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 March 31, 2001

     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)


                        543 Granville Street, Suite 1200
                           Vancouver, British Columbia
                                 Canada V6C 1X8
                    (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 March 31, 2001:  16,706,000


<PAGE>

Part 1.  Financial Information
Item 1.  Financial Statements

Consolidated Balance Sheet
(Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
                                                                         March 31            December 31
                                                                           2001                  2000
                                                                       ------------         ------------
                                                                        (Unaudited)
<S>                                                                   <C>                 <C>
ASSETS

Current
  Cash and cash equivalents                                            $  3,037,672         $  4,092,702
  Restricted funds                                                        2,439,970            2,247,613
  Accounts receivable                                                     1,028,051            1,166,876
  Inventories                                                               623,015              474,041
  Prepaid and deposits                                                      116,399               96,934
                                                                       ------------         ------------
Total current assets                                                      7,245,107            8,078,166

Fixed assets                                                              2,575,097            2,330,349

Investment in Hepatitis B vaccine project - related party                 4,000,000            4,000,000

Refundable investment deposits - related party                              372,000              372,000

Licence and permit                                                        3,654,546            3,766,315
                                                                       ------------         ------------
Total assets                                                           $ 17,846,750         $ 18,546,830
                                                                       ============         ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Current
  Bank loans                                                           $  2,477,042         $  2,198,280
  Accounts payable and accrued liabilities                                1,359,815            1,435,820
                                                                       ------------         ------------
Total current liabilities                                                 3,836,857            3,634,100
                                                                       ------------         ------------
Minority interests                                                          825,643              929,265
                                                                       ------------         ------------
Commitment (Note 13)

Stockholders' Equity

Share capital
  Authorized:  50,000,000 common shares at
    par value of $0.001 each
  Issued and outstanding:  16,706,000 common shares
    (December 31, 2000 - 16,700,000)                                         16,706               16,700

Additional paid in capital                                               20,055,866           20,000,897

Accumulated other comprehensive (loss)                                      (23,595)             (25,588)

Accumulated deficit                                                      (6,864,727)          (6,008,544)
                                                                       ------------         ------------
Total stockholders' equity                                               13,184,250           13,983,465
                                                                       ------------         ------------
Total liabilities and stockholders' equity                             $ 17,846,750         $ 18,546,830
                                                                       ============         ============

</TABLE>

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

<PAGE>3


DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Consolidated Statement of Stockholders' Equity
(Expressed in U.S. Dollars)
(Unaudited)

<TABLE>
<CAPTION>
                                                                                                            Accumulated
                                                                               Compre-                       Other         Total
                                                              Additional       hensive                       Compre-       Stock-
                                           Common stock        paid-in         income        Deficit         hensive      holders'
                                       Shares      Amount      capital         (loss)      accumulated       Income        equity
----------------------------------------------------------------------------------------------------------------------------------

<S>                                <C>          <C>        <C>               <C>         <C>             <C>         <C>
Balance, December 31, 1999          10,735,000   $ 10,735   $ 15,690,734                   $ (3,262,750)   $  50,049   $ 12,488,768

Issued 4,258,000 common shares
  Previously allotted                4,258,000      4,258         (4,258)                             -            -              -

Additional share issuance costs
  to 4,258,000 common shares issued                     -         (5,247)                             -            -         (5,247)

Exercise stock options for cash        107,000        107         53,393                              -            -         53,500

Exercise warrants for cash           1,600,000      1,600      2,498,400                              -            -      2,500,000

Allotted 250,000 common shares
  at $6.25 per share                         -          -      1,562,500                              -            -      1,562,500

Stock option compensation                    -          -        205,375                              -            -        205,375

Other comprehensive income
 - foreign currency translation              -          -              -          (75,637)            -      (75,637)       (75,637)

Comprehensive income
 - net (loss) for the period                 -          -              -       (2,745,794)   (2,745,794)           -     (2,745,794)
                                    ----------   --------   ------------     ------------  ------------    ---------   ------------
Comprehensive income (loss)                                                  $ (2,821,431)
                                                                             ============
Balance, December 31, 2000          16,700,000   $ 16,700   $ 20,000,897                   $ (6,008,544)   $ (25,588)  $ 13,983,465
                                    ==========   ========   ============        `          ============    =========   ============

</TABLE>

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


<PAGE>4


DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Consolidated Statement of Stockholders' Equity
(Expressed in U.S. Dollars)
(Unaudited)

<TABLE>
<CAPTION>
                                                                                                            Accumulated
                                                                               Compre-                       Other         Total
                                                              Additional       hensive                       Compre-       Stock-
                                           Common stock        paid-in         income        Deficit         hensive      holders'
                                       Shares      Amount      capital         (loss)      accumulated       Income        equity
----------------------------------------------------------------------------------------------------------------------------------

<S>                                <C>          <C>        <C>               <C>         <C>             <C>         <C>

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       6,000           6         2,994                -             -            -          3,000

Other comprehensive income
 - foreign currency translation              -           -             -            1,993             -        1,993          1,993

Comprehensive (loss)
 - net (loss) for the period                 -           -             -         (856,183)     (856,183)           -       (856,183)

Stock option compensation                    -           -        51,975                -             -            -         51,975
                                    ----------   ---------  ------------     ------------  ------------    ---------   ------------
Comprehensive (loss)                                                         $   (854,190)
                                                                             ============

Balance, March 31, 2001             16,706,000   $ 16,706   $ 20,055,866                   $ (6,864,727)   $ (23,595)  $ 13,184,250
                                    ==========   ========   ============        `          ============    =========   ============

</TABLE>

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


<PAGE>5

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Consolidated Statement of Operations
(Expressed in U.S. Dollars)
(Unaudited)

<TABLE>
<CAPTION>
                                                                        January 1            January 1
                                                                          2001 to              2000 to
                                                                         March 31             March 31
                                                                            2001                2000
                                                                     ------------         ------------

<S>                                                                  <C>                  <C>
Sales                                                                $    664,414         $    661,785

Cost of sales                                                             146,920               98,865
                                                                     ------------         ------------
Gross profit                                                              517,494              562,920

Selling, general and
  administrative expenses                                              (1,125,808)            (472,653)

Depreciation of fixed assets and
  amortization of licence and permit
  and land-use right                                                     (153,814)             (88,233)

Research expenses                                                         (40,200)                   -

New market development                                                    (99,880)             (12,081)

Provision for doubtful debts                                              (36,826)             (24,038)

Loan interest expense                                                     (33,993)             (25,471)

Stock-based compensation                                                  (51,975)            (188,365)
                                                                     ------------         ------------
Operating loss                                                         (1,025,002)            (247,921)

Interest income                                                            65,259               24,052
                                                                     ------------         ------------
Loss before minority interest                                            (959,743)            (223,869)

Minority interest                                                         103,560              (10,911)
                                                                     ------------         ------------
Net (loss) for the period                                            $   (856,183)        $   (234,780)
                                                                     ============         ============
(Loss) per share
  Basic and diluted                                                  $      (0.05)        $      (0.02)
                                                                     ============         ============
Weighted average number of
  common shares outstanding
      Basic and diluted                                                16,701,233           11,807,933
                                                                     ============         ============

</TABLE>


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


<PAGE>6


DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Consolidated Statement of Cash Flows
(Expressed in U.S. Dollars)
(Unaudited)


<TABLE>
<CAPTION>
                                                                      January 1            January 1
                                                                       2001 to              2000 to
                                                                       March 31             March 31
                                                                        2001                 2000
                                                                     ------------        ------------
<S>                                                                <C>                 <C>
Cash flows from (used in) operating activities
   Net (loss) for the period                                         $   (856,183)       $   (234,780)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
     - stock-based compensation expense                                    51,975             188,365
     - depreciation of fixed assets and amortization of
          licence and permit and land-use right                           197,323             122,469
     - minority interests                                                (103,560)             10,911
     - provision for doubtful debts                                        36,826              24,038
  Changes in non-cash working capital items:
     - accounts receivable                                                101,974             (38,015)
     - inventories                                                       (148,974)            (87,979)
     - prepaid expenses and deposits                                      (19,465)           (427,536)
     - accounts payable and accrued liabilities                           (76,005)           (460,287)
                                                                     ------------        ------------
                                                                         (816,089)           (902,814)
                                                                     ------------        ------------
Cash flows used in investing activities
  Purchase of fixed assets                                               (327,932)            (38,360)
  Increase in restricted funds                                           (192,357)         (1,513,800)
  Additional cost of licence                                                    -            (250,000)
                                                                     ------------        ------------
                                                                         (520,289)         (1,802,160)
                                                                     ------------        ------------
Cash flows from financing activities
  Loan proceeds                                                           277,842             934,840
  Proceeds from issuance of shares                                          3,000             113,500
  Proceeds from shares subscribed and allotted
    in prior period, net of issuance costs                                      -           8,786,603
  Funds contributed by minority shareholders                                    -             403,380
                                                                     ------------        ------------
                                                                          280,842          10,238,323
                                                                     ------------        ------------
Foreign exchange loss on cash
  held in foreign currency                                                    506               8,318
                                                                     ------------        ------------
Increase (decrease) in cash and
  And cash equivalents                                                 (1,055,030)          7,540,932

Cash and cash equivalents, beginning of period                          4,092,702             617,262
                                                                     ------------        ------------
Cash and cash equivalents, end of period                             $  3,037,672        $  8,158,194
                                                                     ============        ============

</TABLE>

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


<PAGE>7

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)


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").  Kailong  and  Huaxin  are  in the  business  of  research  and
     development, production and sales of pharmaceutical products in China.


2.   Significant Accounting Policies

     (a)  Basis of Consolidation

          (i)  These consolidated  financial  statements include the accounts of
               the Company and Its subsidiaries, Allwin, Kailong and Huaxin. All
               inter-company transactions and balances have been eliminated.

          (ii) Under the terms of Sino-Foreign Joint Venture Contract,  Huaxin's
               board of  directors  consists  of five  directors  of  which  the
               Company has the right to select  three  directors  including  the
               chairman.   Except  for  (1)   amending   Huaxin's   articles  of
               association; (2) liquidating Huaxin; (3) increasing or decreasing
               Huaxin's registered capital;  (4) mortgaging Huaxin's assets; and
               (5) merging Huaxin, which transactions require unanimous approval
               by Huaxin's  board,  the Company  controls Huaxin in the ordinary
               course  of  business.  Because  the  Company  has  a  controlling
               financial interest in Huaxin, and controls Huaxin's operations in
               the ordinary  course of business,  the Company has  accounted for
               Huaxin using the consolidated  method of accounting as opposed to
               using the equity method.

     (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.

<PAGE>8

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)


2.   Significant Accounting Policies (continued)

     (c)  Fixed Assets

          Depreciation is based on the estimated  useful lives of the assets and
          is computed using the straight-line  method. 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
          Land improvements                        10 years
          Leasehold improvements                   Term of lease (10 years)
          Production equipment                     10 years

     (d)  Foreign Currency Transactions

          The  parent  company,   Allwin,  Kailong  and  Huaxin  maintain  their
          accounting records in their functional currencies (i.e., U.S. dollars,
          U.S. dollars,  Renminbi Yuan, and Renminbi Yuan,  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)  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.

<PAGE>9

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)


2.   Significant Accounting Policies (continued)

     (g)  Advertising Expenses

          The Company  expensed  advertising  costs as  incurred.  There were no
          advertising  expenses  incurred by the  Company  for the period  ended
          March 31, 2001.

     (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  using
          enacted tax rates in effect in the years in which the  differences are
          expected to reverse.

     (i)  Comprehensive Income

          In 1998, the Company  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.

<PAGE>10

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)


2.   Significant Accounting Policies (continued)

     (j)  Financial Instruments and Concentration of Risks (continued)

          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.

     (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 an impairment in 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 Equivalents

          Cash equivalents  usually consist of highly liquid  investments  which
          are readily  convertible  into cash with maturities of three months or
          less.  As at March 31, 2001,  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.

<PAGE>11

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)


2.   Significant Accounting Policies (continued)

     (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
          4,658,000  warrants and 3,037,000  stock options  outstanding at March
          31, 2001 are anti-dilutive, however, they may be dilutive in future.


<PAGE>12

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)


2.   Significant Accounting Policies (continued)

     (q)  New Accounting Pronouncements


          (i)  The  Financial  Accounting  Standards  Board  ("FASB") has issued
               Interpretation  No. 44 in March  2000,  which  addresses  certain
               practice issues  regarding  Accounting  Principles  Board ("APB")
               Opinion No. 25,  Accounting  for Stock Issued to  Employees.  The
               effective date of the interpretation was July 1, 2000.

               If the terms of an option  (originally  accounted  for as a fixed
               option)  are  modified  during  the  option  term to  change  the
               exercise price directly,  the modified option should be accounted
               for as a variable  option.  Variable grant  accounting  should be
               applied to the modified option from the date of the  modification
               until the date of exercise.  Consequently,  the final measurement
               of compensation expense would occur at the date of exercise.  The
               cancellation of an option and the issuance of a new option with a
               lower exercise price shortly thereafter (e.g., within six months)
               to the same  individual  should  be  considered  in  substance  a
               modified (variable) option.

               The Company has no such  modified  option and,  accordingly,  the
               pronouncement  would have nil effect on the  Company's  financial
               statements.

          (ii) In June 1998,  the Financial  Accounting  Standards  Board issued
               SFAS No. 133, "Accounting for Derivative  Instruments and Hedging
               Activities".  SFAS No. 133 requires  companies  to recognize  all
               derivatives  contracts  as either  assets or  liabilities  in the
               balance  sheet and to  measure  them at fair  value.  If  certain
               conditions are met, a derivative may be  specifically  designated
               as a hedge, the objective of which is to match the timing of gain
               or  loss   recognition  on  the  hedging   derivative   with  the
               recognition  of (I) the  changes  in the fair value of the hedged
               asset or liability  that are  attributable  to the hedged risk or
               (ii) the earnings  effect of the hedged  forecasted  transaction.
               For a derivative not designated as a hedging instrument, the gain
               or loss is recognized in income in the period of change. SFAS No.
               133  is  effective  for  all  fiscal  quarters  of  fiscal  years
               beginning after June 15, 2000.

               Historically,  the  Company  has  not  entered  into  derivatives
               contracts  either  to hedge  existing  risks  or for  speculative
               purposes.  Accordingly,  the Company does not expect  adoption of
               the new  standards  on  July 1,  2000  to  affect  its  financial
               statements.

<PAGE>13

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)



3.   Restricted Funds


<TABLE>
<CAPTION>
                                                                  March 31      December 31
                                                                    2001            2000
                                                                 ----------      ----------

<S>                                                              <C>             <C>
     Term deposits held as collateral against bank loans         $2,439,970      $1,736,328

     Restricted for use in acquisition of fixed assets                    -         511,285
                                                                 ----------      ----------
                                                                 $2,439,970      $2,247,613
                                                                 ==========      ==========
</TABLE>


4.   Accounts Receivable

<TABLE>
<CAPTION>
                                                                  March 31      December 31
                                                                    2001            2000
                                                                 ----------      ----------

<S>                                                              <C>             <C>

     Trade receivable                                            $  934,448      $  996,100

     Allowance for doubtful accounts                                (77,514)        (40,663)
                                                                 ----------      ----------
                                                                    856,934         955,437
     Other receivable                                               171,117         211,439
                                                                 ----------      ----------
                                                                 $1,028,051      $1,166,876
                                                                 ==========      ==========
</TABLE>

5.   Inventories

<TABLE>
<CAPTION>
                                                                  March 31      December 31
                                                                    2001            2000
                                                                 ----------      ----------

<S>                                                              <C>             <C>

     Raw materials                                               $  161,036      $   72,033

     Finished goods                                                 439,416         391,469

     Work in progress                                                22,563          10,539
                                                                 ----------      ----------
                                                                 $  623,015      $  474,041
                                                                 ==========      ==========

</TABLE>

<PAGE>14

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)


6.   Fixed Assets



<TABLE>
<CAPTION>
                                                              March 31, 2001
                                              -----------------------------------------
                                                             Accumulated      Net book
                                                  Cost       depreciation       value
                                              ----------    -------------    ----------

<S>                                           <C>              <C>           <C>
     Motor vehicles                           $  100,347       $ 19,986      $   80,361
     Office equipment and furniture              230,550         67,852         162,698
     Leasehold improvements                      953,639        147,570         806,069
     Production and lab equipment              1,897,846        371,877       1,525,969
                                              ----------       --------      ----------
                                              $3,182,382       $607,285      $2,575,097
                                              ==========       ========      ==========
</TABLE>

<TABLE>
<CAPTION>

                                                             December 31, 2000
                                              -----------------------------------------
                                                             Accumulated      Net book
                                                  Cost       depreciation       value
                                              ----------    -------------    ----------

<S>                                           <C>              <C>           <C>
     Motor vehicles                           $  100,309       $ 15,752      $   84,557
     Office equipment and furniture              202,242         57,746         144,496
     Leasehold improvements                      952,364        119,234         833,130
     Production and lab equipment              1,598,360        330,194       1,268,166
                                              ----------       --------      ----------
                                              $2,853,275       $522,926      $2,330,349
                                              ==========       ========      ==========
</TABLE>

For the three-month period ended March 31, 2001,  depreciation expenses totalled
$84,755 (December 31, 2000 - $269,125). All fixed assets are located in China.


7.   Investment in Hepatitis B Vaccine Project - Related Party

     (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.

     (b)  Pursuant to an amended  agreement  dated March 22, 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.

<PAGE>15

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)



8.   Refundable Investment deposits - Related Party

                                                         March 31    December 31
                                                           2001         2000
                                                        --------      --------
     Guanzhou Recomgen Biotech Co. Ltd.
     - Tissue Plasminogen Activator ("TPA") Project     $400,000      $400,000

     Less:  Valuation allowance                          (28,000)      (28,000)
                                                        --------      --------
                                                        $372,000      $372,000
                                                        ========      ========

     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.  Subsequent to the year-end,
     due to financial market and economic conditions, the Company decided not to
     proceed  with the  funding  and the  acquisition.  In  accordance  with the
     agreement,  Guanzhou  Recomgen  and its  principals  agreed to  refund  the
     $400,000 before September 30, 2001.


9.   Bank Loans


<TABLE>
<CAPTION>
                                                                        March 31        December 31
                                                                          2000              2000
                                                                       ----------       ----------

<S>                                                                   <C>            <C>
    RMB 3,000,000, bearing interest at 5.85% per annum and due on
    July 31, 2001                                                      $  362,494       $  362,354

    RMB 2,000,000, bearing interest at 5.85% per annum and due on
    August 15, 2001                                                       241,663          241,570

    RMB 7,800,000, bearing interest at 5.265% per annum and due on
    January 31, 2002.  The loan is secured by the  term deposit           942,484          942,120

    RMB 4,000,000, bearing interest at 5.58% per annum and due on
    June 11, 2001.  The loan is secured by the term deposit               483,325          483,138

    RMB 1,400,000 bearing interest at 5.58% per annum and due on
    June 11, 2001.  The loan is secured by the term deposit               169,164          169,098

    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            277,912                -
                                                                       ----------       ----------
    Total                                                              $2,477,042       $2,198,280
                                                                       ==========       ==========
</TABLE>


     The weighted  average  interest rate was 5.48% for the  three-month  period
     ended March 31, 2001 and 5.79% for the year ended December 31, 2000.


<PAGE>16

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)


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   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 March 31,  2001,  the parent  company,  Kailong  and Huaxin have
          estimated   losses,   for  tax   purposes,   totalling   approximately
          $2,980,000,  which  may be  applied  against  future  taxable  income.
          Accordingly,  there is no tax  expense  charged  to the  Statement  of
          Operations  for the period ended March 31,  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:

                                                     March 31      March 31
                                                       2001          2000
                                                    ----------     --------

          Tax loss carryforwards                   $1,013,000     $392,000
          Stock-based compensation                     17,700       64,000
          Less: valuation allowance                (1,030,700)    (456,000)
                                                   ----------     --------
                                                   $        -     $      -
                                                   ==========     ========

          A reconciliation  of the federal statutory income tax to the Company's
          effective income tax rate is as follows:

                                                     March 31      March 31
                                                       2001          2000
                                                    ----------     --------

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

<PAGE>17


DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)


11.  Stock Options and Warrants

     (a)  Stock Options Plans

          The Company charged $51,975 and $188,365,  for the three-month periods
          ended  March 31,  2001 and 2000,  respectively,  to income  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.  There  was no stock
          option granted during the period ended March 31, 2001.

          The  following is a summary of the employee  stock option  information
          for the period ended March 31, 2001:


<TABLE>
<CAPTION>
                                                                         Weighted Average
                                                              Shares      Exercise Price
                                                            ---------    ----------------

<S>                                                      <C>                <C>
          Options outstanding at December 31, 1999          1,520,000          $  0.58
          Granted                                           1,737,500          $  3.31
          Forfeitured                                        (107,500)         $  7.00
          Exercised                                          (107,000)         $  0.50
                                                            ---------          -------
          Options outstanding at December 31, 2000          3,043,000          $  1.89
          Options exercised                                    (6,000)         $  0.50
                                                            ---------          -------
          Options outstanding at March 31, 2001             3,037,000          $  1.89
                                                            =========          =======

</TABLE>


<TABLE>
<CAPTION>

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

<S>                         <C>            <C>             <C>         <C>             <C>
          $0.01 - $1.00       1,422,000      2.98            $0.50       1,408,000       $0.50
          $1.01 - $2.00               -       -              $   -               -       $   -
          $2.01 - $3.00          20,000      3.61            $2.50          20,000       $2.50
          $3.01 - $4.00       1,595,000      4.60            $3.13       1,595,000       $3.13
                              ---------      ----            -----       ---------       -----
                              3,037,000      3.83            $1.89       3,023,000       $1.90
                              =========      ====            =====       =========       =====

</TABLE>

<PAGE>18

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)



11.  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 2 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:

                                                    March 31       March 31
                                                      2001           2000
                                                   ---------      ---------

     Net (loss) for the period:
     - as reported                                 $(856,183)     $(234,780)
     - pro-forma                                    (856,767)      (235,264)
                                                   ---------      ---------
     Basic and diluted (loss) per share:
     - as reported                                    $(0.05)        $(0.02)
     - pro-forma                                      $(0.05)        $(0.02)
                                                   ---------      ---------

     (b)  Warrants

          Share purchase warrants outstanding as at March 31, 2001:


         Number         Underlying        Exercise Price
       Of Warrants        Shares            Per Share        Expiry Date
       -----------      ----------        --------------     ------------
       4,258,000         4,258,000            $2.50          May 1, 2001
         400,000           400,000            $3.00          November 24, 2002


<PAGE>19

DRAGON PHARMACEUTICALS INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2001
------------------------------------------------------------------------
(Expressed in U.S. Dollars)
(Unaudited)


12.  Related Party Transactions

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

                                                 March 31     March 31
                                                   2001         2000
                                                 ---------    --------

          Management fees                         $18,000      $18,000
                                                  =======      =======

     (b)  See Notes 8 and 9.


     13.  Commitment

          The Company has entered into an operating lease agreement with respect
          to Huaxin's  production  plant in Nanjing,  China for an amount of RMB
          3,000,000  (approximately  US$362,490)  per annum until June 11, 2009.
          Minimum payments required under the agreement are as follows:


          2002                           750,000               90,620
          2003                         3,000,000              362,490
          2004                         3,000,000              362,490
          2005                         3,000,000              362,490
          2006                         3,000,000              362,490
          2007 - 2009                  7,375,000              891,130
                                   -------------         ------------
          Total                    RMB20,125,000         US$2,431,710
                                   =============         ============

14.  Comparative Figures

Certain  2000  comparative  figures have been  reclassified  to conform with the
financial statement presentation adopted for 2001.

<PAGE>20

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-K for the fiscal year ended December 31, 2000.

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 Biotech Co.
Ltd. which  manufactures EPO in China. The Company increased the efficiencies in
the  production  of EPO by Nanjing  Huaxin  Biotech by  improving a  proprietary
high-yield  mammalian cell line and "vectoring process" which has been developed
by Dragon.  The Company  successfully  achieved  commercial  production in China
during the last quarter of calendar1999.

On March 30, 2000, the Allwin Newtech (a wholly-owned subsidiary of the Company)
entered  into an  agreement  to increase  its equity  interest in Sanhe  Kailong
Bio-pharmaceutical  Co.,  Ltd. from 75% to 95%. The Company paid $250,000 and is
committed to issue  250,000  common shares to increase its equity  interest.  To
date, due to administrative  delays, the shares have not yet been issued but are
represented as common shares allotted on the Company's financial statements.

On June 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 results primarily from the sale of EPO in China.  Revenue for
the three month period ending March 31, 2001, was $664,414  compared to $661,785
for the three month period  ending  March 31, 2000.  Cost of sales for the three
months ended March 31, 2000, of $146,920 is attributed to the  production  costs

<PAGE>21

of the  pharmaceutical  products.  The cost of sales for the three  months ended
March 31,  2000,  was  $98,865.  During the three  months  ended March 31, 2001,
Dragon had  interest  income of $65,259.  Interest  income for the three  months
ended March 31,  2000,  was  $24,052.  Interest  income is related  primarily to
interest  earned on cash  received  from the private  placement  of common stock
received during the last quarter of 1999.

Expenses.  Total  operating  expenses for the three months ended March 31, 2001,
were $1,125,808. The major expense incurred in the first quarter of 2001 related
to the selling of pharmaceutical  products and represented  approximately 41% of
total   expenses.   The  remaining   major  expense  items  are  represented  by
administrative expenses.

Significant  operating  expenses  for the three  months  ended  March 31,  2001,
included  auditing expenses of $36,200,  consulting fees of $122,323,  legal and
corporate  services of $34,414,  new product  line  testing of $93,611,  rent of
$71,330,  salaries  and  benefits of $98,242,  and  management  fees of $35,125.
Management  fees include  $18,000  paid to one director for services  during the
first quarter of 2001.

Other  significant  expenses  for the first  three  months of 2001  include  the
depreciation  of fixed  assets of and  amortization  of  license  and permit and
land-use rights of $153,814,  new market development of $99,880, and stock based
compensation of $51,975.

Comparatively,  total  operating  expenses  for the first  quarter  of 2000 were
$442,653.  Selling expenses represented 39% total operating expenses during this
period.  Other major expenses for the period ended March 31, 2000,  included the
depreciation of fixed assets and  amortization of intangible  assets of $88,233,
bad debt write offs of $24,038, and loan interest of $25,471.

Net  and  Comprehensive   Loss.  Dragon  had  a  net  loss  of  $856,183  and  a
comprehensive loss of $959,743 for the three month period ending March 31, 2001.
Calculated in the comprehensive loss for the period was a minority interest loss
of $103,560.

The  Company's  net loss for the three month period  ended March 31,  2000,  was
$234,780 which includes a minority  interest loss of $10,911.  The comprehensive
loss for the same period was $223,869.

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
months then ended.  The loss per share for the three month  period  ending March
31, 2001 and 2000, was $0.05 and $0.02, respectively. 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.

<PAGE>22

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 75% equity  interest in Nanjing  Huaxin  Biotech.  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.

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 June 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.

As of March 31,  2001 and  December  31,  2000,  Dragon's  working  capital  was
$3,408,250 and $4,444,066, respectively.

Item 3.

Dragon has no long-term debt.  Therefore,  Dragon does not believe that a change
in interest rates will have a material effect on the Company.

PART II.       OTHER INFORMATION

Items 1, 2, 3, 4 and 5

None.

Item 6(a) Exhibits

10.12. Letter agreement between the Company and Alphatech Bioengineering Limited
       modifying their agreement of October 6, 2000.

10.13. Letter of intent between Longbin Liu and the Company.

<PAGE>23

                                   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 PHARMACEUTICALS INC.
                                   (registrant)


Dated:   May 14, 2001              /s/  Dr. Longbin Liu
                                   Dr. Longin Liu
                                   President and Chief Executive Officer and
                                   Chief Financial Officer
                                   (and authorized to sign on behalf of the
                                   registrant)