Strengthen Product Quality in the Overall Vertical Integration Businesses

Dawnrays Pharmaceutical (Holdings) Limited (“Dawnrays Pharma” or the “Group”, stock code: 02348) held a ceremony in Rudong Yang Kou Chemical Industrial Park, Nantong, Jiangsu Province, P.R. China on 20 November 2008 in celebrating the Grand Opening of its new chemical plant . Dawnrays (Nantong) Pharmaceutical Science and Technology Co., Ltd. (“Dawnrays (Nantong)”).

Dawnrays (Nantong) occupies a site area of about 86,000 square meters and forms another corollary production base of chemical raw materials for Suzhou Dawnrays Pharmaceutical Co., Ltd. under the Group. The first phase project has commenced operation. with an aggregate gross floor area of approximately 12,878 square meters, the plant was well-equipped with state-of-the-art facilities including multi-purpose workshop for Cephalosporin chemical intermediate syntheses, a workshop for Penicillin chemical intermediate syntheses, a sewage treatment station and a solvent recycling workshop, etc. The first phase project will contribute an annual production capacity of 500 tonnes Cephalosporin and Penicillin chemical intermediates. With the construction of the second phase project in 2010, Dawnrays (Nantong) will constitute an important sector of the Group’s industrial chain.

In her opening ceremony speech, Ms. Li Kei Ling, the Chairman of Dawnrays Pharma said, “As a national characteristic pharmaceutical company, the medium term of development planning of Dawnrays Pharma will still rely on China’s blueprint for the development and reforms of the healthcare industry and will regard Chinese market as an axis of our work, optimize our hardware strength and also consolidate and expand the shares in domestic market. In the meantime, we will seek opportunities to selectively break through overseas high-end markets. The different phases of Dawnrays (Nantong)’s project is a part of the major deployment of our medium term of development planning. It will enhance our competitiveness in overseas and domestic markets.”

Dawnrays (Nantong) has its production techniques integrated from the practice and experience of the two existing chemical plants of the Group. Meanwhile, a large-scale study on the project has been conducted by the R & D Centre of the Group with its endeavor to improve the production techniques, which includes: 1. improvement on production techniques and control technologies can achieve the aims of cost reduction and enhancing product quality; 2. organic solvents utilized for reactions in the solvent recycling workshop can be recycled iteratively, which lowers production cost and greatly reduces the emission of pollutants. 3. In respect to environmental protection, by adopting advanced devices, the challenge of handling sewage with high salt content from chemical and pharmaceutical industries is completely solved; moreover, with the advanced dual-stage sewage treatment technology, water for production can be recycled for use, resulting in saving annual fresh water amounted to 20,000 tonnes. Thus, Dawnrays (Nantong) has implemented a more scientific management on production and sewerage treatment to conserve the ecology and reduce the production cost which progressively realizes the recycled economy of the industrial chain.

As one of the few comprehensive vertically integrated 3rd generation Cephalosporin manufacturers in China, Dawnrays Pharma will engage in sales of high quality chemical intermediates and crude products from Dawnrays (Nantong) to outside parties upon satisfying its in-house consumption. That will develop new growth point of profit for the Group. Furthermore, as a crucial strategic planning of the Group, Dawnrays (Nantong) will be combined with the blueprint for the overall vertically extended business infrastructural planning in order to stay ahead for the future development of pharmaceutical market in China and enhance corporate brand recognition and image and also leverage on Dawnrays Pharma’s strength and excellence to make every endeavor to expand overseas markets.