Jiwa Bio-Pharm Holdings Limited
(Stock Code: 2327)

Major Shareholder:

• Mr. Lau Yau Bor ¡V 56.0% interest

Company Subsidiaries:

• Jiwa International (HK) (100%): Trading of pharmaceutical products
• Jiwa Pharmaceuticals (100%): Investment holdings
• Tech Medi (HK)(100%): Trading of health care products
• Kunming Jida (100%): Manufacturing and trading of pharmaceutical products

The Group is principally engaged in the research, development, manufacture and sale of pharmaceutical products, including new medicine and generic pharmaceutical products, and to a lesser extent, health-care products.

Currently, the Group's manufactured pharmaceutical products, which are applied for the treatment of various diseases, account for a significant portion of the Group's turnover. As at the Latest Practicable Date, the Group was involved in the manufacture and sale of 20 manufactured pharmaceutical products in the PRC. The Group's manufactured pharmaceutical poducts are manufactured or processed by Kunming Jida, an operating subsidiary of the group, at its manufacturing base located in Kunming City, Yunnan Province, the PRC.

The Group has obtained all the relevant approvals and permits for the production of its manufactured pharmaceutical products in the PRC. These approvals and permits include the Pharmaceutical Production Enterprise Permit, the GMP certificates, the business licence and the requisite production approval. The Group has also obtained the requisite licences/permits for the sale of its manufactured pharmaceutical products from the SFDA at the national level and thus, the Group's manufactured pharmaceutical products would be sold nationwide in the PRC.

The Group is also engaged in the trading in the PRC of a number of pharmaceutical products of European pharmaceutical companies. These traded pharmaceutical products are for the treatment of different types of diseases, including coadjutant in prophylaxis, gastric ulcer and rheumatoid arthritis. Two of these traded pharmaceutical products are processed/manufactured and sold by the Group under licences granted by the relevant European pharmaceutical companies. The Group is the exclusive distributor/sole agent of three pharmaceutical products of European pharmaceutical companies for the PRC market.

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

• GMP certified production facilities
• Diversified product range
• Strong research and development capabilities
• Strong and committed management team
• Extensive sales and distribution network

• past overdue contribution of the registered capital of Kunming Jida;
• failure to obtain the state-owned land use rights certificates and/or real estate ownership
• certificates;
• reliance on the PRC market;
• product liability;
• trademark protection and counterfeit products;
• reliance on key management;
• regulatory approval and market acceptance of new products;
• reliance on major customers;
• reliance on major suppliers;

With an improving standard of living and a growing demand for health-care and related products in the PRC, the Directors expect that there will be rapid growth in the pharmaceutical and health-care markets in the PRC. The Directors intend to increase the market share of the Group's existing products in the PRC and to expand its market to countries in Southeast Asia. The Directors also plan to broaden the Group's product mix through the development of new pharmaceutical and health-care products. The Group's business objective is to become one of the leading pharmaceutical companies in the PRC and to introduce new drugs through a more vertically integrated production process.

Leveraging on its in-house research and development capability and its collaboration with pharmaceutical research institutes in the PRC, the Group plans to continue its expansion by introducing a diverse range of pharmaceutical and health-care products. As at the Latest Practicable Date, the Group had 13 pharmaceutical products under development, 11 of which are in collaboration with other third parties. Of these 13 products, the Group plans to launch two, namely Loratadine and Loratadine tablets, in 2003 and the other 11 during the period from 2004 to 2005.

With the Group's research and development capability, the Directors believe that the lead time for the development and approval of a pharmaceutical product can be shortened. The Group intends to focus on developing both Western and Chinese medicine and health-care products.

The Group's marketing efforts are currently targeted towards major cities in the PRC, which account for the more developed and wealthy market. However, there is still a lucrative market in other parts of the PRC which are highly populated. The Directors plan to further strengthen the Group's marketing activities to other parts of the PRC, in particular the less developed areas, in the coming three to five years. Although the PRC market is expected to remain as its main focus, the Group is also actively pursuing international market exposure, starting from countries in Southeast Asia. The Directors believe that the economic growth of these regions will fuel the demand for pharmaceutical and health-care products in these regions.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$56 million (based on the offer price HK$0.47 per share). The Group at present intends to apply the net proceeds as follows: