Dong-A Pharmaceutical Co Ltd (000640 Ks) Urges Shareholders to Vote against the Kang-Korea Alcohol Nominees at the October 31 EGM.

* Election Of Kang-Korea Alcohol Nominees Would Imperil The Continued Success Of Dong-A's Strategic Plan

* Commences Distribution Of Proxy Materials Urging Shareholders To Vote Against The Kang-Korea Alcohol Nominees

SEOUL, South Korea -- Dong-A Pharmaceuticals Co Ltd (000640 KS), the largest Korean pharmaceutical company, is urging its shareholders to vote against the five candidates nominated by Moon-Seok Kang, Dong-A's former CEO, and Korea Alcohol Industries at the October 31, 2007 EGM called by Mr. Kang and Korea Alcohol for the sole purpose of adding five new directors to the existing seven member Board. Election of the Kang-Korea Alcohol slate would give the proponents control of the Board since Mr. Kang and one of his associates are currently Board members.

In a letter to shareholders, Dong-A warned that the election of the Kang-Korea Alcohol nominees would imperil the continued success of management's Strategic Plan to turn the company into a world class, R&D driven pharmaceutical company focused on Dong-A's core competencies. A Kang-Korea Alcohol controlled Board would not have the same interests as all other shareholders in increasing the value of Dong-A, the letter continues and notes that since the removal of Mr. Kang as CEO in December 2004, Dong-A's stock price has increased by 295%, from 24,026 Won on December 30, 2004 to 94,800 Won as of October 9, 2007.

The shareholder letter, the Reference Document for the EGM, a detailed description of the Strategic Plan, as well as other information concerning the company, are available at www.protetectdong-a.com and www.donga-pharm.com.

The full text of the letter to shareholders follows:

October 10, 2007

Dear Shareholders,

A group led by Moon-Seok Kang, Dong-A's former CEO, and Korea Alcohol Industries is attempting to seize control of Dong-A Pharmaceutical's Board of Directors at the October 31, 2007 EGM. Mr. Kang and Korea Alcohol are seeking to add five (5) of their associates to the Board at the EGM. If successful, Mr. Kang and Korea Alcohol would control seven (7) of the twelve (12) Board seats since Mr. Kang and his associate, Chung-Sik Yoo, Dong-A's former Vice Chairman, are currently Directors.

We believe that turning over control of the Board to Mr. Kang and Korea Alcohol would greatly harm the interests of Dong-A shareholders. As described below, a Kang-Korea Alcohol controlled Board would not have the same interests as all other shareholders in increasing the value of Dong-A. Such a Board could prevent current management from continuing to execute on its successful Strategic Plan to become a world class, R&D driven pharmaceutical company focused on our core competencies. Consider that since Mr. Kang was removed as CEO in December 2004, Dong-A's stock price has increased by 295%, from 24,026 Won on December 30, 2004 to 94,800 Won as of October 9, 2007.

The Board has already determined to add up to two (2) new outside directors at next year's AGM. Those new directors will be selected from a group of candidates chosen by an Advisory Council of shareholders and industry experts who understand the skills and experience necessary to direct the continued development and implementation of our successful Strategic Plan described below. That is the appropriate way to select new Directors for a company - not through an EGM featuring nominees hand picked by a failed former CEO and a company seeking to benefit itself from our profitable technology and brands.

We strongly urge all shareholders to safeguard the value of their investment in Dong-A by voting AGAINST the election of the five (5) nominees chosen by Mr. Kang and Korea Alcohol. Please mark the enclosed proxy card with a vote AGAINST all items and then sign and return it as soon as possible.

VOTE AGAINST THE KANG-KOREA ALCOHOL NOMINEES BECAUSE:

* Mr. Kang Generated Enormous Losses And Focused On Declining, Diverse Businesses During His Tenure At Dong-A.

* Dong-A Was Recently Assessed 37.8bn Won In Additional Taxes And Penalties Due To Various Improper Activities During Mr. Kang's Tenure, Including Diverting 1.4bn Won In Company Assets To Himself.

* A Return To Mr. Kang's Leadership Would Harm The Shareholders' Investment In Dong-A.

As CEO, Mr. Kang generated the following enormous losses for Dong-A's shareholders:

* 112.54bn Won through investments in and support for subsidiaries which did not generate any meaningful returns.

* 20bn Won in unrecoverable bad loans from an export agency business unrelated to the company's core activities.

* 4.6bn Won through the purchase of real estate far in excess of its value without first examining its development potential.

In addition, the Korean tax authorities recently assessed the company 37.8bn Won in additional taxes and liabilities for various improper activities during Mr. Kang's tenure. Among other items, the tax authorities found that Mr. Kang had improperly diverted 1.4bn Won of company assets for his own benefit and taxed such payments as "constructive bonuses."

Dong-A recently filed a complaint against Mr. Kang with the Seoul Western District Prosecutors' Office alleging that he embezzled 1.76bn Won from the company. The complaint also alleges that Mr. Kang took 850mm Won in profits from stock transactions with Dong-A's affiliates using internal information in 2004.

Mr. Kang simply did not understand the profitable potential of Dong-A's business. Rather than focus on Dong-A's core competencies in the high margin ethical drug business, as current management has done, Mr. Kang focused the company on low margin over-the-counter products, an export-import business that generated enormous losses, as noted above, and failed investments in various unrelated businesses.

By contrast, as more fully described below, current management is successfully implementing a new Strategic Plan to turn the company into a world class, research and development driven pharmaceutical company focused on its core competencies. The success of the Strategic Plan and the consequent dramatic increase in the price of our stock would be imperiled if Mr. Kang controlled the Company's Board of Directors, given his poor track record running Dong-A.

VOTE AGAINST THE KANG-KOREA ALCOHOL NOMINEES BECAUSE:

* Korea Alcohol Wants To Benefit From Our Assets And Technology.

* Korea Alcohol's Interests Are Not The Same As Yours.

To protect their best interests, shareholders also need to vote AGAINST the Kang-Korea Alcohol slate because Korea Alcohol, which is supporting these nominees, at least two (2) of whom are directly affiliated with Korea Alcohol, is looking to serve its own interests, not those of the other Dong-A shareholders.

As Korea Alcohol itself admitted on pp.55-56 of its 2006 Business Report:

     We considered it necessary to diversify (Korea Alcohol's)
     business into IT chemicals based on nano-technologies ....
     Accordingly, we invested in Dong-A, which, as the leading
     domestic pharmaceutical company, has brand power and strengths in
     the consumer distribution division.

Turning over control of the Board of Directors to the Kang-Korea Alcohol slate will serve the interests of Korea Alcohol and its shareholders, not your interests.

VOTE AGAINST THE KANG-KOREA ALCOHOL NOMINEES BECAUSE:

* The Kang-Korea Alcohol Nominees Do Not Have the Qualifications And Experience Needed To Oversee The Development And Implementation Of The Strategic Plan.

Mr. Kang and Korea Alcohol have selected five (5) nominees to further their efforts to seize control of the Dong-A Board. None of these nominees would serve the interests of the Dong-A shareholders because they are close affiliates of Mr. Kang and/or Korea Alcohol or they do not have the appropriate qualifications to continue the development and implementation of our successful Strategic Plan.

[TABLE OMITTED]

VOTE AGAINST THE KANG-KOREA ALCOHOL NOMINEES BECAUSE:

* Current Management's Strategic Plan To Develop Dong-A Into A World Class R&D Focused Pharmaceutical Company Is Creating Shareholder Value.

* Election Of The Kang Korea Alcohol Nominees Will Imperil The Shareholders' Investment.

Current management has developed a Strategic Plan strikingly different from, and more successful than, Mr. Kang's failed focus on multiple, unrelated businesses and diversions of corporate assets for his own use. We are developing Dong-A into a world class, R&D focused pharmaceutical company. That effort is directly led by CEO Won Bae Kim who had previously been head of Research & Development and pushed through many of our successful drug products against the objections of Mr. Kang.

A detailed description of the Strategic Plan, entitled "Strategy and Commitment for Shareholder Value Maximization" is available on our website, www.protectdonga.com.

The Strategic Plan will shift more of our business into high margin ETC drugs. We expect that by 2011, 61% of our revenue will come from such drugs, significantly reducing our marginal cost. We are ramping up our R&D expenditures which will be focused on our core competencies: new chemical entities for quality of life drugs and phytomedicines for anti-inflammatory disorders, as well as biosimilars, in addition to generic drugs targeted for mega markets with high growth and innovatively modified supergeneric drugs.

Naturally, we need to expand our export business and have already met with success in that area. We are targeting North Asia for phytomedicines, Europe and South America for biosimilars and the world market for blockbuster new chemical entities.

For example, Stillen, a phytomedicine originally developed by Dong-A, has been extremely successful, going from 6.2bn Won in sales in 2003 to estimated sales of 55bn in 2007. We are introducing Stillen into North Asian markets that are very receptive to phytomedicines. Unfortunately Mr. Kang, while CEO, did not support the development of this blockbuster drug. Similarly, in little more than a year, Zydena, our originally produced erectile dysfunction drug (EDS), has approximately the same market share in Korea as Cialis, previously the second biggest selling EDS drug in Korea. We are now in the process of introducing Zydena into other markets around the world.

We realize that we need to seek partners to accomplish this goal. Accordingly, we are approaching certain Japanese and Chinese companies for co-promotion deals, Indian and Chinese companies for API in manufacturing and several multinationals in the area of R&D.

We are also considering developing new high growth healthcare businesses, such as diabetes care, cancer care, geriatric care and cancer equipment leasing. These areas fall within our core competencies and will be the continued subject of analysis to ensure that entry into any of these areas will produce significant shareholder returns.

Finally, we are in the process of restructuring our businesses by improving business and cost structures at the pharmaceutical/beverage businesses we are retaining, while disposing of non-related businesses.

Our Strategic Plan is working. As noted above, the stock price has increased by 295% since current management took over in January 2005. There are still challenges ahead, however. Dong-A's ability to continue to create shareholder value will be imperiled if Mr. Kang and Korea Alcohol seize control of the Board of Directors. Mr. Kang's track record at Dong-A demonstrates that he does not understand the company's real potential to build value for the shareholders, and Korea Alcohol is looking at Dong-A to serve its interests, not those of the Dong-A and its shareholders.

To continue to prosper, Dong-A needs Directors with the skills and experience to continue the development and implementation of the Strategic Plan, not Directors hand picked by a failed former CEO and a company pursuing its own interests at the expense of Dong-A's shareholders.

VOTE AGAINST THE KANG-KOREA ALCOHOL NOMINEES BECAUSE:

* The Recent Issuance Of Exchangeable Bonds Enabled Dong-A To Pay The 37.8bn Won Tax Liability Arising From Improper Activities During Mr. Kang's Tenure And Other Capital Needs.

* The Exchangeable Bonds Were The Most Efficient, Practical And Shareholder Friendly Way To Address The Pressing Need To Pay The Tax Liability.

The Company recently raised 65.6bn Won1 through the issuance of zero coupon exchangeable bonds in order to pay the 37.8bn Won tax liability that, as discussed above, arose from various improper activities during Mr. Kang's tenure, including the diversion of 1.4bn Won of company assets for his own use that the tax authorities characterized as a "constructive bonus". We were notified of the amount of the tax liability in April 2007 and needed to pay it in installments in April, May and July 2007, with a final payment later this year. Since our cash on hand was insufficient to pay this amount, the company raised the money through the issuance of exchangeable bonds.

Mr. Kang and Korea Alcohol have attempted to mislead the shareholders into thinking that the exchangeable bond was merely a device to help current management. They have resorted to various untruths in their efforts to mislead. As discussed below, the exchangeable bond was in fact the most efficient, practical and shareholder friendly way to address our pressing capital needs.

The exchangeable bonds were structured as follows:

Dong-A sold 748,400 shares of its treasury stock at then market price to special purpose companies (SPCs) incorporated in Labuan, Malaysia. Dong-A had been repurchasing its shares in the open market since 2000 to help stabilize the stock price. Under such circumstances, Korean law prohibits Dong-A from retiring those shares - they must remain as treasury shares until the company sells them or disposes of them other than through retirement.

The SPCs then issued zero coupon exchangeable bonds in the amount of 112% of the amount it paid for the treasury shares to non-Korean investors unrelated to Dong-A. We believe that it is important to attract additional foreign investors into our stock to achieve maximum valuation. The foreign based SPCs provided tax advantages, described below, to non-Korean investors that made the exchangeable bonds very attractive to such investors.

There were two exchangeable bonds, a five year bond at 3.95% annual interest and a 10 year bond at 4.1% interest. Both bonds also contained rights to purchase the treasury shares held by the SPCs at an exercise price of 115% of the price paid by the SPCs for the treasury shares. The exchangeable bonds were sold to non-Korean investors who are independent of the company and its management.

Exchangeable bond transactions of this type are a common Korean market practice. Among the companies that have issued similar exchangeable bonds are Kia, INI Steel, SK Telecom and Daelim Industrial.

The fees and expenses incurred in connection with the issuance of the exchangeable bonds were customary for this type of transaction.

The exchangeable bonds served the best interests of the shareholders in the following ways:

* Lower Interest Rates The exchangeable bonds had interest rates of 3.95% and 4.1%, significantly lower than the 5.5% to 6% rates on the short term debt retired with part of the proceeds from the exchangeable bond. Our outside investment bankers estimated that annual interest rates on a new debt financing in the amount raised would have been above 7%.

* Minimized Dilution Financial analysts and other market professionals had included the treasury shares in their EPS calculations because, as noted above, they could not be retired under Korean law. Consequently, the overhang on the market caused by the treasury shares was a drag on the company's stock price. If we had tried to raise the necessary capital through the issuance of new stock, either as a direct placement or the issuance of convertible bonds, the stock price would have suffered significantly due to the double dilution caused by the existing treasury shares as well as the new issuance shares.

By contrast, the stock price rose after the announcement that the exchangeable bonds had been issued, a common phenomenon among Korean companies after selling treasury shares. Korean companies frequently sell treasury shares into the market. According to a story in the October 4, 2007 Financial News, 81 Korean companies sold a total of 48,590,000 treasury shares in the first 9 months of this year, an increase of approximately 23% over the same period last year. In most instances, stock prices rose after such sales.

While there was a tax imposed on the sale of the treasury shares to the SPCs, the tax cost was outweighed by avoiding the harm to the stock price arising from the double dilution resulting from an issuance of new stock or convertible bonds, as well as the dramatically lower interest costs described above.

* Premium Pricing As noted above, the SPCs raised 112% of the purchase price of the treasury shares. The SPCs lent the additional cash raised to Dong-A so that the entire net proceeds of the exchangeable bonds were provided to the company. In addition, the exercise price of the warrants was set at 115% of the market price of Dong-A's shares on the date of the issuance of the bonds.

By contrast, if we had issued new stock, our outside bankers estimated that we would have had to sell the stock at a 15-25% discount to account for the additional dilution described above.

* Foreign Investment The use of foreign SPCs made the exchangeable bonds more attractive to foreign holders, a group of investors we need to attract to maximize our stock value. At present, only about 12% of our shares are held by non-Korean institutional investors, excluding the SPCs.

In particular, the holders of the exchangeable bonds are not subject to Korean income or withholding taxes on the interest paid with respect to the bonds. In addition, the foreign SPCs also provide foreign investors with additional protection with respect to the treasury shares as collateral in the event of a bankruptcy.

* Timely As noted above, we had very little time to pay the 37.8bn tax liability. The exchangeable bonds were able to be consummated in sufficient time.

* No Manipulation of Voting Rights Mr. Kang and Korea Alcohol would like you to believe that the exchangeable bonds were issued primarily to provide the voting rights over those shares to current management. In fact, the exchangeable bonds are structured to avoid that situation.

Each bond carries the right to direct the SPC to vote the holder's proportionate share of the treasury stock. If the holder does not direct the SPC how to vote, the SPC is required to vote such shares in proportion to the shares voted by all other Dong-A shareholders, or to "shadow vote". As noted above, the exchangeable bonds are freely transferable and are held by non-Korean investors who are independent of the company and its current management. Consequently, given that the voting rights are held by independent third parties who can sell their investment to additional third parties and that shadow voting will apply if no instructions are given to the SPC, the exchangeable bonds are simply not conducive to manipulation of voting rights by current management.

Please act today to protect the value of your investment in Dong-A by signing and dating your proxy card with a vote AGAINST all of the Kang-Korea Alcohol nominees.

Thank you for your continued support.

/s/_____________________ Won Bae Kim Representative Director & CEO

IF YOU WOULD LIKE ADDITIONAL INFORMATION, PLEASE GO TO OUR WEBSITE, WWW.PROTECTDONGA.COM.

1 The exchangeable bonds are dollar-denominated. Exchange rate of 935.1 Won to $1USD on July 30, 2007.