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

                                   Form 10-QSB

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

        For the quarterly period ended September 30, 2004

                                       OR

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

                  For the transition period from _____ to _____

                         Commission file number 0-27937

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



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



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

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

                  (Former address if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be  filed by  Section  13 or 15(d) of the  Exchange  Act of 1934  during  the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days. Yes [X]   No [ ]


Number  of  shares  of  common  stock  outstanding  as of  September  30,  2004:
20,582,000




<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statement


                      Consolidated Financial Statements
                     (Unaudited - Prepared by Management)
                     (Expressed in U.S. Dollars)
                      September 30, 2004

                      Index

                      Consolidated Balance Sheets

                      Consolidated Statements of Stockholders' Equity

                      Consolidated Statements of Operations

                      Consolidated Statements of Cash Flows

                      Notes to Consolidated Financial Statements


                                       2
<PAGE>

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

ASSETS

Current
  Cash and short term securities                 $    2,383,072    $   3,126,667
  Accounts receivable                                 1,571,659        1,265,676
  Inventories                                         1,127,597        1,090,464
  Due from director                                     500,100                -
  Prepaid and deposits                                  106,855          139,595
--------------------------------------------------------------------------------

Total current assets                                  5,689,283        5,622,402

Fixed assets                                          1,829,946        2,089,352

Due from related party - Hepatitis B vaccine project          -              100

Patent rights - related party                                 -          500,000

Licence and permit and other assets                   2,740,193        2,924,198
--------------------------------------------------------------------------------

Total assets                                     $   10,259,422   $   11,136,052
================================================================================


LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Current
  Accounts payable and accrued liabilities            1,341,471        1,428,257
--------------------------------------------------------------------------------

Commitments (Note 12)

Stockholders' Equity

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

Additional paid in capital                           26,768,750       26,708,870

Accumulated other comprehensive (loss)                  (32,275)        (32,007)

Accumulated deficit                                 (17,839,106)    (16,989,530)
--------------------------------------------------------------------------------

Total stockholders' equity                             8,917,951       9,707,795
--------------------------------------------------------------------------------

Total liabilities and stockholders' equity       $    10,259,422   $  11,136,052
================================================================================

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

                                       3
<PAGE>



DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)

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

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

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

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

- net (loss) for the year                         -          -                -  (1,994,735)   (1,994,735)          -    (1,994,735)
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive (loss)                                                            $(1,991,731)
                                                                                ============
Balance, December 31, 2003               20,462,000    $ 20,462    $ 26,708,870               $(16,989,530)   $(32,007)   $9,707,795
================================================================================            ========================================
</TABLE>
The accompanying notes are an integral part of these financial statements.



                                       4
<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>           <C>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           Accumulated
                                                                                    Compre-                      other         Total
                                              Common stock           Additional     hensive                    compre-        Stock-
                                         ---------------------          paid-in      income       Deficit      hensive      holders'
                                             Shares     Amount          capital      (loss)   accumulated       income        equity
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2003                20,462,000   $20,462     $ 26,708,870          -   $(16,989,530)    $(32,007)   $9,707,795

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

Components of comprehensive income (loss)
 - foreign currency translation                    -         -                -        (268)            -         (268)        (268)

- net (loss) for the period                        -         -                -    (849,576)     (849,576)           -     (849,576)
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive (loss)                                                            $  (849,844)
                                                                                ============
Balance, September 30, 2004                20,582,000   $20,582    $ 26,768,750               $(17,839,106)   $(32,275)   $8,917,951
================================================================================            ========================================
</TABLE>
The accompanying notes are an integral part of these financial statements.


                                       5
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Consolidated Statement of Operations
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
<S>          <C>                                              <C>                   <C>                <C>             <C>
-----------------------------------------------------------------------------------------------------------------------------------
                                                          Three Months         Three Months       Nine Months        Nine Months
                                                                 Ended                Ended             Ended              Ended
                                                          September 30,        September 30,     September 30,    September 30,
                                                                  2004                 2003              2004              2003
-----------------------------------------------------------------------------------------------------------------------------------

Sales                                                       $ 1,057,254        $ 1,151,646        $ 2,843,669       $ 2,823,654

Cost of sales                                                   281,536            353,998            723,033           882,267
-----------------------------------------------------------------------------------------------------------------------------------

Gross profit                                                    775,718            797,648          2,120,636         1,941,387

Selling, general and
  administrative expenses                                     (810,870)           (861,160)        (2,273,807)       (2,553,462)

Depreciation of fixed assets and
  amortization of licence and
  permit                                                      (179,612)           (186,674)          (538,466)         (555,869)

Research and development expenses                                   (4)            (25,884)          (152,011)          (25,884)

New market development                                          (1,588)             (6,577)           (13,993)          (30,291)

Provision for doubtful debts                                         -              (3,257)           (20,816)          (44,668)

Loan interest expense                                             (638)               (862)            (2,154)           (5,251)

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

Operating income (loss)                                       (216,994)           (286,766)          (880,611)       (1,274,038)

Interest income                                                  4,846               4,185             31,035            21,004
-----------------------------------------------------------------------------------------------------------------------------------

Net income (loss) for the period                              (212,148)         $ (282,581)          (849,576)     $ (1,253,034)
===================================================================================================================================

(Loss) per share
      Basic and diluted                                      $   (0.01)          $   (0.01)         $   (0.04)        $   (0.06)
===================================================================================================================================

Weighted average number of
  common shares outstanding
      Basic and diluted                                     20,582,000          20,344,652         20,534,847        20,337,590
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.


                                       6
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2004 and 2003
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
<S>         <C>                                                                                 <C>                    <C>
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                2004                    2003
-----------------------------------------------------------------------------------------------------------------------------

Cash flows from (used in) operating activities
   Net (loss) for the year                                                         $       (849,576)        $    (1,253,034)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
     - depreciation of fixed assets and amortization of
          licence and permit                                                                 708,024                 719,100
     - net write off of land-use right and fixed assets                                                                    -
     - provision for doubtful debts                                                           20,816                  44,668
  Changes in non-cash working capital items:
     - accounts receivable                                                                 (326,799)               (383,032)
     - inventories                                                                          (37,133)                 114,224
     - prepaid expenses and deposits                                                          32,739                (35,716)
     - accounts payable and accrued liabilities                                             (86,786)               (157,987)
     - management fees payable - related parties                                                   -                       -
-----------------------------------------------------------------------------------------------------------------------------

                                                                                           (538,715)               (951,777)
-----------------------------------------------------------------------------------------------------------------------------

Cash flows used in investing activities
  Purchase of property and equipment                                                        (34,655)               (123,732)
  (Increase) in other assets                                                               (230,000)                       -
  (Increase) decrease in restricted funds                                                          -                 510,000
-----------------------------------------------------------------------------------------------------------------------------

                                                                                           (264,655)                 386,268
-----------------------------------------------------------------------------------------------------------------------------


Cash flows from financing activities
Loan proceeds                                                                                                      (483,162)
Proceeds from issuance of shares                                                              60,000                  12,500
-----------------------------------------------------------------------------------------------------------------------------

                                                                                              60,000               (470,662)
-----------------------------------------------------------------------------------------------------------------------------

Foreign exchange (gain) loss on cash
  held in foreign currency                                                                     (225)                  17,986
-----------------------------------------------------------------------------------------------------------------------------

 Decrease in cash and cash equivalents                                                     (743,595)             (1,018,185)

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

Cash and cash equivalents, end of period                                           $       2,383,072        $      3,407,581
=============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.

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

1.   Basis of Presentation

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

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

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

2.   Proposed Business Combination

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

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

3.   Accounts Receivable

     ---------------------------------------------------------------------------
                                                    September 30,   December 31,
                                                             2004           2003
     ---------------------------------------------------------------------------

     Trade receivables                                $ 1,849,101    $ 1,524,465
                                                        (326,968)      (298,284)
     Allowance for doubtful accounts
     ---------------------------------------------------------------------------
                                                        1,522,133      1,226,181
     Other receivables                                     49,526         39,495
     ---------------------------------------------------------------------------
                                                      $ 1,571,659    $ 1,265,676
     ===========================================================================

                                       8
<PAGE>
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2004
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------

4.   Inventories

     ---------------------------------------------------------------------------
                                                   September 30,    December 31,
                                                            2004           2003
     ---------------------------------------------------------------------------

         Raw materials                                  $ 86,679       $ 129,650
                                                         110,955         107,833
         Finished goods
                                                         929,962         852,981
         Work in progress
     ---------------------------------------------------------------------------
                                                     $ 1,127,597     $ 1,090,464
     ===========================================================================

5.   Due from director

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

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

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

6.   Property and equipment

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

     Motor vehicles                   $   126,444    $    82,818    $     43,626
     Office equipment and furniture       420,973        276,644         144,329
     Leasehold improvements             1,089,231        510,393         578,838
     Production and lab equipment       1,639,822        838,754         801,068
     Idle equipment                       555,339        293,254         262,085
     ---------------------------------------------------------------------------
                                      $ 3,831,809    $ 2,001,863     $ 1,829,946
     ===========================================================================

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

6.   Property and equipment (continued)

     ---------------------------------------------------------------------------
                                                     December 31, 2003
                                         ---------------------------------------
                                                     Accumulated        Net book
                                          Cost      depreciation           value
     ---------------------------------------------------------------------------

     Motor vehicles                        $140,423     $ 75,996        $ 64,427
     Office equipment and furniture         414,759      221,076         193,683
     Leasehold improvements               1,089,006      418,888         670,118
     Production and lab equipment         1,595,450      708,841         886,609
     Idle equipment                         555,339      280,824         274,515
     ---------------------------------------------------------------------------
                                        $ 3,794,977    $ 1,705,625   $ 2,089,352
     ===========================================================================

     For  the  nine-months  ended  September  30,  2004,  depreciation  expenses
     totalled  $294,061  (2003 -  $305,038).  The  majority of fixed  assets are
     located in China.

7.   Due from Related Party - Hepatitis B Vaccine Project

     ---------------------------------------------------------------------------
                                                   September 30,    December 31,
                                                            2004            2003
     ---------------------------------------------------------------------------

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

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

     (a)  Pursuant to an  agreement  dated  October 6, 2000,  the  Company  paid
          $4,000,000  for the  acquisition  of  certain  assets  and  technology
          relating to the  production of Hepatitis B vaccine.  The vendor of the
          transaction  was a company  named  Alphatech  Bioengineering  Limited,
          incorporated  in  Hong  Kong,  with  two  shareholders  who  are  both
          directors of the Company.

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

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

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


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

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

     In April 2002,  the  Company  decided not to pursue the project and Dr. Liu
     has repurchased the project on the agreed terms.

     The amount  owing by Dr. Liu to the  Company  was  unsecured.  The  Company
     chose, given the significant  amount involved and the lack of security,  to
     conservatively value the amount owing and set up a provision in fiscal 2002
     for the full amount,  less a nominal  amount of $100.  Dr. Liu defaulted on
     repayment in September 2003 but subsequently  renegotiated  repayment terms
     with the Company (see note 5).

8.   Patent Rights - Related Party

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

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

9.   Licence and permit and other assets

     ---------------------------------------------------------------------------
                                                  September 30,     December 31,
                                                          2004              2003
     ---------------------------------------------------------------------------
     Original cost                                  $5,012,582        $5,012,582
     Accumulated amortization                      (2,502,389)       (2,088,384)
     ---------------------------------------------------------------------------

     Licence and permit                              2,510,193         2,924,198
     Other assets                                      230,000                 -
     ---------------------------------------------------------------------------
                                                   $ 2,740,19        $ 2,924,198
     ===========================================================================

     Amortization  expense for the licence and permit for the nine-months  ended
     September 30, 2004 was $413,963 (2003 - $414,062).

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

9.   Licence and permit and other assets (continued)

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

         2004     (balance of the year)                       $138,000
         2005                                                 $552,000
         2006                                                 $552,000
         2007                                                 $552,000
         2008                                                 $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.  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,  2004,  $3.9  million  of  unremitted  earnings   attributable  to
          international  companies were considered to be indefinitely  invested.
          No  provision  has been made for taxes  that might be payable if these
          earnings were remitted to the United States.  The Company's  intention
          is  to  reinvest  these  earnings  permanently  or to  repatriate  the
          earnings when it is tax effective to do so. It is not  practicable  to
          determine the amount of incremental  taxes that might arise were these
          earnings to be remitted.

          As at September 30, 2004,  the Company has estimated  losses,  for tax
          purposes,  totalling approximately  $10,518,000,  which may be applied
          against future taxable income. The potential tax benefits arising from
          these losses have not been recorded in the financial  statements.  The
          Company  evaluates its valuation  allowance  requirements on an annual
          basis based on projected future operations.  When circumstances change
          and  this  causes  a  change  in  management's   judgement  about  the
          realizability of deferred tax assets,  the impact of the change on the
          valuation allowance is generally reflected in current income.

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

10.  Income Taxes (continued)

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

          ----------------------------------------------------------------------
                                                    September 30,   December 31,
                                                            2004            2003
          ----------------------------------------------------------------------

          Tax losses carried forward                 $ 3,576,000     $ 3,237,000
          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                  (4,700,400)     (4,361,400)
          ----------------------------------------------------------------------
                                                     $         -     $         -
          ======================================================================

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

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

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

11.  Stock Options and Warrants

     (a)  Stock Options Plans

          There were no options  granted during the nine months ended  September
          30, 2004.

          The  following is a summary of the employee  stock option  information
          for the period ended September 30, 2004:

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

          Options outstanding at December 31, 2002    3,288,000         $   1.82
          Granted                                       500,000         $   0.68
          Forfeited                                 (1,061,000)         $   0.90
          Exercised                                   (128,000)         $   0.50
          ----------------------------------------------------------------------

          Options outstanding at December 31, 2003    2,599,000         $   2.04
          Forfeited                                    (482,500)        $   1.96
          Exercised                                    (120,000)        $   0.50
          ----------------------------------------------------------------------

          Options outstanding at September 30, 2004   1,996,500         $   2.16
          ======================================================================

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

11.  Stock Options and Warrants (continued)
<TABLE>
<CAPTION>
<S>     <C>             <C>            <C>             <C>             <C>              <C>


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

     $0.01 - $1.00       588,500      2.13          $   0.61            563,500        $   0.60

     $1.01 - $2.00       308,000      2.57          $   1.70            308,000        $   1.70

     $2.01 - $3.00        25,000      0.11          $   2.50             25,000        $   2.50

     $3.01 - $4.00     1,075,000      1.12          $   3.13          1,075,000        $   3.13
                     ------------ --------        ----------          ---------       ----------

                       1,996,500      1.63          $   2.16          1,971,500        $   2.17
                     ============ =========        =========          =========       ==========
</TABLE>

          The  Company  accounts  for  its  stock-based   compensation  plan  in
          accordance  with APB Opinion No. 25,  under which no  compensation  is
          recognized in connection with options  granted to employees  except if
          options  are  granted  with a strike  price  below  fair  value of the
          underlying stock. The Company adopted the disclosure requirements SFAS
          No. 123,  Accounting for Stock-Based  Compensation.  Accordingly,  the
          Company is required to  calculate  and present the pro forma effect of
          all awards granted.  For disclosure  purposes,  the fair value of each
          option  granted to an employee  has been  estimated  as of the date of
          grant using the Black-Scholes  option pricing model with the following
          assumptions:  risk-free  interest  rate of 5.5%,  dividend  yield  0%,
          volatility of 90%, and expected lives of  approximately  0 to 5 years.
          Based on the  computed  option  values and the  number of the  options
          issued, had the Company recognized compensation expense, the following
          would have been its effect on the Company's net loss:

          ----------------------------------------------------------------------
                                      September 30, 2004    September  30,  2003
          ----------------------------------------------------------------------

          Net (loss) for the period:
          - as reported                      $ (849,576)            $(1,253,034)
          - pro-forma                        $ (849,576)            $(1,253,034)
          ----------------------------------------------------------------------

          Basic and diluted (loss) per share:
          - as reported                          $(0.04)                 $(0.06)
          - pro-forma                            $(0.04)                 $(0.06)
          ----------------------------------------------------------------------

     (b)  Warrants

          Share purchase warrants outstanding as at September 30, 2004:

              Number      Underlying       Exercise Price
           of Warrants      Shares           Per Share         Expiry Date

              50,000        50,000             $1.70           November 15, 2004

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

12.  Related Party Transactions

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

          ----------------------------------------------------------------------
                                              September 30,        September 30,
                                                       2004                 2003
          ----------------------------------------------------------------------

          Management fees                                $-              $40,000
          ======================================================================

     (b)  Pursuant to an agreement  dated January 14, 2002, the Company  entered
          into a Project Development Agreement with Dr. Longbin Liu ("Dr. Liu"),
          a director of the Company (and President and CEO of the Company at the
          time of the  transaction)  to continue the research and development of
          G-CSF and Insulin for the  Company.  The Company will make payment for
          the development of G-CSF as follows:

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

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

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

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

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

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

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

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

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

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

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

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

12.  Related Party Transactions (continued)

          For both the G-CSF and Insulin Projects:

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

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

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

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

13.  Commitments

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

        2004 (balance of the year)                         $ 125,9011
        2005                                                  504,954
        2006                                                  509,035
        2007                                                  372,253
        2008                                                  326,205
        2009                                                  144,738
        -------------------------------------------------------------

        Total                                             $ 1,983,086
        =============================================================

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

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

14.  Segmented Information

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

                                      September 30, 2004        December 31,2003
     ---------------------------------------------------------------------------
     ASSETS
     North America                            $2,754,530              $3,156,953
     China                                     6,963,686               7,079,241
     Other                                       541,206                 899,858
     ---------------------------------------------------------------------------
     Total                                  $ 10,259,422             $11,136,052
     ===========================================================================


     ---------------------------------------------------------------------------
                                      Nine months ended        Nine months ended
                                     September 30, 2004       September 30, 2003
     ---------------------------------------------------------------------------
     REVENUE
     North America                              $     -                  $     -
     China                                    2,051,164                1,773,709
     Other                                      792,485                1,049,945
     ---------------------------------------------------------------------------
     Total                                  $ 2,843,669              $ 2,823,654
     ===========================================================================

15.  Comparative Figures

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

                                       17

<PAGE>

Item 2.   Management's Discussion and Analysis and Plan of Operations

The  following  discusses  the  Company's  financial  condition  and  results of
operations based upon the Company's consolidated financial statements which have
been prepared in accordance with generally accepted  accounting  principles.  It
should be read in conjunction  with the Company's  financial  statements and the
notes thereto and other  financial  information  included in the Company's  Form
10-KSB for the fiscal year ended December 31, 2003.

Overview

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

On  July  27,  1999,   Dragon   acquired  a  75%  interest  in  Nanjing   Huaxin
Bio-pharmaceutical  Co. Ltd.  ("Huaxin"),  which  manufactures EPO in China. The
Company  increased the  efficiencies  in the production of EPO and  successfully
achieved  commercial  production  during the last quarter of calendar  1999.  In
January 2002 the Company purchased the balance of Huaxin for $1,400,000.

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

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

Recent Events

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

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

Oriental Wave Group currently has two Chinese State Food and Drug administration
("SFD&A")  certified GMP production  facilities in operations:  a pharmaceutical
facility  with a capacity of  producing

                                       18
<PAGE>
1.6  billion  tablets  and  capsules,  80  million  injectables  and 10  million
suppositories  per year and a  chemical  plant  producing  clavulanic  acid by a
fermentation process. A third facility for the production,  by fermentation,  of
7-ACA, an intermediate for Cephalosporin antibiotics started pilot production on
July 1,  2004.  Oriental  Wave  Group  has a total  of  approximately  290  drug
approvals from the SFD&A of which about 35, mainly  anti-infectious  drugs, were
actively marketed in China in 2003.

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

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

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

In exchange,  Dr Liu will pay to the Company the  $3,710,000  in  principal  and
interest  owing under the  Hepatitis B Project as well as reimburse  the Company
$1,330,000  that  had  been  paid  previously   under  the  Patent  and  Project
Development  agreements.  All  amounts  are due on  December  31,  2004  and the
warrants  granted to Dr. Liu under the Patent  Development  agreement  have been
cancelled. Dr. Liu has agreed to provide 2,600,000 common shares of the Company,
to be held in escrow,  as  security  for the  amounts  owing of which  2,231,000
common  shares of the  Company  have been placed in escrow as of  September  30,
2004.

Results of Operations

     Sales. Sales are generated from the sale of EPO in China by our subsidiary,
Nanjing Huaxin,  and throughout the developing  world by our subsidiary,  Allwin
Biotrade.  Revenues for the  three-month  period ending  September 30, 2004 were
$1,057,254  compared to $1,151,646 for the three-month  period ending  September
30, 2003. Sales in and outside of China were $691,669 and $365,585, respectively
during the  three-month  period  ending  September  30,  2004.  Sales during the
three-month period ending September 30, 2003 were $742,467 in China and $409,179
outside of China.  Sales for the nine-month period ended September 30, 2004 were
$2,843,669  compared to $2,823,654 for the nine-month period ended September 30,
2003. Sales in and outside of China were $2,051,184 and $792,485,  respectively,
during  the  nine-month  period  ended  September  30,  2004.  Sales  during the
nine-month  period  ended  September  30,  2003  were  $1,773,708  in China  and
$1,049,946  outside of China.  Sales in China  increased  during the  nine-month
period ended September 30, 2004 due to our implementing a more  commission-based
sales  compensation  plan during the latter part of the year ended  December 31,
2003.  During the first part of the nine months ended  September  30, 2003,  our
compensation  structure was more salary-based  which did not provide  sufficient
incentives to our sales force.  During the nine months ended September 30, 2004,
sales outside of China decreased  compared to the same period of the prior year.

                                       19
<PAGE>
During the nine months ended  September  30,  2003,  because the  shelf-life  of
certain of our EPO product inventory was about to expire, we decreased the price
of this product in order to encourage sales. Although sales increased during the
nine months ended  September 30, 2003,  the price  reduction  reduced our profit
margin.

     Cost of sales for the three-months  ended September 30, 2004 of $281,536 is
attributed to the production costs of the pharmaceutical  products.  The cost of
sales for the  three-months  ended  September 30, 2003 was  $353,998.  The gross
profit margin was 73% for the three-month  period ending  September 30, 2004 and
68% for the  three-month  period ended September 30, 2003. Cost of sales for the
nine-months  ended  September  30, 2004 and September 30, 2003 were $723,033 and
$882,267.  The gross  profit  margin  was 75% for the  nine-month  period  ended
September 30, 2004 and 69% for the nine-month  period ended  September 30, 2003.
The lower profit  margin  during the nine month period ended  September 30, 2003
reflects  price  reductions  in sales price for certain of our products  that we
were required to sell due to the anticipated  expiration  dates of such products
reducing  the  gross  margin  to 69% from the  normal  overall  gross  margin of
75%-80%.

     Interest  income is related  primarily to interest  earned on cash received
from the private  placement of common stock received during the third quarter of
2001 and subsequent  sales.  Interest  income for the  three-month  period ended
September  30,  2004 was $4,846  compared to $4,185 for the  three-month  period
ended  September  30,  2003.  Interest  income for the  nine-month  period ended
September  30, 2004 was $31,035  compared to $21,004 for the  nine-month  period
ended September 30, 2003. Interest income increased during the nine months ended
September  30, 2004 as compared to the same period for the prior year  primarily
due to a marginally increase in interest rates.

     Expenses.  Total  operating  expenses  for  the  three-month  period  ended
September   30,  2004  were  $992,712   consisting   of  selling,   general  and
administrative expenses of $810,870,  depreciation and amortization of $179,612,
research expenses of $4, new market  development of $1,588, and interest expense
of $638. Total operating  expenses for the nine-month period ended September 30,
2004 were $3,001,246, consisting of selling, general and administrative expenses
of $2,273,807,  depreciation and amortization of $538,466,  research expenses of
$152,011,  new market development of $13,993,  provision for bad debt of $20,816
and interest expense of $2,154.

     Comparatively,  total operating  expenses for the three-month  period ended
September  30,  2003  were  $1,084,414   consisting  of  selling,   general  and
administrative expenses of $861,160,  depreciation and amortization of $186,674,
research expenses of $25,884,  new market  development of $6,577,  provision for
bad debt of $3,257 and interest  expense of $862.  Total operating  expenses for
the nine-month  period ended  September 30, 2003 were  $3,215,425  consisting of
selling,  general and  administrative  expenses of $2,553,462,  depreciation and
amortization of $555,869,  research expenses of $25,884,  new market development
of $30,291, provision for bad debt of $44,668 and interest expense of $5,251.

     Selling,  general and  administrative  expenses  for the three months ended
September 30, 2004 primarily consisted of $369,093 in selling expenses,  rent of
$85,775, salaries and benefits of $209,541,  travel costs of $50,051,  insurance
of $10,927  and legal  fees of  $17,808.  Selling,  general  and  administrative
expenses for the nine months ended  September  30, 2004  primarily  consisted of
$997,423  in selling  expenses,  rent of  $253,876,  salaries  and  benefits  of
$600,012,  travel  costs of  $133,934,  insurance  of $34,832  and legal fees of
$56,526.

     Comparatively,  selling,  general and administrative expenses for the three
months  ended  September  30, 2003  primarily  consisted  of $368,380 in selling
expenses,  rent of $68,680,  salaries and benefits of $204,960,  travel costs of
$42,964,  insurance of $12,293 and legal fees of $47,620.  Selling,

                                       20
<PAGE>
general and administrative expenses for the nine months ended September 30, 2003
primarily  consisted  of  $1,161,719  in  selling  expenses,  rent of  $280,796,
salaries  and  benefits of  $594,938,  travel  costs of  $143,377,  insurance of
$50,001   and  legal  fees  of  $59,268.   Included  in  selling,   general  and
administrative  expenses were  management fees of $40,000 paid to a director for
services. No similar payment was made during the nine months ended September 30,
2004.

     Overall, selling, general and administrative expenses decreased by $164,296
during the nine months ended  September 30, 2004 as compared for the nine months
ended September 30, 2003.  Selling expenses decreased as a result of sales staff
reductions and  implementation  of a  commission-based  compensation  structure.
Other  reductions  occurred in  administrative  salaries as our personnel levels
have  decreased as we  streamlined  operations,  rent through the closure of our
Beijing and Hong Kong  representative  offices and  diligently  pursued  cutting
costs in all areas where  practical.  In addition,  during the nine months ended
September 30, 2003 we incurred fees for management  services to related parties.
No  management  fees were paid to directors  for services  during the first nine
months of 2004.

     Depreciation  and fixed  assets and  amortization  of license and permit of
$538,466 for the nine months ended  September  30, 2004 compared to $555,869 for
the nine months ended September 30, 2003 remained  relatively the same as we did
not  acquired  significant  assets or  licenses  during  the nine  months  ended
September 30, 2004.  Further during the nine months ended September 30, 2004, we
incurred research expenses of $152,011 related to our proposed EPO product to be
offered in Europe.  The majority of the research expense was incurred during the
first part of 2004. In general,  it is our policy to expense research  expenses.
No  significant  research  expense was  incurred  during the same period for the
prior year.

     New market  development  expense  decrease by $16,298  from $30,291 for the
nine months  ended  September  30, 2003  compared to $13,993 for the nine months
ended  September  30,  2004.  The  decrease  was due to fewer new EPO dosages or
indications  being  introduced in 2004. In addition,  the provision for doubtful
debts  decreased by $23,852 from $44,668 for the nine months ended September 30,
2003 compared to $20,816 for the nine months ended September 30, 2004 due to our
tightening of our credit policy in China. Finally, interest expense decreased by
$3,097 from  $5,251 for the nine months  ended  September  30, 2003  compared to
$2,154 for the nine months ended September 30, 2004 due to the payoff of certain
loans in early 2003.

Expenses,  Net and Comprehensive Loss. Dragon had a net loss and a comprehensive
loss of $212,148 for the three-month  period ending  September 30, 2004 compared
to $282,581 for the same period last year.

The Company's net and  comprehensive  loss of $849,576 for the nine-month period
ending September 30, 2004 compared to $1,253,034 for the same period last year.

Basic and Diluted Net Loss Per Share

The  Company's net loss per share has been computed by dividing the net loss for
the period by the weighted average number of shares outstanding during the three
and nine month  periods  ended  September  30, 2004.  The loss per share for the
three-month  period  ended  September  30,  2004 was  $0.01  and  $0.04  for the
nine-month  period ended  September  30, 2004.  Common stock  issuable  upon the
exercise of common stock  options and common stock  warrants  have been excluded
from  the  net  loss  per  share   calculations  as  their  inclusion  would  be
anti-dilutive.

                                       21
<PAGE>
Liquidity and Capital Resources

Dragon is a pharmaceutical and  biotechnological  company that has commenced the
manufacture  and  marketing  of  pharmaceutical  products  in China  through its
indirect ownership in Nanjing Huaxin  Bio-pharmaceuticals  Ltd. Previously,  the
Company has raised funds through equity financings to fund its operations and to
provide working capital.

As of September 30, 2004,  the Company had  $2,283,072 in cash  available.  This
cash, the $1,571,659 in accounts  receivable and anticipated  sales will be used
to fund the ongoing operations and research and development. Working capital was
$4,347,812 at September 30, 2004.  The Company does not  anticipate  significant
capital requirements in the near future.

During the  nine-months  September  30,  2004,  the Company  incurred  losses of
$849,576  and the  Company  will  continue to incur  losses  until sales for its
products  increase or the  contemplated  merger with Oriental Wave is completed.
The Company  will  continue to fund its  operations  in the near future  through
working capital.

Item 3.   Controls and Procedures

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

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

                           PART II. OTHER INFORMATION

Item 1.   Legal Proceedings

          The Company is not currently involved in any legal proceedings.

Item 2.   Unregistered Sales of Equity 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

                                       22
<PAGE>

Item 5.   Other Information.

          None

Item 6.   Exhibits.

          (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.


                                   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 10, 2004                    /s/ Matthew Kavanagh
                                              ---------------------------------
                                              Matthew Kavanagh
                                              Director of Finance and Corporate
                                              Compliance and Corporate Secretary
                                              (Duly authorized Officer and
                                              Principal Financial Officer)

                                       23
<PAGE>

                                                                 EXHIBIT 31.1

            Section 302 Certification of Principal Executive Officer

I, Alexander Wick, certify that:

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

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

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


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

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

     b) Omitted

     c) Evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  and  presented  in  this  report  our  conclusions   about  the
     effectiveness of the disclosure  controls and procedures,  as of the end of
     the  period  covered  by  this  report  based  on such  evaluation;  and d)
     Disclosed in this report any change in the  registrant's  internal  control
     over financial  reporting that occurred during the registrant's most recent
     fiscal quarter that has  materially  affected,  or is reasonable  likely to
     materially  affect,  the  registrant's   internal  control  over  financial
     reporting;  and

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

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

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


Date: November 10, 2004                    /s/ Alexander Wick
                                        ------------------------------------
                                        Alexander Wick, President and
                                        Chief Executive Officer
                                        (Principal Executive Officer)

<PAGE>
                                                                EXHIBIT 31.2

            Section 302 Certification of Principal Financial Officer

I, Matthew Kavanagh, certify that:


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

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

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

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

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

     b) Omitted

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

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

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

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


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


Date: November 10, 2004                         /s/ Matthew Kavanagh
                                                -------------------------------
                                                Matthew Kavanagh
                                                Principal Financial Officer

<PAGE>

                                                                  EXHIBIT 32


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


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

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

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


Dated: November 10, 2004                /s/ Alexander Wick
                                        ---------------------------------
                                        Alexander Wick
                                        President and Chief Executive Officer


Dated: November 10, 2004                /s/ Matthew Kavanagh
                                        ---------------------------------
                                        Matthew Kavanagh
                                        Principal Financial Officer