rhSA
rhSA is usually injected in large amounts, often 10 grams per dose. The large dosage presents a very high requirement for the purity of rhSA. For a long time, the high purity rhSA used in clinical studies can only be produced in laboratory quantities. Mass production was not feasible without appropriate equipment.

Recent Scientific Breakthrough
The limitation has been removed by the scientific breakthrough achieved by Swedish based Amersham Pharmacia Biotech (Amersham). The new technology, called STREAMLINE process, provides the key solution by adopting new absorption technology in the genetic manipulation of Pichia pastorisis. The application for the governmental approval of the process was lodged in 1997 under the brand name Albrec.The best example of the application of STREAMLINE process on a commercial scale for the production of rhSA is the Chitose human serum albumin plant in Japan (“Chitose Plant”). Yoshitomi Pharmaceutical Industries (“YPI”) applied the completed STREAMLINE process technology provided by Amersham in constructing its Chitose plant in Bipha of Hokkaido. The Chitose plant, which costs YPI 14 billion Yen, started to manufacture rhSA in the middle of 2001. It was reported by YPI that its Chitose plant has achieved a stunning increase in productivity and that nearly all the previous technological obstacles have been resolved under the STREAMLINE process.

Current Status of rhSA R&D Project
As of now, the rhSA R&D project of the Company has been temporarily suspended due to the shortage of funds to purchase key production equipments from Amersham. The management of the Company estimates the total cost of the required Amersham equipment would be RMB 10 million.

Prospective of rhSA R&D Project
Although the production of r-HAS has been approved for marketing in Japan, the clinical research conducted by the Company does not constitute an infringement on the intellectual property right of YPI since the clinical research of the Company is protected by its own patent. Accordingly, the Company is eligible to apply to SDA for the Category I new drug license for its rhSA product.

The management of the Company believes that it is worthwhile to invest in this R&D project for its promising market prospects. Furthermore, the necessary clinical research and documentation can be completed within 3 years provided that the required financial resources are available.