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 September 30, 2003

                                       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
    incorporation or organization)                    Identification No.)


                      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 [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12 b-2 of the Exchange act).  Yes [ ]   No [X]

Number  of  shares  of  common  stock  outstanding  as of  September  30,  2003:
20,359,000


<PAGE>
ITEM 1. FINANCIAL INFORMATION


DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Consolidated Balance Sheets
September 30, 2003 and December 31, 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                                                                                             <C>                     <C>

                                                                                           September 30,            December 31,
                                                                                                    2003                    2002
----------------------------------------------------------------------------------------------------------------------------------

ASSETS

Current
  Cash and short term securities                                                    $          3,407,581      $         4,935,766
  Accounts receivable                                                                          1,287,409                  949,045
  Inventories                                                                                  1,094,053                1,208,277
  Prepaid and deposits                                                                           190,267                  154,551
----------------------------------------------------------------------------------------------------------------------------------

Total current assets                                                                           5,979,310                7,247,639

Fixed assets                                                                                   2,239,307                2,420,613

Due from related party - Hepatitis B vaccine project                                                 100                      100

Patent rights - related party                                                                    500,000                  500,000

Licence and permit                                                                             3,062,014                3,475,740
----------------------------------------------------------------------------------------------------------------------------------
Total assets                                                                        $         11,780,731      $        13,644,092
==================================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Current
  Bank loans                                                                        $                  -      $           483,162
  Accounts payable and accrued liabilities                                                     1,367,418                1,525,404
----------------------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                                      1,367,418                2,008,566
----------------------------------------------------------------------------------------------------------------------------------
Commitments (Note 13)

Stockholders' Equity

Share capital
  Authorized:  50,000,000 common shares at
    par value of $0.001 each
  Issued and outstanding:  20,359,000 common shares                                               20,359                   20,334

Additional paid in capital                                                                    26,657,473               26,644,998

Accumulated other comprehensive (loss)                                                          (16,690)                 (35,011)

Accumulated deficit                                                                         (16,247,829)             (14,994,795)
----------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                                    10,413,313               11,635,526
----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                                          $         11,780,731      $        13,644,092
==================================================================================================================================
</TABLE>

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

                                       2
<PAGE>

DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES

Consolidated Statements of Stockholders' Equity
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                                          <C>          <C>          <C>         <C>             <C>         <C>            <C>
                                                                                                         Accumulated
                                                                                  Compre-                      other         Total
                                               Common stock       Additional      hensive                    compre-        Stock-
                                            -------------------      paid-in       income        Deficit     hensive      holders'
                                            Shares      Amount       capital        (loss)   accumulated      income        equity
------------------------------------------------------------------------------------------------------------------------------------

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

Exercise of stock options for cash             3,000         3         1,497             -             -          -          1,500

Stock based compensation                           -         -        18,760             -             -          -         18,760

Components of comprehensive income (loss)
 - foreign currency translation                    -         -             -       (10,003)            -    (10,003)       (10,003)

- net (loss) for the year                          -         -             -    (5,250,946)   (5,250,946)         -     (5,250,946)
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive (loss)                                                           $(5,260,949)
                                                                               =============

Balance, December 31, 2002                20,334,000   $20,334   $26,644,998                $(14,994,795)  $(35,011)   $11,635,526
===============================================================================             ========================================
</TABLE>

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)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                                          <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)    ccumulated     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             25,000        25        12,475                                               12,500

Components of comprehensive income (loss)
 - foreign currency translation                     -         -             -        18,321             -     18,321        18,321

- net (loss) for the year                           -         -             -    (1,253,034)   (1,253,034)         -    (1,253,034)
------------------------------------------------------------------------------------------------------------------------------------

Comprehensive (loss)                                                            $(1,234,713)
                                                                                ============

Balance, September 30, 2003                20,359,000   $20,359   $26,657,473                $(16,247,829)  $(16,690)  $10,413,313
================================================================================             ======================================
</TABLE>

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


                                       4
<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>

                                                              Three Months      Three Months       Nine Months        Nine Months
                                                                 Ended              Ended             Ended              Ended
                                                             September 30,      September 30,     September 30,      September 30,
                                                                  2003              2002               2003              2002
------------------------------------------------------------------------------------------------------------------------------------

Sales                                                         $ 1,151,646       $ 3,777,326         $2,823,654       $ 6,176,292

Cost of sales                                                     353,998           460,987            882,267           825,977
------------------------------------------------------------------------------------------------------------------------------------

Gross profit                                                      797,648         3,316,339          1,941,387         5,350,315

Selling, general and
  administrative expenses                                        (861,161)       (1,157,646)        (2,553,462)       (3,570,684)

Depreciation of fixed assets and
  amortization of licence and
  permit and land-use right                                      (186,674)         (186,580)          (555,869)         (548,687)

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

Research expenses                                                 (25,884)         (350,003)           (25,884)       (2,121,370)

New market development                                             (6,577)           (9,816)           (30,291)         (172,139)

Provision for doubtful debts                                       (3,257)           (5,533)           (44,668)          (86,082)

Loan interest expense                                                (862)           (6,586)            (5,251)          (62,601)

Stock-based compensation                                                -                 -                  -                 -
------------------------------------------------------------------------------------------------------------------------------------

Operating income (loss)                                          (286,766)         1,600,175        (1,274,038)       (1,212,473)

Interest income                                                     4,185            26,224             21,004            76,126
------------------------------------------------------------------------------------------------------------------------------------

Net income (loss) for the period                               $ (282,581)       $ 1,626,399      $ (1,253,034)     $ (1,136,347)
====================================================================================================================================

(Loss) per share
      Basic and diluted                                         $   (0.01)          $   0.08         $   (0.06)        $   (0.05)
====================================================================================================================================

Weighted average number of
  common shares outstanding
      Basic and diluted                                        20,344,652        20,334,000         20,337,590        20,334,000
====================================================================================================================================
</TABLE>

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


                                       5
<PAGE>

DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2003 and 2002
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                                                                                            <C>                     <C>

                                                                                                2003                    2002
-----------------------------------------------------------------------------------------------------------------------------

Cash flows from (used in) operating activities
   Net (loss) for the year                                                         $      (1,253,034)        $    (1,136,347)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
     - depreciation of fixed assets and amortization of
          licence and permit                                                                 719,100                 548,686
     - net write off of land-use right and fixed assets                                            -                   1,225
     - provision for doubtful debts                                                           44,668                  86,082
  Changes in non-cash working capital items:
     - accounts receivable                                                                  (383,032)             (2,630,750)
     - inventories                                                                           114,224                  (1,833)
     - prepaid expenses and deposits                                                         (35,716)                (13,686)
     - accounts payable and accrued liabilities                                             (157,987)                (35,920)
     - management fees payable - related parties                                                   -                (134,000)
-----------------------------------------------------------------------------------------------------------------------------

                                                                                            (951,777)             (3,316,543)
-----------------------------------------------------------------------------------------------------------------------------

Cash flows used in investing activities
  Purchase of fixed assets                                                                  (123,732)               (140,626)
  (Increase) decrease in restricted funds                                                    510,000               2,629,955
  Acquisition of Patent rights                                                                     -                (500,000)
  Acquisition of balance of Huaxin                                                                 -              (1,400,000)
  Refundable investment deposits                                                                   -                 400,000
  Recovery from Hepatitis B Vaccine Project                                                        -                 500,000
-----------------------------------------------------------------------------------------------------------------------------

                                                                                             386,268               1,489,329
-----------------------------------------------------------------------------------------------------------------------------


Cash flows from financing activities
Loan proceeds                                                                               (483,162)             (2,404,055)
Proceeds from issuance of shares                                                              12,500                   1,500
-----------------------------------------------------------------------------------------------------------------------------

                                                                                            (470,662)             (2,402,555)
-----------------------------------------------------------------------------------------------------------------------------

Foreign exchange (gain) loss on cash
  held in foreign currency                                                                    17,986                  (6,132)
-----------------------------------------------------------------------------------------------------------------------------

 Decrease in cash and cash equivalents                                                    (1,018,185)             (4,235,901)

Cash and cash equivalents, beginning of period                                             4,425,766               6,306,129
-----------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                           $       3,407,581        $      2,070,228
=============================================================================================================================
</TABLE>

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

                                       6
<PAGE>

DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2003
(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 , 2003,  and the results of operations
     and cash flows for the interim periods ended June 30, 2003 and 2002.

     The  accompanying  unaudited  consolidated  financial  statements have been
     prepared in accordance  with the  instruction for Form 10-Q 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, 2002
     included in the annual report previously filed on Form10-K.

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

2.   Restricted Funds
<TABLE>
<CAPTION>
<S>                                                                             <C>                     <C>


     ---------------------------------------------------------------------------------------------------------
                                                                             September 30,        December 31,
                                                                                      2003                2002
     ---------------------------------------------------------------------------------------------------------

     Cash and cash equivalents                                                 $ 3,407,581         $ 4,425,766
     Term deposits held as collateral against bank loans                                 -             510,000
     ---------------------------------------------------------------------------------------------------------

     Cash and short term securities                                            $ 3,407,581         $ 4,935,766
     =========================================================================================================
</TABLE>

3.   Accounts Receivable
<TABLE>
<CAPTION>
<S>                                                                                   <C>               <C>

     ---------------------------------------------------------------------------------------------------------
                                                                                 September 30,    December 31,
                                                                                          2003           2002
     ---------------------------------------------------------------------------------------------------------

     Trade receivables                                                           $ 1,526,776      $ 1,141,896
                                                                                    (323,694)        (279,018)
     Allowance for doubtful accounts
     ---------------------------------------------------------------------------------------------------------
                                                                                   1,203,082          862,878
                                                                                      84,327           86,167
     Other receivables
     ---------------------------------------------------------------------------------------------------------
                                                                                 $ 1,287,409        $ 949,045
     =========================================================================================================
</TABLE>

                                       7
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2003
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

4.   Inventories
<TABLE>
<CAPTION>
<S>                                                                                    <C>             <C>


     ---------------------------------------------------------------------------------------------------------
                                                                                  September 30,   December 31,
                                                                                           2003           2002
     ---------------------------------------------------------------------------------------------------------

     Raw materials                                                                    $ 163,076      $ 135,710
                                                                                         35,406         88,857
     Finished goods
                                                                                        895,570        983,710
     Work in progress
     ---------------------------------------------------------------------------------------------------------
                                                                                    $ 1,094,053    $ 1,208,277
     =========================================================================================================
</TABLE>

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

     -------------------------------------------- --------------------------------------------------------------
                                                                           September 30, 2003
                                                  --------------------------------------------------------------
                                                                               Accumulated            Net book
                                                             Cost             depreciation             value
     -------------------------------------------- ------------------- ---------------------- -------------------

     Motor vehicles                                        $ 140,406               $ 69,668            $ 70,738
     Office equipment and furniture                          414,240                202,353             211,887
     Leasehold improvements                                1,066,884                425,792             641,092
     Production and lab equipment                          2,148,949                833,358           1,315,591
     -------------------------------------------- ------------------- ---------------------- -------------------

                                                         $ 3,770,479            $ 1,531,171          $2,239,308
     ============================================ =================== ====================== ===================


     -------------------------------------------- --------------------------------------------------------------
                                                                            December 31, 2002
                                                  --------------------------------------------------------------
                                                                               Accumulated            Net book
                                                             Cost             depreciation             value
     -------------------------------------------- ------------------- ---------------------- -------------------

     Motor vehicles                                        $ 140,388               $ 50,103            $ 90,285
     Office equipment and furniture                          385,462                144,199             241,263
     Leasehold improvements                                1,065,313                336,503             728,810
     Production and lab equipment                          2,052,260                692,005           1,360,255
     -------------------------------------------- ------------------- ---------------------- -------------------

                                                         $ 3,643,423            $ 1,222,810          $2,420,613
     ============================================ =================== ====================== ===================
</TABLE>

     For the  nine  months  ended  September  30,  2003,  depreciation  expenses
     totalled  $305,038(2002  -  $277,260).  The  majority  of fixed  assets are
     located in China.


                                       8
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2003
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

6.   Due from Related Party - Hepatitis B Vaccine Project
<TABLE>
<CAPTION>
<S>                                                                             <C>                <C>

     ----------------------------------------------------------------- -------------------- --------------------
                                                                            September 30,        December 31,
                                                                                     2003                2002
     ----------------------------------------------------------------- -------------------- --------------------

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

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

                                                                                   $  100             $  100
     ================================================================= ==================== ====================
</TABLE>

     (a)  Pursuant to an  agreement  dated  October 6, 2000,  the  Company  paid
          $4,000,000  for the  acquisition  of  certain  assets  and  technology
          relating to the  production of Hepatitis B vaccine.  The vendor of the
          transaction  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  this  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.

     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 is  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 amount owing was not repaid
     on the due date and the Company is pursuing collection.



                                       9
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2003
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

7.   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  US$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  US$500,000  will be refunded to the Company if no patent  applications
     have been filed by January 14, 2005.

8.   Licence and permit

     ---------------------------------------------------------------------------
                                               September 30,   December 31,
                                                        2003           2002
     ---------------------------------------------------------------------------

     Original cost                               $,5,012,582     $5,012,582
     Accumulated amortization                      1,950,568      1,536,842
     ---------------------------------------------------------------------------

                                                 $ 3,062,014     $3,475,740
     ===========================================================================

     Amortization  expense for the licence and permit for the nine months  ended
     September 30, 2003 was $414,062 (2002 - $414,024)

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

         2003     (balance of the year)      $138,000
         2004                                $552,000
         2005                                $552,000
         2006                                $552,000
         2007                                $552,000

     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
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2003
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

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

     -------------------------------------------------------------------------------------------------------------
                                                                                   September 30,      December 31,
                                                                                            2003              2002
     -------------------------------------------------------------------------------------------------------------

     RMB 4,000,000, bearing interest at 3.394% per annum and due on February 26,
     2003. The loan was secured by the term deposit. $ - $ 483,162
     -------------------------------------------------------------------------------------------------------------

     Total                                                                                   $ -         $ 483,162
     =============================================================================================================
</TABLE>
     The  weighted  average  interest  rate was  3.394%  and 5.265% for the nine
     months ended September 30, 2003 and 2002.

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 September
          30,  2003,  $3.7  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 September 30, 2003,  the company has estimated  losses,  for tax
          purposes,  totalling  approximately  $8,200,000,  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.

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


          ---------------------------------------------------------------------------------------------------
                                                                                September 30,   December 31,
                                                                                         2003           2002
          ---------------------------------------------------------------------------------------------------
                  Tax losses carried forward                                      $ 2,790,000    $ 2,560,000
                  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                                        (3,914,400)    (3,684,400)
          ---------------------------------------------------------------------------------------------------
                                                                                  $         -   $          -
          ===================================================================================================
</TABLE>


                                       11
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2003
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

10.  Income Taxes (continued)

          A reconciliation  of the federal statutory income tax to the Company's
          effective  income tax rate,  for the three months ended  September 30,
          2003 and 2002 are as follows:

          ----------------------------------------------------------------------
                                                           2003           2002
          ----------------------------------------------------------------------
          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

          During the six months ended June 30, 2003 the Company  granted options
          to purchase  500,000  shares at a price of $0.68 per share,  at a time
          when the market price was $0.48 per share.

          The  following is a summary of the employee  stock option  information
          for the period ended September 30, 2003:
<TABLE>
<CAPTION>
<S>                                                                        <C>                  <C>

          ------------------------------------------------------------------------------------------------
                                                                                         Weighted Average
                                                                         Shares           Exercise Price
          ------------------------------------------------------------------------------------------------

          Options outstanding at December 31, 2001                      2,969,500            $   1.92
          Granted                                                         920,000            $   1.70
          Forfeited                                                      (598,500)           $   2.30
          Exercised                                                        (3,000)           $   0.50
          ------------------------------------------------------------------------------------------------

          Options outstanding at December 31, 2002                      3,288,000            $   1.82
          Granted                                                         500,000            $   0.68
          Forfeited                                                      (296,000)           $   1.67
          Exercised                                                       (25,000)           $   0.50
          ------------------------------------------------------------------------------------------------

          Options outstanding at September 30, 2003                     3,467,000              $ 1.68
          ================================================================================================
</TABLE>


                                       12
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2003
(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     1,716,500          1.69         $   0.55          1,566,500        $   0.54

     $1.01 - $2.00       440,500          3.57         $   1.70            440,500        $   1.70

     $2.01 - $3.00        60,000          1.11         $   2.50             60,000        $   2.50

     $3.01 - $4.00     1,275,000          2.12         $   3.13          1,275,000        $   3.13
                       -----------    -----------     ---------          ----------       --------
                       3,467,000          2.08         $   1.68          3,342,000        $   1.72
                       ===========    ===========     =========          ==========       ========

</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:
<TABLE>
<CAPTION>
<S>                                                                             <C>                  <C>

          ------------------------------------------------------------ -------------------- --------------------
                                                                           September 30,        September 30,
                                                                                    2003                 2002
          ------------------------------------------------------------ -------------------- --------------------
          Net (loss) for the period:
          - as reported                                                     $(1,253,034)         $(1,136,347)
          - pro-forma                                                       $(1,253,034)         $(1,136,347)
          ------------------------------------------------------------ -------------------- --------------------

          Basic and diluted (loss) per share:
          - as reported                                                     $(0.06)              $(0.05)
          - pro-forma                                                       $(0.06)              $(0.05)
          ------------------------------------------------------------ -------------------- --------------------

</TABLE>


                                       13
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2003
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

11.  Stock Options and Warrants (continued)

     (b)  Warrants

          Share purchase warrants outstanding as at September 30, 2003:

            Number           Underlying      Exercise Price
          of Warrants          Shares          Per Share        Expiry Date
          -----------          ------          ---------        -----------
             50,000            50,000            $1.70         November 15, 2004
          1,000,000*        1,000,000            $2.50         January 14, 2007


          * See Note 7

12.  Related Party Transactions

     (a)  The Company  incurred the following  expenses to a director (2002: two
          directors) of the Company:

     ---------------------------------------------------------------------------
                                              September 30,    September 30,
                                                       2003             2002
     ---------------------------------------------------------------------------

     Management fees                               $ 40,000         $172,500
     ===========================================================================


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

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

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

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

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



                                       14
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2003
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

12.  Related Party Transactions (continued)

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

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

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

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

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

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

          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, 2003,  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.

(c)  see Notes 6 and 7 also.



                                       15
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2003
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

13.  Commitments

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

        2003                                 $ 117,733
        2004                                   487,813
        2005                                   489,053
        2006                                   492,771
        2007                                   368,136
        2008 - 2009                            470,904
        ----------------------------------------------
        Total                               $2,426,410
        ==============================================

14.  Segmented Information

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

                                     September 30, 2003        December 31,2002
     ---------------------------------------------------------------------------
     ASSETS
     North America                           $3,225,045              $4,144,668
     China                                    7,624,810               9,020,882
     Others                                     930,876                 478,542
     ---------------------------------------------------------------------------
     Total                                  $11,780,731             $13,644,092
     ===========================================================================


     ---------------------------------------------------------------------------
                                     Nine months ended        Nine months ended
                                    September 30, 2003       September 30, 2002
     ---------------------------------------------------------------------------
     REVENUE
     North America                         $         -              $         -
     China                                   1,773,709                2,097,292
     Others                                  1,049,945                4,079,000
     ---------------------------------------------------------------------------
     Total                                 $ 2,823,654              $ 6,176,292
     ===========================================================================

15.  Comparative Figures

     Certain 2002 comparative  figures have been  reclassified to conform to the
     financial statement presentation adopted for 2003.


                                       16
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
     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-K for the fiscal year ended December 31, 2002.

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.

During the third quarter,  the Company reviewed all facets of its EPO production
and decided not to continue  with the EPO  production  using  bioreactors.  As a
result of our review,  the Company  doubled the  capacity of the EPO  production
using  roller  bottle in order to  fulfill  demand  in China and the  developing
countries.  In addition,  the Company has  undertaken to obtain more data on the
EPO cell line using roller bottle in accordance with the legislated requirements
in Europe and the United States.  This will upgrade our  registration  documents
and  positively  differentiate  Dragon  from  other low price EPO  producers  in
developing  countries  where the  Company,  through its  licensees,  meets tough
competition.  These developing  countries requires more documentation  regarding
the safety of the 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.


                                       17
<PAGE>

RESULTS OF OPERATIONS

REVENUES.  Revenue  is  generated  from the sale of EPO in China by  Huaxin  and
throughout the developing world by Biotrade.  Revenue for the three-month period
ending  September  30,  2003  was  $1,151,646  compared  to  $3,777,326  for the
three-month period ending September 30, 2002. Sales in and outside of China were
$742,467  and  $409,179,  respectively  during  the  three-month  period  ending
September 30, 2003.  Sales during the  three-month  period ending  September 30,
2002 were $745,326 in China and $3,032,000  outside of China. The overseas sales
during the three-month  period ending September 30, 2002 included  delivery of a
$3,000,000  bulk order to be used by the  purchaser  for new drug  research  and
development.  Cost of sales for the  three-months  ended  September  30, 2003 of
$353,998 is attributed to the production costs of the  pharmaceutical  products.
The cost of sales for the  three-months  ended  September 30, 2002 was $460,987.
The gross profit margin was 69% for the three-month  period ending September 30,
2003 and 88% for the  three-month  period ended  September 30, 2002.  The profit
margin  decreased  during the three months ended  September 30, 2003 because the
Company decided to sell and sold some product with short-term  expiry dates at a
reduced  price and  because  there  was not a large  bulk  order in the  current
periodRevenue for the nine-month period ending September 30, 2003 was $2,823,654
compared to $6,176,292  for the  nine-month  period  ending  September 30, 2002.
Sales in and  outside  of China were  $1,773,708  and  $1,049,946,  respectively
during the  nine-month  period  ending  September  30,  2003.  Sales  during the
nine-month  period  ending  September  30,  2002  were  $2,097,292  in China and
$4,079,000  outside of China.  The overseas sales during the  nine-month  period
ending  September  30, 2002 included  delivery of a $3,700,000  bulk order to be
used by the purchaser for new drug research and development.  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 September 30, 2003 was $4,185 compared to $26,224
for the  three-month  period ended  September 30, 2002.  Interest income for the
nine-months  period ended September 30, 2003 was $21,004 compared to $76,126 for
the nine-month period ended September 30, 2002.

Interest  income has  decreased as interest  rates have declined and as the cash
balance has decreased to fund the Company's operations.

EXPENSES. Total operating expenses for the three-months ended September 30, 2003
were $1,084,414.  The major expenses  incurred in the third quarter of 2003 were
selling expenses of $368,380  representing 34% of total expenses.  The remaining
major expense items are represented by administrative expenses.

Significant  operating  expenses for the  three-months  ended September 30, 2003
included rent of $68,680,  salaries and benefits of $204,960,  $42,964 in travel
costs and legal fees of $47,620.  No management  fees were paid to directors for
services during the third quarter of 2003.

Other  significant  expenses for the third quarter  include the  depreciation of
fixed assets and amortization of license and permit of $186,674.

Comparatively, total operating expenses for the three-months ended September 30,
2002 were $1,716,164.  The major expenses  incurred in the third quarter of 2002
were research and development  expenses of $350,000 and the selling  expenses of
$459,199   representing   20%  and   27%  of   total   expenses,   respectively.
Administrative expenses represent the remaining major expense items.



                                       18
<PAGE>

Significant  operating  expenses for the  three-months  ended September 30, 2002
included consulting fees of $130,535, loan interest of $6,586, rent of $121,375,
salaries and benefits of $143,278,  $90,017 in travel costs and management  fees
of $76,451.  Management  fees  include  $57,500  incurred to two  directors  for
services during the third quarter of 2002.

Other   significant   expenses  for  the  third  quarter  of  2002  include  the
depreciation of fixed assets and amortization of license and permit and land-use
rights of $186,580.

Total  operating  expenses for the  nine-months  ended  September  30, 2003 were
$3,215,425.  The major expense  incurred in the nine-months  ended September 30,
2003 was selling expense of $1,161,719  representing 36% of total expenses.  The
remaining expense items are primarily administrative expenses.

Significant  operating  expenses for the  nine-months  ended  September 30, 2003
included rent of $280,796, salaries and benefits of $594,938, $143,357 in travel
costs and a bad debts provision of $44,668. Management fees of $40,000 were paid
to a director for services during the nine-months ended September 30, 2003.

Other significant  expenses for the nine-months ended September 30, 2003 include
the  depreciation  of fixed  assets and  amortization  of license  and permit of
$555,869.

Comparatively,  total operating expenses for the nine-months ended September 30,
2002, were  $6,562,788.  The major expenses  incurred in the  nine-months  ended
September 30, 2002 were research and development  expenses of $2,121,370 and the
selling  expenses  of  $1,410,306  representing  32% and 21% of total  expenses,
respectively. Administrative expenses represent the remaining expense items.

Significant  operating  expenses for the  nine-months  ended  September 30, 2002
included  bad debt write offs of  $86,082,  consulting  fees of  $441,815,  loan
interest  of $62,601,  rent of  $292,767,  salaries  and  benefits of  $409,234,
$352,507 in travel costs and  management  fees of  $1,209,087.  Management  fees
include $172,500 paid to two directors for services during the nine-months ended
September 30, 2002.

Other significant  expenses for the second half of 2002 include the depreciation
of fixed assets of and amortization of license and permit and land-use rights of
$548,687 and new market development of $172,139.

Overall, expenditures have decreased in 2003 from 2002 levels as the Company has
streamlined operations,  closed its Beijing and Hong Kong representative offices
and diligently pursued cutting costs in all areas, where practical.

NET AND COMPREHENSIVE  LOSS.  Dragon had a net loss and a comprehensive  loss of
$282,581 for the three-month period ending September 30, 2003 compared to income
of $1,626,399 for the same period last year.

The Company's net and comprehensive loss of $1,253,034 for the nine-month period
ending September 30, 2003 compared to $1,136,347 for the same period last year.


                                       19
<PAGE>

DUE FROM RELATED PARTY - HEPATITIS B VACCINE PROJECT.  Dr. Longbin Liu exercised
his right to repurchase the Hepatitis B vaccine project from the Company for the
original  purchase price of $4 million,  of which $500,000 has been paid and the
balance of $3.5 million,  plus interest  accruing at 6% per annum from September
2002,  was due  September  5,  2003.  Dr. Liu paid  $500,000  at the time of the
repurchase  but did not pay the balance of $3.5 million  plus accrued  interest,
due September 5, 2003.

The Company fully intends to pursue  collection of the full amount owing and has
commenced  legal action.  The Board of Directors has removed Dr. Liu as Chairman
of the Board of Directors  and has  demanded  that he step down as a Director of
the Company. Dr. Liu has declined to step down as a Director at this time.

BASIC AND DILUTED NET LOSS PER SHARE

The  Company's net loss per share has been computed by dividing the net loss for
the  period  by  the  weighted  average  number  of  shares  outstanding  during
three-month and nine-month  periods ended September 30, 2003. The loss per share
for the  three-month  period ended September 30, 2003 was $0.01 and the loss per
share for the nine-month period ended September 30, 2003 was $0.06. Common stock
issuable  upon the  exercise of common stock  options and common stock  warrants
have been excluded from the net loss per share  calculations  as their inclusion
would be anti-dilutive.

LIQUIDITY AND CAPITAL RESOURCES

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

As of September 30, 2003,  the Company had  $3,407,581 in cash  available.  This
cash, the $1,287,409 in accounts  receivable and anticipated  sales will be used
to fund the ongoing operations and research and development. Working capital was
$4,611,892 at September 30, 2003.

During the nine-months  ended September 30, 2003, the Company incurred losses of
$1,253,034  and the Company  will  continue to incur  losses until sales for its
products  increase.  The Company will  continue to fund its  operations  through
working capital.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

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

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


                                       20
<PAGE>


The following  table sets forth the  percentage of the Company's  administrative
expense by  currency  for the years  ended  December  31,  2001 and 2002 and the
nine-months ended September 30, 2003 and 2002.

By Currency

                                          December 31,        December 31,
                                          2001                2002

U.S. Dollar                               31%                 27%

Canadian Dollar                           12%                 46%

Renminbi Yuan                             57%                 27%

Total                                     100%                100%


                                          September 30,       September 30,
                                          2002                2003

U.S. Dollar                               26%                 12%

Canadian Dollar                           47%                 64%

Renminbi Yuan                             27%                 24%

Total                                     100%                100%

Such  administrative  expense by currency may change from time to time. Further,
the Company  incurred  expenses in China of $1,867,597  and  $1,983,450  for the
nine-months ended September 30, 2003 and 2002,  respectively,  all of which were
paid in RMB.

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

ITEM 4. 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
first 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.


                                       21
<PAGE>

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 is  currently  in the process of
serving the complaint against the defendant.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

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 FROM 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 8K.



                                       22
<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:   November 14, 2003                    /S/ Matthew Kavanagh
                                              ----------------------------------
                                              Matthew Kavanagh
                                              Director of Finance and Corporate
                                              Compliance and Corporate Secretary
                                              (duly authorized Officer and
                                              Principal Financial Officer)









                                       23