
<S>                                                                                                <C>    <C>


                                                                                            June 30,        December 31,
                                                                                                2002                2001

                  Tax losses carried forward                                             $ 2,650,000          $1,850,000
                  Stock-based compensation                                                         -              17,700
                  Less: valuation allowance                                               (2,650,000)        (1,867,700)


                                                                                         $         -          $       -


              A reconciliation of the federal statutory income tax to the
              Company's effective income tax rate, for the six months ended June
              31, 2002 and 2001, is as follows:


                                                                                            2002                 2001


                  Federal statutory income tax rate                                            34%                 34%
                  Change in valuation allowance                                              (34%)               (34%)


                  Effective income tax rate                                                     -                   -

</TABLE>




<PAGE>
DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)


12.  Stock Options and Warrants

     (a)  Stock Options Plans

          The Company charged $51,975 to income during the six months ended June
          30, 2001 due to the exercise price of the vested options granted being
          below  fair  value of the  Company's  stock on the date of the  grant.
          During the six months ended June 30, 2002, the Company granted options
          to  purchase  920,000  shares at a price of $1.70 per share,  expiring
          April 25, 2007.

          The  following is a summary of the employee  stock option  information
          for the period ended June 30, 2002:
<TABLE>
<CAPTION>
<S>                                                                                  <C>                <C>


                                                                                                   Weighted Average
                                                                                    Shares           Exercise Price


                  Options outstanding at December 31, 2000                       3,043,000            $   1.89
                  Granted                                                          195,000            $   1.79
                  Forfeited                                                       (137,500)           $   2.93
                  Exercised                                                       (131,000)           $   0.50



                  Options outstanding at December 31, 2000                       2,969,500            $   1.92
                  Granted                                                          920,000            $   1.70
                  Forfeited                                                       (187,500)           $   3.13


                  Options outstanding at June 30, 2002                           3,702,000            $   1.81

</TABLE>

<TABLE>
<CAPTION>
<S>     <C>            <C>              <C>            <C>                <C>            <C>


                       Options Outstanding                                 Options Exercisable

                                     Weighted
                                      Average         Weighted                           Weighted
     Range of                        Remaining         Average                           Average
     Exercise         Number        Contractual       Exercise           Number          Exercise
      Prices       Outstanding         Life             Price          Exercisable        Price

     $0.01 - $1.00     1,257,000       1.79          $   0.50          1,243,000        $   0.50

     $1.01 - $2.00     1,095,000       4.70          $   1.71          1,095,000        $   1.71

     $2.01 - $3.00        60,000       2.36          $   2.50             60,000        $   2.50

     $3.01 - $4.00     1,290,000       3.35          $   3.13          1,290,000        $   3.13


                       3,702,000       3.21          $   1.81          3,688,000        $   1.81

</TABLE>




<PAGE>
DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)


12.  Stock Options and Warrants (continued)

          The  Company  accounts  for  its  stock-based   compensation  plan  in
          accordance  with APB Opinion No. 25,  under which no  compensation  is
          recognized in connection with options  granted to employees  except if
          options  are  granted  with a strike  price  below  fair  value of the
          underlying stock. The Company adopted the disclosure requirements SFAS
          No. 123,  Accounting for Stock-Based  Compensation.  Accordingly,  the
          Company is required to  calculate  and present the pro forma effect of
          all awards granted.  For disclosure  purposes,  the fair value of each
          option  granted to an employee  has been  estimated  as of the date of
          grant using the Black-Scholes  option pricing model with the following
          assumptions:  risk-free  interest  rate of 5.5%,  dividend  yield  0%,
          volatility of 89%, and expected lives of  approximately  0 to 5 years.
          Based on the  computed  option  values and the  number of the  options
          issued, had the Company recognized compensation expense, the following
          would have been its effect on the Company's net loss:
<TABLE>
<CAPTION>
<S>                                                                                      <C>             <C>


                                                                                   June 30, 2002      June 30, 2001


                  Net (loss) for the period:
                  - as reported                                                     $(2,762,745)       $(1,828,896)
                  - pro-forma                                                        (2,762,745)        (1,829,480)


                  Basic and diluted (loss) per share:
                  - as reported                                                     $(0.14)            $(0.11)
                  - pro-forma                                                       $(0.14)            $(0.11)

</TABLE>


       (b)    Warrants

              Share purchase warrants outstanding as at June 30, 2002:
<TABLE>
<CAPTION>
<S>                       <C>                       <C>                    <C>                  <C>

                        Number                  Underlying            Exercise Price
                      of Warrants                 Shares                 Per Share          Expiry Date

                         400,000                    400,000                $3.00            November 24, 2002
                       3,500,000                  1,750,000                $2.00            September 13, 2003
                          50,000                     50,000                $1.70            November 15, 2004
                       1,000,000                  1,000,000                $2.50            January 14, 2007

</TABLE>





<PAGE>
DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)


13.  Related Party Transactions

     (a)  The Company  incurred the  following  expenses to two directors of the
          Company:


                                                June  30, 2002        June  30,
                                                                           2001


                  Management fees                     $115,000          $60,000




     (b)  Pursuant to an agreement  dated January 14, 2002, the Company  entered
          into a Project  Development  Agreement  with the  President  and Chief
          Executive  Officer of the Company  (the  "President")  to continue the
          research and  development  of G-CSF and Insulin for the  Company.  The
          Company will make payment for the development of G-CSF as follows:

          (i)  US$500,000 to be provided at the  commencement of the research in
               the G-CSF Project;

          (ii) US$500,000 to be provided when  cell-line and related  technology
               is established and animal experimentation  commences in the G-CSF
               Project; and

          (iii)US$300,000 to be provided  when a permit for clinical  trials for
               G-CSF has been issued by the State Drug  Administration  of China
               ("SDA"); and

          (iv) US$200,000  to be provided  when a new drug  license for G-CSF is
               issued to Dragon by the SDA.

          (v)  US$500,000  to be paid as a bonus if the SDA  issues the new drug
               license for G-CSF to Dragon before January 14, 2005.

          The  Company  will make  payment  for the  development  of  Insulin as
          follows:

          (vi) US$750,000 to be provided by at the  commencement of the research
               in the Insulin Project;

          (vii)US$750,000 to be provided when  cell-line and related  technology
               is  established  and  animal  experimentation  commences  in  the
               Insulin Project;

          (viii) US$300,000 to be provided when a permit for clinical trials for
               Insulin has been issued by the SDA; and

          (ix) US$200,000  to be provided when a new drug license for Insulin is
               issued to Dragon by the SDA.

          (x)  US$500,000  to be paid as a bonus if the SDA  issues the new drug
               license for Insulin to Dragon before January 14, 2005.



<PAGE>



13.  Related Party Transactions (continued)

          For  both the G-CSF and Insulin Projects:

          (i)  If the Company elects to cease development of the project it will
               forfeit any payments made and lose ownership of the Project,  but
               it will not be obligated to make any further  payments toward the
               Project;

          (ii) if an application for permit for clinical trials is not submitted
               within three years with  respect to the G-CSF  Project by or four
               years with  respect to the Insulin  Project or if the SDA rejects
               the Project for technical or scientific reasons or If development
               of the Project is terminated by the President, then the President
               will refund to the Company all amounts paid,  without interest or
               deduction, with respect to the Project within six months.

          As at June 30,  2002,  the Company has paid  $1,500,000  and  $250,000
          towards the Insulin and G-CSF Projects, respectively.

     (c)  see Notes 7,8, and 9 also.


14.  Commitments

     The Company has entered into  operating  lease  agreements  with respect to
     Huaxin's production plant in Nanjing,  China for an amount of RMB 2,700,000
     (US$326,000)   per  annum   until  June  11,   2009,   and  the   Company's
     administrative   offices  in  Vancouver  for  an  amount   escalating  from
     CDN$200,000 to CDN$230,000 (US$126,000 to US$145,000) per annum until March
     31, 2007. Minimum payments required under the agreements are as follows:

            2002                                       $ 235,269
            2003                                         458,513
            2004                                         473,936
            2005                                         475,069
            2006                                         478,467
            2007 - 2009                                  835,558

            Total                                     $2,956,811



15.  Comparative Figures

     Certain 2001 comparative  figures have been  reclassified to conform to the
     financial statement presentation adopted for 2002.





<PAGE>


Item 2.  Management's Discussion and Analysis or Plan of Operation


The  following  discusses  the  Company's  financial  condition  and  results of
operations based upon the Company's consolidated financial statements which have
been prepared in accordance with generally accepted  accounting  principles.  It
should be read in conjunction  with the Company's  financial  statements and the
notes thereto and other  financial  information  included in the Company's  Form
10-KSB for the fiscal year ended December 31, 2001.


Overview

The Company (or  "Dragon")  was formed on August 22, 1989,  under the name First
Geneva Inc. First Geneva  Investment's  business was to evaluate  businesses for
possible  acquisition.  On July 28, 1998, First Geneva Investment entered into a
share exchange agreement with Allwin Newtech.  Allwin Newtech was formed in 1998
for the purpose of  developing  and marketing  pharmaceutical  drugs for sale in
China. Prior to the acquisition of Allwin Newtech,  First Geneva Investments had
no operations.  On September 21, 1998, First Geneva Investments changed its name
to Dragon Pharmaceutical Inc.

On  July  27,  1999,   Dragon   acquired  a  75%  interest  in  Nanjing   Huaxin
Bio-pharmaceutical  Co. Ltd.  ("Huaxin"),  which  manufactures EPO in China. The
Company  increased  the  efficiencies  in the  production  of EPO by improving a
proprietary  high-yield  mammalian cell line and  "vectoring  process" which has
been  developed  by  Dragon.  The  Company   successfully   achieved  commercial
production during the last quarter of calendar1999.  In January 2002 the Company
purchased the balance of Huaxin for $1,400,000.

On September 6, 2000 Dragon  incorporated  Allwin  Biotrade  Inc.  ("Biotrade").
Biotrade  was  incorporated  for  the  purpose  of  marketing  and  distributing
biopharmaceutical   products   outside  China.  On  September  15,  2000  Dragon
incorporated  Dragon  Pharmaceuticals  (Canada) Inc. ("Dragon  Canada").  Dragon
Canada was  incorporated  for the  purpose of  researching  and  developing  new
biopharmaceutical products.


Results of Operations


Revenues.  Revenue  is  generated  from the sale of EPO in China by  Huaxin  and
throughout the developing world by Biotrade.  Revenue for the three-month period
ending June 30, 2002 was  $1,026,159  compared to $602,341  for the  three-month
period  ending June 30,  2001.  Sales in and outside of China were  $826,659 and
$199,500,  respectively  during the three-month period ending June 30, 2002. All
sales during the three-month  period ending June 30, 2001 were in China. Cost of
sales for the three-months  ended June 30, 2002 of $174,465 is attributed to the
production  costs of the  pharmaceutical  products.  The  cost of sales  for the
three-months  ended June 30, 2001 was  $155,726.  The gross profit margin of 83%
for the three-month period ending June 30, 2002 and 85% for the six-month period
ending  June  30,  2002  increased  from  74% and 76%  for the  three-month  and
six-month  periods,  respectively,  ending June 30, 2001.  The profit margin has
increased as a result of improved production efficiency.

Revenue for the six-month period ending June 30, 2002 was $2,398,966 compared to
$1,266,755 for the six-month  period ending June 30, 2001.  Sales in and outside
of China were  $1,351,966  and  $1,047,000,  respectively  during the  six-month
period ending June 30, 2002.  All sales during the six-month  period ending June
30, 2001 were in China. Cost of sales for the six-months ended June 30, 2002 and

<PAGE>

2001 were $364,989 and $302,647, respectively.

Interest income is related primarily to interest earned on cash received from
the private placement of common stock received during the third quarter of 2001
and the last quarter of 1999. Interest income for the three-months period ending
June 30, 2002 was $16,295 compared to $54,985 for the three-month period ended
June 30, 2001. Interest income for the six-months period ending June 30, 2002
was $49,902 compared to $120,243 for the six-month period ended June 30, 2001.


Interest  income has  decreased  as the cash balance has  decreased  through the
funding of operations.


Expenses. Total operating expenses for the three-months ended June 30, 2002 were
$2,692,855.  The  major  expenses  incurred  in the first  quarter  of 2002 were
research and  development  expenses of  $1,015,796  and the selling  expenses of
$473,911 representing 38% and 18% of total expenses, respectively. The remaining
major expense items are represented by administrative expenses.

Significant operating expenses for the three-months ended June 30, 2002 included
consulting  fees of  $162,543,  loan  interest  of  $15,605,  rent of  $109,906,
salaries and benefits of $124,270,  $184,100 in travel costs and management fees
of $58,443.  Management  fees  include  $57,500  incurred to two  directors  for
services during the first quarter of 2002.


Other  significant  expenses for the first half of 2002 include the depreciation
of fixed assets and amortization of license and permit of $180,449.


Comparatively,  total  operating  expenses  for the second  quarter of 2001 were
$1,540,264.  Selling  expenses  represented 27% total operating  expenses during
this period. Other major expenses for the three-month period ended June 30, 2001
included the depreciation of fixed assets and amortization of intangible  assets
of $154,515,  consulting fees of $105,402,  bad debt write offs of $42,000, loan
interest of $38,313,  rent of $86,638,  salaries of $106,073 and management fees
of  $69,146,  including  management  fees of $42,000  paid to two  director  for
services rendered during the period.

Total  operating   expenses  for  the  six-months  ended  June  30,  2002,  were
$4,846,624.  The major  expenses  incurred  in the  second  quarter of 2002 were
research and  development  expenses of  $1,771,368  and the selling  expenses of
$951,1071  representing  37%  and  20%  of  total  expenses,  respectively.  The
remaining major expense items are represented by administrative expenses.

Significant  operating  expenses for the six-months ended June 30, 2002 included
bad debt write offs of $80,549,  consulting  fees of $311,280,  loan interest of
$56,015, rent of $171,452, salaries and benefits of $265,956, $262,490 in travel
costs and management fees of $132,636.  Management fees include $115,000 paid to
two directors for services during the six-months ended June 30, 2002.


Other significant  expenses for the second half of 2002 include the depreciation
of fixed assets of and amortization of license and permit and land-use rights of
$362,107 and new market development of $162,323.


Comparatively,  total operating expenses for the six-months ended June 30, 2001,
were  $3,082,759.  The major  expense  incurred  in the  second  quarter of 2001

<PAGE>

related to the selling of pharmaceutical products and represented  approximately
32% of total  expenses.  The remaining  major expense items are  represented  by
administrative expenses.

Significant  operating  expenses for the six-months ended June 30, 2001 included
auditing  and  accounting  expense  of  $82,848,  bad debt write offs of $78,825
consulting fees of $227,725,  investor  relations of $274,166,  loan interest of
$72,306, rent of $157,968, salaries and benefits of $204,315, $119,376 in travel
costs and management  fees of $104,271.  Management fees include $60,000 paid to
two directors for services during the six-months ended June 30, 2001.


Other  significant   expenses  for  the  second  quarter  of  2001  include  the
depreciation  of fixed  assets of and  amortization  of  license  and permit and
land-use  rights of $308,329 new market  development  of $90,171 and stock based
compensation of $51,975.

Overall,  expenditures  have increased in 2002 over 2001 levels due to increased
research and development and increased personnel and activity levels.


Net and Comprehensive  Loss.  Dragon had a net loss and a comprehensive  loss of
$1,824,867 for the three-month period ending June 30, 2002.

The  Company's  net loss for the  three-month  period ended June 30,  2001,  was
$972,713,  which includes a minority interest loss of $65,952. The comprehensive
loss for the same period was $1,038,665.

Dragon had a net loss and a  comprehensive  loss of $2,762,745 for the six-month
period ending June 30, 2002.

The  Company's  net loss for the  six-month  period  ended  June 30,  2001,  was
$1,828,896,   which  includes  a  minority   interest  loss  of  $169,512.   The
comprehensive loss for the same period was $1,998,408.


Basic and Diluted Net Loss Per Share

The  Company's net loss per share has been computed by dividing the net loss for
the  period  by  the  weighted  average  number  of  shares  outstanding  during
three-month  and six-month  periods ended June 30, 2002.  The loss per share for
the three-month  period ended June 30, 2002 was $0.09 and the loss per share for
the six-month  period ended June 30, 2002 was $0.14.  Common stock issuable upon
the  exercise  of common  stock  options  and common  stock  warrants  have been
excluded from the net loss per share  calculations  as their  inclusion would be
anti-dilutive.


Liquidity and Capital Resources

Dragon is a development stage pharmaceutical and  biotechnological  company that
has commenced the manufacture and marketing of pharmaceutical  products in China
through its 100%  equity  interest in Nanjing  Huaxin  Bio-pharmaceuticals  Ltd.
Previously,  the Company has raised funds through equity  financings to fund its
operations  and to provide  working  capital.  The Company  may  finance  future
operations through additional equity financings.

<PAGE>

On October 14, 1999, the Company  entered into  securities  purchase  agreements
with two investors located in Hong Kong. Under the terms of this agreement,  the
investors purchased,  in the aggregate,  600,000 shares of common stock at $2.50
per share, with the Company raising in the aggregate $1.5 million.

On December 31, 1999, the Company closed a private placement raising $10,645,000
through the issue of  4,258,000  shares of common  stock at a price of $2.50 per
share.   $600,000  of  the  gross  proceeds  from  the  December  1999  offering
represented the conversion of the outstanding debt by the lenders into shares of
common stock of the Company at a price of $2.50 per share.

One million  common  shares were issued  through the  exercise of warrants  that
expired on  September  30,  2000.  These  warrants  were issued to  shareholders
through the  acquisition  of Allwin  Newtech on August 17, 1998.  Gross proceeds
from the exercise of the warrants were $1,000,000.

On September 14, 2001, the Company closed a private placement raising $7,000,000
through the issue of  3,500,000  shares of common  stock at a price of $2.00 per
share.

As of June 30, 2002,  the Company had  $3,612,284  in cash  available,  of which
$690,000 is held as collateral  for loans  totaling  RMB5,400,000  (US$652,465).
This cash,  the $961,063 in accounts  receivable and  anticipated  sales will be
used to fund the ongoing operations and research and development.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk,  primarily  related to foreign  exchange.
The Company  maintains its  accounting  records in their  functional  currencies
(i.e., U.S.  dollars,  Renminbi Yuan, and Canadian dollars  respectively).  They
translate foreign currency  transactions  into their functional  currency in the
following manner.

At  the  transaction  date,  each  asset,  liability,  revenue  and  expense  is
translated  into the  functional  currency  by the use of the  exchange  rate in
effect at that date.  At the period end,  monetary  assets and  liabilities  are
translated into the functional  currency by using the exchange rate in effect at
that date.  The  resulting  foreign  exchange  gains and losses are  included in
operations.

The following  table sets forth the  percentage of the Company's  administrative
expense by  currency  for the years  ended  December  31,  1999 and 2000 and the
six-months ended June 30, 2001 and 2002.

By Currency


                                       December 31,2000        December 31, 2001

U.S. Dollar                                   22%                     31%

Canadian Dollar                                0%                     12%

Renminbi yuan                                 78%                     57%

Total                                        100%                    100%

<PAGE>



                                          June 30,2001            June 30, 2002

U.S. Dollar                                    76%                     26%

Canadian Dollar                                 0%                     48%

Renminbi yuan                                  24%                     26%

Total                                         100%                    100%


Such  administrative  expense by currency may change from time to time. Further,
the Company  incurred  expenses in China of $1,350,069  and  $1,334,159  for the
six-months ended June 30, 2001 and 2002, respectively, all of which were paid in
RMB.

The Company has not entered  into any  material  foreign  exchange  contracts to
minimize  or  mitigate  the  effects of  foreign  exchange  fluctuations  on the
Company's operations. The Company exchanges Canadian dollars to fund its Chinese
operations.  Based on prior  years,  the  Company  does not  believe  that it is
subject to material foreign exchange fluctuations.  However, no assurance can be
given that this will not occur in the future.

As disclosed in Note 10 to the Company's financial  statements,  the Company has
entered into a series of loans in the aggregate  outstanding  amount of $652,465
as of June 30, 2002. The weighted  average interest rate was 5.265% for the six-
months ended June 30, 2002.  These loans are due on July 26, 2002 and August 20,
2002.  To the extent  that there may be  increased  interest  rates  during this
period, the Company will be adversely affected.

PART II. OTHER INFORMATION

Items 1, 2, 3, 4 and 5

None.

Item 6.

     (a)    Exhibit 99.1 Chief Executive Officer certification
     (b)    Exhibit 99.2 Chief Financial Officer certification

(b)      Reports on 8-K

None.



<PAGE>


                                    Signature

In accordance with the requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.








                                              DRAGON PHARMACEUTICALS INC.
                                              (registrant)

Dated:   August 13, 2002                      /s/ Matthew Kavanagh
                                              _________________________________
                                              Matthew Kavanagh
                                              Director of Finance and Corporate
                                              Compliance and Corporate Secretary
                                              (and authorized to sign on behalf
                                              of the registrant)

<PAGE>
Exhibit 99.1

                            CERTIFICATION PURSUANT TO
                      18 U.S.C. SECTION 1350, AS ADOPTED TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In  connection  with the  filing  of the  Quarterly  Report on Form 10-Q for the
quarterly  period  ended June 30, 2002,  (the Report) by Dragon  Pharmaceutical,
Inc. (the  Company),  the  undersigned,  as the Chief  Executive  Officer of the
Company,  hereby  certifies  pursuant to Section  1350,  as adopted  pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:

     The Report fully complies with the requirements of Section 13(a) or Section
     15(d) of the Securities Exchange Act of 1934; and

     The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and results of operations of the Company.



                                                     /s/ Longbin Liu
                                                     __________________________
                                                     Dr. Longbin Liu
                                                     Chief Executive Officer
<PAGE>
Exhibit 99.2

                            CERTIFICATION PURSUANT TO
                      18 U.S.C. SECTION 1350, AS ADOPTED TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In  connection  with the  filing  of the  Quarterly  Report on Form 10-Q for the
quarterly  period  ended June 30, 2002,  (the Report) by Dragon  Pharmaceutical,
Inc. (the  Company),  the  undersigned,  as the Chief  Financial  Officer of the
Company,  hereby  certifies  pursuant to Section  1350,  as adopted  pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:

     The Report fully complies with the requirements of Section 13(a) or Section
     15(d) of the Securities Exchange Act of 1934; and

     The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and results of operations of the Company.


                                              /s/ Matthew Kavanagh
                                              __________________________________
                                              Matthew Kavanagh
                                              Director of Finance and Compliance
                                              (acting Chief Financial Officer)