VRG Technologies, Inc.

Consumers are bombarded with drug advertising on television, radio and in print media. Their conversations include discussions of newly introduced drugs and, as patients, they
have become advocates of their own health care by confronting their physicians with information they have acquired. Concurrently, as many of the newly introduced drugs
achieve billions of dollars annually in sales, industry observers, industry participants, patients, and health care reformers are beginning to question why the cost of drugs is so high. Consequently, the future health of the U.S. drug industry may be in doubt.

According to a soon-to-be-released BUSINESS COMMUNICATIONS CO., INC. study C-181R
The Changing Drug Industry: New Strategies, Product Trends, total worldwide drug sales reached $145 billion in 1998, with $94.5 billion in domestic use. Ethical, generics and OTC drugs
accounted for $42.7 billion, $22.8 billion and $29 billion respectively. By the year 2003 domestic sales are expected to grow to $186.5 billion, exhibiting an annual average growth rate (AAGR) of
14.6% for the period 1998-2003. The worldwide market will grow at an AAGR of 13.3% from 1998 to 2003, reaching $271.2 billion in 2003.

In 1999 the leading "block buster" drugs will generate sales over $26.6 billion. Numerous drugs have been "switched" from prescription to OTC status. Currently, there are more than 600 drug products in the OTC marketplace that were available only by prescription a decade ago. This segment will experience the fastest AAGR of 15.7% from 1998 to 2003. Nevertheless ethical sales will contribute to roughly 43% of the total domestic drug sales.

On-line drug stores on the Internet are estimated to be capable of generating $150 billion annually in sales for drugs and cosmetic products. Direct to consumer marketing and co-marketing will also
be an important trend in the years to come. Internet sales will experience an AAGR of 13% from 1999 to 2004.

Drug companies are closely examining monoclonal antibodies as potential new drugs. Pharmaceutical companies are expanding the uses of existing compounds as a means to stretch profits. Sales in this segment are expected to grow from $3.55 billion in 1998 to $47.8 billion in 2003.

The U.S. drug industry has come a long way since the early 90s, where it underwent a concerted attack on the high cost of drugs by health care reformers. One of the dynamics that changed
competitive forces was the relaxation of FDA rules in 1997, allowing pharmaceutical companies to advertise directly to consumers, which exceeded $1 billion in 1998, accounting for nearly 1% of
estimated U.S. drug industry domestic sales.

Future growth in the worldwide drug industry will be impacted by worldwide efforts to reduce cost to patients. Also the worldwide market will see efforts among managed care facilities to control
buying patterns. They will orchestrate greater use of generics and vary drug prices throughout Europe as politicians examine various markets as the result of the introduction of the Euro. The
U.S., Europe and Japan total 81% of all pharmaceutical sales in 1998 but this share is expected to drop to 79% by 2003.