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

                                   Form 10-QSB

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

                For the quarterly period ended June 30, 2004

                                       OR

         [ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES ACT OF 1934

                For the transition period from _____ to _____

                         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)

Indicate by check mark whether the registrant (1) has filed all reports required
to be  filed by  Section  13 or 15(d) of the  Exchange  Act of 1934  during  the
preceding 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, 2004: 20,582,000


<PAGE>
                          PART I: FINANCIAL INFORMATION

Item 1.  Financial Statements


                           DRAGON PHARMACEUTICAL INC.
                           & SUBSIDIARIES

                           Consolidated Financial Statements
                           (Unaudited - Prepared by Management)
                           (Expressed in U.S. Dollars)

                           June 30, 2004


                           Index
                           -----

                           Consolidated Balance Sheets

                           Consolidated Statements of Stockholders' Equity

                           Consolidated Statements of Operations

                           Consolidated Statements of Cash Flows

                           Notes to Consolidated Financial Statements


                                       2
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Consolidated Balance Sheets
June 30, 2004 and December 31, 2003
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
                                                     June 30,       December 31,
                                                         2004               2003
--------------------------------------------------------------------------------

ASSETS

Current
  Cash and short term securities                $  2,608,594        $  3,126,667
  Accounts receivable                              1,407,671           1,265,676
  Inventories                                      1,130,847           1,090,464
  Due from director                                  500,100                   -
  Prepaid and deposits                                92,670             139,595
--------------------------------------------------------------------------------
Total current assets                               5,739,882           5,622,402

Fixed assets                                       1,912,249           2,089,352

Due from related party - Hepatitis B vaccine project       -                 100

Patent rights - related party                              -             500,000

Licence and permit and other assets                1,240,678           2,924,198
--------------------------------------------------------------------------------
Total assets                                    $  8,892,809        $ 11,136,052
================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Current
  Accounts payable and accrued liabilities         1,325,780           1,428,257
--------------------------------------------------------------------------------
Commitments (Note 12)

Stockholders' Equity

Share capital
  Authorized:  50,000,000 common shares at
    par value of $0.001 each
  Issued and outstanding:  20,582,000 common shares   20,58               20,462

Additional paid in capital                       25,206,250           26,708,870

Accumulated other comprehensive (loss)             (32,845)             (32,007)

Accumulated deficit                            (17,626,958)         (16,989,530)
--------------------------------------------------------------------------------
Total stockholders' equity                        7,567,029            9,707,795
--------------------------------------------------------------------------------
Total liabilities and stockholders' equity     $  8,892,809        $  11,136,052
================================================================================
The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>     <C>                                  <C>         <C>            <C>          <C>            <C>            <C>         <C>

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

Balance, December 31, 2002               20,334,000   $ 20,334    $ 26,644,998           -    $(14,994,795)  $ (35,011)  $11,635,526

Exercise of stock options for cash          128,000        128          63,872           -               -            -       64,000

Components of comprehensive income (loss)
 - foreign currency translation                  -           -               -       3,004               -        3,004        3,004

 - net (loss) for the year                       -           -               -  (1,994,735)     (1,994,735)           -  (1,994,735)
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive (loss)                                                           $(1,991,731)
                                                                               ============

Balance, December 31, 2003                20,462,000   $ 20,462    $ 26,708,870                $(16,989,530)   $(32,007)  $9,707,795
===============================================================================                =====================================

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

</TABLE>
                                       4

<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>     <C>                                  <C>         <C>            <C>          <C>            <C>            <C>         <C>

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

Balance, December 31, 2003                20,462,000    $20,462     $ 6,708,870          -    $(16,989,530)   $(32,007)   $9,707,795

Exercise of stock options for cash           120,000        120          59,880                                               60,000

Cancellation of 250,000 common shares
  allotted for  in 2000                            -          -     (1,562,500)                                          (1,562,500)

Components of comprehensive income (loss)
 - foreign currency translation                    -          -              -        (838)               -       (838)        (838)

- net (loss) for the period                        -          -              -    (637,428)       (637,428)          -     (637,428)
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive (loss)                                                            $ (638,266)
                                                                                ===========
Balance, June 30, 2004                    20,582,000    $20,582     $25,206,250               $(17,626,958)   $(32,845)   $7,567,029
===============================================================================               =====================================
The accompanying notes are an integral part of these financial statements.

</TABLE>
                                       5


<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Consolidated Statement of Operations
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
<S>     <C>                                                      <C>                <C>                <C>                <C>

----------------------------------------------------------------------------------------------------------------------------------

                                                             Three Months      Three Months         Six Months         Six Months
                                                                    Ended             Ended              Ended              Ended
                                                                  June 30,          June 30,           June 30,           June 30,
                                                                     2004              2003               2004               2003
----------------------------------------------------------------------------------------------------------------------------------

Sales                                                             $908,145        $1,007,686        $1,786,415         $1,672,009

Cost of sales                                                      194,755           326,988           441,497            528,269
----------------------------------------------------------------------------------------------------------------------------------

Gross profit                                                       713,390           680,698         1,344,918          1,143,740

Selling, general and
  administrative expenses                                        (784,051)         (723,743)       (1,462,937)        (1,692,302)

Depreciation of fixed assets and
  amortization of licence and
  permit and land-use right                                      (179,412)         (183,896)         (358,854)          (369,195)

Net write off of land-use right and fixed assets                        -                 -                 -                  -

Research and development expenses                                (151,472)                 -         (152,007)                  -

New market development                                            (12,404)           (8,234)          (12,404)           (23,713)

Provision for doubtful debts                                         6,257          (10,701)          (20,816)           (41,412)

Interest expense                                                     (747)             (929)           (1,516)            (4,389)

Stock-based compensation                                                 -                 -                 -                  -
----------------------------------------------------------------------------------------------------------------------------------
Operating loss                                                   (408,439)         (246,805)         (663,616)          (987,271)

Interest income                                                     20,435            10,381            26,189             16,819
----------------------------------------------------------------------------------------------------------------------------------

Net (loss) for the period                                       $(388,004)        $(236,424)        $(637,427)         $(970,452)
==================================================================================================================================

(Loss) per share
      Basic and diluted                                         $   (0.02)        $   (0.01)        $   (0.03)         $   (0.05)
==================================================================================================================================

Weighted average number of
  common shares outstanding
      Basic and diluted                                         20,560,022        20,334,000        20,511,011         20,334,000
==================================================================================================================================

The accompanying notes are an integral part of these financial statements.
</TABLE>

                                      6

<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2004 and 2003
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
<S>           <C>                                                                              <C>                       <C>
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                 2004                   2003
-----------------------------------------------------------------------------------------------------------------------------

Cash flows from (used in) operating activities
   Net (loss) for the period                                                       $        (637,428)     $        (970,452)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
     - depreciation of property and equipment and amortization
          of licence and permit                                                               473,564                477,415
     - provision for doubtful debts                                                            20,816                 41,412
  Changes in non-cash working capital items:
     - accounts receivable                                                                  (162,811)               (29,098)
     - inventories                                                                           (40,383)                 21,337
     - prepaid expenses and deposits                                                           46,925                (3,405)
     - accounts payable and accrued liabilities                                             (102,477)               (84,860)
-----------------------------------------------------------------------------------------------------------------------------

                                                                                            (401,794)              (547,651)
-----------------------------------------------------------------------------------------------------------------------------

Cash flows used in investing activities
  Purchase of property and equipment                                                         (20,486)               (38,559)
  (Increase) in other assets                                                                (155,000)                      -
  (Increase) decrease in restricted funds                                                           -                510,000
-----------------------------------------------------------------------------------------------------------------------------

                                                                                            (175,486)                471,441
-----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
  Issuance of common shares                                                                    60,000                      -
  Loan proceeds                                                                                     -              (483,162)
-----------------------------------------------------------------------------------------------------------------------------

                                                                                               60,000              (483,162)
-----------------------------------------------------------------------------------------------------------------------------

Foreign exchange (gain) loss on cash
  held in foreign currency                                                                      (793)                  3,879
-----------------------------------------------------------------------------------------------------------------------------

 Decrease in cash and cash equivalents                                                      (518,073)              (555,493)

Cash and cash equivalents, beginning of period                                              3,126,667              4,425,766
-----------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                           $        2,608,594     $        3,870,273
=============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                       7
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2004
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
1.   Basis of Presentation

     The accompanying unaudited interim consolidated balance sheets,  statements
     of  operations  and cash flows  reflected  all  adjustments,  consisting of
     normal  recurring  adjustments  and other  adjustments,  that  are,  in the
     opinion of management,  necessary for a fair  presentation of the financial
     position of the Company,  at June 30, 2004,  and the results of  operations
     and cash flows for the interim periods ended June 30, 2004 and 2003.

     The  accompanying  unaudited  consolidated  financial  statements have been
     prepared in accordance with the instruction for Form 10-QSB pursuant to the
     rules and regulations of Securities and Exchange Commission and, therefore,
     do not  include  all  information  and notes  normally  provided in audited
     financial  statements and should be read in conjunction  with the Company's
     consolidated  financial  statements  for the year ended  December  31, 2003
     included in the annual report previously filed on Form 10-KSB.

     The  results  of  operations  for the  interim  periods  presented  are not
     necessarily indicative of the results to be expected for the full year.

2.   Proposed Business Combination

     The Company has entered into a definitive  Share  Purchase  Agreement  with
     Oriental Wave Holding Ltd. ("Oriental") whereby the Company would issue its
     common  shares in  exchange  for all the issued and  outstanding  shares of
     Oriental.   The  transaction  is  subject  to  approval  by  the  Company's
     shareholders and the regulatory authorities.

     If the acquisition is consummated, the former shareholders of Oriental will
     own 68.35% of the issued and  outstanding  shares of the  combined  Company
     resulting in accounting  principles applicable to reverse acquisition being
     applied to record the transaction. Under this basis of accounting, Oriental
     would be the acquirer and,  accordingly,  the consolidated  entity would be
     considered  to be a  continuation  of  Oriental  with the net assets of the
     Company deemed to have been acquired and recorded at fair market value.


3.   Accounts Receivable

     ---------------------------------------------------------------------------
                                                       June 30,     December 31,
                                                          2004             2003
     ---------------------------------------------------------------------------

     Trade receivables                             $ 1,683,549       $ 1,524,465
                                                     (326,967)         (298,284)
     Allowance for doubtful accounts
     ---------------------------------------------------------------------------
                                                     1,356,582         1,226,181
     Other receivables                                  51,088            39,495
     ---------------------------------------------------------------------------
                                                   $ 1,407,670       $ 1,265,676
     ===========================================================================
                                       8
<PAGE>

DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2004
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

4.   Inventories

     ---------------------------------------------------------------------------
                                                     June 30,       December 31,
                                                         2004               2003
     ---------------------------------------------------------------------------

     Raw materials                                  $ 112,109          $ 129,650

     Finished goods                                   106,160            107,833

     Work in progress                                 912,578            852,981
     ---------------------------------------------------------------------------
                                                   $1,130,847        $ 1,090,464
     ===========================================================================

5.   Due from director

     The Company  entered into an agreement  with Dr. Longbin Liu, a director of
     the Company, to settle the amount owing to the Company from his acquisition
     of the  Hepatitis B Project  (note 7) as well as to cancel the Patent (note
     8) and Project Development (note 12) agreements between the parties.  Under
     the terms of the settlement  agreement,  the G-CSF, Insulin and Hepatitis B
     Projects,  including  the rights of ownership and  development  obligations
     would revert to Dr. Liu.

     In exchange, Dr Liu will pay to the Company the $3,710,000 in principal and
     interest  owing  under the  Hepatitis  B Project as well as  reimburse  the
     Company  $1,330,000  that had been paid  previously  under the  Patent  and
     Project Development  agreements.  All amounts are due December 31, 2004 and
     Dr. Liu has agreed to provide 2,600,000 common shares of the Company, to be
     held in escrow,  as security  for the  amounts  owing,  of which  2,200,000
     common shares have been placed in escrow as of June 30, 2004.  The warrants
     granted  to Dr.  Liu  under  the  Patent  Development  agreement  have been
     cancelled.

     The  carrying  value of the amount due from Dr.  Liu is  equivalent  to the
     previous  carrying  value of the Patent  Rights and the Hepatitis B Project
     amount owing.

6.   Property and equipment
<TABLE>
<CAPTION>
<S>                 <C>                                           <C>                   <C>                    <C>

         -----------------------------------------------------------------------------------------------------------
                                                                                 June 30, 2004
                                                      --------------------------------------------------------------
                                                                                   Accumulated            Net book
                                                                 Cost             depreciation             value
         -------------------------------------------- ------------------- ---------------------- -------------------

         Motor vehicles                                        $ 126,444               $ 77,731            $ 48,713
         Office equipment and furniture                          412,688                256,629             156,059
         Leasehold improvements                                1,088,528                479,646             608,882
         Production and lab equipment                          1,630,604                794,094             836,510
         Idle equipment                                          555,339                293,254             262,085
         -------------------------------------------- ------------------- ---------------------- -------------------

                                                              $3,813,603             $1,901,354          $1,912,249
         ============================================ =================== ====================== ===================
</TABLE>

                                       9
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2004
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

6.   Property and equipment (continued)
<TABLE>
<CAPTION>
<S>                     <C>                                        <C>            <C>                  <C>
         -------------------------------------------- --------------------------------------------------------------
                                                                            December 31, 2003
                                                      --------------------------------------------------------------
                                                                                    Accumulated            Net book
                                                                  Cost             depreciation              value
         -------------------------------------------- ------------------- ---------------------- -------------------

         Motor vehicles                                         $140,423               $ 75,996            $ 64,427
         Office equipment and furniture                          414,759                221,076             193,683
         Leasehold improvements                                1,089,006                418,888             670,118
         Production and lab equipment                          1,595,450                708,841             886,609
         Idle equipment                                          555,339                280,824             274,515
         -------------------------------------------- ------------------- ---------------------- -------------------

                                                             $ 3,794,977            $ 1,705,625         $ 2,089,352
         ============================================ =================== ====================== ===================
</TABLE>


     For the  six-months  ended June 30, 2004,  depreciation  expenses  totalled
     $197,589  (2003 -  $201,374).  The  majority of fixed assets are located in
     China.


7.   Due from Related Party - Hepatitis B Vaccine Project

         ------------------------------- ------------------- -------------------
                                               June 30,          December 31,
                                                 2004                 2003
         ------------------------------- ------------------- -------------------

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

         Less : Repayment                          -               (500,000)
                Valuation allowance                -             (3,499,900)
         ------------------------------- ------------------- -------------------
                                                 $ -                  $  100
         =============================== =================== ===================

     (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  was a company  named  Alphatech  Bioengineering  Limited,
          incorporated  in  Hong  Kong,  with  two  shareholders  who  are  both
          directors of the Company.

     (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 the amended agreement,
          Dr.  Longbin Liu, a director of the Company (and  President and CEO of
          the  Company  at  the  time  of  the   transaction)  and  one  of  the
          shareholders of Alphatech, demanded to repurchase the project from the
          Company. The repurchase price of $4.0 million is 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.

                                       10
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2004
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

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

     The Company  decided not to pursue the project and Dr. Liu has  repurchased
     the project on the agreed terms.

     The amount owing by Dr. Liu to the Company was  unsecured.  The Company has
     chosen, given the significant amount involved and the lack of security,  to
     conservatively  value the amount  owing and has set up a provision  for the
     full  amount,  less a  nominal  amount of $100.  The  Company  has  reached
     settlement with Dr. Liu on this amount owing and other projects (note 5).

8.   Patent Rights - Related Party

     Pursuant to an agreement dated January 14, 2002, the Company entered into a
     Patent  Development  Agreement  with the Dr. Longbin Liu, a director of the
     Company  (and  President  and  CEO  of  the  Company  at  the  time  of the
     transaction) and a company  controlled by the Dr. Liu 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  $500,000  (paid) 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.

     The issuance and exercise of the warrants to acquire 1,000,000 common stock
     of the Company is contingent  upon the success of the patent  applications.
     The $500,000 will be refunded to the Company if no patent applications have
     been filed by January 14, 2005. The Company has reached settlement with Dr.
     Liu on this  and  other  projects  (note  5) and  the  warrants  have  been
     cancelled.

9.   Licence and permit and other assets

     ----------------------------------- -------------------- ------------------
                                                  June 30,        December 31,
                                                      2004               2003
     ----------------------------------- -------------------- ------------------

     Original cost                              $5,012,582         $5,012,582
     Cancellation of allotted shares           (1,562,500)                  -
     Accumulated amortization                  (2,364,404)        (2,088,384)
     ----------------------------------- -------------------- ------------------
     Licence and permit                          1,085,678          2,924,198
     Other assets                                  155,000                  -
     ------------------------------------ ------------------- ------------------
                                                $1,240,678        $ 2,924,198
     =================================== ==================== ==================

     Amortization  expense for the licence and permit for the  six-months  ended
     June 30, 2004 was $275,975 (2003 - $275,956)

                                       11
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2004
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)


9.   Licence and permit and other assets (continued)

     The estimated  amortization  expense for each of the five succeeding fiscal
     years is as follows:

         2004     (balance of the year)                       $175,000
         2005                                                 $350,000
         2006                                                 $350,000
         2007                                                 $211,000

     The above amortization  expense forecast is an estimate.  Actual amounts of
     amortization  expense may differ from  estimated  amounts due to additional
     intangible asset acquisitions,  changes in foreign currency exchange rates,
     impairment of intangible  assets,  accelerated  amortization of licence and
     permit, and other events.

10.  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.

          Allwin and  Biotrade are not subject to income  taxes.  As at June 30,
          2004,   $3.9   million  of   unremitted   earnings   attributable   to
          international  companies were considered to be indefinitely  invested.
          No  provision  has been made for taxes  that might be payable if these
          earnings were remitted to the United States.  The Company's  intention
          is  to  reinvest  these  earnings  permanently  or to  repatriate  the
          earnings when it is tax effective to do so. It is not  practicable  to
          determine the amount of incremental  taxes that might arise were these
          earnings to be remitted.

          As at June  30,  2004,  the  Company  has  estimated  losses,  for tax
          purposes,  totalling approximately  $10,100,000,  which may be applied
          against future taxable income. 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.

                                       12
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2004
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
10.  Income Taxes (continued)

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

          ------------------------------------------ ------------ --------------
                                                         June 30,   December 31,
                                                             2004           2003
          ------------------------------------------ ------------ --------------
                                                      $ 3,451,000    $ 3,237,000
          Tax losses carried forward
          Stock-based compensation                          6,400          6,400
          Provision for amount owing from Hepatitis B
          Vaccine Project                               1,118,000      1,118,000
          Less: valuation allowance                   (4,575,400)    (4,361,400)
          ------------------------------------------ ------------- -------------
                                                      $         -    $         -
          ========================================== ============= =============

          A reconciliation  of the federal statutory income tax to the Company's
          effective  income tax rate,  for the three  months ended June 30, 2004
          and 2003 are as follows:

          ------------------------------------ ---------------- ----------------
                                                           2004             2003
          ------------------------------------ ---------------- ----------------

          Federal statutory income tax rate                 34%              34%
          Benefit of loss carry forward                   (34%)            (34%)
          ------------------------------------ ---------------- ----------------
          Effective income tax rate                           -                -
          ==================================== ================ ================

11.  Stock Options and Warrants

     (a)  Stock Options Plans

          There were no  options  granted  during the six months  ended June 30,
          2004.

          The  following is a summary of the employee  stock option  information
          for the period ended June 30, 2004:
<TABLE>
<CAPTION>
<S>                           <C>                                          <C>                    <C>
          ------------------------------------------------------ ------------------ ------------------------
                                                                                           Weighted Average
                                                                            Shares           Exercise Price
          ------------------------------------------------------ ------------------ ------------------------
          Options outstanding at December 31, 2002                       3,288,000             $  1.82
          Granted                                                          500,000             $  0.68
          Forfeited                                                     (1,061,000)            $  0.90
          Exercised                                                       (128,000)            $  0.50
          ------------------------------------------------------ ------------------ ------------------------
          Options outstanding at December 31, 2003                       2,599,000             $  2.04
          Forfeited                                                       (482,500)            $  1.96
          Exercised                                                       (120,000)            $  0.50
          ------------------------------------------------------ ------------------ ------------------------
          Options outstanding at June 30, 2004                           1,996,500             $  2.16
          ====================================================== ================== ========================
</TABLE>

                                       13
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2004
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

11.  Stock Options and Warrants (continued)
<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       588,500         2.39           $   0.61          563,500          $   0.60
     $1.01 - $2.00       308,000         2.82           $   1.70          308,000          $   1.70
     $2.01 - $3.00        25,000         0.361          $   2.50           25,000          $   2.50
     $3.01 - $4.00     1,075,000         1.372          $   3.13        1,075,000          $   3.13
                     ---------------  ---------         ----------      ---------          --------
                       1,996,500         1.88           $   2.16        1,971,500          $   2.17
                     ===============  =========         =========       =========          ========
</TABLE>

     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 90%, 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:

     ------------------------------------- ----------------- -------------------
                                                   June 30,             June 30,
                                                       2004                2003
     ------------------------------------- ----------------- -------------------
     Net (loss) for the period:
     - as reported                                $(663,616)         $ (970,452)
     - pro-forma                                  $(663,616)         $ (970,452)
     ------------------------------------- ----------------- -------------------
     Basic and diluted (loss) per share:
     - as reported                                $(0.03)            $(0.05)
     - pro-forma                                  $(0.03)            $(0.05)
     ------------------------------------- ----------------- -------------------

     (b)  Warrants

     Share purchase warrants outstanding as at June 30, 2004:

        Number          Underlying         Exercise Price
     of Warrants          Shares              Per Share          Expiry Date
     -----------        ----------         --------------        -----------
        50,000            50,000                 $1.70        November 15, 2004

                                       14
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2004
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

12.  Related Party Transactions

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

          -------------------------------------------- ------------ ------------
                                                        June 30,        June 30,
                                                            2004           2003
          -------------------------------------------- ------------ ------------
          Management fees                                    $-          $40,000

     (b)  Pursuant to an agreement  dated January 14, 2002, the Company  entered
          into a Project Development Agreement with Dr. Longbin Liu ("Dr. Liu"),
          a director of the Company (and President and CEO of the Company at the
          time of the  transaction)  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)  500,000 to be provided at the  commencement  of the  research in
               the G-CSF Project (paid);

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

          (iii)$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");

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

          (v)  $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:


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

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

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

          (iv) $200,000  to be provided  when a new drug  license for Insulin is
               issued to Dragon by the SDA; and

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

                                       15
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2004
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

12.  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 or four
               years with  respect to the Insulin  Project or if the SDA rejects
               the  Projects  for   technical  or   scientific   reasons  or  If
               development of the Project is terminated by Dr. Liu, then Dr. Liu
               will refund to the Company all amounts paid,  without interest or
               deduction, with respect to the Project within six months.

               As at June 30, 2004,  the Company has paid a total of  $1,500,000
               and   $500,000   towards   the   Insulin   and  G-CSF   Projects,
               respectively.  The Company has paid an  additional  $100,000 to a
               company controlled by Dr. Liu to produce Insulin samples for drug
               registration  purposes.  The Company has reached  settlement with
               Dr. Liu on this and other projects (note 5).

     (c) see Notes 5, 6, and 7 also.

13. Commitments

     (a)The Company has entered into operating lease  agreements with respect to
     Huaxin's production plant in Nanjing,  China for an amount of $326,200 (RMB
     2,700,000) per annum until June 11, 2009, and the Company's  administrative
     offices in Vancouver  for an amount  escalating  from  $136,000 to $157,000
     (CDN$200,000  to  CDN$230,000)  per annum  until  March 31,  2007.  Minimum
     payments required under the agreements are as follows:

               2004                                       $ 246,782
               2005                                         494,835
               2006                                         498,684
               2007                                         369,646
               2008                                         326,205
               2009                                         144,738
               -----------------------------------------------------
               Total                                    $ 2,080,889
               =====================================================

     (b) The Company has contracted with a European  Institute of Biotechnology,
     which may develop a high yield proprietary cell line and production process
     technology for the Company. Product from this most advanced technology will
     be  used  by the  Company  to  enter  the  European  market,  once  certain
     competitor's patents expire. The total cost of development will be $609,000
     (EUROS 500,000) of which $365,000  (EUROS  300,000)  remains unpaid at June
     30, 2004.

                                       16
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2004
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

14.  Segmented Information

     The Company  operates  exclusively  in the biotech  sector.  The  Company's
     assets and revenues are distributed as follows:

                                           June 30, 2004        December 31,2003
     ---------------------------------------------------------------------------
     ASSETS
     North America                           $ 2,932,489              $3,156,953
     China                                     5,434,407               7,079,241
     Other                                       525,913                 899,858
     ---------------------------------------------------------------------------
     Total                                   $ 8,892,809             $11,136,052
     ===========================================================================

     ---------------------------------------------------------------------------
                                       Six months ended         Six months ended
                                          June 30, 2004            June 30, 2003
     ---------------------------------------------------------------------------
     REVENUE
     North America                           $        -               $        -
     China                                    1,359,515                1,031,242
     Other                                      429,490                  640,767
     ---------------------------------------------------------------------------
         Total                               $1,786,415              $ 1,672,009
     ===========================================================================

15.  Comparative Figures

     Certain 2003 comparative  figures have been  reclassified to conform to the
     financial statement presentation adopted for 2004.

                                       17
<PAGE>
Item 2. Management's Discussion and Analysis and Plan of Operations

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, 2003.

Overview

The Company (or  "Dragon")  was formed on August 22, 1989,  under the name First
Geneva  Investment  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
Investment had no  operations.  On September 21, 1998,  First Geneva  Investment
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 and  successfully
achieved  commercial  production  during the last quarter of calendar  1999.  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  Pharmaceutical  (Canada) Inc.  ("Dragon  Canada").  Dragon
Canada was  incorporated  for the  purpose of  researching  and  developing  new
biopharmaceutical products.

The Company has contracted with a European  Institute of Biotechnology  that may
develop a high yield proprietary cell line and production process technology for
the Company.  Product from this most advanced technology available today will be
used by the Company to enter the  European  market,  once  certain  competitor's
patents expire.

Recent Events

Agreement to Acquire  Oriental Wave Holding Ltd. On March 24, 2004, we announced
that we entered into a letter of intent to acquire Oriental Wave Holding Ltd. in
a  transaction  in which we will be the  survivor  company.  On June 14, 2004 we
announced  that the parties had signed a  definitive  Share  Purchase  Agreement
setting  forth  the  terms  of  the  merger.  If  the  proposed  acquisition  is
consummated,   the  resulting   ownership  of  the  combined   company  will  be
approximately  31.65%  for  Dragon  shareholders  and  approximately  68.35% for
Oriental Wave shareholders.

                                       18
<PAGE>
Oriental Wave Holding Ltd,  incorporated  in the British  Virgin  Islands,  is a
holding  company  of  a  China-based   pharmaceutical  company  engaged  in  the
production of chemical  intermediates and active pharmaceutical  ingredients and
formulation,  marketing  and sale of generic  drugs.  Based on its 2003  audited
financial  statements,  Oriental  Wave Group had  revenues  of $26  million  and
earnings of $7.5 million.

Oriental Wave Group currently has two Chinese State Food and Drug administration
("SFD&A")  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 producing clavulanic acid by a fermentation  process. A third facility for
the production,  by fermentation,  of 7-ACA, an intermediate  for  Cephalosporin
antibiotics  started pilot production on July 1, 2004. Oriental Wave Group has a
total of  approximately  280 drug  approvals  from the SFD&A of which  about 35,
mainly anti-infectious drugs, were actively exploited in China in 2003.

On consumation of the acquisition, the combined company will be reorganized into
three  major  divisions:   a   Pharmaceutical   division  for  prescription  and
over-the-counter  generic  drugs;  a Chemical  division for bulk  pharmaceutical
chemicals such as Clavulanic Acid, 7-ACA and sterilized bulk drugs and a Biotech
division for EPO and in-licensed G-CSF.

Completion  of the  proposed  acquisition  is subject to a number of  conditions
including required regulatory and shareholder approvals.

Settlement  agreement  with Dr. Liu. In view of the slow  progress in developing
new drugs, the  availability of alternative  drugs, the desire to avoid conflict
of interest issues in the future and, in some cases,  the high investment  costs
associated  with bringing the drugs into  production,  the Company has reached a
settlement with its research partners to discontinue  further development of the
drugs under  development and recover some of the development costs paid to date.
On April 4, 2004, the Company entered into an agreement with Dr. Longbin Liu and
his affiliate to settle the amount owing to the Company from his  acquisition of
the  Hepatitis  B Vaccine  Project  as well as  cancellation  of the  Patent and
Project  Development  agreements  between  the  parties.  Under the terms of the
settlement agreement, the G-CSF, Insulin and Hepatitis B Projects, including the
rights of ownership and development obligations would revert to Dr. Liu.

In exchange,  Dr Liu will pay to the Company the  $3,710,000  in  principal  and
interest  owing under the  Hepatitis B Project as well as reimburse  the Company
$1,330,000  that  had  been  paid  previously   under  the  Patent  and  Project
Development  agreements.  All  amounts  are due on  December  31,  2004  and the
warrants  granted to Dr. Liu under the Patent  Development  agreement  have been
cancelled. Dr. Liu has agreed to provide 2,600,000 common shares of the Company,
to be held in escrow,  as  security  for the  amounts  owing of which  2,200,000
common shares of the Company have been placed in escrow as of June 30, 2004.

Results of Operations

Revenues.  Revenues  are  generated  from the sale of EPO in China by Huaxin and
throughout the developing  world by Biotrade.  Sales for the three-month  period
ending June 30, 2004 were $908,145  compared to $1,007,686  for the  three-month

                                     19
<PAGE>
period  ending June 30,  2003.  Sales in and outside of China were  $657,645 and
$250,500, respectively during the three-month period ending June 30, 2004. Sales
during the  three-month  period  ending June 30, 2003 were $576,894 in China and
$430,792  outside of China.  Cost of sales for the  three-months  ended June 30,
2004 of $194,755 is attributed  to the  production  costs of the  pharmaceutical
products.  The cost of  sales  for the  three-months  ended  June  30,  2003 was
$326,988. The gross profit margin was 79% for the three-month period ending June
30, 2004 and 68% for the  three-month  period  ended June 30,  2003.  The profit
margin was lower during the three months ended June 30, 2003 because the Company
decided to sell and sold some product with short-term  expiry dates at a reduced
price.

Sales for the six-month period ending June 30, 2004 were $1,786,415  compared to
$1,672,009 for the six-month  period ending June 30, 2003.  Sales in and outside
of China were $1,359,515 and $426,900,  respectively during the six-month period
ending June 30, 2004.  Sales during the  six-month  period  ending June 30, 2003
were $1,031,242 in China and $640,767 outside of China.

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.
Interest  income for the  three-months  period  ended June 30,  2004 was $20,435
compared to $10,381 for the  three-month  period ended June 30,  2003.  Interest
income for the  six-months  period  ended June 30, 2004 was $26,189  compared to
$16,819 for the six-month period ended June 30, 2003.

Expenses. Total operating expenses for the three-months ended June 30, 2004 were
$1,121,830.  The major  expenses  incurred  in the  second  quarter of 2004 were
selling  expenses of $364,877 and research and development  expenses of $151,472
representing  33% and 14% of total expenses,  respectively.  The remaining major
expense items are represented by administrative expenses.

Significant operating expenses for the three-months ended June 30, 2004 included
rent of $84,074, salaries and benefits of $208,566,  $53,197 in travel costs and
legal expenses of $13,543.  During 2004,  the Company  ceased paying  management
fees to certain directors for consulting services.

Other  significant  expenses for the second quarter include the  depreciation of
fixed assets and amortization of license and permit of $179,412.

Comparatively, total operating expenses for the three-months ended June 30, 2003
was  $927,504.  The major  expense  incurred  in the second  quarter of 2003 was
selling expenses of $287,667 representing 31% of total expenses.  Administrative
expenses represent the remaining major expense items.

Significant operating expenses for the three-months ended June 30, 2003 included
rent of $123,912, salaries and benefits of $198,586, $34,055 in travel costs and
a bad debts  provision  of $10,701.  Management  fees of $20,000  were paid to a
director for consulting services during the second quarter of 2003.

                                       20
<PAGE>
Other  significant   expenses  for  the  second  quarter  of  2003  include  the
depreciation of fixed assets and amortization of license and permit and land-use
rights of $183,896.

Total operating expenses for the six-months ended June 30, 2004 were $2,008,535.
The major  expense  incurred  in the first half of 2004 was  selling  expense of
$628,330  representing  31% of total expenses.  The remaining  expense items are
primarily administrative expenses.

Significant  operating  expenses for the six-months ended June 30, 2004 included
rent of $168,101,  salaries and benefits of $390,471,  $83,883 in travel  costs,
legal  expenses of $38,718 and  research and  development  expenses of $152,007.
There were no management fees paid to directors during the first half of 2004.

Other  significant  expenses  for  the  first  half  of  the  year  include  the
depreciation of fixed assets and amortization of license and permit of $358,854.

Comparatively,  total operating expenses for the six-months ended June 30, 2003,
were  $2,131,011.  The major  expense  incurred  in the  first  half of 2003 was
selling expenses of $793,339 representing 37% of total expenses.  Administrative
expenses represent the remaining expense items.

Significant  operating  expenses for the six-months ended June 30, 2003 included
bad debt write offs of  $41,412,  rent of  $212,111,  salaries  and  benefits of
$389,978 and $100,393 in travel costs. Management fees of $40,000 were paid to a
director for services during the six-months ended June 30, 2003.

Other significant  expenses for the second half of 2003 include the depreciation
of fixed assets of and amortization of license and permit and land-use rights of
$369,195.

Net and Comprehensive  Loss.  Dragon had a net loss and a comprehensive  loss of
$388,004 for the  three-month  period  ending June 30, 2004 compared to $236,424
for the same period last year.  The primary reason for the increase was that the
Company  paid in excess of $150,000 in  development  expense in the three months
ended June 30, 2004.

The Company's net and  comprehensive  loss of $637,427 for the six-month  period
ending June 30, 2004 compared to $970,452 for the same period last year.

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 the three
and six  month  periods  ended  June  30,  2004.  The  loss  per  share  for the
three-month  period  ended June 30,  2004 was $0.02 and $0.03 for the  six-month
period ended June 30, 2004.  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.

                                       21
<PAGE>
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.

As of June 30, 2004,  the Company had $2,608,594 in cash  available.  This cash,
the $1,407,671 in accounts receivable and anticipated sales will be used to fund
the  ongoing  operations  and  research  and  development.  Working  capital was
$4,414,102 at June 30, 2004. The Company does not anticipate significant capital
requirements in the near future.

During the six-months June 30, 2004, the Company incurred losses of $637,427 and
the Company will continue to incur losses until sales for its products  increase
or the  contemplated  merger with Oriental  Wave is completed.  The Company will
continue to fund its operations through working capital.

Item 3.  Controls and Procedures

We carried out an evaluation,  under the supervision and with the  participation
of our management,  including our Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure  controls and
procedures  (as defined by  Exchange  Act Rule  13a-15(e))  as of the end of our
second fiscal quarter  pursuant to Exchange Act Rule 13a-15(b).  Based upon that
evaluation,  our Chief Executive  Officer and Chief Financial  Officer concluded
that our  disclosure  controls and  procedures  are  effective in ensuring  that
information  required to be  disclosed  by us in reports  that we file or submit
under the Exchange Act is recorded,  processed,  summarized and reported  within
the time periods specified in the Securities and Exchange Commission's rules and
forms.

There have been no changes in our  internal  control  over  financial  reporting
identified in connection  with our  evaluation as of the end of the first fiscal
quarter that occurred during such quarter that have materially affected,  or are
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

Dragon  Pharmaceutical  Inc. v. Longbin Liu, Supreme Court of British  Columbia,
Canada,  No.  S036057,  filed  November 10, 2003.  On November  2003, we filed a
complaint  against our Director and former  Chairman for payment of  $3,500,000,
plus interest  calculated at 6% per annum, due on September 5, 2003, pursuant to
the terms of the  Acquisition  Agreement  related to Hepatitis B Vaccine Project
entered into by the Company and the  defendant on October 6, 2000, as amended on
June 5, 2001. The Company has served the complaint against the defendant but has
suspended  the action  pursuant to the terms of a Settlement  Agreement  entered
into on April 4, 2004. See Item 2, Management's Discussion and Analysis and Plan
of Operations, Recent Events - Settlement Agreement with Dr. Liu.

                                       22
<PAGE>
Item 2.   Changes in Securities.

          None

Item 3.   Defaults Upon Senior Securities.

          None

Item 4.   Submission of Matters to a Vote of Security Holders.

          None

Item 5.   Other Information.

          None

Item 6.   Exhibits and Reports on Form 8-K.

          (a)  Exhibits.

               Exhibit No.

               31.1 Certification by the Principal Executive Officer Pursuant to
                    Section 302 of the Sarbanes-Oxley Act

               31.2 Certification by the Principal  Accounting  Officer Pursuant
                    to Section 302 of the Sarbanes-Oxley Act

               32   Certification  by  the  Principal  Executive  and  Financial
                    Officers Pursuant to Section 906 of the Sarbanes-Oxley Act

          (b)  Reports on Form 8-K.

               Form 8-K for April 22, 2004  reporting  announcing  2003 year end
               results.

               Form 8-K for May 13, 2004 announcing first quarter results.

               Form  8-K for  June  11,  2004  reporting  entering  into a Share
               Purchase Agreement with Oriental Wave Holdings Ltd.

                                       23
<PAGE>
                                   Signatures

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 PHARMACEUTICAL INC.
                                           (registrant)

Dated:   August 5, 2004                    /s/ Matthew Kavanagh
                                           ---------------------------------
                                           Matthew Kavanagh
                                           Director of Finance and Corporate
                                           Compliance and Corporate Secretary
                                           (Duly authorized Officer and
                                           Principal Financial Officer)

                                       24
<PAGE>
                                                                EXHIBIT 31.1

            Section 302 Certification of Principal Executive Officer

I, Alexander Wick, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Dragon Pharmaceutical
Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading  with respect to the period  covered by this  report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant  as of,  and  for,  the  periods  presented  in this  report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)  Designed  such  disclosure  controls  and  procedures,  or caused  such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant,  including its
     consolidated  subsidiaries,  is made  known to us by  others  within  those
     entities,  particularly during the period in which this quarterly report is
     being prepared;

     b) Omitted

     c) Evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  and  presented  in  this  report  our  conclusions   about  the
     effectiveness of the disclosure  controls and procedures,  as of the end of
     the  period  covered  by  this  report  based  on such  evaluation;  and

     d) Disclosed in this report any change in the registrant's internal control
     over financial  reporting that occurred during the registrant's most recent
     fiscal quarter that has  materially  affected,  or is reasonable  likely to
     materially  affect,  the  registrant's   internal  control  over  financial
     reporting; and

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's  auditors and the audit committee of registrant's board of
     directors (or persons performing the equivalent functions):

     a) All significant  deficiencies  and material  weaknesses in the design or
     operation  of  internal   controls  over  financial   reporting  which  are
     reasonably  likely to adversely affect the registrant's  ability to record,
     process, summarize and report financial information; and

     b) Any fraud,  whether or not material,  that involves  management or other
     employees who have a significant role in the registrant's internal controls
     over financial reporting.

Date: August 5, 2004                    /s/ Alexander Wick
                                        --------------------------------------
                                        Alexander Wick, President and
                                        Chief Executive Officer
                                        (Principal Executive Officer)
<PAGE>
                                                                EXHIBIT 31.2

            Section 302 Certification of Principal Financial Officer

I, Matthew Kavanagh, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Dragon Pharmaceutical
Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant  as of,  and  for,  the  periods  presented  in this  report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules  13a-15(e) and  15d-15(e))  for the  registrant  and have:

     a)  Designed  such  disclosure  controls  and  procedures,  or caused  such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant,  including its
     consolidated  subsidiaries,  is made  known to us by  others  within  those
     entities,  particularly during the period in which this quarterly report is
     being prepared;

     b) Omitted

     c) Evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  and  presented  in  this  report  our  conclusions   about  the
     effectiveness of the disclosure  controls and procedures,  as of the end of
     the  period  covered  by  this  report  based  on such  evaluation;  and

     d) Disclosed in this report any change in the registrant's internal control
     over financial  reporting that occurred during the registrant's most recent
     fiscal quarter that has  materially  affected,  or is reasonable  likely to
     materially  affect,  the  registrant's   internal  control  over  financial
     reporting;  and

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
registrant's auditors and the audit committee of registrant's board of directors
(or  persons   performing  the  equivalent   functions):

     a) All significant  deficiencies  and material  weaknesses in the design or
     operation  of  internal   controls  over  financial   reporting  which  are
     reasonably  likely to adversely affect the registrant's  ability to record,
     process,  summarize  and report  financial  information;  and

     b) Any fraud,  whether or not material,  that involves  management or other
     employees who have a significant role in the registrant's internal controls
     over financial reporting.


Date: August 5, 2004               /s/ Matthew Kavanagh
                                   ------------------------------------------
                                   Matthew Kavanagh,
                                   Principal Financial Officer

<PAGE>

                                                                EXHIBIT 32

                                  CERTIFICATION
            PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
             (SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF
                          TITLE 18, UNITED STATES CODE)

Pursuant to section 906 of the  Sarbanes-Oxley  Act of 2002 (subsections (a) and
(b) of section 1350,  chapter 63 of Title 18,  United States Code),  each of the
undersigned  officers of Dragon  Pharmaceutical Inc., a Florida corporation (the
"Company"),  does hereby  certify  with respect to the  Quarterly  Report of the
Company on Form  10-QSB for the  quarter  ended June 30,  2004 as filed with the
Securities  and Exchange  Commission  (the "Form  10-QSB")  that, to the best of
their knowledge:

     (1) the Form 10-QSB fully complies with the  requirements  of section 13(a)
     or 15(d) of the Securities Exchange Act of 1934; and

     (2) the information  contained in the Form 10-QSB fairly  presents,  in all
     material respects, the financial condition and results of operations of the
     Company.


Dated: August 5, 2004                      /s/ Alexander Wick
                                           -------------------------------------
                                           Alexander Wick
                                           President and Chief Executive Officer


Dated: August 5, 2004                       /s/ Matthew Kavanagh
                                           -------------------------------------
                                           Matthew Kavanagh
                                           Principal Financial Officer