Major Shareholder:

• Mr. Ko Sai Ying, Thomas - 20.86% interest
• Mr. Tao Lung - 33.6% interest

Company Subsidiary:

• Vital (Sichuan)(100%): Research and development
• Weiao (76.7%): Manufactured and development biopharmaceutical products
• Tianao (95.0%): Manufactured and development of biopharmaceutical products
• Beshabar (HK): Trading
• Vitapharm Research (100%): Research and development
• Maxsun (51%): Trademark holding

The Group is principally engaged in the research and development, production and distribution of biopharmaceutical and conventional pharmaceutical products. The research and development of the Group focuses on downstream value adding biotechnology-processing systems. Downstream research and development work refers to processing technology, which tends to be industrially oriented and is usually performed in large scale in terms of quantity. The Group has commercialized and refined two platform technologies, namely the "Protein Stabilization and Delivery (PSD)" and the "Skin Drug Delivery System (SDDS)" technologies.

With its research and development capabilities, the Group focuses on advanced drug delivery system built on a unique micro bio-encapsulation platform for the delivery of active ingredients for human and veterinary applications via non-injection methods, such as through the mucosal membrane. The Group has also utilized the micro bio-encapsulation platform technologies and various other drug delivery systems to enhance or develop its own products, namely Opin and Spray-On Bandage.

Since 2000,the Group has developed an extensive distribution network of pharmaceutical products in the PRC. Currently, the Group has 22 marketing and liaison offices strategically located in various major cities in the PRC to promote the Group 's products and to provide after-sales services. In order to penetrate into the vast PRC market at a faster pace and lower cost, the Group has also appointed distribution agents in the PRC to distribute its products.

The application of biotechnology in pharmaceutical science has brought a series of breakthroughs in the development of new drugs. The Directors believe that the development and application of biotechnology have contributed and will continue to contribute to the discovery and development of new pharmaceutical products.

The total production value of the PRC pharmaceutical industry increased to RMB233.2 billion in 2000. The total production value of the PRC pharmaceutical industry grew by approximately 20%compared with that of first half-year in 1999.

As living standard continues to improve, average life expectancy in the PRC is expected to improve. This has led to an increase in health consciousness and the demand for health care services and products is expected to grow significantly. With general availability of the genetic information from the Human Genome Program, the Directors believe that the demand for advanced technology and new methodologies for the production and development of effective and affordable biopharmaceutical products will increase.

The Directors believe that the Group has the following competitive advantages:

• The Group has a team of professional scientists with diverse backgrounds and specialization ranging from formulation, product development, production process control, vaccine development, polymer chemistry, micro bio-encapsulation to enzyme immobilization.
• The Group 's research and development capabilities have attracted the co-operation of various manufacturers of pharmaceutical products and enable it to tap the potential growth of the biotechnology and pharmaceutical market in the PRC.
• The Group is able to distribute its products through established channels, including its own marketing and liaison offices and distributors.
• The Group has a production plant in Chengdu City Sichuan Province, the PRC, which obtained PRC GMP certification in December 2001.The production plant is expected to commence commercial production in early 2002.

• Risk related to the trust arrangements in respect of Tianao and Vitapharm Research;
• The Group may not succeed in its patent applications for its platform technologies;
• There is no assurance that the plans of the Group will be achieved within the proposed time frame as set out in the section headed "Statement of business objectives " of this prospectus;
• Future success will depend on its ability to keep pace with the production methodology of the biotechnology and pharmaceutical industry in the PRC;
• Defective products or harmful effects from the consumption or use of the Group's products and lack of product liability insurance coverage may result in material liability and loss of market share;

The Group will pursue its marketing objective of technology transfer by actively forging strategic alliances for mutually beneficial partnerships. The 'Search and Development ' mission is an example of this active strategy, where the Group will explore the market looking for potential technology transfer partners. The technology transfer may involve, for example, the application of the Group 's platform technologies to its partners ' existing products that are already on the market.

The Group will focus its product marketing strategies on establishing and building its position as a reputable company specializing in its platform technologies. It will focus initially on expanding the current OTC and prescription drug market for its flagship products and gradually introducing new products to the PRC market. The Group will invest resources on strengthening its distributing network in the PRC. The emphasis will be to expand the distribution network to the OTC market to support new product launch and in preparation for the PRC 's accession to the WTO.

The Directors consider that the markets in the Asia Pacific region and Europe have vast business potential for the Group 's biopharmaceutical products. To explore such business potential, the Group will appoint local agents with established marketing networks for distribution of its products in selected countries in the Asia Pacific region and Europe.

The Group intends to further expand its production capacity and research and development capabilities to further strengthen the competitive advantages currently enjoyed by the Group. It is also one of the business objectives of the Group to further develop new products in order to serve the increasing demands in the PRC.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$96 million (based on the mid point offer price HK$0.45 per share). The Group at present intends to apply the net proceeds as follows: