Major Shareholder:

• Ms. Lee Siu Fung ¡V 29.05% interest
• Ms. Leelalertsuphakun Wanee ¡V 28.25% interest

Company Subsidiaries:

• Lee's Pharmaceutical (100%): Investment holding and management
• Lee's China (100%): Marketing and promotion of biopharmaceutical products
• Zhaoke (70%): Research, development, production and sale of biopharmaceutical products.

The Group is an integrated research-driven and market-oriented biopharmaceutical group engaged in the development, manufacturing and sales of quality biopharmaceutical diseases. The business activities of the group are primarily carried out through Zhaoke, a Sino-foreign equity joint venture established in the PRC in which the group owns 70 per cent located in Hefei, Abnhui Provinces, the PRC.

Zhaoke has two fully operational and GMP- compliant workshops for the production of (1) bulk pharmaceutical for injection and lyophilized powder for injection and (2) el. Since its establishment in 1994, Zhaoke has developed three-technology platform, namely, (1) the snake venison technology, (2) he low molecular weight herparin technology and (3) the water-based gel delivery system. As at the Latest Practicable Date, the Group manufacture and sells three self-developed biopharmaceutical products, namely Defibrase, Livaracine and Yallaferon, which are all Category 4 biopharmaeutical products, for the treatment stroke, cardiovascular diseases and viral sexually transmitted diseases such as genital warts, respectively.

In addition, the Group has a strong products pipeline as its has (1) three other products, the applications for clinical trials of which have been submitted and the relevant clinical trials are anticipated to be launched in 2002 and 2003 and (2) five products identified for research and development with a view to eventual commercialization. Currently, the Group's sales and distribution network is divided into three major districts covering approximately 28 provinces, cities or districts and over 500 major hospitals and clinics in the PRC.

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

• the Group's procession of three in-house developed technology platforms, which provides a gateway for the future business develop of the grope, based on which the Group's pipeline of new products are gauged;
• the Group's successful launch of three self-developed biopharmaceutical products for the treatment of stroke, cardiovascular diseases and viral-infected venereal disease in the PRC
• the Group's proprietary intellectual property in respect of its self-developed snake venom technology and topical interferon in water-based gel delivery form for viral-infected sexual disease have enhanced in the Group's competitiveness in the biopharmaceutical industry in the PRC.
• the Group's two GMP-compliant pharmaceutical manufacturing workshops providing a quality assurance of the Group's products and an entry barrier for competitors in the PRC without GMP certification.

• potential competition with high knowledge;
• history of losses during the Track Record Period, net current liabilities and financial support from the Group's shareholders;
• Remuneration of directors;
• Relationship with the PRC partner of Zhaoke;
• Injection of intangible assets by the PRC partner of Zhaoke as registered capital of Zhaoke;
• Reliance on key management and employees;

In line with the Group's business expansion plan, the Group will continue to upgrade, enhance ad expand its existing production facilities for its further growth and development. The Group will also apply advanced technology on the production process n order to upgrade its production efficiency and to improve the quality of its existing products so as to achieve economies of scale and to enhance the competitiveness of its products in the marketplace.

The Directors intend to further expand the Group's distribution network and sales teams to explore the customer base and broaden its market coverage of regional cities and rural areas in the PRC where there is a high growth potential for effective and high quality medicines such as the Group's products.

As a research-driven group, the Group commits to continue its investment in technology and research in the biopharmaceutical industry. Apart from the research and development of new products, the Group also works continuously on identifying new indications and new applications for its existing products. The group believes that through continuously searching for new and better treatments for diseases customers and patients will be benefited through improved health, longevity and lower societal costs.

The Directors are of the opinion that suitable acquisitions of and strategic alliances with overseas and PRC-based pharmaceutical companies will enable the Group to expand and strengthen its position in the biopharmaceutical industry or bring in synergies benefits to the Group both in the PRC and overseas. In addition, the Group will aggressively pursue business opportunities to acquire latest technology or products to further develop the Group's pipeline.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$20.0 million (based on the offer price HK$0.4 per share). The Group at present intends to apply the net proceeds as follows: