Dragon Announces a Proposed Merger with a Profitable, Fully-integrated Pharmaceutical Company
March 24 2004 - 8:01AM
PR Newswire (US)
Dragon Announces a Proposed Merger with a Profitable,
Fully-integrated Pharmaceutical Company VANCOUVER, March 24
/PRNewswire-FirstCall/ -- Dragon Pharmaceutical Inc. (TSX: DDD, OTC
BB: DRUG) ("Dragon") is pleased to announce that it has entered
into a letter of intent to combine with Oriental Wave Holding Ltd
("Oriental Wave") and its subsidiary (together as "Oriental Wave
Group") in a merger by which Dragon shareholders would own 31.65%
of the new entity and Oriental Wave Holding Ltd. shareholders would
own 68.35% of the new entity. ("Proposed Transaction") Completion
of the Proposed Transaction is subject to a number of conditions
including the completion of a definitive agreement and all required
regulatory and shareholder approvals. Dragon and Oriental Wave are
unaffiliated and the terms of the Letter of Intent were negotiated
at arm's length. Oriental Wave Holding Ltd, incorporated in the
British Virgin Islands, is a privately held company that is a sole
shareholder of a China-based pharmaceutical company, which is
primarily engaged in the production of chemical intermediates and
active pharmaceutical ingredients, formulation, marketing and sale
of generic drugs. Oriental Wave Group currently has 2 Chinese State
Food and Drug Administration ("SFD&A") certified GMP production
facilities on stream: a pharmaceutical facility with a capacity of
producing 1.6 billion tablets and capsules, 80 million injectables
and 10 million suppositories per year as well as a chemical plant
producing clavulanic acid by a fermentation process. A third
facility is under construction for the production, by fermentation,
of 7-ACA, an intermediate for Cephalosporin antibiotics. Oriental
Wave Group has a total of approximately 280 drug approvals from the
SFD&A of which about 35, mainly anti-infectious drugs, were
actively exploited in China in 2003. Based on the financial
statements prepared by the management of Oriental Wave Group, the
company in 2003 had consolidated revenues of US$26 million (2002:
US$11.2 million), earnings of US$7.6 million (2002: net loss of US$
0.24 million) and a net profit margin of 29%. In 2003, all the
revenues were entirely generated by the Chemical Drug Division of
the company as the brand new Chemical Intermediate Division
commenced its production only in January, 2004. An audit of
management's numbers is being completed under U.S. GAAP by a U.S.
Registered Public Accounting firm. It is expected that this audit
will be completed within 2 weeks. On completion of the Proposed
Transaction, Dragon's rHu Erythropoietin (EPO) business and the
production facility in Nanjing, China will become the core
foundation of the Biotech Division of the combined company which
will be organized into three major divisions: a Chemical Drug
Division, a Chemical Intermediate Division and a Biotech Division
with 3 existing SFD&A certified GMP manufacturing facilities
and the fourth facility under final construction. In addition, the
combined company will also have an extensive sales and marketing
network in China which will give a boost to Dragon's local EPO
sales. In return, the commercial ties of Dragon established over
the years for the sale of EPO and the registration expertise in a
large number of international markets will be decisive for the
international sales and marketing of Oriental Wave Group products.
"We are very excited about this project and highly satisfied to
enhance the visibility of Dragon's medium and long term prospect by
merging two companies that draw their strengths from the same basic
activity but are complementary when it comes to products. The
merged entity will enjoy a strong financial foundation, access to
the financial markets through the existing listings on Toronto
Stock Exchange and OTC Bulletin Board, a sizeable sales force in
China and international market exposure creating significant growth
and value creation opportunities by offering substantial
operational improvements and immediate cost synergies." said Dr.
Alexander Wick, President and CEO of Dragon. "The combined company
intends to create significant synergies by benefiting from the
competitive advantages of both Dragon and Oriental Wave Group while
sharing a joint vision of aiming at both the Chinese market and
international market opportunities with diverse and proven product
lines of substantial growth prospect." Subject to fulfillment of
all conditions, Dragon is targeting to have the Proposed
Transaction completed by the third quarter of 2004. However, no
assurance can be given that definitive documentation will be
executed or, that once documentation is executed, the transaction
will be consummated. Detailed information regarding the
transaction, the business of Oriental Wave and its subsidiary and
its financial statements will be prepared and circulated to the
shareholders of Dragon in connection with a general meeting of
shareholders which would be convened to approve the transaction.
About Dragon Pharmaceutical Inc. Dragon Pharmaceutical Inc. is an
international biopharmaceutical company headquartered in Vancouver,
Canada, with a GMP production facility in Nanjing, China. The
Company develops and commercializes human proteins for therapeutic
use. Dragon's EPO is currently approved to treat anemia due to
renal failure and surgery in China, India, Brazil, Egypt, and Peru.
Additional regulatory submissions are in progress throughout
Central and Eastern Europe, Asia, Latin America, the Middle East
and Africa. About Oriental Wave Holding Limited. Oriental Wave
Holding Limited is a privately held holding company of a
pharmaceutical company in China, with two GMP production facilities
for chemical drugs and chemical intermediates and one production
facility for chemical intermediates under construction. Forward
Looking Statement: Cautionary Statement for Purposes of the "Safe
Harbor" Provisions of the Private Securities Litigation Reform Act
of 1995: All statements, other than historical facts, included in
the foregoing press release are forward-looking statements. These
forward-looking statements include, but are not limited to
management's belief that the combined company's products will be
accepted in the international market and the combined company will
be able to create new generic drugs. Forward-lookingstatements are
not guarantees of future performance. They involve risk,
uncertainties and assumptions including risks discussed under
"Risks Associated With Dragon Pharmaceuticals" in the Company's
annual report on Form 10-KSB, SEC File No.: 0- 27937 and other
documents filed with the SEC. The Company does not undertake the
obligation to publicly revise these forward-looking statements to
reflect subsequent events or circumstances. For further
information, please contact Garry Wong (email: ) at (604) 669-8817
or toll free 1-877-388-3784 or visit our web site at
http://www.dragonbiotech.com/ DATASOURCE: Dragon Pharmaceuticals
Inc. CONTACT: please contact Garry Wong (email: ) at (604) 669-8817
or toll free 1-877-388-3784 or visit our web site at
http://www.dragonbiotech.com/
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