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, 2002

                         Commission file number 0-27937


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




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




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

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


                  (Former address if changed since last report)


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

Number of shares of common stock outstanding as of September 30, 2002:20,334,000



<PAGE>


Part 1.  Financial Information

Item 1.  Financial Statements


<PAGE>

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

---------------------------------------------------------------------------------------------------------------------------------
                                                                                          September 30,               December 31,
                                                                                                   2002                      2001
---------------------------------------------------------------------------------------------------------------------------------

ASSETS

Current
  Cash and short term securities                                                    $         2,580,228       $         9,446,084
  Accounts receivable                                                                         3,826,354                 1,309,686
  Inventories                                                                                 1,097,693                 1,095,860
  Prepaid and deposits                                                                          154,026                   140,340
---------------------------------------------------------------------------------------------------------------------------------

Total current assets                                                                          7,658,301                11,991,970

Fixed assets                                                                                  2,539,348                 2,534,609

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

Refundable investment deposits - related party                                                        -                   372,000

Patent rights - related party                                                                   500,000                         -

License and permit                                                                            3,614,155                 3,316,458
---------------------------------------------------------------------------------------------------------------------------------

Total assets                                                                        $        17,601,804       $        22,005,037
=================================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Current
  Bank loans                                                                        $           483,290       $         2,887,345
  Accounts payable and accrued liabilities                                                    1,283,018                 1,318,938
  Management fees payable - related parties                                                     100,000                   234,000
---------------------------------------------------------------------------------------------------------------------------------

Total current liabilities                                                                     1,866,308                 4,440,283
---------------------------------------------------------------------------------------------------------------------------------

Minority interests                                                                                    -                   688,539
---------------------------------------------------------------------------------------------------------------------------------

Commitments (Note 13)

Stockholders' Equity

Share capital
  Authorized:  50,000,000 common shares at
    par value of $0.001 each
  Issued and outstanding:  20,334,000 common shares
    (December 31, 2001 - 20,331,000)                                                             20,334                    20,331

Additional paid in capital                                                                   26,626,238                26,624,741

Accumulated other comprehensive (loss)                                                         (30,880)                  (25,008)

Accumulated deficit                                                                        (10,880,196)               (9,743,849)
---------------------------------------------------------------------------------------------------------------------------------

Total stockholders' equity                                                                   15,735,496                16,876,215
---------------------------------------------------------------------------------------------------------------------------------

Total liabilities and stockholders' equity                                          $        17,601,804       $        22,005,037
=================================================================================================================================
</TABLE>


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

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

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

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

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

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

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

Comprehensive (loss)                                                         $(3,734,725)
                                                                             ============

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

</TABLE>

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


<PAGE>


DRAGON 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

Other comprehensive income
 - foreign currency translation                   -           -            -      (5,872)            -       (5,872)       (5,872)

Comprehensive (loss)
 - net (loss) for the period                      -           -            -  (1,136,347)  (1,136,347)             -   (1,136,347)
-----------------------------------------------------------------------------------------------------------------------------------

Comprehensive (loss)                                                         $(1,142,219)
                                                                             ============

Balance, September 30, 2002              20,334,000    $ 20,334  $26,626,238             $(10,880,196)   $  (30,880)   $15,735,496
=============================================================================            ==========================================
</TABLE>


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


<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          September        September           September
                                                                 30, 2002           30, 2001         30, 2002            30, 2001
-----------------------------------------------------------------------------------------------------------------------------------

Sales                                                            $ 3,777,326          $787,682       $ 6,176,292        $ 2,054,437

Cost of sales                                                        460,987           113,937           825,977            416,584
-----------------------------------------------------------------------------------------------------------------------------------

Gross profit                                                       3,316,338           673,745         5,350,315          1,637,853

Selling, general and
  administrative expenses                                        (1,157,649)       (1,253,892)       (3,570,683)        (3,671,617)

Depreciation of fixed assets and
  amortization of license and
  permit and land-use right                                        (186,580)         (102,793)         (548,687)          (417,813)

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

Research and development expenses                                  (350,003)           (9,037)       (2,121,370)           (75,774)

New market development                                               (9,816)          (77,171)         (172,139)          (167,342)

Provision for doubtful debts                                         (5,533)           (9,838)          (86,082)           (88,663)

Loan interest expense                                                (6,586)          (44,158)          (62,601)          (116,464)

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

Operating income (loss)                                            1,600,175         (823,144)       (1,212,473)        (2,941,795)

Interest income                                                       26,224            60,438            76,126            180,681
-----------------------------------------------------------------------------------------------------------------------------------

Income (loss) before minority interest                             1,626,399         (762,706)       (1,136,347)        (2,761,114)

Minority interest                                                          -            24,924                 -            194,436
-----------------------------------------------------------------------------------------------------------------------------------

Net income (loss) for the period                                 $ 1,626,399        $(737,782)      $(1,136,347)      $ (2,566,678)
===================================================================================================================================

Earnings (Loss) per share
      Basic and Diluted                                               $ 0.08          $ (0.04)          $ (0.05)           $ (0.15)
===================================================================================================================================

Weighted average number of
  common shares outstanding
     Basic and Diluted                                            20,334,000        16,960,982        20,334,000         16,960,982
===================================================================================================================================
</TABLE>

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

<PAGE>

DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES

Consolidated Statement of Cash Flows
Nine Months Ended September 30, 2002 and 2001
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
<S>                                                                                      <C>                       <C>

-----------------------------------------------------------------------------------------------------------------------------
                                                                                          2002                     2001
-----------------------------------------------------------------------------------------------------------------------------

Cash flows from (used in) operating activities
   Net (loss) for the period                                                       $     (1,136,347)        $    (2,566,678)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
     - stock-based compensation expense                                                            -                  51,975
     - depreciation of fixed assets and amortization of
          license and permit and land-use right                                              548,686                 407,813
     - minority interests                                                                          -               (194,436)
     - net write off of land-use right and fixed assets                                        1,225                       -
     - provision for doubtful debts                                                           86,082                  88,663
  Changes in non-cash working capital items:
     - accounts receivable                                                               (2,630,750)                  40,060
     - subscriptions receivable                                                                    -             (1,000,000)
     - inventories                                                                           (1,833)               (546,373)
     - prepaid expenses and deposits                                                        (13,686)                (35,373)
     - accounts payable and accrued liabilities                                             (35,920)               (200,464)
     - management fees payable - related parties                                           (134,000)                       -
-----------------------------------------------------------------------------------------------------------------------------

                                                                                         (3,316,543)             (3,954,813)
-----------------------------------------------------------------------------------------------------------------------------

Cash flows used in investing activities
  Purchase of fixed assets                                                                 (140,626)               (301,387)
  (Increase) decrease in restricted funds                                                  2,629,955               (892,342)
  Acquisition of Patent rights                                                             (500,000)                       -
  Acquisition of balance of Huaxin                                                       (1,400,000)                       -
  Refundable investment deposits                                                             400,000                       -
  Recovery from Hepatitis B Vaccine Project                                                  500,000                       -
-----------------------------------------------------------------------------------------------------------------------------

                                                                                           1,489,329             (1,193,729)
-----------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities
  Loan proceeds                                                                          (2,404,055)                 689,693
  Proceeds from issuance of shares                                                             1,500               6,597,000
-----------------------------------------------------------------------------------------------------------------------------

                                                                                         (2,402,555)               7,286,693
-----------------------------------------------------------------------------------------------------------------------------

Foreign exchange (gain) loss on cash
  held in foreign currency                                                                   (6,132)                   1,875
-----------------------------------------------------------------------------------------------------------------------------

Increase (decrease) in cash and
  and cash equivalents                                                                   (4,235,901)               2,140,026

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

Cash and cash equivalents, end of period                                           $       2,070,228        $      6,232,728
=============================================================================================================================
</TABLE>

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


<PAGE>

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

1.   Nature of Business

     The Company was formed on August 22, 1989 as First Geneva  Investments
     Inc. under the laws of the State of Florida.  The Company  changed its name
     to Dragon  Pharmaceutical  Inc.  on August 31,  1998.  Pursuant  to a share
     exchange  agreement,  dated July 29, 1998, the Company acquired 100% of the
     issued and outstanding shares of Allwin Newtech Ltd.  ("Allwin") by issuing
     7,000,000  common shares of the Company.  This transaction is accounted for
     as a reverse acquisition. Allwin was incorporated under the laws of British
     Virgin   Islands  on  February  10,  1998.   Pursuant  to  a   Sino-Foreign
     Co-operative  Company Contract,  dated April 18, 1998, Allwin and a Chinese
     corporation formed a limited liability company under the Chinese law, named
     as Sanhe Kailong Bio-pharmaceutical Co., Ltd. ("Kailong"), located in Hebei
     Province,  China. Allwin has a 95% interest in Kailong. Pursuant to another
     Sino-foreign  Co-operative  Company  Contract,  dated July 27, 1999, Allwin
     completed   the   acquisition   of  a  75%   interest  in  Nanjing   Huaxin
     Bio-pharmaceutical  Co.  Ltd.  ("Huaxin").  In January  2002,  the  Company
     acquired  the balance of Huaxin for  $1,400,000.  Kailong is  inactive  and
     Huaxin is in the business of research and development, production and sales
     of pharmaceutical  products in China. Allwin Biotrade Inc.  ("Biotrade) was
     incorporated  under the laws of British  Virgin Islands on June 6, 2000 for
     the  purpose  of  marketing  and  distributing  biopharmaceutical  products
     outside China.  Dragon  Pharmaceutical  (Canada) Inc. ("Dragon Canada") was
     incorporated  in British  Columbia,  Canada on  September  15, 2000 for the
     purpose of researching and developing new biopharmaceutical products.

2.   Significant Accounting Policies

a.   Basis of Consolidation

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

b.   Principles of Accounting

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

c.   Fixed Assets

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

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

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

d.   Foreign Currency Transactions

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


<PAGE>

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


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

e.   Foreign Currency Translations

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

f.   Accounting Estimates

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

g.   Advertising Expenses

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

h.   Income Taxes

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

i.   Comprehensive Income

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

j.   Financial Instruments and Concentration of Risks

     Fair value of financial  instruments  are made at a specific point in time,
     based  on  relevant   information  about  financial  markets  and  specific
     financial  instruments.  As  these  estimates  are  subjective  in  nature,
     involving  uncertainties and matters of significant judgement,  they cannot
     be determined  with  precision.  Changes in assumptions  can  significantly
     affect  estimated  fair  values.  The  carrying  value  of  cash  and  cash
     equivalents,  term  deposits,  accounts  receivable,  bank loans,  accounts
     payable and accrued liabilities approximate their fair value because of the
     short-term  nature of these  instruments.  The Company  places its cash and
     cash  equivalents  with high credit  quality  financial  institutions.  The
     Company occasionally  maintains balances in a financial  institution beyond
     the insured  amount.  As of September 30, 2002, the Company had deposits of
     $690,000 above insured limits.

<PAGE>

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


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

k.   Licence and Permit

     Licence  and  permit,   in  relation  to  the   production   and  sales  of
     pharmaceutical  products in China,  is amortized on a  straight-line  basis
     over ten years.  The  carrying  value of license  and permit is reviewed by
     management at least annually and impairment  losses, if any, are recognized
     when the expected  non-discounted  future operating cash flows derived from
     the related  product  licence  acquired are less than the carrying value of
     such  licence and permit.  In the event of  impairment  in the value of the
     licence and permit,  the discounted  cash flows method is used to arrive at
     the estimated fair value of such licence and permit.

l.   Cash and Cash Equivalents

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

m.   Inventories

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

n.   Revenue Recognition

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

o.   Stock-based Compensation

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

p.   Loss Per Share

     Loss per share is  computed  using the  weighted  average  number of shares
     outstanding  during the period. The Company adopted SFAS No. 128, "Earnings
     per  share".  Diluted  loss per share is equal to the basic  loss per share
     because common stock equivalents consisting of options to acquire 3,694,000
     common  shares and  warrants to acquire  3,200,000  common  shares that are
     outstanding at September 30, 2002 are anti-dilutive,  however,  they may be
     dilutive in future.


<PAGE>

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


q.       New Accounting Pronouncements

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

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

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

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


<PAGE>

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

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

3.       Restricted Funds

         ------------------------------------------------------------------- -------------------- ------------------
                                                                                   September 30,       December 31,
                                                                                            2002               2001
         ------------------------------------------------------------------- -------------------- ------------------

         Term deposits held as collateral against bank loans                           $ 510,000        $ 3,139,955
         Cash and cash equivalents                                                     2,070,228          6,306,129
         ------------------------------------------------------------------- -------------------- ------------------

         Cash and short term securities                                              $ 2,580,228        $ 9,446,084
         =================================================================== ==================== ==================

4.       Accounts Receivable

         ------------------------------------------------------------------ -------------------- -------------------
                                                                                  September 30,        December 31,
                                                                                           2002                2001
         ------------------------------------------------------------------ -------------------- -------------------

         Trade receivable                                                           $ 3,935,576        $  1,225,455

         Allowance for doubtful accounts                                               (212,039)            (97,982)
         ------------------------------------------------------------------ -------------------- -------------------

                                                                                      3,723,537           1,127,473

         Other receivable                                                               102,817             182,213
         ------------------------------------------------------------------ -------------------- -------------------

                                                                                    $ 3,826,354         $ 1,309,686
         ================================================================== ==================== ===================

5.       Inventories

         ------------------------------------------------------------------ -------------------- -------------------
                                                                                  September 30,        December 31,
                                                                                           2002                2001
         ------------------------------------------------------------------ -------------------- -------------------

         Raw materials                                                                $ 160,971            $173,687

         Finished goods                                                                 167,121             179,871

         Work in progress                                                               769,601             742,302
         ------------------------------------------------------------------ -------------------- -------------------

                                                                                    $ 1,097,693          $1,095,860
         ================================================================== ==================== ===================

</TABLE>


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


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

         -----------------------------------------------------------------------------------------------------------
                                                                           September 30, 2002
                                                      --------------------------------------------------------------
                                                                               Accumulated            Net book
                                                             Cost             depreciation             value
         -------------------------------------------- ------------------- ---------------------- -------------------

         Motor vehicles                                        $ 140,425               $ 45,816            $ 94,609
         Office equipment and furniture                          382,566                130,420             252,146
         Leasehold improvements                                1,043,211                302,876             740,335
         Production and lab equipment                          2,111,284                659,026           1,452,258
         -------------------------------------------- ------------------- ---------------------- -------------------

                                                             $ 3,677,486            $ 1,138,138         $ 2,539,348
         ============================================ =================== ====================== ===================

         -----------------------------------------------------------------------------------------------------------
                                                                            December 31, 2001
                                                      --------------------------------------------------------------
                                                                               Accumulated            Net book
                                                             Cost             depreciation             value
         -------------------------------------------- ------------------- ---------------------- -------------------

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

                                                              $3,378,510               $843,901          $2,534,609
         ============================================ =================== ====================== ===================
</TABLE>

         For the  nine  months  ended  September  30,  2002,  depreciation
         expenses totalled $277,260 (2001-$120,432). The majority of fixed
         assets are located in China.

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

         -----------------------------------------------------------------------------------------------------------
                                                                                 September 30,         December 31,
                                                                                          2002                 2001
         -----------------------------------------------------------------------------------------------------------

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

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

                                                                                    $3,290,000           $3,790,000
         ================================================================= ==================== ====================
</TABLE>

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

<PAGE>

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


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

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

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

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

8.       Refundable Investment deposits - Related Party

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


         -----------------------------------------------------------------------------------------------------------
                                                                                 September 30,         December 31,
                                                                                          2002                 2001
         -----------------------------------------------------------------------------------------------------------

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

         Less:  Valuation allowance                                                         -               (28,000)
         -----------------------------------------------------------------------------------------------------------

                                                                                            -              $372,000
         ===========================================================================================================
</TABLE>

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

9.        Patent Rights - Related Party

          Pursuant to an agreement  dated January 14, 2002, the Company  entered
          into a Patent Development Agreement with Dr. Longbin Liu and a company
          controlled  by Dr.  Longbin 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  and  the  issuance  of  warrants  to  acquire
          1,000,000  common  shares of the Company at a price of $2.50 per share
          for a period  of five  years.  The  patent  may be  acquired  prior to
          January 14, 2005 at no additional cost other than the reasonable legal
          costs of obtaining the patent.


<PAGE>

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

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

         ------------------------------------------------------------------------- --------------- ------------------
                                                                                    September 30,       December 31,
                                                                                             2002               2001
         ------------------------------------------------------------------------- --------------- ------------------

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

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

         RMB 4,000,000, bearing interest at 3.394% per annum and due on February
         26, 2003.  The loan is secured by the term deposit.                              483,290                  -

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

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

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

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

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

         Total                                                                          $ 483,290        $ 2,887,345
         ========================================================================= =============== ==================
</TABLE>

       The weighted average interest rate was 5.265% and 5.25% for the nine
       months ended September 30, 2002 and 2001.


<PAGE>

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


11.       Income Taxes

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

          Allwin is not subject to income taxes.

          As at September 30, 2002, the parent company,  Kailong and Huaxin have
          estimated   losses,   for  tax   purposes,   totalling   approximately
          $6,010,000,  which  may be  applied  against  future  taxable  income.
          Accordingly,  there is no tax  expense  charged  to the  Statement  of
          Operations for the nine months ended  September 30, 2002 and 2001. The
          potential  tax  benefits  arising  from  these  losses  have  not been
          recorded  in the  financial  statements.  The  Company  evaluates  its
          valuation allowance requirements on an annual basis based on projected
          future operations.  When circumstances change and this causes a change
          in  management's  judgement  about the  realizability  of deferred tax
          assets,  the  impact  of the  change  on the  valuation  allowance  is
          generally reflected in current income.

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

            ------------------------------- ---------------- -----------------
                                              September 30,      December 31,
                                                       2002              2001
            ------------------------------- ---------------- -----------------

            Tax losses carried forward        $ 2,040,000          $1,850,000
            Stock-based compensation                    -              17,700
            Less: valuation allowance         (2,040,000)         (1,867,700)
            ------------------------------- ---------------- -----------------
                                              $         -          $        -
            =============================== ================ =================

            A  reconciliation  of the federal  statutory  income tax to the
            Company's  effective income tax rate, for the nine months
            ended September 30, 2002 and 2001, is as follows:

            ------------------------------- ----------------- -----------------
                                                   2002              2001
            ------------------------------- ----------------- -----------------

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

            Effective income tax rate                 -                 -
            =============================== ================= =================

<PAGE>

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


12.  Stock Options and Warrants

     a.   Stock Options Plans

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

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

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

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

                  Options outstanding at December 31, 2001                       2,969,500            $   1.92
                  Granted                                                          920,000            $   1.70
                  Forfeited                                                       (192,500)               $   3.13
                  Exercised                                                         (3,000)           $   0.50
                  ------------------------------------------------------ ------------------ ------------------------

                  Options outstanding at September 30, 2002                      3,694,000              $ 1.81
                  ====================================================== ================== ========================
</TABLE>


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

                 Options Outstanding                                       Options Exercisable
------------------------------------------------------------------- ----------------------------------
                                     Weighted
                                      Average         Weighted                           Weighted
     Range of                        Remaining         Average                           Average
     Exercise         Number        Contractual       Exercise           Number          Exercise
      Prices       Outstanding         Life             Price          Exercisable        Price
------------------------------------------------------------------- ----------------------------------
     $0.01 - $1.00     1,254,000       1.54               $   0.50          1,240,000        $   0.50

     $1.01 - $2.00     1,095,000       4.45               $   1.71          1,095,000        $   1.71

     $2.01 - $3.00        60,000       2.11               $   2.50             60,000        $   2.50

     $3.01 - $4.00     1,290,000       3.10               $   3.13           1,285,000       $   3.13
                       --------------------               --------           ---------       --------
                       3,694,000       2.95               $   1.81           3,680,000       $   1.81
                       =========      =====               ========           =========       ========

</TABLE>


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



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

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

                  ------------------------------------------------------------ ------------------ ------------------
                                                                                   September 30,      September 30,
                                                                                            2002               2001
                  ------------------------------------------------------------ ------------------ ------------------

                  Net (loss) for the period:
                  - as reported                                                    $ (1,136,347)      $ (2,566,678)
                  - pro-forma                                                        (1,136,347)      $ (2,566,678)
                  ------------------------------------------------------------ ------------------ ------------------

                  Basic and diluted (loss) per share:
                  - as reported                                                    $ (0.06)           $ (0.16)
                  - pro-forma                                                      $ (0.06)           $ (0.16)
                  ------------------------------------------------------------ ------------------ ------------------

</TABLE>


     b.       Warrants

              Share purchase warrants outstanding as at September 30, 2002:

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

                        Number                  Underlying            Exercise Price
                      of Warrants                 Shares                 Per Share          Expiry Date
                      -----------               ----------            --------------        -----------

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

</TABLE>

<PAGE>

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


13.  Related Party Transactions

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

         ----------------------------------- ----------------- ----------------
                                                September 30,    September 30,
                                                         2002             2001
         ----------------------------------- ----------------- ----------------

         Management fees                            $ 172,500        $ 102,000
         =================================== ================= ================



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

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

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

          (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");

          (iv) US$200,000  to be provided  when a new drug  license for G-CSF 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 G-CSF to Dragon before January 14, 2005.

          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;

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

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

          (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.

<PAGE>

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


          For both the G-CSF and Insulin Projects:

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

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

     As at September  30,  2002,  the Company has paid  $1,500,000  and $500,000
     towards the Insulin and G-CSF Projects,  respectively. The Company has also
     paid $100,000 to a company  controlled by the President to produce  insulin
     samples for drug registration purposes.


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


14.  Commitments

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

                2002                                        $116,101
                2003                                         452,889
                2004                                         467,658
                2005                                         468,742
                2006                                         471,996
                2007 - 2009                                  833,902
                -----------------------------------------------------
                Total                                     $2,811,288
                -----------------------------------------------------

15.  Segmented Information

     $3,700,000  in sales has been  made to one  customer,  representing  60% of
     total sales for the nine months ended September 30, 2002

<PAGE>


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

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

Overview

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

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

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,  2002  was  $3,777,326   compared  to  $787,682  for  the
three-month period ending September 30, 2001. Sales in and outside of China were
$745,326 and  $3,032,000,  respectively  during the  three-month  period  ending
September 30, 2002. The overseas  sales included  delivery of a $3 million order
to be used by the purchaser for new drug research and development.  Sales during
the  three-month  period  ending  September  30, 2001 were $613,092 in China and
$174,590 outside of China.  Cost of sales for the  three-months  ended September
30, 2002 of $460,987 is attributed to the production costs of the pharmaceutical
products.  The cost of sales for the  three-months  ended September 30, 2001 was
$113,937.  The gross  profit  margin of 88% for the  three-month  period  ending


<PAGE>


September 30, 2002 and 87% for the nine-month  period ending  September 30, 2002
increased  from  86%  and  80%  for  the  three-month  and  nine-month  periods,
respectively,  ending  September 30, 2001.  The profit margin has increased as a
result of improved production efficiency.

Revenue for the  nine-month  period  ended  September  30,  2002 was  $6,176,292
compared to $2,054,437 for the nine-month period ended September 30, 2001. Sales
in and outside of China were $2,097,292 and $4,079,000,  respectively during the
nine-month  period ended September 30, 2002. Sales during the nine-month  period
ended September 30, 2001 were $1,879,847 in China and $174,590 outside of China.
Cost of sales  for the  nine-months  ended  September  30,  2002  and 2001  were
$825,977 and $416,584, respectively.

Interest  income is related  primarily to interest  earned on cash received from
the private  placement of common stock received during the third quarter of 2001
and the last quarter of 1999.  Interest income for the three-months period ended
September 30, 2002 was $26,224  compared to $60,438 for the  three-month  period
ended  September  30, 2001.  Interest  income for the  nine-months  period ended
September 30, 2002 was $76,126  compared to $180,681 for the  nine-month  period
ended September 30, 2001.

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

Expenses. Total operating expenses for the three-months ended 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. The remaining
major expense items are represented by administrative expenses.

Significant  operating  expenses for the  three-months  ended September 30, 2002
included consulting fees of $130,535, rent of $121,315, 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 first quarter  include the  depreciation of
fixed assets and amortization of license and permit of $186,580.

Comparatively,  total  operating  expenses  for the third  quarter  of 2001 were
$1,496,889.  Selling  expenses  represented 28% total operating  expenses during
this period. Other major expenses for the three-month period ended September 30,
2001 included the  depreciation  of fixed assets and  amortization of intangible
assets of $102,793,  consulting fees of $176,104, loan interest of $44,158, rent
of $75,257, salaries of $99,343, $100,540 in travel costs and management fees of
$68,250,  including  management  fees of $42,000  incurred to two  director  for
services rendered during the period.


<PAGE>


Total  operating  expenses for the  nine-months  ended  September 30, 2002, were
$6,562,788.  The major  expenses  incurred  during the period were  research and
development  expenses  of  $2,121,373  and the selling  expenses  of  $1,410,306
representing  32% and 21% of total expenses,  respectively.  The remaining major
expense items are represented by administrative expenses.

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  $209,087.  Management  fees
include  $172,500  incurred 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 $165,870.

Comparatively,  total operating expenses for the nine-months ended September 30,
2001, were $4,579,649.  The major expense incurred in the second quarter of 2001
related to the selling of pharmaceutical products and represented  approximately
31% of total  expenses.  The remaining  major expense items are  represented  by
administrative expenses.

Significant  operating  expenses for the  nine-months  ended  September 30, 2001
included  auditing and  accounting  expense of $128,053,  bad debt write offs of
$88,663  consulting  fees of $403,828,  investor  relations  of  $370,964,  loan
interest of  $116,464,  rent of  $233,225,  salaries  and  benefits of $303,658,
$219,916  in travel  costs and  management  fees of  $172,521.  Management  fees
include $102,000 paid to two directors for services during the nine-months ended
September 30, 2001.

Other  significant   expenses  for  the  second  quarter  of  2001  include  the
depreciation  of fixed  assets of and  amortization  of  license  and permit and
land-use  rights of $417,813 new market  development of $167,342 and stock based
compensation of $51,975.

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

Net and Comprehensive  Loss. Dragon had a net income and a comprehensive  income
of $1,626,399 for the three-month period ending September 30, 2002.

The Company's net loss for the three-month  period ended September 30, 2001, was
$737,782,  which includes a minority interest loss of $24,924. The comprehensive
loss for the same period was $1,762,706.

Dragon had a net loss and a comprehensive  loss of $1,136,347 for the nine-month
period ending September 30, 2002.


<PAGE>


The Company's net loss for the nine-month  period ended  September 30, 2001, was
$2,566,678,   which  includes  a  minority   interest  loss  of  $194,436.   The
comprehensive loss for the same period was $2,761,114.

Basic and Diluted Net Loss Per Share

The  Company's  net earnings or loss per share has been computed by dividing the
net  income or loss for the  period  by the  weighted  average  number of shares
outstanding  during three-month and nine-month periods ended September 30, 2002.
The basic and fully diluted  earnings per share for the  three-month  and period
ended  September  30, 2002 were $0.08 and the loss per share for the  nine-month
period  ended  September  30, 2002 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.

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

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

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

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

As of September 30, 2002, the Company had $2,580,228 in cash available, of which
$510,000 is held as collateral  for loans  totaling  RMB4,000,000  (US$483,290).


<PAGE>


This cash, the $3,826,354 in accounts  receivable and anticipated  sales will be
used to fund the  ongoing  operations  and  research  and  development.  Working
capital was $5,791,993 at September 30, 2002.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

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

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

By Currency

                                  December 31,        December 31,
                                  2000                2001

U.S. Dollar                          22%                 31%

Canadian Dollar                       0%                 12%

Renminbi yuan                        78%                 57%

Total                               100%                100%



                                  September 30,       September 30,
                                  2001                2002

U.S. Dollar                          53%                 26%

Canadian Dollar                      23%                 47%

Renminbi yuan                        24%                 27%

Total                               100%                100%


<PAGE>


Such  administrative  expense by currency may change from time to time. Further,
the Company  incurred  expenses in China of $1,983,450  and  $1,993,311  for the
nine-months ended September 30, 2001 and 2002,  respectively,  all of which were
paid in RMB.

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

As disclosed in Note 10 to the Company's financial  statements,  the Company has
entered  into a series of loans  with an amount of  $483,290  outstanding  as of
September 30, 2002. The weighted  average interest rate was 5.265% for the nine-
months ended  September  30, 2002.  The loan is due on February 26, 2003 and, to
the extent that there may be increased  interest  rates during this period,  the
Company would be adversely affected.

Item 4. DISCLOSURE CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this Form 10-Q, the Company  carried out
an evaluation, under the supervision and with the participation of the Company's
management, of the design and operation of the Company's disclosure and internal
controls  and  procedures  pursuant  to  Exchange  Act Rule  13a-14.  The review
identified a number of areas where there could be  improvements  to increase the
effectiveness  of  controls  and the  Company  is  currently  in the  process of
improving the controls and procedures in these areas. Notwithstanding the above,
the  Company's  President and Chief  Executive  Officer along with the Company's
Chief Financial  Officer have concluded that the Company's  disclosure  controls
and  procedures  are  sufficient  enough  to  ensure  adequate  and  appropriate
disclosure  of  material  information  relating to the  Company  (including  its
consolidated subsidiaries) required to be included in this Form 10-Q.

There have been no significant  changes in the Company's internal controls or in
other factors,  which could significantly affect internal controls subsequent to
the  date the  Company  carried  out its  evaluation,  other  than  those  being
undertaken to increase the effectiveness of controls as discussed above.

PART II. OTHER INFORMATION

Item 1, 2, 3, 4 and 5

None.

Item 6.

(a)      Exhibit 99.1

(b)      Reports on 8-K  None.


<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 13, 2002                    /s/ MATTHEW KAVANAGH
                                             ---------------------------
                                             Matthew Kavanagh
                                             Director of Finance and Corporate
                                             compliance and Corporate Secretary
                                             (duly authorized Officer and
                                             Principal Financial Officer)


<PAGE>

                            Section 302 Certification

CERTIFICATION FOR QUARTERLY REPORT ON FORM 10-Q


I, Alexander Wick, certify that:

1. I have reviewed this quarterly  report on Form 10-Q of Dragon  Pharmaceutical
Inc. ("Registrant");

2. Based on my  knowledge,  this  quarterly  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 quarterly
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 quarterly 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-14 and 15d-14) for the Registrant and we have:

a) designed  such  disclosure  controls and  procedures  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) evaluated  the  effectiveness  of the  Registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The Registrant's other certifying officer and I have disclosed,  based on our
most recent evaluation,  to the Registrant's auditors and the audit committee of
Registrant's board of directors (or persons performing the equivalent function):

a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  Registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  Registrant's
auditors any material weaknesses in internal controls; 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; and


<PAGE>


6. The  Registrant's  other  certifying  officer  and I have  indicated  in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002                  /s/ ALEXANDER WICK
                                         ---------------------------------
                                         Alexander Wick, President and
                                         Chief Executive Officer

<PAGE>

                            Section 302 Certification

CERTIFICATION FOR QUARTERLY REPORT ON FORM 10-Q

I, Matthew Kavanagh, certify that:

1. I have reviewed this quarterly  report on Form 10-Q of Dragon  Pharmaceutical
Inc. ("Registrant");

2. Based on my  knowledge,  this  quarterly  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 quarterly
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 quarterly 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-14 and 15d-14) for the Registrant and we have:

a) designed  such  disclosure  controls and  procedures  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) evaluated  the  effectiveness  of the  Registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The Registrant's other certifying officer and I have disclosed,  based on our
most recent evaluation,  to the Registrant's auditors and the audit committee of
Registrant's board of directors (or persons performing the equivalent function):

a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  Registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  Registrant's
auditors any material weaknesses in internal controls; 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; and


<PAGE>


6. The  Registrant's  other  certifying  officer  and I have  indicated  in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002                   /s/ MATTHEW KAVANAGH
                                          -----------------------------
                                          Matthew Kavanagh, Principal
                                          Financial Officer


<PAGE>

                                                                  Exhibit 99.1


                                  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 California  corporation
(the "Company"), does hereby certify with respect to the Quarterly Report of the
Company on Form 10-Q for the quarter ended  September 30, 2002 as filed with the
Securities and Exchange  Commission (the " Form10-Q") that, to the best of their
knowledge:

        (1) the Form10-Q  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-Q fairly presents, in all
        material respects, the financial condition and results of operations
        of the Company.


Dated: November 14, 2002                  /s/ ALEXANDER WICK
                                          -----------------------
                                          Alexander Wick
                                          President and Chief Executive Officer

Dated: November 14, 2002                  /s/  MATTHEW KAVANAGH
                                          -----------------------
                                          Matthew Kavanagh
                                          Principal Financial Officer