On behalf of the board of directors ("Board") of Hua Han Bio-Pharmaceutical Holdings Limited ("Hua Han", together with its subsidiaries, the "Group"), I am pleased to present the annual results of the Group for the year ended 30 June 2008 ("Year").

BUSINESS REVIEW

During the year under review, results of the Group continued to report satisfactory growth. Turnover for the year ended 30 June 2008 amounted to approximately HK$806.2 million, representing a growth of 8.4% as compared with HK$743.9 million for the preceding year. Profit attributable to shareholders amounted to approximately HK$144.2 million. Such growth was mainly attributable to the increased sales of the "Magic（美即）" product series, expansion in the over-the-counter ("OTC") market, development of the third point of sales, concentrated and careful deployment of effort in hospital market, integrated application of the Group's enterprise resources, implementation of products sales strategies, enhancement in operational efficiency, and consolidation and extension of sales network and channels.

OPERATION REVIEW

During the Year, the economy of the People's Republic of China ("PRC") continued to grow. Following implementation of the newly launched state medical reform measures, and with the expansion of capacity of the pharmaceutical industry, improvement in market conditions of the
pharmaceutical sector, the growing popularity of and demand for pharmaceutical and healthcare products, and the stimulation from the Beijing Olympics on the economy, a more favourable environment for business development of pharmaceutical enterprises had been in place, thereby facilitated the continual growth of the business of Group.

The Group is dedicated to raise the brand awareness of its products and accumulate its underlying competitiveness on the basis of its exclusive products. It had succeeded in maintaining a highly stable development pattern through continuous implementation of designated strategies of differentiation with forward-looking perspectives, and defending its strong strategic position by timely involvement in the bio-pharmaceutical arena. Through overall operational efficiency upgrade, consolidation of production and sales resources, reengineering of production and sales systems, reinforcement of product quality and safety management, and expansion in sales network, the Group had established a sound and solid production and sales platform. Last but not least, it had received a boost of confidence to its prospective full-scale expansion into the bio-pharmaceutical segment through the acquisition of 52% equity interest in a pharmaceutical enterprise with two bio-pharmaceutical medicines which have been granted as the State category one new bio-pharmaceutical medicines by the States Food and Drug Administration of the PRC（中國國家食品藥品監管局）("SFDA").

The measures mentioned above had contributed to the considerable enhancement of the Group's competitive strength and innovation capacity, which in turn helped the Group in realising its strategy, thus enabled it to maintain stable growth.

PROSPECTS

Looking forward, given that the PRC economy has not yet been totally converged with the international arena, and that the economic growth in the PRC has been relying primarily on domestic demand, the Directors consider that the current global financial market turmoil triggered by the US sub-prime mortgage crisis will not have significant adverse effect on the PRC pharmaceutical industry. The Directors consider that buoyant economic growth in the PRC, increasing input of resources into medical care and healthcare sectors by the State, expedition in urbanization process, aging population and greater awareness in health and medication will continue to drive the growth in domestic demand for pharmaceutical products. The introduction of medical reform policies and Universal Health Care had facilitated the well-regulated development and healthy growth of the pharmaceutical market. With supportive government policies and relatively relaxing regulatory environment, the outlooks of both the Chinese medicine sector and the biopharmaceutical sector remain favourable.

As the Group aspires to become a leading manufacturer and provider of gynecological pharmaceutical products and feminine medicinal healthcare products as well as a manufacturer of newly emerged biopharmaceutical medicines in the PRC, the Group will capitalize on growth opportunities created through industrial development, conduct mergers and acquisitions and implement consolidation to enhance overall operational efficiency, thereby to intensify and further build up its inherent strength. Through increase in investment in "Magic（美即）" and other high growth product series, and with the boom of new products (the most recognizable one being the State category one new bio-pharmaceutical medicine – Human Nerve Growing Factor Injection（人神經生長因子注射液）), the Group will continue to strive to improve its overall performance.

At the same time, in view of the growing market size of the pharmaceutical industry brought by the new government policy on healthcare, the Group has recognised that consumption power in pharmaceuticals in second and third-tier cities and rural area is quickly gathering pace. In this regard, greater effort would be exerted on promoting brand names of the Group; and through development of sales network which covers drug stores, community healthcare institutions and hypermarkets, the Group intends to increase sales of its OTC drugs (led by Fuke Zaizaowan（婦科再造丸）) and feminine medicinal healthcare products series (led by the "Magic（美即）" products), and thereby expand the Group's presence in these cities and regions and ultimately improve its earnings.

The Group will also extend its involvement in research and development through selecting and enlisting a greater number of products for ongoing research and development. It will also gear up the marketing of new products led by Native DNA Bio Chip（原態基因組生命信息芯片）, and will focus on the launching of Human Nerve Growing Factor Injection（人神經生長因子注射液）, Yi Fu（易孚）, Yi Bei（易貝）and other bio-pharmaceutical product series, thereby increase the Group's advanced technology contents and brand equity.

The Board and I have great confidence in the Group's future development. As always, we will adhere to our designated strategy and continue to recruit high-caliber talents to our professional management team, develop a professional operation and management model, and work with other leading pharmaceutical enterprises. The Group is confident and capable of resolving difficulties and challenges. We will grasp emerging opportunities and strive to achieve high growth, so that we can bring lasting and maximum value to our shareholders.

APPRECIATION

On behalf of the Board, I would like to express my gratitude to our management, staff, clients, business partners and shareholders for their contribution to the Group's development. We attribute the achievements of the Group to the great support from, and dedication and teamwork of, the parties mentioned above. We firmly believe that, leveraging on the sustainable economic growth in the PRC, the ongoing support from the shareholders, and the substantial market space in the PRC, we could become a leading enterprise of gynecological pharmaceutical products, feminine medicinal healthcare products as well as bio-pharmaceutical medicines in the PRC.

Zhang Peter Y.
Chairman

Hong Kong
23 October 2008