Stock Code 股份代號 : 1513
(A joint stock company incorporated in the People’s
Republic of China with limited liability)
（在中華人民共和國註冊成立的股份有限公司）
麗珠世界生命常青
Evergreen Life
Bright Future & Wisdom
www.livzon.com.cn 2024
環境、社會及管治報告
Environmental
Social and
Governance
Report
* For identi cation purpose only 僅供識別
麗珠醫藥集團股份有限公司 Livzon Pharmaceutical Group Inc. 環境、社會及管治報告 Environmental Social and Governance Report 20241 ABOUT THIS REPORT 4
2 CHAIRMAN’S MESSAGE 8
3 ABOUT THE COMPANY 12
3.1 THE COMPANY’S BUSINESS 13
3.2 CORPORATE GOVERNANCE 14
3.3 PERFORMANCE HIGHLIGHTS IN 2023 15
3.4 THE COMPANY'S HONORS 18
4 ESG GOVERNANCE 20
4.1 BOARD STATEMENT 21
4.2 ESG GOVERNANCE STRUCTURE 22
4.3 STAKEHOLDER COMMUNICATION 23
4.4 MATERIAL ISSUES 24
4.5 RISK MANAGEMENT 26
5 OPERATION COMPLIANCE 30
5.1 BUSINESS ETHICS 31
5.1.1 Anti-corruption 32
5.1.2 Whistleblowing protection 34
5.1.3 Clinical ethics 34
5.1.4 Ethical marketing 35
5.2 DATA SAFETY AND CLIENT PRIVACY PROTECTION 37
5.3 SAFEGUARING OF INTELLECTUAL PROPERTY RIGHTS 39
5.4 PARTY BUILDING ACTIVITIES 40
6 ACCESS TO HEALTH CARE 42
6.1 RESEARCH AND DEVELOPMENT INNOVATION 44
6.2 PRODUCT ACCESSIBILITY 52
6.3 AFFORDABILITY AND FAIR PRICING 57
6.4 ENHANCEMENT OF HEALTH CARE 60
6.5 SUPPORT FOR POST-MARKET PHARMACOVIGILANCE 63
6.6 INVESTMENT IN RARE DISEASES 63
6.7 RATIONAL USE OF DRUGS 64
CONTENTS7 PRODUCT RESPONSIBILITY 66
7.1 QUALITY MANAGEMENT SYSTEM 70
7.2 QUALITY RISK MANAGEMENT 71
7.3 R&D QUALITY MANAGEMENT 75
7.3.1 Quality management of pharmaceutical R&D 75
7.3.2 Quality management of clinical trial 77
7.3.3 External regulation 78
7.4 QUALITY MANAGEMENT OF PRODUCT MANUFACTURING 78
7.4.1 Registration and certification 79
7.4.2 External regulatory inspections 80
7.4.3 Quality control on production process 82
7.4.4 Quality audit 85
7.5 QUALITY MANAGEMENT OF PRODUCT DISTRIBUTION 86
7.5.1 Management of product package inserts and labels 86
7.5.2 Product tracing 86
7.5.3 Product recall and safety emergency management 87
7.5.4 Protection of customer rights and interests 88
7.6 PHARMACOVIGILANCE 91
7.6.1 Pharmacovigilance management 91
7.6.2 Report of adverse drug reaction 92
7.7 ESTABLISHMENT OF QUALITY CULTURE 94
8 RESPONSIBLE SUPPLY CHAIN 96
8.1 SUPPLY CHAIN MANAGEMENT 98
8.1.1 Entry management 99
8.1.2 Classification of suppliers 99
8.1.3 Supplier audit 100
8.1.4 Annual comprehensive supplier evaluation 101
8.2 IMPROVEMENT OF SUPPLY CHAIN QUALITY 102
8.3 ESTABLISHMENT OF CLEAN SUPPLY CHAIN 105
8.4 ENHANCEMENT OF SUPPLY CHAIN STABILITY 107
8.5 GREEN AND SUSTAINABLE SUPPLY CHAIN 110
8.5.1 Supplier EHS audit 110
8.5.2 Sustainable procurement 111
8.6 DRIVING INDUSTRY DEVELOPMENT 112
9 TAKE HUMAN AS THE FOREMOST 114
9.1 EMPLOYMENT 115
9.1.1 Compliant employment 116
9.1.2 Diversity and inclusion 118
9.1.3 Preservation of talent 124
9.2 TALENT MANAGEMENT 125
9.2.1 Employee training 125
9.2.2 Talent development 128
9.2.3 Remuneration and welfare 130
9.3 EMPLOYEE COMMUNICATION 137
CONTENTS9.3.1 Complaint reporting procedures 137
9.3.2 Communication of labor union 137
9.3.3 Employee engagement survey 138
9.4 OCCUPATIONAL HEALTH AND SAFETY 141
9.4.1 Occupational health 143
9.4.2 Work safety 145
10 GREEN OPERATION 148
10.1 ENVIRONMENTAL MANAGEMENT SYSTEM 150
10.1.1 Management structure 151
10.1.2 Certification 151
10.1.3 Regular audit 152
10.1.4 Compensation linked to ESG performance 153
10.1.5 Environmental risk management 154
10.2 ENVIRONMENTAL MANAGEMENT TARGETS 156
10.3 POLLUTANTS CONTROL 158
10.3.1 Treatment of air emissions 160
10.3.2 Wastewater management 162
10.3.3 Waste management 164
10.3.4 Noise management 165
10.3.5 Reducing environmental impact 166
10.4 RESOURCE USE MANAGEMENT 166
10.4.1 Water resource management 167
10.4.2 Energy management 170
10.4.3 Material management 172
10.5 ADDRESSING CLIMATE CHANGE 173
10.5.1 Governance 173
10.5.2 Strategy 174
10.5.3 Risk management 200
10.5.4 Metrics and targets 202
10.6 BIODIVERSITY PROTECTION 202
11 SOCIAL CONTRIBUTIONS 208
11.1 RURAL REVITALIZATION 210
11.2 SOCIAL AND PUBLIC WELFARE 211
12 APPENDIX 214
12.1 LIST OF LAWS AND REGULATIONS AND POLICIES 215
12.2 DATA LIST OF KEY PERFORMANCE INDICATORS 232
13 CONTENT INDEX
246
CONTENTS1 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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ABOUT
THIS
REPORT
4 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions index
OVERVIEW
This report is the ninth environmental social and governance (“ESG”) report
(the “Report”) issued by the Company that serves as an annual ESG reportwhich covers the period from 1 January 2024 to 31 December 2024 (“ReportingPeriod” “the Reporting Period” “the Year” or “this Year”) to disclose the
ESG performance of the Company and its subsidiaries for 2024. To enhance the
comparability and completeness of the contents of the Report some contents
are traced back to previous years or extended to the first quarter of 2025 as
appropriate.BASIS OF THE REPORT
The Report has been prepared in accordance with the requirements of
Appendix C2 Environmental Social and Governance Reporting Code to the
Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited and the Self-Disciplinary Regulatory Guidelines No. 17 for Companies
Listed on Shenzhen Stock Exchange – Sustainability Reporting (Trial) and has
taken into account the results of the Company’s analysis of material issues.SCOPE AND BOUNDARY OF THE REPORT
The coverage of the Report is in line with the scope of consolidated financial
statements as set out in the 2024 annual report of the Company.DATA SOURCE AND RELIABILITY STATEMENT
The data and case studies in the Report are mainly derived from the formal
documents statistical reports relevant public documents and internal reporting
documents of the Group. The Company undertakes that the Report contains
no false representations or misleading statements and is responsible for the
truthfulness accuracy and completeness of its contents. Unless otherwise
specified all monetary amounts are denominated in Renminbi (RMB).CONFIRMATION AND APPROVAL
The Report was confirmed by the Company’s management and approved by the
board of directors (the “Board”) on 23 April 2025.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 51 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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AVAILABILITY OF THE REPORT AND FEEDBACK
The Report is available and can be downloaded from the website of Hong Kong Exchanges and Clearing Limited (“HKEx”)
(www.hkexnews.hk) the website of the Company (www.livzon.com.cn) and Cninfo (www.cninfo.com.cn).For any comments or suggestions regarding the Report please contact the Company by email at LIVZON_GROUP@livzon.com.cn.The Report is prepared in both Chinese and English. In case of any discrepancies the Chinese version shall prevail.
6 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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EXPLANATION FOR ABBREVIATIONS
In order to facilitate presentation and reading unless otherwise specified the following abbreviations have the meanings
below:
Abbreviated company name Full company name
The Company Company Livzon Pharmaceutical Group Inc.*（麗珠醫藥集團股份有限公司）
The Group The Company and its subsidiaries
Sichuan Guangda Pharmaceutical Manufacturing Co. Ltd.*
Sichuan Guangda
（四川光大製藥有限公司）
Shanghai Livzon Pharmaceutical Manufacturing Co. Ltd.*
Shanghai Livzon（上海麗珠製藥有限公司）
Shanghai Livzon Biotechnology Co. Ltd. Jiaozuo Branch*
Shanghai Livzon Biotech（上海麗珠生物科技有限公司焦作分公司）
Pharmaceutical Factory Livzon Group Livzon Pharmaceutical Factory*（麗珠集團麗珠製藥廠）
Livzon Group Limin Pharmaceutical Manufacturing Factory*
Limin Factory（麗珠集團利民製藥廠）
Livzon Diagnostics Zhuhai Livzon Diagnostics Inc.*（珠海麗珠試劑股份有限公司）
Livzon MAB Livzon MABPharm Inc.*（珠海市麗珠單抗生物技術有限公司）
LivzonBio LivzonBio Inc.*（珠海市麗珠生物醫藥科技有限公司）
Livzon Group Xinbeijiang Pharmaceutical Manufacturing Inc.*
Xinbeijiang Pharma（麗珠集團新北江製藥股份有限公司）
Gutian Fuxing Gutian Fuxing Pharmaceutical Co. Ltd.*（古田福興醫藥有限公司）
Jiaozuo Livzon Hecheng Pharmaceutical Manufacturing Co. Ltd.*
Jiaozuo Hecheng（焦作麗珠合成製藥有限公司）
Livzon Group (Ningxia) Pharmaceutical Manufacturing Co. Ltd.*
Ningxia Pharma
（麗珠集團（寧夏）製藥有限公司）
Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co. Ltd.*
Livzon Hecheng（珠海保稅區麗珠合成製藥有限公司）
Livzon Group Fuzhou Fuxing Pharmaceutical Co. Ltd.*
Fuzhou Fuxing（麗珠集團福州福興醫藥有限公司）
Zhuhai Livzon Microsphere Technology Co. Ltd.*
Livzon Microsphere（珠海市麗珠微球科技有限公司）
Maohaizi Animal Health (Guangdong) Co. Ltd.*
Maohaizi
（毛孩子動物保健（廣東）有限公司）
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 71 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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Mr. Zhu Baoguo
Chairman of the Board
CHAIRMAN’S
MESSAGE
Dear stakeholders and all friends who care about Livzon
In 2024 under the dual drive of technological innovation and policy adjustment in the pharmaceutical industry Livzon
Group has always been committed to the mission of “prioritizing the quality of life of patients”. With the vision of
“becoming a leader in the pharmaceutical industry” the Group focuses on planning the robust operation and development
in its main innovative pharmaceutical business. Faced with the support of national policies and opportunities arising from
industry transformation we always uphold compliance as the baseline while embracing change with an open mindset. By
pushing forward with R&D innovation integrating AI technology into drug R&D process improving talent development
systems accelerating global product deployment and shifting pharmaceutical R&D from being “experience-driven” to
“technology-driven” we have laid a robust foundation for long-term sustainable growth.
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In 2024 Livzon Group resolutely implemented the strategy of “independent R&D + BD dual-wheel drive” focusing on
the dual pathways of “innovative drugs + high-barrier complex preparations”. With innovation serving as the engine
and globalization as the vision the Group deployed resources around its advantageous fields such as gastroenterology
assisted reproduction and psychoneurosis and progressively expanded into the fields of chronic diseases such as
metabolic disorders anti-infectives cardiovascular/cerebrovascular diseases to supplement the R&D pipeline consolidate
the core product portfolio and open up new areas of accessibility. In the field of assisted reproduction Triptorelin
Acetate Microspheres for Injection (1M) was granted the launch approval for the new indication of endometriosis and
the marketing application for Recombinant Human Follitropin Alfa Solution for Injection was submitted and accepted
at the end of January 2025; in the field of psychoneurosis following the license application submission for Aripiprazole
Microspheres for Injection in 2023 supplementary materials were successfully submitted during the Reporting Period with
launch approval expected in the first half of 2025; in the field of auto-immunity the phase III clinical enrollment for the
psoriasis indication of Recombinant anti-human IL-17A/F Humanized Monoclonal Antibody Injection was completed while
the phase III clinical enrollment for the ankylosing spondylitis indication was completed; in the field of metabolism the
marketing authorization application for Semaglutide Injection for type 2 diabetes was accepted and the phase III clinical
enrollment for its weight loss indication was completed. The continuous output of R&D results has paved the way for
international expansion. In the field of assisted reproduction Cetrorelix Acetate for Injection was approved by the US FDA
for marketing in 2024. These fruitful results have consolidated the Group’s position in various formulation fields broughtmore high-quality treatment options to patients and fully embodied the corporate mission of “prioritizing the quality oflife of patients”.The Group continues to make efforts in access to medicines. In active response to the national call the Group effectively
improves the accessibility and affordability of pharmaceutical products through multiple measures to promote the balanced
distribution and accessibility of medical resources. During the year a total of 191 products of the Group were included in
the Medical Insurance Catalogue of which 92 were in the class A list and 99 were in the class B list further expandingthe choices of medicines available to patients. In terms of pricing the Company adheres to the principle of “high qualityat affordable prices” optimizing processes to reduce production costs and providing cost-effective products for clinical
use. In terms of international expansion Livzon Group has further expanded the overseas reach of its products. In 2024
in the chemical drug preparation segment a registration application was submitted for Cetrorelix Acetate for Injection in
the United States; in the API and intermediate segment high-end pet drugs Fluralaner and Afoxolaner as well as antibiotic
product Dalbavancin Hydrochloride are undergoing registration in the United States; in the biological products segment
the Company is actively distributing Recombinant Human Choriogonadotropin alfa for Injection in the Asia Africa and
Latin America regions; in the traditional Chinese medicine segment Jingfu Antipruritic Granules were granted the launch
approval in Russia. The Company has also established a joint venture with Kalbe’s subsidiary in Indonesia to strengthen
its local production distribution and inject new momentum into its international development. Through a global two-way
licensing cooperation model the Company introduces advanced technologies and products while also promoting its
competitive products to international markets bringing more well-beings to patients around the world.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 91 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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The Group continues to focus on its talent strategy keeps optimizing mechanisms and enhances corporate vitality in
an all-round manner. The Company continuously optimizes and improves its systematic talent development mechanism.While nurturing and identifying talents internally the Company actively expands its global talent acquisition strategy
to adapt to the needs of its rapid development and industry transformation trends. The Group uses the Livzon Business
School as its core platform to build a diversified employee training system empowers employees on demand through a
learning model that combines online and offline forms and integration of resources and stimulates organizational vitality.The company strictly standardizes training management improves supporting resources promotes the systematization
and institutionalization of employee training and continuously delivers high-quality talents for business development.The Company values employee well-being practices the values of “happy life happy work” and creates a harmonious
corporate culture. By improving working and living facilities optimizing the industrial park environment and organizing
a variety of team activities we create a comfortable and convenient working and living space for employees enhancing
team cohesion and collaboration spirit and injecting strong impetus for the sustainable development of the enterprise.The Group actively responds to the national carbon peak and carbon neutrality policies deeply implements the concept
of sustainable development and further improves the management of pollutant discharge and resource utilization. In
addressing climate change the Company has incorporated climate risks into the Group’s ESG risk management system
detailing the impact of related risks and opportunities on the financial level. In 2024 for the first time we conducted
a scope 3 greenhouse gas inventory to thoroughly assess carbon emissions in the upstream and downstream value
chains of the Company and actively implement the concept of low-carbon operations. The Group has established a
sound environmental management system and continuously improves environmental management effectiveness through
continuous optimization of treatment processes and regular monitoring and evaluation. The Company attaches great
importance to the potential impact of pollutant discharge on employees and local communities. We conduct in-depth
analyses and develop risk assessment and control plans to ensure compliant discharge. Meanwhile we actively conduct
environmental awareness and professional technical training to strengthen the relevant employees’ environmental
expertise in areas such as “three waste” treatment water resource management and energy management.
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Bearing in mind its public welfare mission Livzon is actively engaged in rural revitalization and educational public welfare
and contributes to a healthy China and common prosperity through industrial assistance and resource coordination.During the Year the charitable donation of Livzon amounted to RMB12.98 million. The Group continues to promote the
Public Welfare Program for Prevention and Treatment of Chronic Diseases focusing on remote areas with high incidence
of chronic diseases such as hypertension and hyperlipidemia. Through drug donations we reduce the financial burden on
patients. As at the end of the Reporting Period the Company had entered into a total of 31 agreements in relation to the
Public Welfare Program for Prevention and Treatment of Chronic Diseases covering 9 provinces and 4 autonomous regions
across the country and had benefited more than 30000 people with chronic diseases. The Company has also established
long-term scholarship programs with well-known colleges and universities and made charitable donations to educational
charities to support scientific research and teaching efforts and the growth of outstanding students and promote the
balanced distribution of educational resources.Long as the journey is we will reach our destination if we stay the course; high as the mountains stand and vast as
the waters span we will prevail if we press on. On the road to the future Livzon Group will remain true to its founding
principle of “prioritizing the quality of life of patients” stay focused on innovation and R&D practice social responsibility
promote green transformation optimize product portfolios and provide more high-quality treatment options for patients.We are willing to align with the grand blueprint of healthy China enable the balanced development of medical resources
with innovation protect the health and well-being of all people with the heart of universal benefits and contribute to the
realization of the “Healthy China 2030” goal.Mr. Zhu Baoguo
Chairman of the Board
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 111 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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ABOUT
THE
COMPANY
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3.1 THE COMPANY’S BUSINESS
Founded in January 1985 and headquartered in Zhuhai City Guangdong
Province the People’s Republic of China (the “PRC” or “China”) the Company
is a comprehensive group company that is principally engaged in pharmaceutical
R&D production and sales. We are among the top 100 enterprises in Chinese
pharmaceutical industry（中國醫藥工業百強企業）. The Company was listed
on the main board of the Shenzhen Stock Exchange (stock code: 000513.SZ)
on 28 October 1993 and listed on the main board of the Hong Kong Stock
Mission Exchange (stock code: 01513.HK) on 16 January 2014.Prioritizing Regarding R&D and innovation as the cornerstone of sustainability the
the quality of life Company continued to pay attention to new molecules and cutting-edge
of patients technologies in the field of global new drug R&D and planned distribution
of innovative drugs and high-barrier complex preparations based on clinical
value and differentiated prospect. With a focus on gastroenterology assisted
reproduction psychoneurosis and other fields the Company formed a complete
product portfolio and a differentiated product pipeline covering the entire R&D
lifecycle which includes preparation products APIs and intermediates and
diagnostic reagents and equipment.Vision
Becoming a leader
in the pharmaceutical
industry
Value
People-oriented
Craftsmanship Spirit
Trustworthy Truth-seeking
and Pragmatism-oriented
Happy Life Happy Work
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3.2 CORPORATE GOVERNANCE
The Company has set up a corporate governance structure which is composed of the general meeting of the Company
(the “General Meeting”) the Board and its special committees the supervisory committee (the “Supervisory Committee”)
and the senior management of the Company. The decision-making and regulatory bodies of the Company including
the General Meeting the Board and the Supervisory Committee strictly followed the requirements of the regulatory
operating rules and internal system in performing management decision-making and operation supervision. The operating
standards were proven to be effective. The special committees of the Board all performed their respective duties. For more
information on corporate governance please refer to Livzon 2024 Annual Report.Livzon Board Structure
Board of
Directors
Strategy Remuneration
and Appraisal Nomination Audit
ESG
Committee Committee
Committee Committee Committee
Diversity of the Board
The Company highly recognizes the contribution of a diverse Board in its corporate development. According to the
requirements of the Board Diversity Policy the Company takes into account diversity related factors such as gender age
cultural and educational background professional experiences skills and knowledge race and ethnicity when appointing
Board members. The Company makes decisions based on objective conditions such as comprehensive values a candidate
can deliver to the business and development of the Company contributions a candidate can make to the Board while
ensuring the diversity of the Board and makes sure that the Board includes at least one female member to achieve gender
diversity in the Board. The nomination committee under the Board of the Company is responsible for monitoring and
reviewing the Board diversity policy to ensure that it is working effectively.As at the end of the Reporting Period the Board of the Company comprised 11 directors including 2 executive directors
4 non-executive directors and 5 independent non-executive directors of which 1 was a female director.
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3.3 PERFORMANCE HIGHLIGHTS IN 2024
Economic performance Economic performance Social performance
Net profit attributable to the Social contribution per share R&D innovation
shareholders of the Company RMB
RMB Number of R&D employees
2061 5.87 per share and its percentage to the total million number of employees
a year-on-year increase
of 5.50% 908 10.01%
Tax revenue created for the
country R&D investment and its
RMB proportion in operating income
1531 RMB million 1044 million
Wages bonuses allowances 8.84%
compensation welfare housing
funds and social insurance paid
to the employees
Inclusive health
RMB
1656 Products included in the million
National Medical Insurance
Catalogue
191
Fair pricing policy that matches
local income levels in South
Asia Southeast Asia South
America and Africa for
28 products
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3.3 PERFORMANCE HIGHLIGHTS IN 2024 (continued)
Social performance Social performance Social performance
Health and safety Diversity and training Public welfare and charity
Investment in work safety and Percentage of female Expenditure on charitable
occupational health employees to the workforce donation
RMB
3447%
RMB
million 12.98 million
Number of minorities
Certification rate of GB/T By the end of the Reporting
45001-2020/ISO 45001:2018 559 Period agreements signed in
Occupational Health and Safety relation to the Public Welfare
Management System Average length of training for Project for Prevention and
100% staff Treatment of Chronic Diseases
102 hours 31
Number of work-related
fatalities in all employees and As at the end of the Reporting
contractors Period the number of low-
0 income people with chronic diseases receiving our
assistance
30000
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3.3 PERFORMANCE HIGHLIGHTS IN 2024 (continued)
Environmental performance Environmental performance ESG rating performance
Greenhouse gas emission Environmental investment MSCI ESG scored
Total CO2 emissions and Environmental protection
AAA
percent reduction compared to investment
2020 74 S&P Global CSA score:525420 RMB million 67
Of which:
8.5% Included in the "Sustainability tCO2e Investment in maintenance Yearbook 2025” by S&P Global
of environmental protection
Increase of total CO emissions operation
CDP (Climate Change Response)
2
scored
compared to previous year
RMB63 million
11087 B tCO2e
Investment in renovation of
environmental protection
Reduction of CO2 emission equipment
intensity compared to 2020
14% RMB11 million
(2024 target: 22%)
System and certification
Target year of achieving carbon
neutrality Certification rate of GB/T
2055 24001-2016/ISO 14001:2015 Environmental Management
System
100%
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3.4 THE COMPANY’S HONORS
Name of Award Issued by
25th in the 2023 Top 100 Enterprises in Chinese Pharmaceutical Industry The 41st China Pharmaceutical Industry
Information Annual Conference 2024
Information disclosure rating: A Shenzhen Stock Exchange
Best Practice Case of the Board of Directors of Listed Companies in 2024 China Association for Public Companies
The 2024 ESG Golden Dawn Award The Golden Dawn Environmental
WEEKLY ON STOCKS
Responsibility Award The Golden Dawn Leadership Award
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3.4 THE COMPANY’S HONORS (continued)
Name of Award Issued by
Top 100 Value of Main Board Listed Companies in China egsea.com
Best Board of Directors of Listed Companies National Business Daily
Listed Companies with Excellent High-Quality Development
Hong Kong Ta Kung Wen Wei Media Group
Best Investment Value for Listed Companies
Corporate Governance Special Contribution Award Directors & Boards
The Top 20 Chinese Pharmaceutical Listed Companies in ESG
Healthcare Executive
Competitiveness in 2024
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ESG
GOVERNANCE
20 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions index
A robust ESG governance system is the internal foundation on which companies
can efficiently fulfill their environmental and social responsibilities. To achieve
the Company’s ESG management goals and improve the Company’s ESG
governance Livzon continuously strengthens ESG risk management regularly
inspects the progress of ESG tasks and rationally adjusts ESG governance
policies and strategies. Meanwhile we maintain active communication with
stakeholders fully integrate the ESG philosophy into corporate operation
decisions and promote the coordinated development of the upstream and
downstream players of the industrial value chain.
4.1 BOARD STATEMENT
The Board of the Company places great importance on the deep integration of
ESG management philosophy and corporate development strategy and continues
to improve the ESG management mechanism to lay a solid foundation and
provide a strong guarantee for the sustainable and high-quality development of
the Group.ESG management approach and strategy:
The Board continuously pays attention to global ESG development trends and
changes in the macroeconomic situations at home and abroad comprehensively
finds out ESG-related risks and opportunities on a regular basis in the context
of the Company’s development strategy planning production and operation
conditions and the results of stakeholder communication and provides timely
guidance on the optimization and adjustment of the ESG management approach
and strategy to ensure that the Group’s ESG philosophy is up-to-date.Goal setting and progress review:
The ESG Working Team of the Company sets ESG goals and related
implementation plans; the ESG Committee regularly reviews the progress of
achieving the ESG goals provides requirements and recommendations for action
on items that require improvement and reports to the Board. In addition to
effectively promote Livzon’s ESG management work the Company has tied the
remuneration of members of the ESG Working Team under the ESG Committee
to ESG performance and established a mechanism of tying management
remuneration to ESG performance. For details of the Company’s ESG goals and
the progress made in achieving them during the Report please refer to Chapters
5 to 11 of the Report.
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4.2 ESG GOVERNANCE STRUCTURE
The Board is the highest decision-making body for Livzon’s ESG governance and is ultimately responsible for the ESG
work of the Group. The ESG Committee is responsible for formulating the vision goals and strategies of the Group’s
ESG inspect the ESG management structure regularly reviewing the results and performance of ESG-related work and is
accountable to the Board.The ESG Committee has the ESG Working Team as its executive body which is mainly responsible for the daily
management of ESG collaborating with the functional department business unit and subsidiary of the Company to fully
implement the ESG management strategy regularly sorting out and summarizing the progress and results of the Group’s
ESG work and reporting to the ESG Committee. In addition the Company also has ESG full-time staff who are responsible
for the implementation of specific ESG tasks in accordance with the ESG Working Team’s management plan.ESG governance level Members Duties
ESG Committee It is chaired by the Chairman and consists of Develop and review the ESG vision goals
an executive director and three independent strategies and management guidelines
non-executive directors inspect the ESG management structure and
performance and be accountable to the
Board.Team leader and Team leader: president of the Company Responsible for the daily management of
deputy leader of the Deputy leaders: all vice presidents chief ESG regularly review the progress of the
ESG Working Team medical officer secretary to the Board dean Group’s ESG work and key ESG data and
of the research institute general manager of report to the ESG committee.API business department and all assistants
to the president
Members of the Heads of the Company’s functional Implement specific ESG tasks as directed by
ESG Working Team departments business units and subsidiaries the ESG Working Team leader and deputy
leaders.
22 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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4.3 STAKEHOLDER COMMUNICATION
We highly emphasize maintaining communication with internal and external stakeholders establishing a normalized
communication mechanism for timely knowledge of stakeholders’ requirements and continuously optimizing and
adjusting communication channels to actively respond to stakeholders’ concerns thereby steadily promoting the orderly
implementation of the Group’s sustainable development work.Stakeholder Issues of focus Communication channels
Government and regulators Product quality and safety Supervision and inspection work reports
Pollution control on-site visits meetings between the
government and the corporate sector
Emission management
information disclosure
Ethical marketing
Climate change mitigation and adaptation
Shareholders and investors Product quality and safety General meetings daily information
Risk management disclosure investor communication
conferences and on-site visits hotlines and
Corporate governance and compliance
e-mails
Resource consumption management
Business ethics and anti-corruption
Product R&D and technological innovation
Energy efficiency and management
Directors and senior Product quality and safety Board meetings daily operation and
management Intellectual property rights protection management meetings
Corporate governance and compliance
Talent attraction retention and development
Product R&D and technological innovation
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 231 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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4.3 STAKEHOLDER COMMUNICATION (Continued)
Stakeholder Issues of focus Communication channels
Staff Occupational health and safety Workers’ representatives conference and
Employee compensation and benefits trade union employee engagement survey
opinion feedback platform
Protection of labor rights and interests
Diversity equality and inclusion
Talent attraction retention and development
Consumers and clients Product quality and safety Product labels client visits consumer
Customer privacy and data security satisfaction survey handling of consumer
complaints and opinions
Biodiversity
Responsible marketing
Water resource management
Product R&D and technological innovation
Partners and suppliers Product quality and safety Regular communication training and
Sustainable supply chain management advocacy supplier audit
Industry development and cooperation
Product R&D and technological innovation
Local community Pollution control Participation in social welfare events
Emission management provision of regular assistance to the local
community volunteer service
Inclusive health and accessibility
Community social welfare and charity
4.4 MATERIAL ISSUES
During the Year the Company formulated its ESG material issues matrix in accordance with the requirements of Appendix
C2 Environmental Social and Governance Reporting Guidelines to the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited and the Self-Disciplinary Regulatory Guidelines No. 17 for Companies Listed on
Shenzhen Stock Exchange – Sustainability Reporting (Trial) and in compliance with the double materiality principle by
inviting internal and external interested parties to give feedback on the ESG issues from financial materiality and impact
materiality.
24 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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4.4 MATERIAL ISSUES (continued)
Material evaluation process
– Review and update the pool of ESG issues: updated the pool of ESG issues for the Year after comprehensive
evaluation by following the requirements of securities regulatory rules and taking into account the overall business
development of the Group in 2024 and the advanced ESG management practices of peer companies;
– Formulate and implement the stakeholder engagement program: communicated and investigated with
important stakeholders to understand and collect relevant opinions and suggestions;
– Quantify and evaluate ESG key issues: asked internal and external interested parties such as the Company’s
directors employees investors suppliers distributors government regulators and local communities to evaluate
each issue in terms of both financial materiality and impact materiality and drew a matrix of material issues;
– Review and approve the matrix of material issues: submitted the evaluation report on material issues to and
published the results after review and approval by the management.Livzon Matrix of Material ESG Issues for 2024
High
Product quality
Intellectual property rights protection and safety
Ethical marketing
Talent attraction Occupational health
retention and safety Supply chain sustainable management
and development
Industry development
Inclusive health and cooperation Corporate governance and compliance operation
and accessibility
Protection of Product R&D and
Client privacy and labor rights Risk management technological innovation
data security and interests
Community charity Business ethics and anti-corruption
Employee remuneration and bene ts
Diversity equality and inclusion
Resource management and circular economy
Energy ef ciency
and management
Emission management
Biodiversity
Water resource management Pollution control
Climate change mitigation and adaptation
Low High
Financial materiality
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 25
Impact materiality1 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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4.5 RISK MANAGEMENT
A robust risk management system is the guarantee of a company’s long-term stable operations. Livzon continuously
improves its risk management level and perfects its risk management system and builds solid risk defenses for the
Group’s stable development through comprehensive and effective risk management and internal control.Risk management structure
The Company has established a model of three defensive lines a risk management structure to effectively control
corporate risks strengthen systematic risk management and fulfill risk management goal. The top regulatory authority
within the structure is the audit committee under the Board. For more information on the Company’s risk management
and internal control please refer to the Company’s 2024 Annual Report.Diagram of Livzon’s Risk Management Structure
Board Level
Audit Committee
Third Line of Defense
Audit and integrity department
Second Line of Defense
Risk management head of ce
First Line of Defense
Business departments
The Company has incorporated the principle of risk control into the daily production management and has established an
incentive and constraint mechanism for the implementation of risk management and internal control. It has included the
effectiveness of risk management and the implementation of internal control by each responsible unit into the performance
evaluation system to promote the effective implementation of internal control.
26 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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4.5 RISK MANAGEMENT (continued)
Risk management culture
The Company integrates a risk management culture into its corporate culture development advocates the concept of
“everyone participates in risk management” and encourages employees to actively offer suggestions and opinions for
improving risk management practices creating a positive risk management environment. The Company regularly provides
risk management training for the Board and conducts risk management knowledge training for staff to increase their
risk awareness and risk management capabilities and improve their ability to detect potential risks and take appropriate
preventive measures in their daily work.Example: detected risks
? Risk of trade secrets disclosure
。 Risk characterization: Disclosure of the Company’s core technologies intellectual propertystrategies and other trade secrets to competitors may lead to the Company’s decreased revenue
and weakened competitiveness.。 Possibility of risk emerging: Likely。 Degree of the potential influence on business: Medium-high。 Response measure: Improve confidentiality measures including but not limited to implementingclassification management of trade secrets finding new positions that involve secrets refining
job responsibilities signing confidentiality agreements and raising employee awareness of
confidentiality and legal risks about trade secrets.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 271 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
4.5 RISK MANAGEMENT (continued)
Risk management culture (continued)
Example: detected risks (continued)
? Risk of single-supplier procurement
。 Risk characterization: Over-reliance on a single supplier may lead to the Company’s lack of flexibilityin technology pricing and supply resulting in price monopolies increased procurement costs or
risks such as production stoppages.。 Possibility of risk emerging: Likely。 Degree of the potential influence on business: Medium。 Response measure: Eliminate single-source procurement as a routine procurement practice by forexample developing double-purchasing plans establishing reasonable inventories and signing
supply assurance agreements; conduct regular supply chain risk evaluation and maintain supplier
relationships.
28 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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4.5 RISK MANAGEMENT (continued)
Emerging risk
We detect and evaluate emerging risks to the long-term development of the Group and social progress in the social and
environmental fields every year and take appropriate measures to prevent and alleviate them in the course of operations.Name of emerging risk Risk description and influence Response measure
Political Environment Risk Changes in international relations In response to changes in the
may lead to the implementation of international political environment
trade restrictions and the erection of we will anticipate potential risks with
tariff barriers between countries thus a proactive mindset. Our response
disrupting the import & export and measures include but are not limited to:
transportation of products resulting
in shortages of raw materials and * Strengthen R&D of critical products
production interruptions which affect the and research on the domestication
stability of the supply chain. It may also of production raw materials to
lead to technological blockades further further reduce dependence on
affecting technological exchange and imported bottleneck products;
cooperation within the industry.* Rationally plan product R&D and
manufacturing and initiate the
storage of relevant raw materials
in advance to improve supply chain
stability;
* Es tab l i sh good re la t ions wi th
governments industry associations
and other s takeho lders keep
abreast of industry trends so as
to further reduce risks posed by
changes in international relations.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 291 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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OPERATION
COMPLIANCE
30 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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Always upholding the principles of compliance and integrity and strictly abided
by national laws and regulations Livzon has established a comprehensive
corporate governance system. Operation compliance is not only the cornerstone
of ensuring the long-term and stable development of the Group but also the
key to enhancing corporate reputation and brand value. By establishing a
sound internal control mechanism and conformance management system we
can effectively prevent corruption and fraud reduce operational risks promote
the rational allocation and efficient use of resources and thereby enhance the
Company’s competitiveness and sustainable development ability.
5.1 BUSINESS ETHICS
Regarding management of business ethics as a priority of corporate governance
the Group continuously strengthens system construction. Several business ethics
management systems have been developed and published on the Company’s
official website including the Anti-Corruption and Anti-Commercial Bribery
Regulations the Interim Provisions on Anti-Fraud and the Administrative
Measures for Reporting and Complaint.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 311 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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5.1 BUSINESS ETHICS (continued)
5.1.1 Anti-corruption
Consistently upholding the philosophy of operating with honesty and integrity Livzon adopts a zero-tolerance attitude
toward any form of commercial subornation and corruption and constantly improves anti-commercial subornation and
anti-graft system construction. During the Year we did not identify nor were aware of any concluded legal cases regarding
corrupt practices laundering illicit money inside dealing brought against the Group or its employees.* Building an anti-corruption system
The Group strictly adheres to internal management norms and requires all relevant parties (including suppliers
service providers contractors clients etc.) that have business transactions with the Group to strictly abide by
the Anti-Corruption and Anti-Commercial Bribery Regulations and sign the Supplier Commitment for Operating
with Integrity. In addition we have defined integrity commitment clauses in commercial contract templates of
the Group requiring the counterparties of the Group to operating with integrity and take active part in integrity
training organized by the Group. If there is any violation the Group has the right to terminate the contract.At the same time we regularly conduct audit of anti-corruption on suppliers to check whether they adhere to the
Company’s business ethics related systems. In daily operations the risk management and control departments of
the Group’s enterprises continuously inspect the procurement process and provide suppliers with business ethics
related training. During the Year we undertook anti-graft inspection on 187 suppliers.For any corruption and commercial subornation committed by the employees of the Group that is proved to be
true the Group shall depending on the seriousness of the circumstances impose a penalty in accordance with the
Labor Employment Management System of the Company. If the circumstances are serious the labor relationship
shall be terminated and the loss caused to the Group shall be recovered in accordance with the law. Any
suspected criminal offense shall be transferred to judicial organs.
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5.1 BUSINESS ETHICS (continued)
5.1.1 Anti-corruption (continued)
* Fostering an anti-corruption culture
Livzon firmly regards honesty and integrity as the cornerstone of its conformance culture. We make continuous
efforts on internal and external promotion of anti-graft and integrity and integrate the concepts of integrity
honesty and anti-graft into daily management and business operations. Through continuous training and
promotion activities we enhance the integrity awareness of employees and business partners and cultivate a
positive conformance culture.The Company has formulated the Administrative Regulations on Staff Integrity to specify the business ethics
guidelines to be followed by employees. The Company requires leaders at all levels to be the primary persons
responsible for anti-fraud issues and all employees to sign the Staff Commitment for Anti-Corruption and Anti-
Commercial Bribery as a commitment to not seeking improper benefits in the performance of duties.To build a solid defense for integrity in all respects we regularly undertake promotion and training on anti– graft
awareness and the philosophy of operating with integrity through various means such as the promotion and
implementation of staff handbooks and company regulations staff training etc. so as to improve the integrity
awareness of all employees and internalize the concept of integrity as a conscious work requirement for employees.During the Year we offered one business ethics training covering permanent employees of the Group reaching
a training coverage of 98%. In addition the Company offers anti-graft trainings and risk management trainings
for directors at least once a year to increase their awareness and capabilities of risk management observance
risk prevention and anti-commercial subornation and anti-graft so as to effectively perform their supervisory and
decision-making functions.Case: Business ethics training
In February 2024 the Group provided business ethics training for 98% of its permanent employees. The training
included case studies of corruption by enterprises and individuals from both within and outside the pharmaceutical
industry helping employees understand the concept of corrupt and subornation practices and related legal
regulations thereby increasing their awareness of conformance to laws and regulations and adherence to business
ethics.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 331 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
5.1 BUSINESS ETHICS (continued)
5.1.2 Whistleblowing protection
To effectively promote the development of integrity within the Group we have established the Administrative Measures
for Reporting and Complaint and built a regular reporting and complaint management mechanism to encourage all
employees suppliers clients contractors business partners and any other parties who have business relationship with
the Group to actively participate in the Company’s actions for a culture of integrity and honesty. We accept anonymous
reports and real-name reports and provide secure and confidential channels for whistleblowers to report any misconduct
ensuring that all complaints are handled in an effective manner and contributing to the Group’s compliant and
high-quality development.In protecting the legitimate rights and interests of whistleblowers we have taken strict confidentiality approach. The
departments that accept reports must keep the information of whistleblowers strictly confidential and ensure that
their personal information and report content are not leaked in any part of the process. We promise to complete the
investigation within 30 working days and issue a written investigation report while continuously following up subsequent
handling. For violation of the regulation by disclosing information of whistleblowers or taking revenge on them the
Company shall impose penalties such as position transfer salary deduction and demotion until transfer to judicial
authorities in accordance with the seriousness of the circumstances.
5.1.3 Clinical ethics
In the clinical R&D process Livzon strictly abides by relevant laws regulations and moral norms including the Drug
Administration Law of the PRC the Good Clinical Practice the Measures for Ethical Review of Life Science and Medical
Research Involving Humans the World Medical Association Declaration of Helsinki the Personal Information Protection
Law of the PRC and the Good Pharmacovigilance Practices for Pharmaceutical Products to ensure that the clinical
R&D process meets scientific and ethical requirements. The Company has established a comprehensive clinical research
management system that covers trial protocol design and review trial preparation trial execution trial data management
and statistical analysis. Standard operating procedures and work manuals are regularly updated and improved in
accordance with regulatory systems industry guidelines and adjustments to the Company’s structure. During the
Reporting Period the Company did not act in violation of clinical ethics norms.* Ensuring the safety of subject’s information and confidentiality
We attach great importance to the subjects’ right to know and confidentiality and protect their rights and interests
through ethical review and informed consent. The Company accepts reviews and oversight by the clinical trial
ethics committees throughout the trial process including: during the clinical trial preparation phase submit
essential ethical materials such as clinical trial protocol informed consent form drug test report and clinical trial
insurance to the ethics committees for approval before a trial can commence; during the clinical research period
ensure that changes to the trial protocol and other related materials are only implemented after receiving approval
from ethics committees and regularly submit follow-up review reports to the ethics committees.We have implemented strict data encryption and secure storage approach to ensure no unauthorized access
and misuse of subject’s information and carefully prevent harms and risks from disclosure of subject’s private
information. During the acquisition of subject’s information we follow the following principles: firstly strictly
limit the scope of information acquisition and explicitly prohibit the acquisition of information irrelevant to clinical
research; secondly apply the principle of minimization for the acquisition of personal information that must be
obtained; thirdly clearly define subject’s information that must be obtained but cannot be partially obtained and
obtain the subject’s written consent. After the preliminary acquisition of information the Company uses a GCP-
verified clinical trial electronic data capture system for information management. Additionally the Company carries
out strict training and certification for clinical researchers who have access to information of subjects to guarantee
the security of information and confidentiality from the two dimensions of technology and personnel qualification.
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5.1 BUSINESS ETHICS (continued)
5.1.3 Clinical ethics (continued)
* Implementing moral norms for animal testing
The Company strictly implements the ethical guidelines and legal provisions related to animal testing and has
developed the Procedures for Laboratory Animal Ethics Management to regulate laboratory animal operations
and effectively protect the welfare of laboratory animals. Before carrying out animal experiments we have ethical
approval for the animal experiment protocols and strictly conduct experiments within the scope of the protocols.In the process of experiments we give full consideration to ethical responsibility and animal welfare providing
appropriate living environments and careful care to reduce stress pain and harm of animals. We strive to achieve
the best balance between scientific progress and moral responsibility.Case: Clinical ethics training
In March 2024 the clinical operations head office of the Company provided GCP regulation training for all staff
emphasizing the ethical review requirements in clinical trials and the importance of protecting the rights and
interests of trial subjects. The training covered clinical ethics-related regulations such as the Measures for the
Ethical Review of Biomedical Research Involving Humans the Measures for Ethical Review of Life Science and
Medical Research Involving Humans and the Guidelines for the Establishment of Ethical Review Committees for
Clinical Research Involving Humans.
5.1.4 Responsible marketing
The Group always upholds the bottom line of compliance and follows a rigorous and prudent approach in all sales and
marketing activities by adhering to all applicable laws regulations and industry guidelines in places where it operates
contributing to the maintenance of a healthy and orderly market environment thereby establishing a solid foundation
for the Company’s long-term development. At the same time the Group has developed several accountable marketing
systems to manage and regulate the marketing behavior of all employees of the Group to ensure that marketing activities
are legal and compliant. During the Year the Group received no complaints or legal proceedings on misleading or
deceptive promotion information.* Improving the responsible marketing system
The Company strictly complies with the requirements of the Basic Norm for Enterprise Internal Control. The risk
management head office carries out daily and special supervision of the Group’s risk management and internal
control. Each year a third-party organization inspects the effectiveness of the Company’s internal control over
financial reporting covering all enterprises within the scope of the Group’s operation control. In addition we
regularly provide ethical marketing training for employees of the Group. We have established wide-ranging and
thorough training courses on ethical marketing which cover relevant laws and regulations on ethical marketing
rules and regulations of the Company product knowledge promotional norms compliant promotion notifications
of non-conformance cases etc. During the Year the Group’s trainings on ethical marketing covered 98% of the
Group’s employees.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 351 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
5.1 BUSINESS ETHICS (continued)
5.1.4 Ethical marketing (continued)
* Preventing unfair competition
To effectively prevent unfair competition and ensure the legal conformance of the Group’s operations we have
taken comprehensive and rigorous approach to actively promote the creation of a healthy and fair business
environment and provide strong support for the sustainable development of the industry. First of all the Company
has established a sound internal control mechanism to ensure that all business practices strictly adhere to
laws and regulations and ensure the transparency and normalization of business processes through continuous
supervision and evaluation so as to effectively avoid potential risks. We also attach importance to the training
and development of employees and the shaping of their awareness of conformance. We regularly organize training
courses on legal knowledge and compliant operations to improve employees’ legal awareness and professional
ethics. Employees are encouraged to take the initiative to practice high standards of professional conduct in all
aspects of their daily work.In terms of cooperation with business partners we sign detailed competition rules and conformance agreements
which clearly stipulate the principle of fair competition that both parties shall follow prevent any form of unjust
enrichment and maintain fairness and integrity in the partnership. During the Year the Group was not involved in
any legal proceedings or major administrative penalties resulting from unfair competition practices.
36 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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5.2 DATA SECURITY AND CLIENT PRIVACY PROTECTION
In today’s era when digitalization is deeply embedded in corporate operations Livzon regards safeguard of data safety
and privacy as an important responsibility for corporate operations as we are keenly aware of the critical importance
of it for a company’s stable development and the maintenance of client trust. The ESG Committee under the Board is
responsible for supervising the Group’s information safety and privacy preservation matters. The information head office
regularly prepares an information risk evaluation report based on the performance on information safety management in
the current year and submits it to the ESG Committee for consideration and approval.The Company has established several information safety and data preservation systems such as the Information System
Management System the Information System Operation and Maintenance Management System the Emergency Response
Management System and the Incident Response Plan of Data Breach which cover information safety management across
all operations of the Group. During the Reporting Period the Group had no information safety incidents or data leakage
nor was it involved in any lawsuits on information and information safety against the Group or its employees.Through a combination of proactive and reactive approach the Company continuously and actively carries out information
safety maintenance and improvement work striving to minimize the occurrence of information safety incidents.Proactive approach
Safety systems and procedures: Develop and implement effective information safety systems standards and
guidelines to ensure that all employees understand and follow relevant regulations.Risk assessment and management: Actively conduct vulnerability detection for the business system on a regular
basis to ensure the implementation of active protection strategies against every new hazard incident identified;
engage third-party companies to perform vulnerability detection and implement appropriate treatment based on the
discovered risks.Technical protection approach: Provide unified deployment of enterprise-level anti-virus software terminal
safety management system network access management system and automatic update service (WSUS) patch server
and have safety devices. Establish power supply and environmental supervision system to detect in real time the
status of physical environment.Information safety training: Regularly conduct special trainings on information safety management for
information safety management personnel; the Company also includes information safety trainings in the
onboarding training system of new employees and pushes messages from time to time on high risks of information
safety and protection approach to all employees through the internal website to improve employees’ information
safety awareness.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 371 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
5.2 DATA SECURITY AND CLIENT PRIVACY PROTECTION (continued)
Reactive approach
Background supervision: Deploy the bastion host management system to supervise the operation permissions
and code approval processes of administrators in the background.Emergency response plan: The Company has established an incident response plan of data breach. In the event
of a suspected data breach our emergency response team will immediately confirm the incident judge the scope
of the data breach and the affected systems report the situation to the emergency response leadership team and
suspend related data access notify the affected user groups and make announcements as required by relevant
laws and regulations.Backup and recovery: Back up important data on a regular basis; deploy encryption management system on data
terminals implement safety approach such as storage snapshots and remote disaster recovery for data centers and
conduct regular system recovery tests to guarantee the availability reliability and recoverability of data.Post-incident analysis and improvement: For identified data safety risks the emergency response team will
evaluate the affected systems data and devices investigate logs for root cause analysis and preserve relevant
evidence; inform affected users of the results of handling restore the affected systems and devices; and reinforce
and upgrade based on identified vulnerabilities to prevent similar attacks to the systems from recurring.To effectively ensure the stable operation of information systems and manageability of data safety we entrust a third-party
independent institution to conduct an annual inspection of the Group’s information systems and data safety management
every year to comprehensively identify and evaluate the relevant risks; we actively take positive adjustment and make
improvements based on the inspection results and continue to improve the Group’s ability to prevent information and
data safety risks. During the Year the Company issued the privacy policy which clarifies the principles of client privacy
preservation.During the Year we provided training on information safety and client privacy preservation for employees of the Group
reaching a training coverage of 98%. We also regularly promoted and disseminated information safety knowledge
throughout the Group to continuously improve the information safety and client privacy preservation awareness of staff.Case: Information security and client privacy protection training
* In May 2024 the Group organized an information safety awareness training for staff. The training started
from case studies of large foreign companies being hacked and introduced common network fraud
techniques used in hacking. It also promoted the Company’s information safety systems and regulations
to help staff increase their awareness of information safety responsibility and standardize daily data safety
management.* In July 2024 the Group organized a training session for all the fresh graduates of 2024 on Information
Safety BPM System Usage and Introduction to the Use of Feishu. The training covered the Company’s
information safety norms the BPM system precautions for using Feishu precautions for sending and
receiving emails identification and disposal of spam and phishing emails means for securing personal
information etc. to help foster a sense of information safety protection among new recruits.
38 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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5.3 SAFEGUARING OF INTELLECTUAL PROPERTY RIGHTS
Livzon regards safeguarding of intellectual property as a priority. According to the relevant notices from China National
Intellectual Property Administration the Company conscientiously maintains the patents it has applied for to ensure the
stability and validity of its patent rights and interests. The Company also extensively explores the innovative technologies
for various key products and is committed to building a comprehensive patent network while always safeguarding against
potential patent infringement risks.The Company has established and follows the requirements of the Patent Workflow and Trademark Management
System which strictly regulates key processes including patent risk assessment before product project establishment
patent transformation of R&D achievements patent risk response for marketed products and review of articles before
publication and provides in detail a series of workflows of new patent application maintenance transfer purchase
technology financing technology patent retrieval infringement litigation invalidity response etc. to allow patent
acquisition maintenance application and preservation to be managed in a more scientific standardized and orderly
manner.In addition the Company’s legal compliance head office maintains close communication and cooperation with the R&D
team and is committed to improving the efficiency of intellectual property management in an all-round way. On one hand
we actively promote patent mining by accurately extracting patentable innovations from research results and efficiently
complete the drafting application and submission of patents to ensure that research results are promptly converted into
intellectual property and build a strong legal protection shield for the Company’s technological innovations. On the other
hand we actively follow up the development of projects under R&D to conduct patent risk assessments provide reference
for assessment of patent infringement risk take appropriate approach such as patent evasion or invalidation according to
the assessment results and effectively resolve risks related to patent infringements thereby ensuring the smooth progress
of the Company’s R&D projects.We regularly organize intellectual property training and exchange activities in diversified formats including legal
and regulatory interpretations case studies and sharing risk assessments and management. We aim to improve the
awareness of intellectual property rights and patent preservation among R&D and conformance personnel and enhance
the Group’s overall comprehensive capability in intellectual property rights and patent preservation.Case: Intellectual property rights related award
Livzon’s trademark was ranked among the top 100 in the 2nd Guangdong-Hong Kong-Macao
Greater Bay Area High-value Trademark Cultivation Competition.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 391 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
5.4 PARTY BUILDING ACTIVITIES
As at the end of the Reporting Period Livzon had a total of 662 Party members including 420 Party members in Zhuhai
headquarters 242 Party members in the Company’s subsidiaries outside Zhuhai City 11 Party branches directly under the
Zhuhai Party Committee and 7 Party organizations of the Company’s subsidiaries outside Zhuhai City.During the Reporting Period with the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New
Era the Company’s Party committee organized in-depth study of the spirits of the Report to the 20th National Congress
of the Communist Party of China the Third Plenary Session of the 20th Central Committee of the Communist Party of
China the Regulations on Disciplinary Actions of the Communist Party of China and other important documents. Through
intensive study sessions special lectures and other forms of study Party members and cadres were guided to deeply
understand the essence of these documents and effectively transform theoretical knowledge into work motivation and
ideological guidance. Party building activities ensure that private enterprises implement the Party’s line principles and
systems during their development guide them to abide by national laws and regulations align their development with
national strategies and prevent them from losing their direction in a complex market environment.By carrying out Party-building activities we arm the Company’s employees especially Party members with the Party’s
theories and thoughts to create a common ideal and value pursuit and enhance internal unity and cohesion. We encourage
Party members to play a pioneering and exemplary role actively participating in the Company’s technological innovation
management innovation and other activities injecting impetus into the Company’s development. We organize various
cultural activities such as Party themed days and joint Party-building to enrich employees’ cultural lives strengthen the
Company’s cultural heritage and vitality create a harmonious corporate culture and stimulate the innovation awareness
and creativity of all employees.Additionally the Party committee organized Party members to visit Xibaipo for the learning and education activity forParty members themed “Drawing Strength from the Revolutionary Heritages to Support High-Quality Development ofthe Company”. By visiting historical revolutionary sites and listening to the stories of predecessors Party members were
able to truly feel the great power of revolutionary spirit draw strength from the revolutionary heritages and integrate
the Party’s fine conduct into the corporate culture to form a positive work atmosphere and value orientation within the
Company and encourage all employees to progress together thus injecting continuous spiritual energy into the Company’s
high-quality development.
40 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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5.4 PARTY BUILDING ACTIVITIES (continued)In 2024 the Company was honored with the title of “Strong Party Building and Development in Non-Public Enterprises inZhuhai”.Case: Party building related activity
A group photo of the Company’s Party member representatives who participated in the learning and educationactivity for Party members themed “Drawing Strength from the Revolutionary Heritages to Support High-QualityDevelopment of the Company” in Xibaipo in May 2024
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 411 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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ACCESS TO
HEALTH CARE
42 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions indexAlways true to the corporate vision of “becoming a leader in the pharmaceuticalindustry” Livzon focuses on unmet clinical needs and regards research and
development innovation as the foundation for sustainable development. Upon
taking full account of medical needs in Chinese and overseas pharmaceutical
markets Livzon establishes clear and abundant product research and
development pipelines and develops differentiated global deployment strategy
striving to protect lives and health.The Board of the Company represents the highest authority for issues of access
to healthcare and overseas the implementation of access to healthcare related
work through the ESG committee including strategies policies and performance
committed to providing more equitable and accessible products and services for
patients around the world.Regarding promotion of inclusive healthcare and public health interests as an
important operation mission Livzon supports provisions in The Doha Declaration
on the Trade-Related Aspects of Intellectual Property Rights Agreement and
Public Health and the Patent Law of the PRC in relation to granting compulsory
licensing of relevant pharmaceutical patents for purposes of public interest or in
emergencies.We support reasonable generics competition. Meanwhile regarding to least
developed countries and low-income countries with actual needs we will
consider entering into voluntary licensing agreements with appropriate third
parties on appropriate terms and conditions to manufacture and import
medicines to these regions for the benefit of the local people. In view of the
current operating environment lobbying for compulsory licensing and trade
imports is not applicable to Livzon for now.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 431 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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6.1 RESEARCH AND DEVELOPMENT INNOVATION
Regarding research and development and innovation as the cornerstone of sustainability Livzon continued to pay attention
to new chemical entities and cutting-edge technologies in the field of global pharmaceutical research and development
made layout of innovative drugs and high-barrier complex preparations based on clinical value and differentiated prospect
and focused on gastroenterology psychiatry assisted reproduction anti-tumor and other fields and continuously
developed and formed a differentiated product pipeline covering the entire research and development lifecycle.In 2024 Livzon had 908 R&D employees accounting for 10.01% of the total number of employees indicating a basically
stable R&D team size.Number and Percentage of Livzon’s R&D Employees from 2021 to 2024
10.91%
100010.81%11.00%
10.50%
97010.14%
10.01%
10.00%
940
9.50%
910
9.00%
8808.50%
8508.00%
2021202220232024
Number of R&D employees Percentage of R&D employees
During the Year Livzon’s total expenditure relating to research and development amounted to RMB1044.33 million
among which capitalized research and development investment accounted for 3.51% of total research and development
investment and research and development investment accounted for 8.84% of the Group’s total operating income for the
Year.Livzon’s R&D Investment and Percentage to Total Operating Income from 2021 to 2024
160014.00%
12.63%
140011.10%12.00%
9.94%
120010.00%
8.84%
10008.00%
8006.00%
2021202220232024
R&D investment (RMB million) Percentage of R&D investment to total operating income
44 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report
9081044.33
9061235.11
1401.27
973
1523.26
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6.1 RESEARCH AND DEVELOPMENT INNOVATION (continued)
Clinical needs orientedThe Company regards research and development and innovation as the foundation of sustainability. We take a “clinicalvalue-oriented” approach to the layout of innovative medicines with a focus on optimizing the current clinical drug
resistance and existing therapeutic regimens. We aim to discover potential new chemical entities and are committed to
solving unmet clinical needs of patients and improving existing diagnostic and treatment regimens to meet the diverse
medicine needs of patients. Relying on our strong independent research and development and innovation strength while
continuously incubating advantageous projects internally we also seek complementary opportunities externally focusing
on new products already under clinical research and near commercialization to further enrich the new medicine product
matrix. We have established a professional new pharmaceutical technology research and development platform.Modified new drug – Aripiprazole Microspheres for Injection
Aripiprazole is a new atypical anti-schizophrenia medicine for treatment of adult schizophrenia and bipolar disorder.The main form of aripiprazole available for sale in Chinese market is the oral preparation which needs to be taken
every day. Livzon Microsphere develops aripiprazole as sustained-release microspheres for injection to realize
prolonged-action and stable release of medicines.The product’s marketing authorization application was accepted by CDE in September 2023 and it passed the on-
site inspection of pharmaceutical registration in January 2024. As at the end of March 2024 this product had
passed the clinical registration inspection by 4 centers and supplementary materials were successfully submitted in
October 2024. Manufacturing license is expected to be obtained in April 2025 and the GMP compliance inspection
of the production workshop will be completed in April 2025.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 451 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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6.1 RESEARCH AND DEVELOPMENT INNOVATION (continued)
Clinical needs oriented (continued)
Modified new drug – Triptorelin Acetate Microspheres for Injection
(1-month sustained release)
Triptorelin is an analogue of natural gonadotropin-releasing hormone (GnRH) for treatment of prostate cancer
precocious puberty in children endometriosis (phase I to IV) etc.Triptorelin Acetate Microspheres for Injection (1-month sustained release) developed by Livzon Microsphere is
a chemical medicine of Class 2.2 and is the first domestically produced triptorelin prolonged-action preparation
approved for production. It has been included in the National Medical Insurance Catalogue 2023.The product’s indication for prostate cancer was approved on 6 May 2023. The marketing authorization application
for endometriosis was accepted in August 2023 and approved in September 2024. Clinical trials for the indication
of precocious puberty in children began in 2024 and by the end of 2024 70% of the planned clinical enrollment
had been completed.Market-demanded generic medicine – Lurasidone Hydrochloride Tablets
In November 2024 the Company’s Lurasidone Hydrochloride Tablets were granted the launch approval. Researchers
conducted comprehensive pharmaceutical comparison and bioequivalence studies between the self-produced
product and the reference preparations through scientific research breakthroughs and repeated trials to ensure the
product’s safety and efficacy for clinical use.Lurasidone is a novel atypical antipsychotic medicine that acts as an antagonist with high affinity for dopamine D2
receptors and 5-hydroxytryptamine (5-HT) receptors 5-HT2A and 5-HT7. It is approved in China for the treatment of
schizophrenia. Lurasidone has weak extrapyramidal symptoms and is less likely to cause adverse reactions such as
weight gain hyperlipidemia and hyperprolactinemia making it well-tolerated.
46 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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6.1 RESEARCH AND DEVELOPMENT INNOVATION (continued)
Clinical needs oriented (continued)
In the field of biologics LivzonBio a subsidiary of the Company specializes in the independent research and development
and industrialization of the world’s leading innovative macromolecular medicines. It has developed novel biologics in
the fields of autoimmune diseases oncology reproduction the prevention of severe infectious diseases etc. and has a
variety of product pipelines for research and development including novel vaccines monoclonal antibodies recombinant
protein medicines etc. to meet various unmet clinical needs and continuously improve patients’ quality of life. In 2024
project B-01 in the assisted reproduction field completed phase III clinical trials and the LZM012 in the auto-immunity
field completed phase III clinical enrollment with expected market launch within the next 2-3 years. Livzon has made a
leapfrog breakthrough in the field of biologics and its product research and development and industrialization have been
highly recognized by the country and the industry.LivzonBio will continue its efforts in accelerating new product development through multiple channels such as independent
research and development external introduction and strategic alliances focus on promoting projects on which it has
advantages based on the existing varieties in the pipeline continue new medicine development across the globe expand
cutting-edge product mix of differentiated treatment and combination therapy improve the technology platforms of
antibodies and protein medicines and enhance its capability of product commercialization.Product under research and development – Recombinant Anti-human IL-17A/F
Humanized Monoclonal Antibody Injection (“LZM012”)
LZM012 is a humanized monoclonal antibody with a unique molecular design targeting IL-17A/F offering a dual
mechanism of action. It is capable of potently and selectively neutralizing two key cytokines IL-17A and IL-17F
thereby inhibiting inflammation more effectively than blocking interleukin-17A alone. Developed indications include
moderate to severe psoriasis and ankylosing spondylitis.Currently only one imported IL-17A/F targeting medicine has been approved for market launch in China and the
world and LZM012 is the first IL-17A/F candidate medicine in China.In August 2023 LZM012 officially initiated phase III clinical trials for the psoriasis indication becoming the first
medicine in China to commence head-to-head clinical studies against secukinumab (“Cosentyx”). As at the end
of the Year all subjects had been enrolled. Additionally the ankylosing spondylitis indication developed by the
partner Beijing Xinkanghe Biomedical Technology Co. Ltd. officially started phase III clinical trials in September
2023 and the first analysis was announced in December 2024 to reach the primary efficacy endpoint of the trial.
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 471 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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6.1 RESEARCH AND DEVELOPMENT INNOVATION (continued)
Clinical needs oriented (continued)
Biosimilar under research – Recombinant Human Follitropin Alfa Solution for
Injection (“B-01”)
B-01 is a biosimilar developed with Gonal-f (original product manufacturer: Merck Serono) as the reference
medicine. Its active ingredient is consistent with that of Gonal-f both being recombinant human follicle-
stimulating hormone (r-hFSH) expressed in CHO cells primarily indicated for infertility. The project has completed
pharmaceutical non-clinical and clinical similarity studies. The study results show that its pharmaceutical properties
are highly similar with consistent non-clinical pharmacokinetics (PK) and safety profiles. Clinical PK and efficacy
both demonstrate good equivalence.LivzonBio’s B-01 shares identical active ingredients specifications and excipients with the original product
Gonal-f’s pen injector. B-01 also uses a novel pre-filled pen injector for easier administration allowing for accurate
medication dosage and adjustable dosage. Compared to traditional syringes pen injector products typically have
finer needles resulting in significantly less pain during injection which can enhance patient compliance.In the field of diagnostic reagents and equipment Livzon Diagnostics a subsidiary of the Company has transitioned to
independent innovation developing raw materials reagents and equipment in a completely independent manner. Based
on several powerful independent research and development technology platforms it strategically focuses on autoimmune
diseases respiratory diseases and severe infectious diseases.The principle of Livzon Diagnostics’ product layout is to solve unmet clinical needs to solve the pain points in the process
of disease diagnosis and treatment. For example Livzon Diagnostics chooses to develop for diseases with relatively limited
global supply and significant impact on people’s quality of life (e.g. autoimmune diseases) and is committed to efficient
comprehensive and accurate diagnosis and treatment of autoimmune diseases as well as early and effective treatment.* There is a rapid growth in the diagnosis and treatment of autoimmune diseases every year but the diagnosis
system in the domestic market is characterized by a low degree of automation and inconsistent standards. To solve
this problem in the market we created a global pioneering technology platform – the fully-automatic multiple
immune analyzer method – by transforming a technology platform from manual to automatic through technological
breakthrough independently achieving the ground-breaking industrialization of diagnostic reagents.This pioneering technology platform has greatly improved the efficiency of diagnosis and the medical experience
of patients: Reports are issued more quickly from weekly to daily reducing the time that patients have to wait for
the prescription. In 2024 Livzon Diagnostics deeply integrated the fully-automatic multiple immune analyzer with
chemiluminescence immunoassays to complete most autoimmune antibody tests on a single device. There is also
potential to further integrate indirect immunofluorescence technology significantly improving the efficiency of laboratory
autoimmune diagnostics and allowing technological breakthrough to benefit patients more widely and promptly.* Alzheimer’s Disease (AD) a class of neurodegenerative diseases that inflict significant social burden and family
impact predominantly affects the elderly population and there is a lack of effective diagnostic and identification
tools. Biomarker testing can better help physicians diagnose AD and tailor medication but previously biomarkers
were largely based on cerebrospinal fluid samples which are difficult to collect and invasive greatly reducing
accessibility. Livzon Diagnostics is committed to developing blood (plasma)-based AD biomarker testing. Its
breakthroughs in raw materials and signal technologies are expected to realize efficient detection and even
screening of early-stage patients thereby widening the beneficiary group.
48 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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6.1 RESEARCH AND DEVELOPMENT INNOVATION (continued)
Clinical needs oriented (continued)
Product under research and development – Diagnostic Kit for Anti-MDA5 Antibodies
The anti-MDA5 antibody a recently discovered MSA antibody is considered indicative of the heterogeneity
of dermatomyositis (DM). Approximately 10% to 30% of DM patients are anti-MDA5 positive with a higher
prevalence among Asian patients. Those with DM and positive for anti-MDA5 antibodies often show worsening ILD
in radiographic imaging within one month of respiratory symptoms onset accompanied by progressive dyspnea and
hypoxemia and they often require intensive care treatment for respiratory failure.Therefore timely detection of MDA5 antibodies is crucial for patients. Given the insidious onset of connective
tissue disease-associated interstitial lung disease (CTD-ILD) and the potential for rapid disease progression and life-
threatening implications after the onset there is an urgent clinical need for the detection of anti-MDA5 antibodies
in CTD patients.Currently the clinical trials for Livzon Diagnostics’ Diagnostic Kit for Anti-MDA5 Antibodies have been completed
and the kit is expected to be approved in 2025.Product under research and development – Diagnostic Kit for
Autoimmune Encephalitis-Related Autoantibodies
Autoimmune encephalitis a disease of great concern in neurology is characterized by brain inflammation mediated
by autoantibodies. Effective symptomatic treatment requires differentiation from other causes of inflammation.Currently diagnostic methods for autoimmune encephalitis are very limited with a global lack of standardized
highly efficacious immunodiagnostic approaches. Existing cell or tissue experiments are difficult to establish in
hospitals and have low standardization and generally moderate reliability.Based on this significant clinical need Livzon Diagnostics strives to make technological breakthrough through
the development of a neuronal transmembrane protein target antigen expression platform. It aims to detect
autoimmune encephalitis-related autoantibodies based on a high-performance immunodiagnostic platform
achieving technological breakthroughs in high efficiency standardization and minimal batch-to-batch variation
thereby improving the diagnostic efficiency and accuracy of autoimmune encephalitis.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 491 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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6.1 RESEARCH AND DEVELOPMENT INNOVATION (continued)
Clinical needs oriented (continued)
AI-enabled research and development and intelligence-driven innovation
Livzon has deeply integrated artificial intelligence (AI) technology into clinical operations management successfully
overcoming a series of critical challenges. To cope with the problem of impurity growth AI technology also played a
key role. During the research and development process of a particular project the problem of impurity growth once
placed great pressure on the research and development team. Through in-depth analysis using AI technology the
team swiftly identified the root cause and proposed a solution of changing the packaging form thereby significantly
shortening the experimental cycle and effectively controlling costs.Furthermore in excipient substitution AI technology demonstrated its unique advantages. During the research
and development process of a particular project the problem of impurity growth similarly posed a challenge to
the research and development team. Through in-depth analysis using AI technology the team swiftly identified
the root cause and proposed replacing capsule polymer with copper-based excipients resulting in effective control
of stability impurities and markedly improved product quality. Also in the process of patient enrollment review
AI greatly improved review accuracy by developing patient profiles and conducting interactive training saving
substantial human resources and further boosting the efficiency of clinical research.These results fully demonstrate Livzon’s remarkable achievements in AI technology application laying a solid
foundation for the Company’s future sustained breakthrough and development.Opportunities brought by AI to pharmaceutical research and development
Livzon actively adopts AI technology to enhance research and development efficiency and quality and
comprehensively broaden its diversified application scenarios across the entire pharmaceutical research and
development process covering critical stages including disease target identification medicine discovery and new
medicine design synthesis planning and formulation design.Leveraging its professional AI medicine development platform the Company made phased achievements during
the Reporting Period: In the early stages of pharmaceutical research and development the Company utilized the
AI platform’s precise process to efficiently predict physicochemical properties and stability correlations of input
molecules and predict storage shelf life based on short-term stability data. Meanwhile AI-based novel molecular
route design provided fresh ideas for exploring chemical synthesis pathways and process development empowering
the researcher team to identify more promising and potential synthetic routes with greater precision from so many
possibilities. The application of AI has effectively improved research and development efficiency and quality injected
robust momentum into research and development endeavors and promoted pioneering research and development
with greater quality and efficiency.
50 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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6.1 RESEARCH AND DEVELOPMENT INNOVATION (continued)
External collaboration
In addition to independent research and development Livzon actively collaborates with various partners and constantly
explores various forms of partnership so as to realize mutual benefit and win-win situation by virtue of resource
integration and complementary advantages.Focusing on key research and development projects in the fields of gastroenterology psychiatry assisted reproduction
anti-tumor anti-infection etc. the Group has established close cooperation with renowned universities research
institutes and medical institutions in China on aspects of academic research and communication technology exchange
and pharmaceutical research and development. The Group has also entered into strategic collaborations with top-
notch enterprises at home and abroad. These collaborations jointly promote scientific research innovation and the
commercialization of technological accomplishment elevate and enrich our research and development technology and
research and development fields and provide more possibilities for Livzon’s commercialization in the future.External collaboration project – NS-041
In July 2024 the Company entered into a Patent Licensing and Technology Transfer Agreement (the “Agreement”)
with NeuShen Therapeutics (Shanghai) Co. Ltd. (“NeuShen Therapeutics”). Under the Agreement Livzon exclusively
obtains all rights and interests in NS-041 within the Greater China region (including China’s mainland Hong
Kong Macao and Taiwan). At the same time NeuShen Therapeutics will retain leadership in the development and
commercialization of NS-041 in other global regions. The Company is required to pay NeuShen Therapeutics the
corresponding patent and technology transfer fees (including upfront payment development milestone payments)
and sales royalties.NS-041 is a highly selective KCNQ2/3 activator developed by NeuShen Therapeutics. As a new chemical medicine
of class 1 it targets neuropsychiatric disorders such as epilepsy and depression. Approved by the National Medical
Products Administration (NMPA) in March 2024 to initiate clinical trials its first clinical trial indication is intended
for focal epilepsy and it is currently in the clinical trial phase.Livzon with many years of expertise in the field of psychoneurosis remains committed to the development of
novel psychiatric and neurological medicines. Leveraging its advantages in research and development and clinical
advancement in this field Livzon will actively promote the commercialization of this product. The introduction of
the NS-041 project will strengthen the Company’s advantages in the field of psychoneurosis aligning with the
Company’s strategic plan of medium to long-term pioneering development.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 511 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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6.1 RESEARCH AND DEVELOPMENT INNOVATION (continued)
External collaboration (continued)
External collaboration project – Development of generic medicine for Magnesium
Sulfate Sodium Sulfate and Potassium Sulfate Concentrate Oral Solution
In 2024 Pharmaceutical Factory a subsidiary of the Company was granted approval for the project of Magnesium
Sulfate Sodium Sulfate and Potassium Sulfate Concentrate Oral Solution. This project was co-developed by
Pharmaceutical Factory and the external enterprise Beijing Minkang Baicao Pharmaceutical Technology Co. Ltd.Pharmaceutical Factory conducted scale-up studies and process validation prepared regulatory submissions and
coordinated supplementary studies during the approval process until obtaining the manufacturing license.The implementation of this project offers a scientific and reasonable technological route for the development
and production of similar formulations in the same field. The project has effectively bolstered the enterprises’
capabilities in research production clinical trials and market evolution. Moreover this collaboration has further
enhanced the enterprise-institute collaboration system providing a valuable foundation for future technological
advancements and product development.
6.2 PRODUCT ACCESSIBILITY
Livzon’s products include drug preparations APIs and intermediates as well as diagnostic reagents and equipment
covering various treatment fields such as gastroenterology assisted reproduction psychiatry anti-tumor etc. and has
formed a relatively complete and diverse product profile. We pursue registration and sales of our proprietary drug and
generics in emerging markets and developing countries.We have developed markets outside China through license cooperation equity investment etc. We now do business
in China and other regions including Europe and North America Latin America Australia the Commonwealth of
Independent States Southeast Asia East Asia Central Asia West Asia South Asia the Middle East and Africa.During the Year the Group continued to provide high-quality pharmaceutical products and services to many countries and
regions and our income from overseas principal businesses amounted to RMB1723.61 million accounting for 14.73% of
income from principal businesses with a compound growth rate of nearly 6.92% in the past five years.
52 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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6.2 PRODUCT ACCESSIBILITY (continued)
API business
As a major global supplier of APIs the Group deepens and maintains business in Asian markets such as India Pakistan
and Vietnam South American markets such as Argentina and Brazil and Middle East markets while continuously
developing and operating in regulated markets such as the United States and Europe. The Group has newly developed
business in Eurasian Economic Union (EAEU) member states and African markets.The Group’s API enterprises are increasingly becoming the preferred strategic partners of leading enterprises in the
global pharmaceutical industry. During the year we continued to intensify our development efforts in both domestic
and international markets. For our high-end antibiotic and intermediate product lines strategic collaborations had been
established with the relevant leading preparation and API enterprises. We focused on anthelmintic APIs for veterinary
drugs and maintained close cooperation with major international animal health companies leading to sustained growth in
the sales of our API business segment.In terms of market access we always adhere to the principle of prioritizing registration. Our extensive registration
experience in European and North American markets has laid the foundation for the reputation of Livzon’s APIs in the
international market for high quality. Meanwhile we continue to widen registration markets strive for completeness of
registration documents respond swiftly and accurately to official requirements and work hand in hand with preparation
customers to accelerate registration progress. In 2024 the Company successfully passed the GMP on-site inspection by
Brazil’s ANVISA with zero defects accelerating the registration of its human-use APIs in Brazil.In order to explore international markets we have set up overseas offices in Europe South America the Middle East and
Southeast Asia to develop markets maintain customers enhance the communication and negotiation of new projects
strengthen promotion of new products and enhance the Company’s brand awareness and product market share. In
2024 our sales team actively participated in the CPhI Worldwide while actively visiting customers to gain in-depth
understanding of their needs; overseas colleagues also increased the frequency of visiting local customers and attending
regional exhibitions to continuously develop new customers.As at the end of the Reporting Period a total of 34 APIs and intermediate products of the Group had completed
202 international registrations in 94 overseas countries/regions; the Group obtained 32 certificates for international
certification for its API and intermediate varieties including: 6 certificates for FDA on-site inspections 16 CEP certificates
1 EU GMP certificate 4 Japanese GMP certificates 1 Mexican GMP certificate and 4 Brazilian GMP certificates. Moreover
as at the end of the Reporting Period the Group completed registrations in China for a total of 52 API products.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 531 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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6.2 PRODUCT ACCESSIBILITY (continued)
API business (continued)
Livzon made contributions to charitable projects on treating river blindness and
other diseases
Onchocerciasis (“river blindness”) is a parasitic infection caused by the bite of the black fly which is most prevalent
in Africa and a few Latin American countries. Once infected by parasites in the river patients will suffer from
inflammation of the cornea which can lead to vision loss or unrecoverable blindness if not treated promptly.Currently there are 200 million people globally exposed to the risk of getting river blindness.Medicines Development for Global Health (“MDGH”) a not-for-profit public company and registered charity. The
oral moxidectin was approved by the US FDA in June 2018 for the treatment of onchocerciasis in patients aged 12
years and older. The Group signed a long-term strategic cooperation agreement with MDGH in 2022. We plan to
provide moxidectin APIs for the charitable project “Moxidectin for human project” under the Bill Gates Foundation
for consecutive years in the future at a favorable price far lower than the market price. The Moxidectin product is
mainly used for treatment of patients with river blindness in Africa and certain Latin American countries with the
medication covering the whole population (including healthy people).In December 2024 MDGH obtained marketing authorization for river blindness (for adults and children over 4 years
of age) from Ghana’s FDA with phased administration in Ghana to follow. Meanwhile MDGH continues phase II
clinical studies for additional indications including scabies soil-transmitted helminthiasis and strongyloidiasis.Drug preparation business
For the drug preparation business Livzon continues to deeply explore markets outside China’s mainland including
the countries and regions in South Asia Southeast Asia Central Asia Latin America and Africa such as Pakistan
the Philippines Thailand Indonesia Malaysia Vietnam Brazil Chile Russia Uzbekistan Kenya and Hong Kong and
Macao of China. Meanwhile we evaluate and select products with higher market potential overseas and strengthen their
registration to continuously cater for the needs of international markets.To align with diverse market characteristics Livzon has developed differentiated development strategies. We rely on the
existing products of the Group that meet the requirements of local registration regulations and meet local medication need
in growing markets which mainly include Southeast Asia South Asia Latin America and other regions so as to initiate
GMP inspection work and submission of regulatory dossiers in CTD format and obtain market approval. In view of the
strict regulatory requirements and the high cost of early development in regulated markets which mainly include Europe
and the United States and South Korea we promote the existing featured high-barrier complex preparations to acquire
high-end preparation certification in Europe and the United States based on international multi-center clinical trial and
declaration so as to seize the opportunity to enter into the regulated markets.
54 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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6.2 PRODUCT ACCESSIBILITY (continued)
Drug preparation business (continued)
In 2024 Livzon’s drug preparation business secured approvals for 6 products and submitted new applications for
registration of 8 products in overseas markets completed 1 GMP on-site inspection in PIC members filed 3 GMP
applications in other countries and signed 15 new overseas registration or business cooperation agreements for
preparations. It is planned that over the next five years 79 new overseas registration or business cooperation agreements
are signed for preparations in 22 more countries/regions 90 overseas registrations are submitted and 60 are approved;
we plan to select 4 products from generic research and development products to list as international goal and reserve
products and in alignment with the Company’s research and development direction and enlarging product pipeline to
further explore more products for internationalization.Livzon hopes to help patients around the world gain access to sustainable and high-quality medical services in the future
is committed to eliminating health disparities in underserved regions and contribute to balanced development in global
healthcare.Preparation entry into the U.S. market – Cetrorelix Acetate for Injection
approved and marketed in the U.S.In April 2024 the Company received an ANDA approval notice from the U.S. Food and Drug Administration for its
self-developed Cetrorelix Acetate for Injection authorizing its market launch in the U.S. The approval of Livzon’s
Cetrorelix Acetate for Injection for market launch in the U.S. certifies the Company’s qualification to market the
product as a pharmaceutical product in the U.S. and will have a positive impact on the Company’s expansion into
overseas markets.U.S. market launch demonstrates the medicine’s compliance with rigorous regulatory scrutiny and validates its
authority in terms of safety and efficacy which provides an important reference for other countries and regions to
introduce the medicine. In addition with the enhancement of production capability and the growth of the market
scale the cost of the medicine is expected to gradually decrease making the medicine affordable to more resource-
constrained countries and regions and enabling broader patient access to effective treatment thereby further
improving the level of global public health.Broaden the layout of biologics – Tocilizumab Injection promotes overseas
collaboration in Brazil the largest market in Latin America
As one of the world’s major emerging pharmaceutical markets Brazil has a broad market space. Brazil accounts
for more than half of the entire Latin American pharmaceutical market. Brazil’s drug regulatory environment leads
Latin America with ANVISA (the Brazilian Health Regulatory Agency) leading the region in terms of drug review
and approval and regulatory criteria. The Company has successfully partnered with a global leader in preparation
internationalization to register Tocilizumab Injection in Brazil and has laid a solid foundation for the promotion
and widespread use of the Company’s biologics across Latin America.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 551 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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6.2 PRODUCT ACCESSIBILITY (continued)
Drug preparation business (continued)
Exploring local production overseas
The South Asian pharmaceutical market stands out as one of the fastest-growing regions with Bangladesh
emerging as a leader and a perceived up-and-coming hub for generics in the region.Following the signing of a Memorandum of Understanding for strategic partnership and local production
collaborations on biologics with a leading reproductive product company in Bangladesh in 2023 Livzon entered
into a formal cooperation agreement in 2024 under which Recombinant Human Choriogonadotropin alfa for
Injection will be introduced into the country through local production which has already started and strategic
collaborations on local production will be initiated. If things continue favorably in the future the Recombinant
Human Choriogonadotropin alfa for Injection will fill a void in this product category in Bangladesh and offer an
enhanced treatment option for local patients in need of reproductive assistance.Diagnostic reagents and equipment business
The demand for autoantibody testing is growing worldwide and the number of people susceptible to specific autoimmune
diseases has exceeded tens of millions. With increasing public health awareness and surging clinical demand accurate
high-throughput and convenient testing methods have become the key to improving the accessibility of autoantibody
testing. In this context Livzon Diagnostics launched an automatic immunoassay analyzer with supporting test reagents.The device offers high throughput fast speed and ease of use for testing providing medical institutions with a solution
for autoimmune disease testing and contributing to tackling the challenge of autoimmune diseases.For respiratory disease testing Livzon Diagnostics continued to distribute and improve other testing products in the
field of respiratory testing. During the Reporting Period it improved 4 rapid antibody testing products for Mycoplasma
pneumoniae and Chlamydia pneumoniae and launched a high-throughput chemiluminescence testing product for
pneumoniae and Chlamydia pneumoniae as well as a rapid influenza antigen screening product.For autoimmune disease testing Livzon Diagnostics launched an integrated intelligent automatic immunoassay analyzer
with one-stop operation which enhances ease of use in laboratory testing of products. With the launch of these products
medical institutions have broader supplier options and more streamlined laboratory operation solutions.
56 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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6.3 AFFORDABILITY AND FAIR PRICING
Livzon has always maintained a highly responsible attitude toward patients and focused on delivering high-quality and
affordable medications to patients. Livzon takes full account of the differences in regional economic development when
setting the price of its products and is committed to making the medicines needed affordable for more patients.Domestic market
In late 2024 the National Healthcare Security Administration and the Ministry of Human Resources and Social Security
published the Catalogue of Drugs for National Basic Medical Insurance Work-related Injury Insurance and Maternity
Insurance (2024) (the “Medical Insurance Catalogue”). A total of 191 products of the Group are included in the Medical
Insurance Catalogue with 92 products in the Class A list and 99 products in the Class B list.In active response to the national polices of the reform of the medical and health system we further reduced medicine
prices in the process of medicine bidding procurement and access to alleviate the financial pressure of patients and
the pressure on the payment of medical insurance funds and contribute to the development of a more fair efficient and
sustainable medical security system.All products marketed by the Group are tendered according to provincial bidding policies mainly classified into two forms:
Sunshine Online Procurement and Volume-based Procurement. In Sunshine Online Procurement the declared access
prices are based on the attributes of the product referring to the original product price median price and lowest price
of products with the same generic name. These prices are reviewed and publicly announced by the National Healthcare
Security Administration before they take effect while Volume-based Procurement involves competitive bidding based on
product selection rules. Livzon actively participates in centralized volume-based procurement projects conducted at various
levels in China’s mainland and has a total of 8 specifications selected in 2024.Use of domestic instead of imported product – Aripiprazole Microspheres for
Injection
Aripiprazole is an antipsychotic medicine mainly used for the treatment of schizophrenia. The overseas selling
price of Aripiprazole prolonged-action preparation from Otsuka Japan is about RMB4000-26000 per dose
corresponding to an annual treatment cost of about RMB50000-RMB300000 which is expensive for patients. It
was marketed for sale in China’s mainland in May 2023.The Aripiprazole Microspheres for Injection developed by Livzon Microsphere is a modified new medicine and is not
subject to the patent restrictions of the original product. Scheduled for launch approval in April 2025 this product
will provide patients with a domestic dosage form for long-acting treatment.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 571 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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6.3 AFFORDABILITY AND FAIR PRICING (continued)
Overseas market
In the development and layout of overseas markets Livzon sets reasonable and favorable prices for its products by fully
considering local economic development GDP local medicine production and supply per capita income product pricing of
peers medical system condition and other socioeconomic factors. The Company actively participates in local government
biddings striving to reduce the burden of medication for local patients.As at the end of the Reporting Period the Group had adopted equitable pricing policy for a total of 28 APIs and
preparations based on local income levels in the sales process in South Asia Southeast Asia Eastern Europe Central Asia
South America and Africa.Livzon adheres to a relatively transparent and consistent pricing policy. Preparations comply with the local government’s
medical pricing policies in developing countries. The overall market prices of APIs are relatively transparent and customers
are familiar with and understand the price level and market sales mainly focused on end preparation factories to reduce
intermediate channels and lower the cost of local medicine supplies.Business segment Equitable pricing policies Progress
API * L i v zon con t inues to r educe the * Livzon has commercial cooperation
production costs of APIs and sells with about more than 50 customers
APIs and intermediates in emerging in India offering 20 kinds of APIs
markets /deve lop ing count r ies a t and intermediates. Among them the
prices lower than those in developed prices of intermediates are about
count r ies to reduce the cos t o f 5%-10% lower than those of the
medicines in target market countries; developed countries while the prices
of APIs are about 20%-30% lower
* Livzon’s sales pricing in domestic than those of the developed countries;
markets fo l lows the pr inc ip le of
fa i rness . Fo r domest i c s t ra teg i c * Certain high-end antibiotic products
cooperation partners we offer certain are in a relatively large demand in
pr ice discounts according to the overseas markets and the average
purchase volume by signing annual se l l ing pr i ce o f L i vzon in South
supply agreements. America Southeast Asia and Africa
that is about 15%-30% lower than
the price of developed countries.
58 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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6.3 AFFORDABILITY AND FAIR PRICING (continued)
Overseas market (continued)
Business segment Equitable pricing policies Progress
Drug preparation * Livzon provides the Asian Africa * For South As ia Southeast As ia
and Lat in Amer ica markets wi th Eastern Europe Central Asia South
preparations that are cheaper than Amer ica and Afr ica L ivzon has
the propr ietary preparat ions and provided or formulated pricing policies
obtain similar therapeutic effects; for preparations that are cheaper
than the proprietary preparations and
* Livzon formulates reasonable prices obtain similar therapeutic effects;
in line with local development levels.Livzon waives the market licensing fee * For the biological product Recombinant
of its products in underdeveloped and Human Choriogonadotropin alfa for
impoverished countries due to social Injection Livzon waived the market
responsibility. l i cens ing fee for i t s cooperat ive
customers in 4 countries in West
Africa South Asia and Southeast Asia;
* For the biological product Tocilizumab
Injection Livzon waived the market
l i c en s i ng f ee i n 3 coun t r i e s i n
Southeast Asia Eastern Europe and
Central Asia;
* For proprietary new drug Ilaprazole
Sodium for Injection Livzon waived
the market l i cens ing fee fo r i t s
cus tomers in 2 Southeast As ian
countries and 1 African country.Reagents * Livzon conducts thorough research * Actively inquire several transportation
on the terminal selling prices of its c o m p a n i e s t o s e e k t h e f r e i g h t
products ensuring that the sales service with the best quotations so
pr ices are not only fair but also as to provide customers with the
competitive; transportation mode that features
the lowest cost and the highest cost-
* Livzon formulates more preferential effectiveness for their selection.p r i c e s i n u n d e r d e v e l o p e d a n d
impoverished countries.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 591 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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6.3 AFFORDABILITY AND FAIR PRICING (continued)
Overseas market (continued)
Some high-end antibiotic sterile APIs verified for production and
commercialization to improve the affordability of APIs
According to market research in some growing markets and developing countries high-end antibiotic preparations
are directly bottled and produced into finished drugs from purchased sterile APIs. However sterile APIs are mainly
produced and supplied under the control of European suppliers leading to high prices due to tight supply.To change this market situation Livzon built a lyophilized production line for high-end antibiotic sterile APIs in
2024. Currently it has successfully initiated validation production of sterile Teicoplanin and realized commercial
sales of sterile Colistimethate Sodium in South American markets.
6.4 ENHANCEMENT OF HEALTH CARE
Amid the prosperity of the global medical and health industry Livzon accelerates its international layout with a forward-
looking strategy. Through innovation and cooperation Livzon has built a breakthrough global partnership network joined
hands with domestic and overseas pharmaceutical peers and engaged in deep cooperation with international partners to
contribute to the enhancement of medical quality.
60 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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6.4 ENHANCEMENT OF HEALTH CARE (continued)
Training of medical staff
As more products enter overseas markets the Group in collaboration with local partners actively provides training for
medical staff to help promote the medical services quality in developing countries and fulfil its social responsibilities.Case
* In March 2024 Livzon Diagnostics communicated with a well-known Grade A tertiary hospital in China
on the basic knowledge latest diagnostic technology product technical principle operation process and
clinical application cases of autoimmune diseases in the laboratory in response to the experiments and
interpretation questions of the hospital in the detection of autoimmune diseases and obtained a positive
evaluation.* After Livzon’s biological product Recombinant Human Choriogonadotropin alfa for Injection was launched
in Indonesia in 2023 we conducted 4 academic seminaring and exchange events in collaboration with local
partners in Indonesia during the Year. In August 2024 Livzon and its partners attended the 9th Indonesian
Fertility and Endocrinology Association Biennial Scientific Meeting in Semarang. The meeting was attended
by around 500 Indonesian fertility specialists. At the meeting Livzon and its partners jointly invited famous
Chinese fertility specialists to present on Recombinant Human Choriogonadotropin alfa and share their
experience in clinical use which received positive feedback from Indonesian fertility specialists.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 611 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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6.4 ENHANCEMENT OF HEALTH CARE (continued)
Enhancing the manufacturing capability of preparation customers
As an API supplier Livzon has actively shared research results and transferred technologies to overseas underdeveloped
countries and regions and helped preparation customers enhance their manufacturing capability so as to facilitate the
successful launch of their products in the regulated markets such as Europe and North America and enhance their
competitiveness.Case
Due to concerns regarding genotoxicity the FDA first introduced guidelines for nitrosamine impurities in 2023
followed by similar regulatory requirements from authorities in Europe Brazil and other regions. In response
Fuzhou Fuxing has actively cooperated with these regulations by conducting risk assessment reports for several
varieties of high-end antibiotics. For varieties identified with risks Fuzhou Fuxing has further developed analytical
methods to comprehensively examine potential points of nitrosamine impurity formation during production. It has
implemented strict control during production and actively collaborated with preparation customers to study and
control impurity levels in preparations. It strives to obtain exemption from inspection thereby further ensuring the
safety of medication use for patients.Drug supply chain management
As a dedicated player in the pharmaceutical industry we continuously optimize supply chain management strictly
adhere to regulations and build an efficient supply chain system. This helps enhance our partners’ capabilities in
product transportation and storage thereby providing high-quality medicines to patients worldwide while safeguarding
pharmaceutical quality and safety.Abroad we collaborate with local partners to disseminate knowledge on how to use transport and store products in
advance imparting professional pharmaceutical knowledge to local distributors thus strengthening the management and
optimization of the local supply chain.For the packaging and temperature monitoring of temperature-controlled products we adapt to the local climatic
conditions by employing regulatory-compliant specialized packaging materials. We upgraded our sea containers from
general containers to temperature-controlled containers. Meanwhile we added GPS thermometers to monitor the
transportation temperature throughout the process which advanced the temperature control conditions for medicine
supply. We carefully differentiate between the varying transportation requirements for raw materials. Meanwhile
through a comprehensive study of our transportation plans we provided customers with the optimal plans to avoid poor
freight transport caused by international instability ensure stable and secure supply and effectively help customers save
transportation costs.
62 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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6.5 SUPPORT FOR POST-MARKET PHARMACOVIGILANCE
In developing countries as late starters in pharmacovigilance (“PV”) work PV progress has been much slow with many
pressing issues yet to be resolved. Therefore the support of Livzon as a pharmaceutical enterprise for the establishment of
a complete post-market pharmacovigilance system in developing countries is an important part of its responsibility.Regarding Livzon’s Recombinant Human Choriogonadotropin alfa for Injection marketed in Indonesia we have actively
collaborated with local companies and the government to enhance the local level of post-market pharmacovigilance. After
the product was marketed we conducted research and activities to discover evaluate understand and prevent adverse
reactions or any other possible drug-related problems. We aimed to ensure the scientific and reasonable clinical use of
the product after its launch and guarantee the safety of clinical medication. Consequently we have aided Indonesia’s
post-market pharmacovigilance enhancement protected the local public from substandard or non-compliant drugs and
promoted the sustainable development of local medical system.
6.6 INVESTMENT IN RARE DISEASES
Under the guidance of relevant policies such as the “Healthy China 2030” Planning Outline and the Guidelines for
Diagnosis and Treatment of Rare Diseases Livzon has leveraged on its scientific research system and capabilities and
actively cooperated with the state to establish a two-way mechanism for research and development of medicines for rare
diseases in an effort to help promote the clinical status of rare diseases in China and strive to make high-quality new
medicines available and affordable to patients with rare diseases.Malignant hyperthermia
Malignant hyperthermia a rare disease is an inheritable myopathy with extremely high mortality rates once developed
while dantrolene sodium is the only specialized medicine for treatment. Due to its research and development difficulty
small patient population and thin profit margins there has been no enterprise in China for the development and
production of dantrolene sodium in the past 40 years.Undertaking the corporate mission of “prioritizing the quality of life of patients” Livzon spent so many years on self-
development of Dantrolene Sodium for Injection which is indicated for the prevention and treatment of malignant
hyperthermia. As our exclusive product Dantrolene Sodium for Injection1 was granted the launch approval in October
2020 saving Chinese patients with malignant hyperthermia from a condition of no medicine available for use and solvingthe problem of clinical medicine shortages in China. Over the years our project “Establishment Promotion and Applicationof Malignant Hyperthermia Diagnosis Treatment and Rescue System” won the first prize of the 2021 (7th) Beijing Medical
Science and Technology Award and the first prize of the 2022 Huaxia Medical Science and Technology Award.
1 Dantrolene Sodium for Injection is the first generic drug in China’s mainland whose patent medicine is Dantrium by
Par Sterile Products LLC an American Company.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 631 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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6.6 INVESTMENT IN RARE DISEASES (continued)
Systemic Juvenile Idiopathic Arthritis (sJIA)
Systemic Juvenile Idiopathic Arthritis (sJIA) is a rare chronic generalized disorder that typically manifests before the age
of 16. It is primarily characterized by persistent joint pain and swelling lasting for 6 weeks or more accompanied by
damage to other tissues and organs. sJIA represents the most severe subtype of Juvenile Idiopathic Arthritis (JIA) with an
incidence rate in China of approximately one in ten thousand.In January 2023 the Tocilizumab Injection (“Atvtia”) developed by LivzonBio was approved for market launch in China’s
mainland with the approved indication for rheumatoid arthritis (with a prevalence rate of 0.42% in China). In May 2023
following a supplemental application for new indications Atvtia was granted approval by the NMPA to include two
additional indications: Systemic Juvenile Idiopathic Arthritis (sJIA) and Cytokine Release Syndrome (CRS). Consequently
Atvtia has received approval for all three indications for the original product in China (the original product Actemra
is the first humanized monoclonal antibody targeting IL-6 receptor to launch on the global markets and was officially
included in China’s National Medical Insurance Catalogue in August 2019).
6.7 RATIONAL USE OF DRUGS
Livzon has recognized resistance to antibiotics as one of the major public health risks worldwide. Bacterial and fungal
resistance has become a major challenge for current global public health. Drug-resistant bacteria and fungi pose a growing
threat to human health. Various factors have led to a decrease in the sensitivity of the patient population to antibacterial
medicines especially hospital-acquired infections caused by certain multi-drug resistant and pan-drug resistant bacteria
and fungi making clinical treatment even more difficult.In order to solve the problem of resistance to antibiotics and other antimicrobials Livzon has actively taken measures
from four aspects: pharmaceutical research and development clinical use of antibiotics pharmacovigilance and industry
communication and was committed to preventing the spread of global antibiotic tolerance.Research and development in response to fungal resistance
During the past few years as the number of people with immunodeficiency and tumor chemotherapy increased
the cases of invasive fungal infection also increased gradually. Currently there are mainly 3 types of antifungal
medicines on the market namely polyenes azoles and echinocandins. After years of clinical application antifungal
tolerance has become more and more serious leading to a very limited number of clinical applicable medicines.In 2024 Livzon introduced SG1001 a new class 1 antifungal medicine and secured exclusive rights to develop
produce and commercialize SG1001 for all developable dosage forms and indications for antifungal and
other therapeutic fields in Greater China. SG1001 is an inhibitor that selectively targets fungal dihydroorotate
dehydrogenase (DHODH) and has demonstrated significant antibacterial activity against Aspergillus (including
Aspergillus fumigatus) Scedosporium penicillium trichoderma and Talaromyces marneffei. The project has now
entered the clinical phase.
64 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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6.7 RATIONAL USE OF DRUGS (continued)
Marketed product – Treatment for acute bacterial skin infections
In October 2024 the Company’s Tedizolid Phosphate for Injection received market approval for the treatment of
acute bacterial skin and skin soft tissue infections caused by susceptible strains of Gram-positive bacteria.While a variety of antibacterial medicines are available domestically for the treatment of skin and soft tissue
infections the number of antibacterial medicines for the treatment of skin and soft tissue infections caused by
MRSA (Methicillin-resistant Staphylococcus aureus) remains highly limited.Tedizolid phosphate a new oxazolidinone prodrug antibiotic provides a new therapeutic option for clinical
treatment. Oxazolidinones represent a new class of fully synthetic antimicrobial agents marketed following
sulfonamides and quinolones. They have a very wide antibacterial spectrum against gram-positive bacteria and have
antibacterial activity against a variety of multi-drug resistant strains. They can be used to treat inflammation skin
soft tissue infections etc. caused by gram-positive bacteria.Industry exchange – National academic conferences in the area of anti-infection
Livzon proactively promotes industry communication and contributes to improving the development of anti-infection
disciplines. During the Year we participated in over 10 national-level academic conferences in the field of anti-
infection covering areas such as respiratory infection deep mycosis infection and bacterial infection. We invited
experts to report on new developments in product research and development and had in-depth communications and
exchanges with clinical experts and scholars engaged in microbiological basic research so as to jointly promote the
development of medical technology.In addition we organized more than 20 online seminars for sales and marketing personnel on topics such as
“Common interpretation of Chinese experts on the clinical application dose of Vancomycin” and “Guideline onpersonalized use of Voriconazole”. These seminars were aimed at bolstering the product knowledge of internal
employees and enhancing their understanding of the reasonable use of antimicrobial products of Livzon.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 651 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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PRODUCT
RESPONSIBILITY
66 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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Product quality not only directly affects customer satisfaction and brand
reputation but also relates to the overall performance and social responsibilityof an enterprise. Livzon stays committed to the mission of “prioritizing thequality of life of patients” continuously strengthens awareness of legal
and compliant operations and consistently builds and improves its quality
management system. The Company takes active quality management actions
fosters a quality culture awareness among all employees and is committedto delivering the quality values of “being scientific and compliant improvingcontinuously pursuing excellence striving to provide patients with high-qualityproducts” to every customer.In the context of the accelerating restructuring in the global pharmaceutical
industry the Group’s quality management has evolved from basic compliance
requirements to the core of the Company’s strategic competitive advantage. The
Group’s deep focus on quality and safety has not only created a competitive
moat for its development but also presents systematic challenges in areas such
as cost control public opinion management and environmental compliance.I. ECONOMIC IMPACT
Positive impact:
Enhanced market competitiveness: Product quality and safety constitute
the fundamental cornerstone of corporate existence. The Group places great
emphasis on product quality and safety which allows it to gain the trust and
recognition of consumers thereby standing out in fierce market competition and
expanding its market share.Reduced operating costs: With strict quality control and safety management
the Group effectively mitigates quality-related losses including product
returns and recalls thus reducing operating risks and costs for the Company.Meanwhile good product quality standards enhance manufacturing efficiency
further optimizing the cost structure of the Company.Improved brand value: High-quality products and strict safety management
help shape the Company’s brand image and improve its brand awareness and
reputation. An improvement in brand value not only attracts more customers
and market share for the Company but also to a certain extent boosts its
bargaining power and increases the added value of its products.Attracting investment and partnerships: In the current market environment
focused on sustainable development investors and partners are increasingly
concerned with an enterprise’s quality and safety management levels. The
Group’s excellent performance in product quality and safety enhances the
confidence of investors and partners and attracts more capital and resources
thereby providing strong support for the Company’s growth.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 671 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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I. ECONOMIC IMPACT (continued)
Negative impact:
Increased costs: To ensure product quality and safety the Company needs to invest substantial funds in R&D
equipment upgrades quality testing safety facilities etc. For example the Group has consistently increased its investment
in environmental protection to meet increasingly stringent environmental requirements which has to some extent raised
its operating costs.Market risks: Despite the Group’s high product quality the complex and ever-changing market environment still poses
unforeseen risks. For example fluctuations in raw material prices and changes in policies and regulations may affect the
Company’s financial performance and operational stability.II. SOCIAL IMPACT
Positive impact:
Protecting public health: The quality and safety of pharmaceutical products are directly related to public health and
safety. Through strict quality control and safety management the Group ensures that the pharmaceutical products
medical devices and other products it provides meet national standards and industry regulations effectively safeguarding
public drug safety and making a positive contribution to the social well-being and stability of health.Improving social trust: The Company’s emphasis on product quality and safety reflects its sense of social responsibility
which strengthens public trust in both the enterprise and its products. This trust not only fosters long-term stable
collaborative relationships between the Company and its consumers but also contributes to the harmonious development
of society as a whole.Promoting employment and talent development: To ensure product quality and safety the Group needs to recruit
and cultivate a large number of professionals. This not only provides employment opportunities for society but also helps
improve the overall professional level and talent quality within the industry.Promoting industry standard development: As a well-known enterprise in the industry the Group can serve as
a role model for its good practices in product quality and safety. Its advanced management experience and quality
control systems can provide reference points for other enterprises promoting the standardized development of the entire
pharmaceutical industry and raising the overall quality and safety standards of the industry.
68 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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II. SOCIAL IMPACT (continued)
Negative impact:
Public opinion pressure: The pharmaceutical industry is under close public scrutiny where even isolated incidents
related to product quality or safety may trigger widespread societal concern and scrutiny. Such events can put significant
public opinion pressure on the Company and impact its public image and reputation.Public panic: Inadequate management of product quality and safety incidents may precipitate public health concerns
and erode consumer confidence. A single pharmaceutical safety event could trigger broader skepticism toward related
therapeutic products and potentially undermine trust in the industry ecosystem. Such scenarios risk precipitating market
disruptions that could extend to societal implications.III. ENVIRONMENTAL IMPACT
Positive impact:
Promoting green production: While pursuing product quality and safety the Group actively practices the concept of
green development. By adopting advanced production technologies and equipment and optimizing production processes
the Group reduces energy consumption and pollutant emissions and discharge during production. For example the Group
has invested in the development of energy-saving projects such as efficient energy-saving equipment upgrade and waste
heat recycling systems effectively reducing energy consumption during production.Resource recycling: The Company places great emphasis on the recycling of resources by implementing waste
classification and recycling and resource recycling systems. This not only reduces waste generation and lowers
environmental pollution but also improves resource utilization efficiency achieving a win-win situation in both economic
and environmental benefits.Raising industry environmental awareness: The Group’s positive actions and good performance in environmental
protection can inspire the entire pharmaceutical industry to pay more attention to environmental protection. Its advanced
environmental protection philosophy and practical achievements can provide reference and inspiration for other
enterprises driving the entire industry towards green and sustainable development.Negative impact:
Increased environmental protection costs: To fulfill the requirements for product quality and safety while also
meeting environmental protection standards the Company needs to invest significant funds in building and operating
environmental protection facilities. This has increased the Company’s operating costs and financial burden.Environmental risks: Despite the implementation of various environmental protection measures by the Company
potential environmental risks may still exist during production. For example improper handling of wastewater waste gas
and solid waste generated during the production of APIs could lead to pollution of the surrounding environment.The Group’s quality management is based on the principles of “risk anticipation and value transformation”. To
operationalize these principles we have established a “dual-drive” response system–leveraging technological innovation
to alleviate rigid cost pressures and ecosystem collaboration to reconstruct the risk defense network.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 691 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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7.1 QUALITY MANAGEMENT SYSTEM
Livzon always regards the establishment improvement and continuous effective operation of its quality management
system as the cornerstone of the Company’s development and ensures the high quality and safety of products through
scientific and rigorous management. The Group strictly adheres to relevant laws and regulations such as the Drug
Administration Law of the PRC and continues to implement the main responsibility as an enterprise for quality and safety.The Group’s quality management system complies with industry standards for quality management systems (GLP GCP
GMP GSP and GVP) as well as the latest regulatory requirements of the National Medical Products Administration
and other regulatory agencies. It covers all stages of R&D manufacturing sales use etc. A quality monitoring system
covering the entire product life cycle has been established and advanced testing technologies and equipment have been
used to conduct full batch testing of raw materials and finished products to ensure that products meet established quality
standards. In 2024 we continued to improve our quality management system and pharmacovigilance system clarify the
quality management responsibilities of each department and continuously optimize the quality management system and
improve the quality management level through regular internal audits and management reviews; during the Year we
established the pharmacovigilance head office at the Group level to strengthen pharmacovigilance work and continuously
refine our full-lifecycle quality management model.? Governance
The Company has established a unified Group-wide quality management system in accordance with relevant
laws and regulations such as the Drug Administration Law of the PRC the Provisions for the Supervision and
Administration of Drug Manufacturing the Provisions for Drug Registration the Good Clinical Practice the Good
Manufacturing Practice the Good Supply Practice the Good Pharmacovigilance Practice and the Regulations on
the Supervision and Administration of Marketing Authorization Holder Implementing Main Responsibility of Drug
Quality and Safety. The Group has established a quality management head office responsible for overseeing the
quality supervision of all subsidiaries. Through dedicated and specialized auditing and special quality work within
the Group we ensure that all subsidiaries within the Group implement the requirements of a unified quality
management system. The Group’s quality management system covers both domestic and international certification
standards and the Group has established a complete quality exception response mechanism forming a closed-loop
of “strategy-process-execution” quality framework. We have developed clear product quality strategies identified
and assessed potential impacts risks and opportunities set quantifiable metrics and targets and continuously
improved product quality to meet customer expectations thereby supporting the Company’s sustainable growth
initiatives.? Metrics and targets
Livzon always prioritizes quality and safety and sets clear targets: official inspections including license inspections
GMP compliance inspections and drug registration inspections are passed on the first attempt and the pass
rate of government sampling inspections reaches 100%. To achieve these targets we regularly conduct internal
production supervision and inspections while performing compliance inspections based on the progress of R&D
projects; for key R&D or technological improvement projects we establish specialized teams to conduct multiple
special inspections based on project progress and assist subsidiaries in resolving quality management and technical
difficulties. In 2024 all our targets were successfully met: official inspections such as license inspections GMP
compliance inspections and drug registration inspections were passed on the first attempt. The government
sampling inspection pass rate remained at 100%.
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7.2 QUALITY RISK MANAGEMENT
To adapt to changing market demands and consumer expectations Livzon always regards product quality as an importantpart of its corporate sustainability strategy. Adhering to the quality concept of “scientific risk assessment and control asthe basis of quality management” the Company has developed a series of management plans and strategies focused
on the impacts risks and opportunities related to product quality. According to external quality management standards
and internal management systems such as Administrative Procedures for Quality Risks the Company conducts quality
risk management (QRM) throughout the entire product life cycle such as product R&D technology transfer commercial
production product circulation and termination. Risks are reviewed at a minimum frequency of once per year to ensure
the safety and compliance of products. This approach guided by high quality and standards promotes the steady progress
of products towards sustainable development goals.QRM Policy of Livzon
Product design
and transfer
Design and
Deviation and construction of
OOS/OOT facilities and
equipment
Quality Risk
Confirmation Material
Management
and verification management
(QRM)
Process control Change control
Complaint
handling
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7.2 QUALITY RISK MANAGEMENT (continued)
From the perspective of patient safety we based on scientific knowledge strive to properly identify and control the risks
of factors involved in the product life cycle implement dynamic risk management and rationally allocate resources to
achieve continuous risk control and continual improvement.Quality risk management of the Group is divided into risk assessment risk control risk communication and risk audit and
review and other processes. Among them risk communication runs through the entire risk management process.We identify quality risks in an all-round way from multiple sources such as gap analysis of product technology transfer
annual quality assessments of material suppliers deviation reports change control quality complaints adverse reaction
information trend analysis for product quality review and inspections on continuous product stability. Secondly we
analyze and estimate the identified risks and their problems confirm the possible consequences of the problems and the
possibility of the occurrence and issue a quality risk assessment report based on the system risk assessment form. We
then determine the control measures to reduce the quality risk according to the risk level and take corrective actions and
preventive actions (CAPA) when necessary; after implementation of the risk mitigation measures and reassessment the
quality risk management team makes a decision on whether to accept the residual risk. Please see the process chart as
below:
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7.2 QUALITY RISK MANAGEMENT (continued)
Quality Risk Management Process of Livzon
Start risk management
Risk assessment
Risk identi cation
Risk analysis
Risk appraisal
Risk control
Risk mitigation
Risk acceptance
Results/output of quality
risk management procedures
Risk audit and review
Event audit and review
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Risk communication
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7.2 QUALITY RISK MANAGEMENT (continued)
Through significant impact assessment and risk management process Livzon identified and assessed the following quality
related risks and opportunities in 2024:
Expected Time of Probability of
Quality related risks
Risk Occurrence Risk Occurrence
Non-compliance risk of sampling inspection: If the product market sampling Long-term Improbable
inspection and government sampling inspection fail to pass production may
be ordered to stop and brand quality image may be damaged.Drug safety risk: Major mass safety incidents related to drug use may trigger Long-term Improbable
recalls substantial compensation and public opinion issues which severely
affect brand image.Expected Time Probability of
Quality related opportunities of Opportunity Opportunity
Occurrence Occurrence
Improvement in drug outer packaging quality: By conducting improvement in Medium-term Almost certain
drug outer packaging quality the quality of drug outer packaging is gradually
enhanced and the appearance and material are aligned with the quality of
outer packaging of drugs imported from Europe and the United States so as
to boost brand influence attract a wider customer base and increase product
competitiveness.Due to the substantial uncertainty in quantifying the above quality related risks and opportunities the value of related
quantitative information is limited. To ensure the accuracy and reliability of the information the Company did not disclose
specific financial data in the Report. The Company plans to further improve the collection and analysis of related data in
the next year and will disclose quantitative information accordingly.? Risk response measures
In response to potential emergencies that may arise during the production process we have established relevant
management systems. We organize emergency drills quarterly to ensure the continuity of production and the safety of
our employees in the event of an emergency. To reduce the risk of production stoppages due to safety and environmental
factors we have implemented several improvement measures. These include the introduction of efficient and energy-
saving regenerative thermal oxidizer (RTO) equipment the upgrading of transformers to meet higher electricity demand
and the installation of lightning protection facilities so as to improve the overall level of production safety and ensure the
normal production process. In addition we mandate daily inspections of safety and environmental protection equipment
by all departments and organize comprehensive safety and environmental protection assessments on a monthly basis by
professionals. We establish a hazard management record and keep track of corrective actions to ensure that hazards are
effectively resolved.
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7.2 QUALITY RISK MANAGEMENT (continued)
? Risk response measures (continued)
To address the risk of supply disruption of upstream raw materials and auxiliary materials due to factors such as market
competition monopolies safety and environmental protection and to ensure production continuity we have adopted a
dual sourcing strategy. By increasing the number of critical raw material suppliers in different regions we try our best to
make sure that each material has at least 2-3 suppliers to secure stable material supply. In addition to address the risk
of supply disruption of critical raw materials we have engaged in the research and development (“R&D”) of processes for
some critical raw materials and reserved in-house production technology to promptly respond to this risk.Meanwhile considering safety and environmental concerns in API product manufacturing the locations of our current
manufacturing sites may not be suitable for long-term production due to surrounding developments. In response to
this risk we have taken the measure of adding back-up manufacturing sites. For example Livzon Hecheng in Zhuhai
Guangdong Province has established a new manufacturing site in Henan Province. This enables the simultaneous
production and supply of key varieties at two locations effectively reducing production and supply risks.
7.3 R&D QUALITY MANAGEMENT
Livzon keeps deepening its quality management by extending the scope of quality management from post-market to the
R&D stage to realize quality control throughout the entire product life cycle.
7.3.1 Quality management of pharmaceutical R&D
The pharmaceutical R&D centers of the Group have established and operated a quality management system for
pharmaceutical R&D in accordance with the GXP1 ICH2 guidelines and relevant registration regulations. The Company’s
quality management head office conducts simulated on-site registration verification (simulated on-site inspection of
pharmacological R&D and production) at key points of drug preparation projects under R&D to assist marketing
authorization holders (“MAHs”) in fully identifying the risks before product approval and takes prompt risk control
measures. By establishing an effective quality assurance system and continuous risk assessment we ensure the smooth
application of projects on schedule.Each of the Group’s R&D centers conducts process reviews and compliance self-inspections at key points in pharmaceutical
development of R&D projects (such as process project establishment process research process pilot production
verification and registration batches and IND/NDA submissions) to make pharmaceutical R&D work more scientific
rational and compliant. The quality head office of the Group conducts special audits or key stage audits based on the
importance level of R&D projects. During the Year the quality management head office of the Company conducted 16
audits on drug preparation projects under R&D. Based on the requirements of API R&D management and technology
transfer documents the Group’s API enterprises conducted 2 self-inspections on the R&D sites for the variety of
Semaglutide. The new variety JP-1366 of API enterprises underwent 1 internal audit by the quality management head
office of the Company. The API enterprises conducted 1 on-site audit on the entrusted research units within the Group.
1 GXP represents Good X (Agriculture Laboratory Clinical Manufacturing Supply) Practices collective name for the Good
Agricultural Practice for Chinese Crude Drugs the Good Laboratory Practice the Good Clinical Practice the Good Manufacturing
Practice and the Good Supply Practice.
2 ICH refers to the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use.
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7.3 R&D QUALITY MANAGEMENT (continued)
7.3.1 Quality management of pharmaceutical R&D (continued)
The Company also implements systematic quality control for the design and development of medical devices. We ensure
product safety and quality stability by establishing a sound design control process including clear product project
establishment design planning design input design output design conversion design verification design validation and
a medical device risk management system based on ISO 14971 applied to the whole process of product R&D.During the Year the Company conducted audits on the compliance requirements of the R&D process of medical device
products by stages according to the project progress and conducted a total of 14 audits in 2024.Case: Registration on-site simulation inspections of new products
To ensure that the three new products of Xinbeijiang Pharma R&D center of traditional Chinese medicine business
department Livzon Pharmaceutical Factory and Livzon MAB passed registration reviews successfully the Company
organized key business employees from the quality module of each manufacturing subsidiary to form a professional
steering group to conduct comprehensive registration on-site simulation inspections. During the inspection process
the steering group focused on the latest developments in new drug R&D took a data-centric approach and
employed interactive inspections item-by-item checks and other inspection methods. The work strictly followed the
requirements for drug registration R&D on-site inspections and drug registration manufacturing on-site inspections.The inspection work was based on clear goals and well-defined responsibilities and strictly complied with the
relevant requirements for drug registration R&D and manufacturing on-site inspections to ensure successful
registration inspections.
76 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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7.3 R&D QUALITY MANAGEMENT (continued)
7.3.2 Quality management of clinical trial
The establishment of a sound clinical trial quality management system is an important cornerstone for the Company to
ensure scientific research quality. During the Reporting Period all R&D units of the Group in strict compliance with the
documents of the clinical trial quality management system enhanced the quality control of clinical trials improved the
ability to manage potential risks conducted clinical trials properly and ensured that the Group’s clinical trials complied
with the requirements of relevant laws and regulations to guarantee the safety of subjects and the reliability of test data.The Group applies the ICH Q10 pharmaceutical quality system to the management of clinical research with reference to
the Quality Management System–Requirements (GB/T 19001-2016) and combining clinical quality management practices
creates a cQMS3 in line with the Company’s management process which provides a comprehensive quality management
system for clinical R&D and ensures that the cQMS of the clinical departments is aligned with the strategic goals of the
Company. At the same time we keep improving the cQMS system documents according to the latest regulatory
requirements related to clinical trials.To improve the quality control and process management of clinical trial projects the clinical research quality management
team coordinates the development of quality risk management plans for each R&D project. By implementing inspection
and audit management measures we can determine the times and frequency of performing audits according to the
characteristics of projects promptly identify potential risks and complete correction within the specified time so as to
ensure that projects remain compliant and meet industry standards.For drug clinical trials the quality management head office of the Company formulates scientific and detailed audit plans
based on the type and complexity of clinical trials and the level of risks that affect subjects. According to the progress of
the clinical trial projects it organizes audits at different stages and strengthens supervision throughout the entire process
of drug clinical trials to ensure compliance with relevant laws and regulations proactively identify potential project
problems and prevent recurrence of problems protect the rights and interests and safety of subjects and ensure the
truthfulness accuracy and completeness of clinical data. The production of the Group’s API enterprises strictly complies
with related regulatory requirements. They guarantee the truthfulness accuracy completeness and traceability of
information throughout the clinical trial process.The Company conducts at least one quality audit for each clinical research project undertaken by all the R&D centers of
the Group.As at the end of the Reporting Period in accordance with the existing annual audit plan the quality management head
office of the Company conducted 37 audits on 8 clinical trial projects of the Group which involved 33 clinical trial
institutions and 3 biological sample analysis units. As a sponsor the Group achieved quality supervision and management
throughout the process of clinical trials by audits thereby further ensuring the quality of clinical trials and continuously
preventing and controlling compliance risks.
3 cQMS is Clinical Quality Management System.
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7.3 R&D QUALITY MANAGEMENT (continued)
7.3.3 External regulation
Livzon has 2 API R&D centers 7 drug preparation R&D centers 1 in vitro diagnostic reagent R&D center and 1 veterinary
drug R&D center. During the Year the R&D centers of the Group accepted 32 inspections from external regulatory
agencies and there were no major or serious defects.Inspections by external regulatory agencies accepted by the R&D
Type of product
centers of the Group in 2024
* 2 varieties passed the registration inspection (pharmaceutical R&D and
manufacturing site)
Drug preparation * 2 varieties passed the registration inspection (clinical trials)
* 2 varieties confirmed exemption from registration inspection (pharmaceutical
development and manufacturing site)
In vitro diagnostic reagent * 3 on-site inspections of registration of medical devices
* The variety of Semaglutide Injection (affiliated with the API business
department) passed the registration on-site inspection initiated by the
API
Center for Food and Drug Inspection of NMPA with participation from the
provincial and city-level administrations in Guangdong Province.
7.4 QUALITY MANAGEMENT OF PRODUCT MANUFACTURING
For quality management of product manufacturing after market launch Livzon has established a quality management
system for the Group’s manufacturing in strict accordance with the standards of the Chinese GMP and international
requirements to ensure that all manufacturing enterprises strictly implement the system and meet quality control
standards. All of the Group’s manufacturing enterprises are 100% committed to promoting the full implementation of the
quality management system to strictly control product quality. In addition the Group’s API manufacturing enterprises have
also implemented the quality management system in accordance with the requirements of ICH Q7 US cGMP and EU-GMP.
78 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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7.4 QUALITY MANAGEMENT OF PRODUCT MANUFACTURING (continued)
7.4.1 Registration and certification
As at 31 December 2024 the product registration national certification and GMP compliance status of the Group are as
follows:
Product Registration National Certification and GMP Compliance Status of Livzon
Item Work of drug preparations in 2024
31 registration projects were completed in 11 countries/regions for 17
International registration
specifications of products
Domestic registration 162 products were registered domestically
Internationally 3 varieties obtained international certification
certified varieties
International
certification Internationally 3 internationally recognized certificates within the validity period were obtained
recognized
certificates
GMP compliance status of A total of 58 production lines were GMP compliant
production lines
Item Work of APIs in 2024
International registration 202 registration projects were completed in 94 countries/regions for 34 products
Domestic registration 60 products were registered domestically
Internationally 15 varieties obtained international certification for on-site inspections
certified varieties
International
certification Internationally 32 internationally recognized certificates were obtained (including:6 certificates
recognized for FDA on-site inspections 16 CEP certificates 1 EU GMP certificate 4 Japanese
certificates GMP certificates 1 Mexican GMP certificate and 4 Brazilian GMP certificates)
GMP compliance status of A total of 71 production lines were GMP compliant
production lines
* 2 enterprises were certified to GB/T 19001-2016/ISO 9001:2015 Quality
ISO quality management system Management System
certification * 1 enterprise was certified to ISO 22000:2018 Food Safety Management
System
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7.4 QUALITY MANAGEMENT OF PRODUCT MANUFACTURING (continued)
7.4.1 Registration and certification (continued)
Product Registration National Certification and GMP Compliance Status of Livzon (continued)
Item Work of in vitro diagnostic reagents in 2024
International registration 27 registration projects were completed in 40 countries/regions for 27 products
169 products were registered domestically (7 drugs with 9 certificates 162
Domestic registration
medical devices)
Internationally 10 varieties obtained international certification
certified varieties
International
certification Internationally 8 internationally recognized certificates within the validity period were obtained
recognized
certificates
GMP compliance status of A total of 2 production lines were GMP compliant
production lines
ISO quality management system 1 enterprise was certified to ISO 13485:2016 Quality Management System for
certification Medical Devices
7.4.2 External regulatory inspections
Livzon has 7 drug preparation enterprises 5 API enterprises and 1 in vitro diagnostic reagent enterprise. In 2024 Livzon
accepted a total of 57 inspections from external regulatory agencies and there were no serious defects.Inspections by External Regulatory Agencies Accepted by Livzon
Inspections by external regulatory agencies accepted by the Group in
Type of enterprise
2024
Drug preparation enterprises accepted a total of 28 inspections from drug
regulatory agencies. All inspections were passed smoothly:
Drug preparation manufacturing * 7 license inspections
enterprises * 12 routine inspections
* 7 other inspections
* 2 unannounced inspections
80 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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7.4 QUALITY MANAGEMENT OF PRODUCT MANUFACTURING (continued)
7.4.2 External regulatory inspections (continued)
Inspections by external regulatory agencies accepted by the Group in
Type of enterprise
2024
API enterprises accepted a total of 24 inspections from drug regulatory agencies.All inspections were passed smoothly:
* License for veterinary drugs manufacturing & GMP acceptance (for export
only): 1
* Pre-market GMP compliance of drugs & Changes to scope of manufacturing
license & On-site inspection of GMP compliance of drugs exported to EU: 1
* U.S. FDA cGMP inspection and pre-approval inspection: 2
* Brazilian ANVISA GMP certification inspection: 1
API manufacturing enterprises * Post-market GMP compliance inspection: 1
* Daily supervision inspection of veterinary drugs: 6
* Daily supervision inspection of pharmaceuticals for human use: 4
* Pre-market GMP compliance inspection: 1
* Daily supervision inspection of food additives: 1
* Clinical on-site inspection: 4
* Combined registration on-site inspection and GMP compliance inspection: 1
* Inspection of changes to scope of manufacturing license for pharmaceuticals
for human use: 1
In vitro diagnostic reagents (drugs) accepted 1 inspection from drug regulatory
agencies. The inspection was passed smoothly:
* 1 daily inspection of drugs
In vitro diagnostic reagents (medical devices) accepted a total of 4 inspections
from medical device regulatory agencies. All inspections were passed smoothly:
In vitro diagnostic reagent enterprise * 1 annual audit of ISO 13485:2016 Quality Management System for Medical
Devices
* 1 MDSAP (Medical Device Single Audit Program) initial certification audit for
medical device quality management systems (U.S. and Japan)
* 1 daily supervision audit of medical devices
* 1 on-site assessment of risk monitoring
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7.4 QUALITY MANAGEMENT OF PRODUCT MANUFACTURING (continued)
7.4.3 Quality control on production process
According to national laws and regulations and industry standards we have developed detailed plans for equipment
certification intermediate process control etc. and implemented comprehensive quality management and control of
various production facilities with a full-spectrum approach to quality control in the production process. We conduct
regular certification on key production facilities. The main principles we abide by are as follows:
。 For facilities with clear regulations such as sterilization cabinets and air-conditioning systems the recertificationcycle strictly follows the regulations;
。 For facilities without clear regulations such as labelling machines and packaging machines recertificationassessments are conducted annually to determine whether recertification is necessary for the current year;
。 If changes to the facilities occur the results of the change risk assessment are used to determine whether toconduct recertification. Facilities recertification is included in the annual certification master plan for management.The quality management officer is responsible for the final approval of the certification master plan certification
plan and reports.During the Year all (100%) of the Group’s key production facilities were certified to an in-house testing standard.
82 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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7.4 QUALITY MANAGEMENT OF PRODUCT MANUFACTURING (continued)
7.4.3 Quality control on production process (continued)
At the same time the Company pays continuous attention to announcements and reports from the NMPA media and
international organizations to ensure timely access to industry trends and quality and safety information. For any new risks
identified we will immediately take relevant measures to ensure product safety as detailed below:
Relevance assessment:
* If relevant information about emerging quality/safety concerns that may involve a certain type of products
or materials is found after verifying the authenticity of the information we will immediately engage the
quality technology production and other relevant departments in a preliminary assessment of the products or
materials to determine the degree and scope of the influence.Extended investigation:
* Once the scope of influence is determined we will send a letter to the supplier involved for investigation;
if the supplier has conducted relevant research and assessment we will collect relevant data as a basis for
further assessment.Quality research:
* According to the results of the relevance assessment we conduct entrusted inspections of influencing
factors quality research tests etc.Quality risk assessment:
* According to the relevant information obtained from the extended investigation of the supplier together
with the data from the quality research conducted we will proceed with a quality risk assessment to
determine whether risks are introduced into the relevant modules and the acceptability of the risks.Corrective and precautionary actions:
* If after the quality risk assessment it is confirmed that emerging quality/safety concerns may pose
a relatively large influence on the products or materials with a relatively high-risk level we will take
appropriate corrective and precautionary actions such as raising quality standards improving processes and
optimizing formulations; we will recall the products if necessary.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 831 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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7.4 QUALITY MANAGEMENT OF PRODUCT MANUFACTURING (continued)
7.4.3 Quality control on production process (continued)
The Group remains mindful of the risk of product quality. We actively conduct precautionary testing for emerging product
quality and safety concerns. We organize quarterly quality analysis meetings for product review analyses to preemptively
identify potential quality and safety risks of products and formulate corresponding quality control plans.Case: Conducting precautionary testing for regular risk analysis
To enhance the internal quality management level and ensure continuous compliance 7 drug preparation
manufacturing enterprises established a quarterly product and quality risk analysis and reporting system which
was used to study and judge product and system risks develop corrective and preventive actions and continuously
improve the quality management system. Quality risk control opinions and suggestions were reported quarterly
to the heads of these enterprises who fully considered these opinions and provided resources for continuous
improvement.Case: Precautionary testing for regulations
During the Year the Guangdong Provincial Medical Products Administration issued the Administrative Measures
for Pharmaceutical Qualified Persons of Guangdong Provincial Medical Products Administration and the National
Medical Products Administration issued the Notice on Strengthening the Supervision and Administration of
Entrusted Drug Manufacturing (Draft for Comments). These regulations impose higher requirements on key
personnel especially those in entrusted manufacturing enterprises. The Company’s quality management head
office required all relevant subsidiaries to conduct a gap analysis with a comprehensive reference to the above-
mentioned regulations and formulate and implement targeted improvement measures. In response to the
increasing qualification requirements for key quality management personnel the Company’s quality management
head office organized key personnel (persons in charge of quality persons in charge of production qualified
persons and delegated qualified persons) from the Group’s 9 manufacturing enterprises to study regulatory
knowledge and held a legal knowledge competition for core personnel to encourage enterprises within the Group
to actively expand their pool of delegated qualified persons. At the same time the quality head office organized
further training for quality management personnel of the enterprises. During the Year a total of 80 people from
subsidiaries participated in audit work organized by the quality head office for 275 person-days from which their
business management skills were improved. They were involved in drug preparation and API audits clinical trial
project audits or self-inspections internal and external training irregular summary exchange sessions and related
management work of the quality management head office. These efforts helped accelerate the development of key
quality management personnel for the future and ensure a reserve of qualified quality management personnel.
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7.4 QUALITY MANAGEMENT OF PRODUCT MANUFACTURING (continued)
7.4.4 Quality audit
Based on the six systems of GMP4 and internal production quality management system standards the Company has
developed detailed inspection rules and defect evaluation standards. According to these standards the Company conducts
a comprehensive quality audit at least once a year for each of the Group’s manufacturing enterprises so as to assist each
of them in conducting a comprehensive management of the quality system throughout the entire life cycle of
pharmaceuticals identify blind spots in quality management and avoid regional and systemic risks thereby further
promoting the steady operation of the quality management system of each manufacturing enterprise.The Company conducts a comprehensive quality audit at least once a year covering all (100%) of the Group’s
manufacturing enterprises and MAHs. During the Reporting Period the Company conducted 18 quality audits on the
Group’s drug preparation enterprises (including animal drug preparation enterprises) 2 quality audits on the Group’s in
vitro diagnostic reagent enterprise 10 quality audits on the Group’s API enterprises and 2 quality audits on the Group’s
distributors.During the Year the Group’s drug preparation enterprises and in vitro diagnostic reagent enterprise accepted a total of
49 audits from drug regulatory agencies and other external auditors all of which revealed no serious defects. The Group’s
API enterprises accepted a total of 176 external audits all of which were successfully passed.For problems and defects revealed in the quality audits the quality management head office of the Company emphasizes
holistic risk identification requires MAHs to actively identify relevant product or system risks on the basis of reviewingdefects and ensures that effective corrective and precautionary actions are implemented under the guidance of the “Plan-Do-Check-Act” (PDCA) model. The PDCA model not only emphasizes the process of teamwork and brainstorming but
also encourages the use of various quality risk management tools to help enterprises identify potential problems more
effectively. The Company strictly requires all MAHs to use the PDCA mode to ensure comprehensive and systematic
investigation of product and system risks. In this process it is necessary to develop a complete risk list and corresponding
control measures list covering the six major factors of man machine material method environment and measurement.Each MAH must implement corrective actions carefully against these lists and make continuous improvements to fulfill the
Group’s basic requirements of “daily settlement and precise GMP” for production quality work.
4 The six systems of GMP are quality system facilities and equipment system material system production system packaging and
labelling system and laboratory system.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 851 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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7.5 QUALITY MANAGEMENT OF PRODUCT DISTRIBUTION
Livzon is committed to establishing a compliant and efficient drug distribution system while closely following regulatory
requirements and the latest regulatory trends of drug regulatory agencies. The Company regularly conducts compliance
training on drug distribution to improve the professional quality of employees. In addition the Company conducts routine
audits on all pharmaceutical distributors of the Group at least once a year in order to implement quality control over the
whole process of drug distribution and to enhance the quality assurance of pharmaceuticals in circulation.In 2024 based on the annual audit plan the quality management head office of the Company conducted quality audits
on all pharmaceutical distributors of the Group in accordance with the GSP system; 2 pharmaceutical distributors of the
Group accepted a total of 4 GSP special and daily supervision inspections by drug regulatory agencies and no material
defects were found hence the quality management risk of our drug distribution is controllable.
7.5.1 Management of product package inserts and labels
Product labels and package inserts are important guides for consumers in correct selection and use of drugs and are of
great significance to ensure the health and life safety of the public. Livzon strictly complies with laws and regulations such
as the Drug Administration Law of the PRC and the Provisions for Drug Package Inserts and Labels. Each manufacturing
enterprise has established a management system of labels and package inserts and has formulated relevant management
systems. Livzon always pays close attention to updates on the regulatory documents of the National Medical Products
Administration (NMPA) on package inserts labels and packaging and continuously conducts internal checks so as to
ensure that our product labels and package inserts fully comply with regulatory requirements safeguarding the safety of
consumer medication.The Group conducts standardized management of package inserts and labels for design audit purchasing printing
acceptance storage distribution and use and sets clear requirements on audit of relevant packaging material suppliers.The Group conducts internal audits of the package inserts and labels on a regular basis each year or when regulations
change and revises and improves the product package inserts and labels in a timely manner.
7.5.2 Product tracing
Livzon has established a complete product information traceability system and formulated the Drug Traceability
Management System. Through traceability platforms such as “Ma Shang Fang Xin（碼上放心）” and the “NationalVeterinary Drug Tracing System” Livzon has successfully enabled the smallest sales packaging unit of drugs class III
medical devices and veterinary drugs to be traceable (giving unique traceability ID to the smallest sales packaging unit).With a comprehensive information traceability mechanism we enable the efficient circulation of traceability information
across different processes thereby promoting the overall governance of product quality and safety and improving our
ability to guarantee product quality and safety.Our API export enterprises have formulated the Procedures for Management of QR Codes for Active Pharmaceutical
Ingredients (APIs) to ensure that each level of packaging labels for exported APIs bears a QR code (Quick Response Code).This enables regulatory agencies and consumers to trace product unique identifiers batch numbers dates of manufactureand other product information by scanning the QR code through tracking systems such as the “China Product InformationService Platform” and “ANCC app”.
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7.5 QUALITY MANAGEMENT OF PRODUCT DISTRIBUTION (continued)
7.5.3 Product recall and safety emergency management
In order to regulate the management of unqualified products and prevent risks such as confusion or errors the Company
has formulated the Operating Procedures for Product Recalls the Unqualified Product Management System the Returned
Product Management System the Contingency Plans for Material Product Safety Incidents and other management
systems. The disposal of unqualified materials intermediate products products to be packaged and finished products
shall be approved by MAH persons in charge of quality and relevant records shall be kept. We establish and keep
complete purchase and sale records to ensure the traceability of products sold and regularly conduct simulated product
recalls and emergency drills for product safety emergencies.During the Year the Group had no recalls of products sold or shipped for safety and health reasons and thus did not incur
any medical expenses resulting from product quality issues.Product Recall Procedures of Livzon
If any unqualified product is identified or assessed by the entrusted party during the process it shall
immediately be marked and isolated. The entrusted party shall give timely feedback on the relevant
information substantiating the nonconformity assessment such as product/material name batch number
supplier validity involved and any abnormal conditions to the entrusting party. For products to be recalled
the quality management department organizes members of the risk assessment team to classify the product
recall into three levels based on the severity of potential product safety hazards.After the recall is approved the quality management department will issue a“ recall notice” to all relevant
departments and the sales department will formulate a recall plan and specific measures and submit a copy
of the recall plan to the drug regulatory agencies.In the course of the recall the sales department has to report the recall progress as required by the documents
conduct statistics and acceptance of the products to be recalled and complete the destruction of the recalled
products that must be destroyed under the supervision of the regulatory department. An Unqualified Product
Destruction Record must be completed and submitted to the regulatory department. In addition the relevant
person in charge will register the destruction and handling information in the Unqualified Product Handling
Record for timely update and maintenance.During the Year some MAHs and all API enterprises of the Group conducted simulated product recalls and emergency
drills for product safety emergencies. The results of these drills met the expected targets fully verifying the feasibility and
effectiveness of the recall processes. The drill results demonstrated that the effectiveness of the recall process had been
fully verified and the establishment of relevant policies ensured that enterprises could quickly and effectively conduct
contingency handling in the event of product safety emergencies.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 871 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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7.5 QUALITY MANAGEMENT OF PRODUCT DISTRIBUTION (continued)
7.5.4 Protection of customer rights and interests
Enhancement of customer satisfaction
In order to effectively protect the rights and interests of customers and improve their satisfaction Livzon always takes the
annual satisfaction survey of the quality of products and services as one of its key priorities. To fully protect the rights and
interests of customers and improve customer satisfaction we regularly distribute questionnaires to customers in various
regions to deeply understand the views and suggestions of customers on the Group’s products and services in a multi-
dimensional way. Guided by customer feedback we optimize service processes and continuously improve service quality
and standards to ensure that customer expectations are fully met.Product ef cacy
Service attitude
Customer
Product quality Satisfaction
Survey
Dimensions
Performance
Packaging
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7.5 QUALITY MANAGEMENT OF PRODUCT DISTRIBUTION (continued)
7.5.4 Protection of customer rights and interests (continued)
Enhancement of customer satisfaction (continued)
In 2024 the Company received 293 feedbacks in written forms from customers. The results showed that customers
were highly satisfied with the quality packaging and efficacy of Livzon’s products. The questionnaires were sent to the
corresponding business departments. Relevant departments analyzed the problems and suggestions from customers’
feedbacks and solved existing problems in a timely manner to provide customers with better products and better services.Customer Satisfaction Survey Results from 2022 to 2024
100%100%99.6%100%100%99.7%100%100%100%
100%
90%
80%
70%
60%
50%
202220232024
Product quality Product ef cacy Packaging
Meanwhile to gain comprehensive insights into end-user needs the Group conducts customer satisfaction surveys
regularly every year in forms of service feedback letters satisfaction survey questionnaires phone calls etc. allowing
customers to comprehensively rate the quality efficacy packaging transportation delivery timeliness and service of
products etc. The customer satisfaction ratings maintained at above 95% in recent years. In addition the Group entrusts
commercial customers to survey doctors and patients via phone calls from time to time and through regular summary of
survey results the Group accurately assesses the safety and efficacy of products to ensure continuous improvement and
optimization.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 891 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
7.5 QUALITY MANAGEMENT OF PRODUCT DISTRIBUTION (continued)
7.5.4 Protection of customer rights and interests (continued)
Protection of customer privacy
As its principal businesses are manufacture and distribution of drugs APIs and intermediates diagnostic reagents and
equipment and veterinary drugs Livzon has little direct contact with end customers and access to their private information.For limited risks of privacy and security management Livzon also fully complies with the relevant legal provisions on
personal data protection under the Civil Code of the PRC and the Personal Information Protection Law of the PRC to
strictly protect customer privacy.We collect necessary information from customers and other individuals under the premise of legal compliance. For the
handling of confidential information we enter into confidentiality agreements with relevant parties and customers can
revise their personal data by telephone email and other methods.During the Year Livzon had no incidents of infringement of customer privacy or loss of customer data.Customer feedbacks and complaints
The Company has established a sound customer complaint handling system and has formulated relevant management
systems to manage the Group’s product quality complaint affairs by coordinated guidance and supervision.We undertake to promptly and properly handle the quality complaints about the products of our subsidiaries and require
each subsidiary to establish or improve its own quality complaint management system in accordance with relevant laws
and regulations and the requirements of the Company’s management systems so as to fully protect customers’ rights and
interests and ensure product quality.During the Year Livzon received 108 product-related feedbacks including 21 medication queries and 87 product-related
complaints. In accordance with relevant processes and systems the Group promptly followed up and dealt with the
relevant product queries and complaints received reaching a response rate of 100%.
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7.6 PHARMACOVIGILANCE
Livzon actively responds to and supports the establishment of a comprehensive pharmacovigilance system including pre-
market clinical trials and post-market monitoring to ensure the effective identification and reduction of possible safety
risks throughout the entire life cycle of pharmaceutical products thereby ensuring patients’ drug safety.
7.6.1 Pharmacovigilance management
Livzon has been constantly enhancing its pharmacovigilance (“PV”) management requirements. All MAHs of the Group
have established the system and policies that cover the current PV-related regulatory requirements and gradually revise
and improve the system and policies according to the latest regulatory requirements during the implementation process.Meanwhile all MAHs of the Group have established an independent PV department and set up a drug safety committee
to ensure the safe and healthy use of drugs by the public.The Group has set up standardized and uninterrupted channels for collecting information on adverse drug event and
achieved monitoring and control of drug safety. We purchased a PV system and a MedDRA dictionary for auxiliary
data alignment to ensure timely and accurate submission of various reports document retrieval and risk warning.Moreover the system is seamlessly integrated with the CDE (Center for Drug Evaluation of the National Medical Products
Administration) improving work efficiency and providing a safeguard for public drug safety.In 2024 the pre-market PV department of the Company was committed to the continuous optimization of the PV
management system comprehensively monitoring and analyzing the risks of clinical research drugs and developing
effective risk control measures to protect the safety of clinical research subjects. This ensured the scientific and compliant
nature of the PV system and provided strong support for the pre-market clinical research of drugs for the Company and its
subsidiaries.Meanwhile in the annual quality audits of the Company’s subsidiaries conducted by the Company’s quality management
head office a special appraisal of the construction and operation of the pharmacovigilance (PV) system was included. The
PV audits across all operations of the Group not only promoted communication among subsidiaries learning from each
other’s strengths but also prevented individual enterprises from working in isolation on PV system development. Through
discussions on solutions to common issues during the audits the subsidiaries collectively enhanced the operational
efficiency and regulatory compliance of their PV system and reduced errors thereby continuously advancing the
continuous improvement of the PV system in the Group’s entire life cycle quality management.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 911 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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7.6 PHARMACOVIGILANCE (continued)
7.6.2 Report of adverse drug reaction
Based on the PV system and its related activities the Group has established the Administrative Procedures for Drug Safety
Information the Operating Procedures for Reporting Post-Approval Individual Case Safety of Drugs Operating Procedures
for Handling Drug Safety Incidents and other relevant systems. The Group collects product safety information (including
adverse reactions/events of products) in multiple ways throughout the entire product life cycle and analyzes evaluates
and supervises it.Livzon has established standardized and uninterrupted channels for autonomously collecting information on suspected
adverse reactions/events of products and makes three feedback channels available to patients and medical institutions
including an Adverse Drug Event (“ADE”) reporting platform to achieve effective monitoring and control of product
safety.Adverse Reaction Feedback Channels
for Patients / Medical Institutions
Channel 1: Feedback through
the ADE reporting platform Channel 2: Report by fax Channel 3: Report by
set up on the of cial or email contact number on the
website product package inserts
Note: To safeguard drug safety for the public Livzon established an ADE reporting platform on its official website and provided
contact number and email as feedback channels for patients or clinical trial subjects with adverse conditions that occur after
drug administration to understand and evaluate adverse events and product characteristics in a timely manner and safeguard
public drug safety.The Group has established a systematic product quality complaint process. When information on adverse drug reactions
is received the relevant functional departments and subsidiaries of the Company will take timely response measures in
accordance with the Administrative Procedures for Quality Complaints.
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7.6 PHARMACOVIGILANCE (continued)
7.6.2 Report of adverse drug reaction (continued)
Flowchart of Handling Product Quality Complaints of Livzon
Staff or customer
Quality management
department
Not required
Quality con rmation
Required
Manufacturers
No Material issues
Quality issues Recorded by quality management department
Adverse
Yes reaction
End PV department
Issue resolution
End
For medical device-related adverse events the Group has allocated full-time staff for monitoring adverse events of
medical devices according to the requirements of internal systems. The Group actively fulfilled its primary responsibilities
for monitoring by proactively collecting information on adverse events of medical devices and conducting a series of
measures such as prompt investigation analysis and evaluation to improve the ability to prevent and control risks of
adverse events. The Group is committed to creating a safer and more reliable environment for the use of medical devices
by the public.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 931 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
7.7 ESTABLISHMENT OF QUALITY CULTURE
To enhance the quality risk awareness and quality management capabilities of all employees Livzon continuously
strengthens the establishment of advanced quality culture actively conducts quality-themed cultural activities in
accordance with relevant quality management regulations and standards based on the requirements of product regulatory
agencies and spreads quality awareness in every process to achieve continuous improvement in overall quality levels.We formulate annual training programs for quality and accordingly conduct product quality and safety trainings on
a regular basis for all employees of the Group every year. Through forms of annual quality meetings weekly quality
meetings regular reports on pharmaceutical policies and regulations etc. we disseminate and strictly supervise the
implementation of the Company’s quality culture and quality control requirements from top to bottom.During the Year the Group’s quality-related trainings covered all (100%) employees of the Group.Livzon’s main channels for disseminating and implementing quality culture:
* Annual quality meeting: Every year an annual quality meeting is held to conduct special report on quality.Participants include the senior management of the Company the general manager of the quality management
head office of the Company heads of all manufacturing enterprises of the Group heads of production
management and quality management of each manufacturing enterprise of the Group etc.* Weekly quality meeting: Every week the person in charge of quality management of each manufacturing
enterprise of the Group reports work to the senior management of the Company through weekly quality
meeting.* Regular report on pharmaceutical regulations: The quality management head office of the Company
sorts out the newly promulgated pharmaceutical policies and regulations every week month and year
extracting the highlights of the regulations and summarizing into weekly monthly and annual reports on
regulations. With these reports employees in quality and production related positions of each manufacturing
enterprise of the Group are able to gain a timely and comprehensive understanding of the updates and trends
of pharmaceutical policies and regulations.* Quality Month event: During the Year the Quality Month event was organized and held by the Company’s
quality management head office and widely attended by all manufacturing enterprises and R&D units of the
Group. The event had an effect of large-scale promotion of the Company’s quality culture.
94 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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7.7 ESTABLISHMENT OF QUALITY CULTURE (continued)
Case: Quality Month event – Shared facilities assessment and cleaning validation
training technology transfer training
In September 2024 the quality management head office of the Company conducted a special training in two parts:
“shared facilities assessment and cleaning validation” and “technology transfer”. Two persons in charge of quality
with extensive quality management experience within the Group were invited to provide explanations and answer
questions. The training attracted online participation from 10 enterprises within the Group and offline participation
from more than 200 quality related staff in the industrial park which further strengthened the quality awareness of
employees and improved quality management levels.Case: Quality Month event – Legal knowledge competition for MAH key personnel
In September 2024 the quality management head office of the Company engaged persons in charge of quality
persons in charge of production qualified persons delegated qualified persons and newcomers to the quality
team from all enterprises in a legal knowledge competition for MAH key personnel. A total of 21 teams from 9
enterprises within the Group participated in the competition which consisted three intense and competitive rounds
with engaging audience Q&A sections. This competition responded to the requirements of the Administrative
Measures for Pharmaceutical Qualified Persons of Guangdong Provincial Medical Products Administration. By
promoting learning through examination enterprises within the Group are encouraged to actively expand the pool
of delegated qualified persons strengthen employees’ learning and understanding of quality laws and regulations
and cultivate future quality talents for enterprises.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 951 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
RESPONSIBLE
SUPPLY CHAIN
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Adhering to the concept of sustainable development the Group is committed
to creating a responsible efficient and green supply chain ecosystem. With a
procurement mechanism that combines market-based pricing and comprehensive
assessment we join hands with supply chain partners to fulfi l l social
responsibilities achieve win-win results for all parties establish a resilient and
sustainable supply chain system and lay a solid foundation for supply chain
management.As at the end of the Reporting Period the Group had a total of 2059 suppliers
with the following regional distribution:
Number of Suppliers by Geographical Region
Northwestern China
5.3%
Southwestern China Overseas
0.3% Southern China2.1% 36.1%
Central China
7.7%
Northern China
9.4%
Eastern China
37.8%
Northeastern China
1.1%
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 971 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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8.1 SUPPLY CHAIN MANAGEMENT
Livzon strictly complies with relevant national and local laws and regulations. In accordance with GMP requirements and
its actual situation Livzon continuously establishes and improves internal supplier management systems to standardize
supply chain management and conducts supplier entry audit assessment and classification management. We keep
improving our supplier management system consistently enhance the comprehensive and multidimensional management
level of the Group’s supply chain and effectively fulfill our social responsibilities for suppliers customers and consumers.We have established a comprehensive performance evaluation system that covers each stage of supplier management
through comprehensive appraisal measures such as qualification confirmation risk assessment audit supervision and
evaluation. We improve our procurement management system based on the principles of openness transparency and
standardized management. In terms of audit and supervision we have established a dedicated team to oversee supplier
conduct through audits and annual comprehensive appraisal; furthermore we have established a supplier complaint
mechanism to encourage employees or other stakeholders to report any violations of the code of conduct by suppliers. In
addition we proactively cooperate with suppliers on resolving issues related to product quality and safety and ESG; we
actively conduct supplier trainings promote energy conservation and emission reduction in the supply chain and provide
support for suppliers to improve themselves and obtain certification. In doing so we are committed to building a healthy
green and sustainable supply chain.To further improve the overall management level of the supply chain enhance procurement efficiency and reduce
procurement costs the Company formulated the Material Centralized Procurement System to regulate the management
process of centralized procurement activities during the Year. We actively conducted joint procurement of common
use items and services. For example the Company’s API business department strengthened strategic and centralized
procurement of bulk materials to continuously enhance the stability and sustainability of the supply chain.The Code of Conduct for Suppliers (the “Code”) established by the Company sets forth standards of conduct for suppliers
in different areas. It designates the Board as the highest responsible authority for overseeing the implementation of
the Code with the ESG Committee under the Board responsible for the day-to-day implementation supervision and
periodic review. To ensure the effective implementation of the Code we continuously communicate its requirements to
suppliers at each stage of the procurement process. We conduct relevant training for cooperating suppliers integrate the
requirements of the Code into supplier audits and build a multi-level supervision system to ensure that suppliers comply
with the Group’s ethics and compliance standards. For suppliers who do not meet the requirements of the Code we will
urge them to propose correction plans and make corrections within a specified timeframe; if a supplier still fails to meet
the standards after correction we will terminate the cooperative relationship with it. In addition Livzon incorporates
compliance with the Code and ESG requirements as contractual terms and specify in contracts that Livzon will conduct
annual comprehensive appraisal of suppliers and implement the concept of sustainable development in the whole process
of procurement management.The Company attaches great importance to collaborative development with suppliers. During the Year we conducted
trainings on the Code for 327 suppliers. For suppliers who did not meet the provisions of the Code we made prompt
corrections and adjustments to ensure the stability and sustainability of our supply chain.
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8.1 SUPPLY CHAIN MANAGEMENT (continued)
8.1.1 Entry management
Livzon strictly controls supplier entry standards. We select qualified suppliers in terms of product quality standards testing
and verification process testing stability etc. and strictly control over the basic threshold of supplier entry. In addition
to the necessary qualifications we focus on the performance of suppliers in terms of system certification operation
compliance production qualification etc. We also take suppliers’ ESG system development social responsibility and
environmental protection into the scope of investigation. Under the same conditions we give priority to suppliers certified
to ISO management systems and EcoVadis and continuously increase the proportion of procurement from high-quality
suppliers.According to different types of suppliers we classify suppliers into suppliers of pharmaceutical raw materials and auxiliary
materials suppliers of immediate pharmaceutical packaging materials and suppliers of pharmaceutical printing and
packaging materials and we have defined the specific qualification requirements and certification documents by type of
suppliers.
8.1.2 Classification of suppliers
To improve the quality delivery level of suppliers the Group classifies suppliers into two categories: direct suppliers (tier 1
suppliers) and indirect suppliers (tier 2 suppliers) with subclassification based on factors of procurement amount material
category risk level irreplaceability etc. of suppliers and updates the list of supplier annual classification in the first
quarter of each year.Diagram of Supplier Classification
Critical suppliers
Direct suppliers
Key suppliers
(Tier 1 suppliers)
General suppliers
All suppliers
Critical indirect suppliers
Indirect suppliers
(Tier 2 suppliers)
General indirect suppliers
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 991 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
8.1 SUPPLY CHAIN MANAGEMENT (continued)
8.1.3 Supplier audit
To build a solid defense line for compliant procurement and product quality at source Livzon has formulated and
strictly implements the internal supplier audit management system and conducts audits from the dimensions of supplier
qualification staff composition equipment and facilities material management production management quality
control and quality assurance business ethics human rights and labor environmental protection etc. The Company
includes supplier EHS performance in the scope of audits to ensure that suppliers’ ESG performance meets the Group’s
requirements. We specify the corresponding requirements of audit frequency and method according to the classification of
suppliers as shown in the following table:
Supplier classification Frequency and method of audit
Tier 1 suppliers Critical suppliers Not less than 1 on-site audit every two years
Key suppliers Not less than 1 on-site audit every three years
General suppliers Not less than 1 written audit every three years
Tier 2 suppliers Critical indirect The enterprises shall require direct suppliers to conduct on-site audits on
suppliers critical indirect suppliers and confirm the completion of these audits
During the year Livzon audited 639 tier 1 suppliers and 28 tier 2 suppliers. Specifically 170 tier 1 suppliers and 9 tier 2
suppliers were on-site audited and 469 tier 1 suppliers and 19 tier 2 suppliers were desk audited. For issues identified
during audits we have overseen suppliers’ remedies in a timely manner. The correction process includes analyzing audit
deficiencies developing corrective plans implementing corrective actions inspecting and assessing correction results and
summarizing and sharing correction experience. In the follow-up work we also pay continuous attention to suppliers and
promote their ongoing improvement in comprehensive management level.
100 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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8.1 SUPPLY CHAIN MANAGEMENT (continued)
8.1.4 Annual comprehensive supplier evaluation
Strict periodic evaluation and review is fundamental to supplier management. The Company has established a sound
annual comprehensive evaluation system for suppliers with the supply chain production quality risk control EHS and
other departments conducting assessments from their respective professional perspectives. The evaluation is based on
multi-dimensional information such as audit reports and questionnaire surveys which forms systematic appraisal results to
be submitted to the Company’s management for presentation and review.During the Year to further build a green and sustainable supply chain we strengthened our audit requirements in ares of
supplier safety environmental protection occupational health etc. thus reducing supply chain risks.According to the standards for annual comprehensive supplier evaluation the Company classifies suppliers into four levels:
excellent good qualified and unqualified. For suppliers rated as excellent we may consider increasing an appropriate
procurement volume as an incentive; for suppliers rated as unqualified we will suspend procurement operations and
request correction within a specified time limit. According to the monitoring and correction results suppliers that meet the
requirements will have their qualifications re-verified; conversely if the correction is not timely or fails to meet standards
the suppliers will be disqualified and removed from the qualified supplier database after a process approval.The results of the annual comprehensive supplier appraisal will be an important basis for allocation of procurement
share in the following year. Each enterprise of the Group will make reasonable adjustments to the procurement share for
the current year according to business operation and the results of the annual comprehensive supplier appraisal for the
previous year.During the Year we conducted an annual comprehensive appraisal for a total of 1928 suppliers. The pass rate of the
annual appraisal of suppliers was 99.7%.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1011 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
8.2 IMPROVEMENT OF SUPPLY CHAIN QUALITY
Livzon places high importance on supply chain quality management and makes every effort to ensure safe and reliable
product sources. To improve supply chain quality we are taking active measures including seminars trainings on-site
guidance and conclusion of strategic agreements to work together with suppliers and achieve win-win cooperation.Optimization of supply chain quality
The Company has a sound supplier audit system in place and clearly communicate our requirements to suppliers through
standardized audit procedures. For any non-compliance identified during audits the supplier is required to make timely
corrections. The results of these corrections are factored into the annual supplier assessment which in turn influences
the allocation of procurement shares for the following year.In addition we regularly organize special seminars to share cutting-edge quality management concepts and practical
experience with suppliers seek their feedback and discuss with them measures and strategies to improve product quality.We also conduct supplier quality training to communicate the Company’s quality standards help suppliers optimize their
quality control systems and actively assist suppliers in passing ISO and other certification standards.Before the release of new industry regulations and standards we take the initiative to investigate suppliers’ understanding
and implementation of relevant provisions and timely conduct interpretation training when necessary; in case of material
supply or quality abnormalities the Company provides specific guidance and when required sends a technical team to
offer on-site support to ensure that problems can be corrected quickly.To achieve full-process information exchange and collaboration we establish a multi-level cooperation mechanism
with suppliers enter into strategic and long-term partnership agreements that clearly specify quality requirements and
responsibilities and undertake to help suppliers improve their overall performance for a long time and consolidate mutual
cooperation trust. Moreover in managing the supply chain of traditional Chinese medicinal materials we have been
committed to the quality research for genuine medicinal materials and has strengthened the construction of medicinal
material bases to ensure the quality stability of traditional Chinese medicinal materials from the very source.Ensuring the supply chain quality of traditional Chinese medicinal materials
The Group has been committed to the quality research and base construction for genuine medicinal materials and
has constructed traditional Chinese medicinal material bases through three models: self-construction co-construction
and joint construction. During the Year the Group worked together with medicinal material suppliers to construct 23
key jointly built bases involving 12 medicinal materials (including Isatis indigotica Acorus tatarinowii Pogostemon
cablin Curcuma aromatica Forsythia suspensa Rehmannia glutinosa Anemarrhena asphodeloides Lonicera japonica
Saposhnikovia divaricata Panax notoginseng Astragalus membranaceus and Codonopsis pilosula) covering a total area
of over 27000 mu providing raw medicinal materials with uniform and stable quality for the production of key varieties.During the Year the Group purchased over 3329 tonnes of dried medicinal materials.We have 5165-mu self-built and 1320-mu jointly built medicinal material bases in Hunyuan County 8786-mu jointly
built standardized GAP (Good Agricultural Practice for Chinese Crude Drugs) bases in Tianzhen County and Yanggao
County of Datong City in Shanxi Province – the genuine producing areas of Astragalus membranaceus; and 5132-mu
jointly built Astragalus membranaceus GAP bases in Yulin City in Shaanxi Province. The area of our bases totaled 20403
mu. Without watering fertilizing or using pesticides it is ensured at the source that high-quality and genuine Astragalus
membranaceus is produced.
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8.2 IMPROVEMENT OF SUPPLY CHAIN QUALITY (continued)
Ensuring the supply chain quality of traditional Chinese medicinal materials (continued)
In response to the significant decline in the resources of wild Acorus tatarinowii over the past few years the Group has
in cooperation with a local pharmaceutical enterprise and under the technical guidance of the expert team of Sichuan
Academy of Traditional Chinese Medicine successfully built bases for Acorus tatarinowii cultivated in simulated wild
conditions. The base area is planned to reach more than 4000 mu in the next three years. In 2024 a 50-mu standardized
cultivation demonstration base of Acorus tatarinowii was jointly built in Wangcang County Guangyuan City Sichuan
Province and cleaning processing workshops were built simultaneously in the producing areas to enable standardized
processing. Furthermore we will guide local farmers to expand the planting area in the future to ensure the uniform and
stable quality of medicinal materials.At present initial results have been achieved with these traditional Chinese medicinal material bases. While meeting the
Group’s needs they can also be sold to stabilize the huge price fluctuations caused by supply and demand imbalances
etc. and supply the Group with raw materials of stable quality.As at the end of the Reporting Period Livzon had completed the construction of a full-process traceability system and the
QR code traceability management for the cultivation bases of 11 key medicinal materials. It is possible to check the entire
process of medicinal material cultivation through a software platform and traceable QR codes which ensures that the
sources of traditional Chinese medicinal materials and their whereabouts can be traced and verified and parties concerned
can be held accountable. As such we have further improved the quality and safety of our TCM products and increased our
supply chain transparency.Supplier training on quality
To control the quality risk of the supply chain we conduct annual training on quality for all high risk suppliers of the
Group. The Group develops an annual supplier training plan every year and conducts trainings for suppliers in both online
and offline forms by providing relevant materials to suppliers or by other means.We determine the training content according to the problems found in the process of the supplier appraisal and supplier
audit so as to improve the training efficiency and effectiveness. The training content includes guiding suppliers to improve
the establishment of quality management systems raise the level of process quality and other ESG-related content in
order to first raise awareness strengthen internal quality and jointly drive win-win cooperation within upstream and
downstream supply chains to achieve collaborative development.During the Year the Group’s supplier trainings on quality covered all high risk suppliers of the Group.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1031 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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8.2 IMPROVEMENT OF SUPPLY CHAIN QUALITY (continued)
Supplier training on quality (continued)
Case: Supplier training on quality
* In July 2024 Pharmaceutical Factory organized trainings on quality with participation from 3 critical
suppliers and 4 key suppliers which further strengthened the suppliers’ understanding of Livzon’s quality
requirements and helped improve the quality level of the supply chain.* In April 2024 Livzon Diagnostics organized a special training for key suppliers. The training covered
interpretation of the latest industry laws and regulations quality standard requirements quality control
processes etc. which further improved the suppliers’ understanding and implementation ability of quality
management and ensured the overall quality level of the supply chain.
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8.3 ESTABLISHMENT OF CLEAN SUPPLY CHAIN
The Company has established various internal supplier management systems to promote the establishment of a clean
supply chain. All senior management of the Company all management personnel at the deputy manager level or above of
each subsidiary and staff in key positions such as procurement engineering and EHS have signed the Staff Commitment
for Anti-Corruption and Anti-Commercial Bribery. During the Year all (100%) of the Group’s employees signed the Staff
Commitment for Anti-Corruption and Anti-Commercial Bribery.External constraints and supervision
We require all interested parties (including suppliers service providers contractors clients etc.) that have business
relationship with the Group to comply with the Anti-Corruption and Anti-Commercial Bribery Regulations of the Company
and sign the Supplier Commitment for Operating with Integrity. As at the end of the Reporting Period the signing rate of
the integrity commitment by all the suppliers that have business relationship with the Group reached 100%.The Company’s Code of Conduct for Suppliers (the “Code”) requires all suppliers of the Group to comply with the
Company’s Anti-Corruption and Anti-Commercial Bribery Regulations adhere to business ethics and agree that the
Company has the right to conduct compliance reviews on them. In addition to strengthen supplier integrity management
the Company has included integrity clauses in its contract templates which require the counterparties to commit to
operating with integrity comply with the Company’s relevant systems and ESG requirements and cooperate with integrity
trainings. If there is any violation the Group has the right to terminate the contract. When signing a contract suppliers
must sign the Supplier Commitment for Operating with Integrity. If there is any breach of commitment the Group will
disqualify such suppliers and terminate the contracts and will transfer those suspected of crime to the judicial organs. The
above measures are effectively binding on counterparties in the legal form.We regularly evaluate suppliers performance of business ethics on an annual basis: There are no less than 4 evaluations
per year for critical suppliers no less than 2 evaluations per year for key suppliers and no less than 1 evaluation per
year for critical indirect suppliers. The Group regularly conducts anti-corruption audits on critical suppliers key suppliers
and general suppliers and subsidiaries report to the risk management head office. During the year 187 suppliers were
audited to ensure compliance. In addition the Company conducts follow-up inspections of major construction projects on
a quarterly basis and also conducts random checks on bidding and procurement files so as to ensure business compliance
and avoid corruption.In daily operations the risk control departments of each enterprise of the Group continuously monitor the procurement
process and annually conduct trainings on business ethics such as anti-corruption for suppliers. During the Year we
conducted trainings on business ethics including anti-corruption for 504 tier 1 suppliers. At the same time we required
tier 1 suppliers to conduct trainings on business ethics such as anti-corruption for critical indirect suppliers.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1051 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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8.3 ESTABLISHMENT OF CLEAN SUPPLY CHAIN (continued)
External constraints and supervision (continued)
Case: Provision of anti-corruption trainings for suppliers
* In 2024 Livzon MAB conducted a special training on the theme of anti-corruption and integrity for its
suppliers to clearly inform suppliers of integrity requirements regulate the conduct of suppliers and
effectively prevent the occurrence of commercial bribery and other corruption incidents. The training covered
suppliers of productive materials raw materials auxiliary materials and packaging materials. Suppliers were
assessed and required to sign a commitment to ensure that they understood and complied with relevant
integrity norms so as to further improve the compliance awareness of suppliers and promote a healthy
business environment.* During the Year Livzon Diagnostics conducted anti-corruption trainings for 97 suppliers. In the anti-
corruption trainings for suppliers Livzon Diagnostics introduced relevant anti-corruption laws and
regulations to suppliers explained the Company’s code of conduct of integrity and related systems and
helped suppliers understand the integrity risks that may exist in various processes of cooperation with the
Company such as rebates in the procurement process risks of bid-rigging and collusion during bidding
risks of improper benefit transfer during the performance of contracts. Suppliers were also taught how to
identify these risks and establish effective internal control and supervision mechanisms to prevent them
thus enhancing their integrity awareness and response ability in practical operations.Internal regulation and management
While regulating the conduct of suppliers we also strictly regulate internal management and processes. We have
established a full-process management system of “ex ante involvement ad interim control and ex post supervision” and
have fully launched a digital supplier management platform – the Supplier Relationship Management system to track
manage and trace the whole process of procurement business. These internal management measures can effectively
prevent the risk of malpractice in the supplier management process ensure fair and equitable procurement and solidly
promote the Group’s establishment of a clean supply chain.
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8.4 ENHANCEMENT OF SUPPLY CHAIN STABILITY
Supply chain risk assessment is an essential component of Livzon’s supply chain management. We conduct comprehensive
assessment and control of supply chain risks to minimize supply chain risks classify suppliers according to their risk levels
and develop targeted precaution mechanisms preventive measures and risk treatment plans so as to ensure the stability
and security of the supply chain and effectively resist systemic risks in the supply chain.According to the requirements of the Company’s internal systems the Group regularly conducts supply chain risk
assessment of its direct suppliers and critical indirect suppliers every year. The assessment includes at least the following
14 indicators:
Enterprise
Impact of qualification Enterprise
workers’ financial
human rights status
Impact of Enterprise
business ethics business
environment
Impact of Enterprise
festivals product quality
and service
Indicators of
Supply Chain Risk
Assessment Impact of
Impact of environmental
social events occupational health and safety
(EHS)
Impact
Impact of of national
major unexpected environmental
events protection regulations and
Impact of
international Impact
policies
International
finance and of climate trade
exchange rate changeenvironment
and impact
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1071 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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8.4 ENHANCEMENT OF SUPPLY CHAIN STABILITY (continued)
According to the supply chain risk assessment results we categorize suppliers into three levels of high risk medium
risk and low risk. For high- medium- and low-risk suppliers the Group formulates corresponding contingency plans
for emergencies and principles of response measures. During the Year we conducted a supply chain risk assessment
combining both qualitative and quantitative analysis across the above 14 assessment dimensions. Overall our suppliers
performed well with only 1 rated as high risk.In addition we have specified the responsibilities of each department of the enterprises for the management of supply
chain risks and developed feasible supply chain risk assessment principles control procedures and response measures
for each type of risks. Meanwhile we require each enterprise to prepare an Annual Supplier Risk Assessment Report each
year to build a full-process systematic and effective risk control system thereby ensuring the stability and security of the
supply chain.Supply Chain Risk Control Process of Livzon
Selecting key materials
Creating templates
Conducting regular supply chain risk
assessment as required
Emergencies/Market abnormalities
Organizing a special team and
Making judgment developing handling strategies
Yes
No
Adjusting the supply plan based
on risk assessment results Formulating a risk handling plan
Regularly following up on completion
Following up and feeding back on delivery of the risk handling plan
Case closed
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8.4 ENHANCEMENT OF SUPPLY CHAIN STABILITY (continued)
For general supply chain risks and special supply chain risks we have established appropriate response measures
respectively as described below:
? General response measures:
。 Establish and improve dual sourcing plans and build back-up manufacturing sites;。 Strengthen communication and sign long-term agreements with suppliers and ensure priority in thedelivery of materials; urge suppliers’ performance of procurement agreements and when necessary assign
personnel to their plants for this purpose;
。 Actively develop new suppliers to avoid exclusive supply optimize supply chain distribution and reasonablyallocate the proportion of imported and domestic materials;
。 Regularly investigate the price trend of bulk key materials;。 Carry out regular visits to suppliers to understand the production and operation of suppliers;。 Develop and deploy suppliers for key varieties in advance and promote the quality improvement ofalternative suppliers;
。 Try the best to ensure the availability of at least 2-3 qualified suppliers in different regions for each type ofmaterial.。 Strengthen the technical support for suppliers’ EHS management and reduce the risk of environmentalregulations.? Specific response measures:
。 For key materials involved in key products formulate supplier supplementation plans and develop anddeploy suppliers in advance;
。 For materials supplied by high-risk suppliers adopt a safe inventory strategy by establishing a reasonableinventory (to meet the production needs of six months or up to one year) and carrying out dynamic
management;
。 For exclusively supplied materials that cannot be replaced temporarily increase the frequency of on-siteaudits or jointly build bases to urge the supply and ensure product quality so as to reduce supply risks;
。 For suppliers of materials with a long order cycle (such as imported materials) sign annual long-termagreements with them to ensure annual supply;
。 Develop futures hedging business to hedge the risk of price fluctuations of bulk materials such as cornstarch and glucose and to stabilize procurement costs.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1091 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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8.4 ENHANCEMENT OF SUPPLY CHAIN STABILITY (continued)
We continue to increase the number of suppliers of key materials and expand our supplier poor by actively seeking new
sources. In 2024 we added 127 new suppliers of key materials further improving the stability of the Group’s material
supply.During the Year the Group conducted risk assessments for 1746 suppliers and identified 1 high-risk supplier. To prevent
stock-outs the Company added new supply channels. There was no production delay caused by supply chain interruptions
throughout the Year which provided strong assurance for the Company’s stable development and improved market
competitiveness.
8.5 GREEN AND SUSTAINABLE SUPPLY CHAIN
Livzon highly emphasizes green development in its supply chain taking active social responsibility and integrating ESG
management concept into the supplier management system. We continuously improve the ability of the supply chain to
create environmental and social value through systematic assessment and control.For the process of supplier selection and appraisal the Group has established an ESG evaluation mechanism which
integrates environmental performance social responsibility and other indicators into the comprehensive assessment
system of suppliers with the results of comprehensive assessment linked to procurement decisions. We also conduct EHS
audits on suppliers enter into green management agreements with suppliers and set out green development requirements
such as energy conservation and emission reduction. As at the end of the Reporting Period we had conducted ESG
assessments of all suppliers to ensure that their production and operations comply with Livzon’s green management
standards.
8.5.1 Supplier EHS audit
To better practice ESG concept in supply chain management the Company has formulated a supplier EHS audit system.The audit results may influence the allocation of procurement shares in the following year creating an effective incentive
and constraint mechanism that encourages suppliers to continuously improve their ESG management levels.The specific requirements for managing and conducting supplier EHS audits are as follows:
* Basic principle: EHS audit must be included in the annual supplier audit plan;
* Audit scope and frequency: consistent with the requirements of supplier audit. For details please refer to the
relevant content of “8.1.3 Supplier audit” in this chapter;
110 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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8.5 GREEN AND SUSTAINABLE SUPPLY CHAIN (continued)
8.5.1 Supplier EHS audit (continued)
* Audit content: It mainly includes the implementation of the “three simultaneous” system energy conservation
and emission reduction compliance with discharge requirements of pollutants the ISO system certification etc. In
particular the audit targets of energy conservation and emission reduction are as follows:
o 1.5% decrease in water consumption per RMB10000 of output value for the next fiscal year compared
with this fiscal year;
o 1.5% decrease in electricity consumption per RMB10000 of output value for the next fiscal year compared
with this fiscal year;
o 1% decrease in COD emissions per RMB10000 of output value for the next fiscal year compared with this
fiscal year;
o 1% decrease in sulfur dioxide emissions per RMB10000 of output value for the next fiscal year compared
with this fiscal year;
o Amount of hazardous waste to be treated in the next fiscal year not exceeding that in the current fiscal
year and meeting national standards and regulatory requirements.* Audit methods and process: written or on-site audit; upon completion of the audit prepare an annual audit report
of the supplier and submit it to the Company’s production technology head office for reporting and review.
8.5.2 Sustainable procurement
Livzon has been active in the promotion of sustainable procurement to facilitate the establishment of a green supply
chain. All manufacturing enterprises of the Group have established the Administrative Procedures for Energy Conservation
and Emission Reduction for Suppliers which impose appraisal requirements related to energy conservation and emission
reduction on all critical suppliers of the Group. Please see the following for details:
* Evaluation targets: Set specific plans and appraisal targets for suppliers according to their actual situation. Please
see the following for details:
o 1.5% decrease in water consumption per RMB10000 of output value for the next fiscal year compared
with this fiscal year;
o 1.5% decrease in electricity consumption per RMB10000 of output value for the next fiscal year compared
with this fiscal year;
o 1% decrease in COD emissions per RMB10000 of output value for the next fiscal year compared with this
fiscal year;
o 1% decrease in sulfur dioxide emissions per RMB10000 of output value for the next fiscal year compared
with this fiscal year;
o Amount of hazardous waste to be treated in the next fiscal year not exceeding that in the current fiscal
year and meeting national standards and regulatory requirements.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1111 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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8.5 GREEN AND SUSTAINABLE SUPPLY CHAIN (continued)
8.5.2 Sustainable procurement (continued)
* Appraisal cycle: Suppliers shall submit a report on the results of energy conservation and emission reduction to
the Group every six months and the Group shall conduct annual appraisal of suppliers and continuously track the
improvement of suppliers.* Appraisal results: The results of the annual appraisal will be included in the annual comprehensive supplier
appraisal and used as an important basis for the allocation of procurement shares in the following year.We pay continuous attention to suppliers’ performance in energy efficiency and utilization of renewable energy
sources. We actively provide professional guidance technical assistance and ESG related trainings to help improve ESG
management performance assist in obtaining relevant certifications and achieving energy conservation and emission
reduction targets so as to jointly promote green development. Meanwhile in specific practice we urge suppliers to adopt
advanced process equipment promote the application of clean energy strengthen the recycling of water resources and
regularly track and assess their energy conservation and emission reduction effects. Moreover by optimizing supply chain
distribution we reduce energy consumption in logistics processes continuously improving the operation efficiency of the
supply chain.During the Reporting Period the Group made collaborative innovation with suppliers on emission reduction projects
jointly created a green and sustainable industrial ecosystem and pushed suppliers to make progress in energy conservation
and emission reduction thus laying a solid foundation for achieving a low-carbon transformation of the supply chain.ESG empowerment for suppliers
We are actively engaged in ESG empowerment for our suppliers and improve suppliers’ ESG management levels by
providing systematic trainings and technical guidance. Meanwhile we conduct special training courses for personnel in
procurement EHS ESG and other related positions within the Group to ensure that they master and effectively implement
supplier ESG management requirements and promote the implementation of the supply chain sustainability strategy.
8.6 DRIVING INDUSTRY DEVELOPMENT
Livzon actively participates in the activities of industry associations and now becomes formal members and holds
positions such as vice-chairman executive director and board member of several associations. By providing assistance in
the development of industry standards delivering academic presentations preparing teaching materials and participating
in seminars industry conferences and forums we share practical experience in the industry and contribute professionally
to the high-quality development of the pharmaceutical industry.Case: Participation in intelligent manufacturing seminarsIn August 2024 China Pharmaceutical Enterprises Association organized a seminar on “Digital Empowermentin Pharmaceutical Supply Chain Management” in Zhuhai aiming to improve the level of digital supply chain
management of pharmaceutical enterprises. The Company actively participated in the event of the association and
invited representatives from more than 50 participating enterprises to visit our factory. We engaged in discussions
and sharing with these representatives on the Company’s supply chain informationization and management and
received unanimous praise from the enterprise representatives which was inspiring and exemplary for improving
the digital development of the industry supply chain.
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8.6 DRIVING INDUSTRY DEVELOPMENT (continued)
Livzon’s Formal Membership in Industry-Wide Associations (Partial)
* Pharmaceutical Supply Chain Quality Branch of China * Guangdong Association for Quality
Quality Association for Pharmaceuticals
* Specialty Committee of Qualified Persons in
* World Federation of Chinese Medicine Societies Pharmaceutical Manufacturing of the Guangdong
Pharmaceutical Association
* Specialty Committee of Multidimensional Evaluation on
Genuine Medicinal Materials of the World Federation of * Pharmacovigilance Alliance of the Guangdong
Chinese Medicine Societies Pharmacological Society
* China Pharmaceutical Enterprises Association * Guangdong Pharmacological Society
* China Chamber of Commerce for Import and Export of * Sichuan Pharmaceutical Industry Association
Medicines and Health Products
* Sichuan Traditional Chinese Medicine Development
* China Association of Traditional Chinese Medicine Promotion Association
* Price Association of China * Specialty Committee of Dose-Effect Study of
Prescriptions Sichuan Provincial Association of Chinese
* China Pharmaceutical Industry Association Medicine
* China Association for Public Companies * Sichuan Medical and Health Products Cosmetics Quality
* Specialty Committee of R&D and Manufacturing of Management Association
Traditional Chinese Medicine Classical Prescriptions of * Pengzhou Medical and Health Industry Development
the China Association of Traditional Chinese Medicine Promotion Association
* Specialty Committee of Child Health and Drug Research * Pengzhou Enterprise Federation
of the China Association of Traditional Chinese
Medicine * Guangdong Bio-pharmaceutical Innovation Technology
Association
* China Ethnic Medical Association – Inheritance and
Rational Drug Use Working Committee * Guangdong Food & Drug Technology Association for
Evaluation & Certification
* China Food and Drug Corporation Quality and Safety
Promotion Association * Guangdong Province Pharmaceutical Industry
Association
* Professional Committee of Traditional Chinese
Medicinal Materials Cultivation of the China Association * Guangdong Association of Traditional Chinese Medicine
of Traditional Chinese Medicine
* Guangdong Medical Price Association
* Guangdong Medical Association
* Guangdong Preventive Medicine Association
* Guangdong Association of Circular Economy and
Resources Comprehensive Utilization
* Alliance for R&D and Technological Innovation in
Vaccines for Emerging Infectious Diseases
* Zhuhai Preventive Medicine Association
* Zhuhai Management Association of Precursor Chemicals
* Guangdong Drug Compliance Insurance Organization
* Shanghai Pharmaceutical Profession Association
* Fuzhou Pharmaceutical Association
* Zhuhai Management Association of Precursor Chemicals
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TAKE HUMAN AS
THE FOREMOST
114 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions indexLivzon values talents upholds the talent philosophy that “Employees arethe most valuable resource and high-caliber talents are the most importantassets” and actively expands the channels for talent introduction. Regarding
the building of talent team as the foundation of development we have
established a scientific and systematic talent training system to provide each
employee with tailor-made career development channels and help them reach
their full potential. Furthermore we prioritize employee health and safety
by continuously improving occupational health and safety management and
protecting the growth of employees throughout their stay with us. Together
with our employees we go on a new journey of sustainable development of the
Company.
9.1 EMPLOYMENT
Livzon always considers high-quality talents as the core competitiveness for
corporate development. We are committed to protecting the legitimate rights
and interests of employees standardizing employee recruitment and employment
processes improving the employment management system and eliminating
any form of discrimination or harassment so as to create a diverse equal and
liberal working environment for staff.As at the end of the Reporting Period the Group had a total of 9067
employees (31 December 2023: 8933 employees).Livzon’s Number of Employees in 2024
Livzon’s number of employees by gender in 2024 Livzon’s number of employees by age in 2024
50 and above
578
Male
employees By Gender By Age
4764
Female
employees 31 - 49
5306 30 and below4303 3183
Livzon’s number of employees by function in 2024 Livzon’s number of employees by educational attainment in 2024
Less than a
Administrative Doctor college diploma
staff Financial staff Master48
5531744782837
Technical staff
By Function By Educational1130 Attainment
Production Undergraduate College
staff diploma
53762927
Sales staff 2777
1834
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9.1 EMPLOYMENT (continued)
9.1.1 Compliant employment
The Group strictly comply with the Labor Law of the PRC the Labor Contract Law of the PRC and other relevant
national and local laws and regulations. It also follows the ten principles of the United Nations Global Compact (the
“Ten Principles”) and the core conventions of the International Labor Organization (the “Core Conventions”) and
other external human rights related demand and the Company formulated relevant compliant employment system and
guideline. In particular the Company’s Code of Labor Employment and Ethical Conduct covers the Ten Principles the
Core Conventions and other external human rights related demand so as to regulate the management of the Group’s
employment practices and ensure compliance fairness and transparency of recruitment and employment procedures.The Group ensures that the recruitment and employment procedures comply with the requirements of laws and regulations
and are implemented in a fair and transparent environment so as to protect the legitimate rights and interests of
candidates while selecting talents. The Group forbids the recruitment and employment of minors under the age of sixteen
and is against compulsory labor. No unit shall force employees to labor by means of violence threats or illegal restrictions
on personal freedom.For procedural compliance the Group strictly follows a sequential process during recruitment which includes publication
of recruitment information collection of resumes resume screening written tests interviews background checks and
offer of employment to ensure that there are clear operating norms and standards for each step. Once an individual is
selected for employment the Group enters into a labor contract with the employee within the stipulated time frame
clearly defining the rights and obligations of both parties.For fairness and transparency the Group’s recruitment information is comprehensive open and transparent. Job
advertisements whether published on the Company’s official website recruitment platform or other collaborative
channels describe information such as job responsibilities and qualifications. For resume screening written tests
interviews and other steps unified and clear selection criteria have been established.In 2024 Livzon did not experience any incidents of using child labor or compulsory labor; there were no incidents of
walkout shutdown or factory closures aimed at compelling workers to accept new compensation or working conditions;
the Company’s human resource head office inquired about the labor employment management and complaints of
subsidiaries. Over the past three years there have been no major layoff nor have there been major merger or acquisition
affecting the majority of the Group’s employees. During the Year the Group was involved in six labor dispute cases of
which two were ruled in favor of the Company three were settled through mediation and one was concluded with an
effective and enforced judgment. The Group terminated its labor contracts through amicable negotiations and mutual
agreement whenever dismissing employees.
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9.1 EMPLOYMENT (continued)
9.1.1 Compliant employment (continued)
Flexible employment
For the management and care of workers in flexible employment the Company adheres to a people-oriented approach
and fully implements protection to build harmonious cooperative relationships. Through the following measures the
Company provides reliable protection and development opportunities for workers in flexible employment to achieve a
mutually beneficial result for both parties.For standardized employment the Company enters into a written agreement with each worker in flexible employment to
reasonably define the rights and obligations of both parties. This guarantees the rights and interests of workers in flexible
employment such as fair treatment and clarifies their responsibilities such as completing tasks on time thus establishing
a solid legal foundation for the cooperation.For remuneration the Company scientifically determines the workload and labor intensity of workers in flexible
employment and ensures that labor remuneration is paid on time and in full.For safety assurance the Company prioritizes the safety and health of workers improves work safety conditions and
equips them with protective equipment and labor protection supplies. The Company strengthens training on safety
awareness protection knowledge etc. to improve the safety awareness and emergency skills of workers in flexible
employment.Human resource (“HR”) related honors and issuing authorities over the past three years
Name of Award Issuing Authority
Center for Social Investigation and Research Peking
China Preferred Employer of the Year 2023
University & Zhaopin.com
Human Resources and Social Security Bureau of Jinwan
First Harmonious Labor Relations Enterprises in Jinwan District Zhuhai; Federation of Industry and Commerce
District Zhuhai in 2023 of Jinwan District Zhuhai; Federation of Labor unions of
Jinwan District Zhuhai
Jiangsu Yunxuetang Network Technology Co. Ltd. Institute
The 5th Cloud Atlas Award for 2023 – Digital Enterprise
of Organization and Talent Development CEIBS Business
Learning and Development Talent – Excellence Award
Review
2023 Model Worker’s Home of Fuzhou Fuzhou Federation of Labor unions
Human Resources and Social Security Bureau of Fuzhou
Fuzhou Federation of Enterprises and Entrepreneurs Fuzhou
Harmonious Labor Relations Enterprise of Fuzhou
Federation of Labor unions Fuzhou Federation of Industry
and Commerce
2023 Worker Pioneer Award Guangdong Provincial Federation of Labor unions
2022 Top 10 Doctoral and Postdoctoral Innovation
Human Resources and Social Security Bureau of Zhuhai
Demonstration Platforms in Zhuhai
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1171 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.1 EMPLOYMENT (continued)
9.1.2 Diversity and inclusion
Livzon understands that the diversity and differences of its employees are the most valuable assets of the Company and
always treats every employee with respect and appreciation. We are committed to creating a warm and caring work
environment where every employee feels accepted and respected. At the same time we build a broad and promising
career development platform for employees providing equal opportunities for them to fully showcase their talents
maximize their personal value and progress hand-in-hand with the Company.The Company’s ESG committee is responsible for reviewing the diversity system surpervising the Group’s overall diversity
performance and discussing future plans. The human resource head office of the Company regularly reviews the
implementation of the Group’s diversity work and counts and collects relevant quantitative data. It also prepares diversity
reports and submits them for review to the ESG committee to ensure the proper progress of diversity related work.Livzon’s Employee Distribution by Gender from 2021 to 2024
450047.70%47.50%50.00%47.35%47.46%
425047.50%
400045.00%
375042.50%
350040.00%
2021202220232024
Total number of female employees Percentage of female employees (%)
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4230
4277
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9.1 EMPLOYMENT (continued)
9.1.2 Diversity and inclusion (continued)
Diversity measures
We actively promote diversity and inclusion in our hiring and day-to-day operations and implement diverse incentives:
Hiring and employment
We carry our hiring activities in the principle of fairness impartiality and openness. We recruit and assign talent based on
job qualifications and candidate’s ability regardless of gender age ethnicity race nationality religious belief and other
background.The Company strengthens the management of hiring information. Our job postings include various diversified welfare
and describe only the job qualifications and skill requirements. At the stages of screening of resumes by human resource
department decision making by employing department etc. we minimize barriers to diversity and avoid imposing higher
and more employment requirements on women than men.Day-to-day management
We believe the degree to which diversity is valued by management is a key driver of diversity.We ask management officers to lead by example be proactive in creating a diverse and liberal work environment and pay
real attention to the needs of staff so that every employee can truly feel the humanistic care of the Company. We provide
targeted training for management officers of diversity to provide guidance on practical actions which managers can take
in actual management and enhance their leadership skills.Training and activities
In our day-to-day operations we strive to create a diverse work environment where all types of staff feel accepted and
recognized. We cultivate awareness of diversity and pluralism and build a corresponding cultural philosophy. To this end
we carry out activities and training for our staff of diversity to enhance their understanding of diversity and create a liberal
workplace atmosphere.During the Year we provided diversity training for 98% of our employees. Employee satisfaction with the training reached
89.4%. The training covered the essence and mechanisms of diversity the importance of diversity personal exploration
and action on diversity etc. so as to achieve the effective dissemination of the concept of diversity.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1191 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.1 EMPLOYMENT (continued)
9.1.2 Diversity and inclusion (continued)
Diversity measures (continued)
Welfare and holidays
We strictly observe the Special Regulations on Labor Protection of Female Staff and specify in the employment system that
female staff are entitled to special leaves such as paid marriage leave maternity leave and breastfeeding leave. Also
we have set up well-equipped mother-and-baby rooms to support female staff returning to work after giving birth and
provide paternity leave for male staff. We have added special items such as breast cancer screening and cervical cancer
screening to the medical check-up of female staff over 35 years to better protect their health and give them full care.We respect the customs and culture of our foreign staff and minority staff. In addition to the Company’s holidays we
ensure that they enjoy their respective ethnic cultural festivals.Anti-discrimination and anti-harassment
The Group has zero tolerance for discrimination rejects all acts of discrimination and prejudice and strictly forbids any
form of harassment in the workplace. We do our best to identify discrimination and harassment and have a clear process
for reporting complaints and remedial or punitive measures for discrimination and harassment. To this end we encourage
relevant personnel to report instances of discrimination and harassment to their supervisors or the human resource
department as soon as possible so that we can investigate and tackle them to reduce future instances.Where discrimination and harassment do exist after investigation we will communicate with the involved staff and
actively take measures to remedy their violations. For all kinds of violations we will judge according to the severity of
the misconduct and implement measures such as warnings demerits and termination of labor contracts according to
regulations. Suspected offenders in particular will be transferred to the relevant judicial organs for serious treatment.
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9.1 EMPLOYMENT (continued)
9.1.2 Diversity and inclusion (continued)
Diversity measures (continued)
Case: Diversity training for the management
In October 2024 the Company carried out a special training on “Diversity of the Management” for the management
through an online format which involved all managers of the Group. The training covered DEI concepts the impact
of diverse cultures diversity management in corporate governance etc. This training effectively helped managers
deeply recognize the importance of diversity to the enterprise better understand and respond to the challenges of
diversity and implement the philosophy of diversity in their work.Data: Training participation rate of female staff
* Fresh graduate training: 68% for female staff
* Intern training: 56% for female staff
* Employee growth training: 48% for female staff
* Career enhancement training: 48% for female staff
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9.1 EMPLOYMENT (continued)
9.1.2 Diversity and inclusion (continued)
Diversity measures (continued)
Case: Diversity events
* Embroidery workshop – “Stitching feminine grace weaving a better life”
To reflect the Company’s deep care and respect for female compatriots enrich their leisure cultural lifeand enhance team cohesion Shanghai Livzon specially planned the embroidery workshop of “Stitchingfeminine grace weaving a better life” in 2024. This unique embroidery event not only allowed participants
to appreciate the profound cultural heritage of traditional Chinese embroidery but also showcased the
wisdom and elegance of women in the new era through the interweaving of needles and threads. This
event aimed to let female staff experience the charm of traditional culture through learning and practicing
traditional handicrafts amid their busy work schedules demonstrate their delicacy and talent and promote
the communication and understanding among colleagues thus collaboratively creating a harmonious and
warm corporate culture atmosphere.* Greetings on the International Women’s Day
As the 2024 International Women’s Day approached Pharmaceutical Factory extended holiday greetings to
all female staff and presented each of them with a small gift and a greeting card. This event aimed to allow
staff with different cultural backgrounds to feel the warmth and care of the company create a positive
organizational atmosphere and demonstrate the company’s diversity and pluralism and its corporate culture
of “happy life happy work”.* Women’s Day themed event
In March 2024 Ningxia Pharma held the Women’s Day themed event of “Spring blossoms March and you”
where female staff showcased their charm through the craft of making round fans. Additionally female staff
played games such as life-size Monopoly to enhance the festive atmosphere and strengthen interpersonal
relationships. At the end of the event their received flowers and exclusive Women’s Day walfare. This event
embodied the concept of gender equality promoted understanding respect and cooperation between
genders and contributed to building more harmonious social relationships.
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9.1 EMPLOYMENT (continued)
9.1.2 Diversity and inclusion (continued)
Diversity measures (continued)
Case: Anti-discrimination training
In October 2024 the Company provided online and offline training for all staff of the headerquarters on anti-
discrimination harassment and gender equality. The training not only elaborated on the definitions and types of
discrimination and harassment but also listed manifestations of discriminatory and harassing behaviors in personal
life and work. It aimed to regulate individual workplace behavior and collectively create a fair and harmonious
atmosphere.With a satisfaction rate of 88% staff offered many suggestions on related work. We will take improvement actions
based on these suggestions trying best to create an equal and liberal working environment for staff.Diversity of the Board
The Company deeply recognizes and values the critical role of a diverse Board in its corporate development and regards
Board diversity as one of the core elements in maintaining competitive advantages and driving long-term development.According to the requirements of the Board Diversity Policy the Company takes into account diversity related factors such
as gender age cultural and educational background professional experiences skills and knowledge race and ethnicity
when appointing Board members. On this basis the Company shall make decisions based on objective conditions such as
comprehensive values a candidate can deliver to the business and development of the Company contributions a candidate
can make to the Board while ensuring the diversity of the Board and make sure that the Board includes at least one
female member to achieve gender diversity in the Board. The nomination committee is responsible for reviewing the Board
diversity policy on an annual basis to ensure that it is working effectively.The Company’s Board has a balanced and diverse composition composed of 11 members aged between 42 and 69
years including one female director. The Board members have diverse professional backgrounds and extensive industry
experience including accounting professionals domestic and international lawyers and individuals experienced in
enterprise management. Their knowledge structure and areas of expertise are both professional and complementary to the
Board providing forward-looking scientific and feasible opinions on the Group’s regulatory governance and major policy
decisions.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1231 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.1 EMPLOYMENT (continued)
9.1.3 Retention of talent
Livzon actively implements talent retention of projects and tries its best to reduce employee turnover from various aspects
such as remuneration and welfare education and training and employee communication. During the year the employee
turnover of the Group was 10.38% (2023: 13.45%).Talent retention measures
* Establish an employment mechanism in which competition is fair the competent are elevated and the
mediocre are demoted and create a positive working atmosphere;
* Establish an early warning mechanism for employee turnover;
* Provide staff with competitive remuneration and welfare and give incentive bonuses in line with job
characteristics;
* Strengthen onboarding training for new staff to help them better understand their duties and fit into the
workplace;
* Identify high potential and key talents and provide appropriate support in processes such as promotion;
* Analyze staff’s needs and try to meet them and assist staff in solving difficult problems;
* Actively improve the working environment address their concerns about the working environment and
create an activity center that staff enjoy providing a foundation for happy work and happy life.
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9.2 TALENT MANAGEMENT
Focused on talent development Livzon has made continuous efforts to strengthen talent development scheme and
optimize the talent management model and has improved the efficiency of human resource management by utilizing
scientific and technological means such as human resources information-based systems. For talent groups in different
fields we develop targeted training plans and strive to build a professional and innovative workforce as a core competitive
edge for Livzon’s development.
9.2.1 Employee training
Livzon believes that adequate training resources are a solid foundation for staff to achieve personal development. The
Group uses the Livzon Business School as its core platform to build an all-round and diversified employee training system
empowers staff on demand through a learning model that combines online and offline forms and full integration of
internal and external resources and continuously stimulates organizational vitality. In accordance with the internal system
we standardize training management and complete internal and external training supporting resources in order to ensure
the full-process and routine operation of training projects systematize and institutionalize employee training and keep
building a workforce that matches business development needs.During the Year we provided employees with all-round and multi-dimensional training including general training and
professional skills training. The training projects were rich and diverse. During the Reporting Period each employee of the
Group had an average of 102.3 training hours.Onboarding training
The Group meticulously planned the training project for new staff and implemented a “180-day tracking project”.The project was built on 70-20-10 (721) rule namely 70% of learning comes from on-the-job practice 20% from
communication sharing and interaction with others and 10% from in-class training. We carried out 8-levels of training
courses for staff to help them equip with a thorough knowledge of the Company’s core values adapt to job requirements
and master job skills as soon as possible.When the new staff’s assessment expired we carried out one-on-one and face-to-face communication and guidance on
the training situation job responsibilities and performance assessment for them during the assessment period so as to
timely understand their feedback and provide incentives such as early transfer promotion and salary adjustment to those
with good performance.Case: Graduate trainingIn 2024 the Company designed a year-long training project in three stages under the theme of “Welcoming NewTalents at Livzon: Creating a Bright Future Together for the Pharmaceutical Industry” for graduates following the
concept of “1-2-6 graduate growth Ladder”. Centered around aspects such as cultural systems role transitions
and competence enhancement the project comprised offline intensive training outdoor development online
fragmented learning sessions offline one-on-one mentorship and debriefing and mentor evaluation to help staff
deeply understand the Company’s values and business strategies.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1251 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.2 TALENT MANAGEMENT (continued)
9.2.1 Employee training (continued)
Training for business positions
The Group formulates annual training plans for each business department based on the Company’s development objectives
for the Year and the previous year’s performance assessment results. Business departments (such as production sales and
R&D) provide business position-specific professional knowledge training for staff based on the annual training plans and
the evolving needs of business development so as to deeply align the growth of staff with the development needs of the
Company.* Research and development positions: carry out technical guidelines experimental skills pharmaceutical regulations
and other skill upgrading courses;
* Production positions: carry out hands-on training on safe production process regulations machine operation and
other knowledge;
* Sales positions: carry out product knowledge compliance promotion communication skills and other skill
upgrading courses.In addition each department has a specific training fund in its annual budget so that staff can attend external professional
skills training according to business needs.Case: Training for research and development positions
In 2024 the Company’s research institute carried out training for staff in the R&D system on SOP laboratory
management procedures equipment and instrument operation skills etc. to improve their experimental and data
analysis skills. Training methods included hands-on practice course training corporate mentoring and coaching
practical drills written assessments skills competitions etc. The number of participants was 106 and the training
duration was 1796.5 hours.
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9.2 TALENT MANAGEMENT (continued)
9.2.1 Employee training (continued)
Management and leadership training
To drive the steady development of the Company Livzon always attaches importance to the improvement of management
ability and strives to build a high-caliber management team to inject strong impetus into the development of the
enterprise. We continued to empower managers improve the capability model of key positions and carried out various
forms of management training to help staff acquire a wealth of management knowledge and thus improve the corporate
management level.During the Year the Company continued to maintain and update the talent advancement system including Young Leaders
Project learners’ growth tracking and other key tasks. In the meantime the Group promoted and increased the salaries
of top-performing staff in terms of overall ability and professional skills and regularly assessed their performance and
progress and provided responses and suggestions to aid their continuous growth and skill enhancement.We provided diverse management training for junior staff executives junior management middle management and senior
management to enhance management effectiveness. During the Year the total duration of management and leadership
training of the Group amounted to approximately 107555 hours involving 4683 staff of whom 47.03% were female
staff.Cases of management and leadership training
* During the Year to discover and cultivate a group of talented young managers with potential to support
the strategic and business growth of the enterprise the Company continued its second Young Leaders
Project and a total of 35 persons successfully completed their studies. Courses included next-generation
management scientific decision making and leadership time management and productivity improvement
lean and fine management introduction etc.To effectively measure the learning outcomes of staff we provided case discussions after-class assignments
and examination and evaluation during the training achieving a 100% participation rate in case discussions
and assignment completion. The Young Leaders Project improved the leadership awareness of the students
and effectively developed their abilities to efficiently complete tasks delve into research and innovate
boldly laying a solid foundation for Livzon to reserve versatile and compound talents.* In 2024 Sichuan Guangda carried out training for executives on topics such as “Self-Management andTime Efficiency Management for Managers” “How to Analyze and Solve Problems” “How to ManageCommunication and Cross-departmental Collaboration” and “How to Use ChatGPT for EfficiencyManagement”.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1271 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.2 TALENT MANAGEMENT (continued)
9.2.1 Employee training (continued)
Management and leadership training (continued)
Case: Employee development project
Limin Factory
(1) Project name & description: “Lean Operations Management System LPS-II” project
(2) Target/Commercial value of the project: To clarify and refine the responsibilities of workshop managers;
optimize and integrate workshop management process forms for standardized daily operations; establish
process standards for the selection of team leaders; create ability accreditation standards for team leaders.
(3) Quantitative effect of business value: Clarified responsibilities of production managers optimized
management process developed seven task objectives/indicators and five guidelines for business segments
and improved management ability of 40 frontline managers laying an important foundation for the
establishment of a lean workshop standardized management system.
(4) Proportion of staff covered by the project: Production department managers and all team members.
9.2.2 Talent development
Talent introduction
The Group focused on the construction of talent team the establishment of a clear formal talent development strategy
and the scientific prediction of talent demand. On the one hand we deepened university-enterprise cooperation
relationship to broaden channels of talent introduction and enlarged the talent reserve; on the other hand we fostered a
free and equal development atmosphere to consolidate the Company’s core competitiveness.Aligning with its strategic positioning business expansion trends and the current state of its talent team Livzon
optimized the structure of its workforce through talent reviews and role assignment. At the same time we innovated
our talent selection methods and continuously intensify efforts to introduce talents. By leveraging diverse channels we
attracted professionals from various fields so as to provide solid strategic support for the Group’s future talent needs
gained a sustained competitive advantage and fostered a healthy internal ecosystem where talents are effectively utilized
and reach their full potential.
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9.2 TALENT MANAGEMENT (continued)
9.2.2 Talent development (continued)
Talent introduction (continued)
To enable complementary advantages and mutual welfare in talent training Livzon established cooperation in terms of
talent cultivation skills training employment referral etc. with domestic first-class research institutes and universities
such as the Chinese Academy of Sciences Jinan University Sun Yat-sen University Fudan University and Shanghai Jiao
Tong University and became the social practice base of many professional colleges and universities smoothing the
channel for talent transfer from schools to enterprises.The Group actively established several social practice and practice bases which received student interns from cooperative
universities and actively promoted campus recruitment. During the Year the Company established cooperative relationship
with Chengdu University of TCM Fujian Normal University Zhuhai City Polytechnic among others.We maintained long-term cooperative relationship with Peking University Shenyang Pharmaceutical University and
Macau University of Science and Technology and other universities to focus on cultivating staff’s professional quality and
practical ability through collaborative training projects. Through intensive professional courses they continuously refined
their medical knowledge structure and advanced their professional skills. In addition the Group actively worked with
government departments and schools to build learning platforms and integrate resources to cultivate professional talents
suited to the regions where the subsidiaries operate.Promotion and transfer mechanism
We highly value the talents of each employee fully recognize the value that they create for the Company in different
positions create free growth space and offer equal opportunities for promotion and transfer for staff. In case of internal
vacancies the Company gives priority to internal staff for their promotion or transfer.The Company established a multi-directional growth channel covering functional technical research and development
promotion production/operation and other sequences fully respecting and supporting staff to choose suitable career
growth paths independently. We broadened the career paths of staff expanded their advancement space and provided a
level-by-level promotion channel for staff in all sequences according to their performance contribution and work ability in
the mode of “ladder promotion”.The Company regularly reviewed the construction and reserve of talent team every month timely collated and publicized
internal job information and encouraged staff to achieve internal promotion through open competition.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1291 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.2 TALENT MANAGEMENT (continued)
9.2.2 Talent development (continued)
Academic qualifications and credentials support
Livzon supported all full-time employees part-time employees and contract employees of the Group in obtaining job-
related qualifications and credentials in their spare time and helped employees apply for relevant specific qualifications or
nationally accredited professional titles including professional title promotion projects vocational qualification promotion
projects and business module training projects.The Company issued the Administrative Regulations on Employee Learning and Growth to assist all staff of the Group in
applying for suitable learning projects according to their own promotion needs. The Company actively collaborated with
colleges and universities to conduct school-enterprise cooperation and collaboratively run classes and actively encouraged
staff to pursue self-study examinations full-time or part-time study distance education on-the-job postgraduate projects
professional title assessment professional credentials etc. At the same time the Company took the qualifications and
credentials obtained by staff into consideration for promotion and salary adjustment considerations in order to fully
motivate staff to participate in training and study.At the same time in accordance with the local government’s talent system the Company actively helped staff apply for
local qualification authentication projects for high-level talents craftsmen young top-notch talents industrial innovation
and development talents innovation teams etc.Case
* The Company provided all staff of the Group and their families with education promotion platforms from 18
universities as well as an exclusive mechanism for obtaining credentials in 8 skill projects.* During the Year to the best knowledge of the Group a total of 25 employees obtained academic
qualification improvement and 407 employees obtained skills/professional title credentials.
9.2.3 Remuneration and welfare
Remuneration composition
In accordance with the relevant laws and regulations Livzon formulated systems such as the Remuneration Management
System and the Administrative Measures for Remuneration Adjustment and established a salary system composed of fixed
and fluctuating income for all staff including non-management positions and non-sales positions with fluctuating income
linked to personal accomplishment and the business results of the Company so as to stimulate the enthusiasm and
subjective initiative of staff maximize the personal value of staff and effectively give play to the effective incentive role of
the salary system for talents.
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9.2 TALENT MANAGEMENT (continued)
9.2.3 Remuneration and welfare (continued)
Performance assessment
In accordance with the relevant provisions of the Administrative Measures for the Performance of Functional Head Offices
the Group carrys out quarterly semi-annual and annual KPI performance assessments on staff. The assessment content
includes the staff’s business performance behavioral performance etc. which serve as the objective basis for the staff’s
performance bonus distribution salary adjustment promotion or demotion annual advanced selection and position
adjustment.The Group follows the principles of “objective fair and timely feedback” to evaluate the performance of each team and
person in a comprehensive and objective manner.In personal performance management we use KPIs as a performance assessment method. The basic dimensions of
assessment include the completion of key performance indicators execution capability teamwork personal learning and
development etc. Meanwhile we integrate the assessment system remuneration system and employee development
system to ensure that employees’ efforts and value contributions are appropriately rewarded.Moreover the Company also factors performance within a team in personal performance assessment in order to more
objectively assess the contribution and value of a person in teamwork. Firstly we set the team performance goals for
each department based on the annual operation goals. Then we break down the team goals into personal work goals for
team members. Finally following a results-oriented principle we assess an employee’s team performance during his/her
personal performance assessment providing performance summaries and guidance to form an effective performance cycle.In terms of team performance we tailor personalized assessment methods for different types of teams. For example for
R&D teams we set an assessment method with key milestones such as “obtaining clinical trial approvals” and “obtainingmanufacturing approvals” as performance goals.Moreover we incorporate performance indicators related to risk management into the performance assessment of
certain staff. For example we include performance indicators such as avoidance of risks of production or environmental
liability accidents in the performance assessment of the general managers. By including risk management in the scope of
assessment we have effectively strengthened risk prevention capability of the Company.Finally we attach importance to providing timely and comprehensive feedback and guidance for staff in the performance
management process. The performance assessment process is divided into four stages: performance plan performance
implementation and guidance performance assessment and interview assessment appeal and result feedback. At each
stage managers can provide responses and improvement suggestions for staff through various methods. After assessment
the human resource department reviews and summarizes the performance assessment results gives replies to each
department and requires each department to improve the relevant issues identified during the assessment period.Equity incentive
In order to continue to improve the long-term incentive mechanism attract and retain outstanding staff and fully motivate
staff Livzon has put forward various forms of equity incentive schemes for the Group’s key staff middle management
senior management directors and staff who have made outstanding contributions to the Company’s performance.For details of equity incentive schemes please refer to Section III of the 2024 Annual Report of the Company.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1311 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.2 TALENT MANAGEMENT (continued)
9.2.3 Remuneration and welfare (continued)
Benefits and welfare
We are mindful of the well-being of our staff and continue to improve the benefit and welfare packages of staff. In terms
of mandatory benefits during the Reporting Period the total wages bonuses allowances compensation welfare housing
funds and social insurance paid to the employees by the Group amounted to RMB1656.49 million (31 December 2023:
RMB1582.87 million).In terms of non-statutory benefits we provide extensive non-compensation benefits for all employees of the Group as
detailed in the table below. At the same time we have special benefits for staff who meet special conditions such as
flexible working practice working from home mother and baby room special health check-up for women and consolation
allowances for staff in desperate need. In terms of statutory benefits in accordance with national or local regulations
we provide staff with statutory holidays rest days sick leave work-related injury leave marriage and bereavement leave
prenatal check-up leave maternity leave paternity leave breastfeeding leave and annual leave.Non-statutory benefits for all employees of the Group
Housing Convenient living Work support
* Welfare dormitory * Welfare canteens * Travel allowance
* Rent allowance * Meal allowance * Communication allowance
* Talent settlement * Commuter shuttle * Shift allowance
* Transport allowance * Office computer allowance
* External training with pay
* Afternoon tea fruit night
snack for night-shift staff
Life Health Assistance
* Summer welfare heat * Occupational health check-up * Admission assistance for staff’s
allowance * Employee welfare for medical children
* Gym check-up * Employee assistance project
* Various sports courses * Maternity/illness/work injury
* Book corner English corner visitation
* Employee activity center
* Employee association activities
* Cafe Holidays
* Team-building activities
* Fellowship activities * Holiday allowances or gifts for traditional festivals
* Birthday allowances or gifts for staff
* Lucky draw at annual meetings back-to-work red packet following
Spring Festival
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9.2 TALENT MANAGEMENT (continued)
9.2.3 Remuneration and welfare (continued)
Work-life balance and employee care
Livzon pays high attention to staff’s well-being and sense of belonging and actively creates a balanced work-life
atmosphere. The Company has set up an employee activity center a gym a book corner and other facilities to help staff
relax and recharge.In terms of enriching the leisure time of staff the Company regularly holds badminton basketball table tennis and other
sports events and also carrys out various team-building activities such as fun games garden parties and answering
lantern riddles at the Mid-Autumn Festival. In addition the Company encourages staff to develop personal interests. Staff
have self-organized clubs such as dance (yoga) club badminton club e-sports club basketball club and mountaineering
club. The Company strongly supports club activities and provides staff with a variety of choices.In terms of employee care Livzon shows equal attention. The Company visits staff who are badly off or sick in hospital
and gives Spring Festival relief funds for staff in severe difficulty; on holidays the Company distributes thoughtful gifts to
staff allowing them to really feel the warmth and care from Livzon.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1331 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.2 TALENT MANAGEMENT (continued)
9.2.3 Remuneration and welfare (continued)
Work-life balance and employee care (continued)
Case: A wide variety of diversified cultural and sports activities
During the Year in order to put into practice the corporate culture value of “happy life happy work” the Group
held a series of wonderful activities. In the field of sports competition these included the 27th Staff Basketball
Game of Livzon Group the 2024 Jinwan District FTU Cup Staff Basketball Game the 1st Fun Games of Livzon
Group the 21st Badminton Mixed Team Competition the 2024 Jinwan District FTU Cup Staff Badminton Game
the 2024 Sanzao FA Cup 8-a-side Football Game the 20th Staff Mountaineering Team Competition etc. In terms
of cultural and sports activities these included the 1st Fun Games of Livzon Group “Livzon Carnival” garden party
event etc. These activities demonstrated the colorful and diverse leisure time of Livzon people in an all-round way.
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9.2 TALENT MANAGEMENT (continued)
9.2.3 Remuneration and welfare (continued)
Work-life balance and employee care (continued)
Case: Carnival event
As the Company approached its 40th anniversary the 2024 “Livzon Carnival” garden party event led by the Party
labor union and Communist Youth League organizations of the Company and organized by the labor union grandly
opened in October 2024 at the plaza outside the headquarters building of the Livzon Industrial Park.This annual cultural celebration meticulously planned a variety of fun games including “blindfold and paste facialfeatures” three-legged race and treasure ring toss. Participants actively competed and the atmosphere at the
event was lively. The event also featured a wide range of local delicacies and a children’s playground. Starting
promptly at 6:00 PM the event lasted nearly 3 hours allowing staff and their family members to leave with great
memories.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1351 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.3 EMPLOYEE COMMUNICATION
Livzon always places great importance on communication and exchange among staff and highly respects the opinions
and suggestions of every employee. We have actively established an equal harmonious efficient and transparent
communication bridge as we are committed to creating a high-quality communication environment where staff can
express themselves freely and without any concerns.
9.3.1 Complaint reporting procedures
Livzon valued the protection of employees’ rights and interests and established a smooth and confidential complaint
reporting mechanism and kept complainants and relevant information strictly confidential. The Company has formulated
the Employee Complaint Management System which allows all parties concerned to file complaints against violations of
human rights labor rights and other human resources-related matters. The Company implemented necessary measures to
protect the personal safety and legitimate rights and interests of complainants.According to the system complainants can be appealed through telephone WeChat email on-site visits and suggestion
boxes. The human resource departments of the Company and its subsidiaries are the complaint acceptance center which
are responsible for recording acceptance investigation processing and follow-up of complaints. The human resource
head office of the Company is responsible for supervising the Group’s complaint handling work regularly carrying out
statistical analysis and summary of the complaint handling situation and reporting to the ESG committee.The complaint handlers shall do a good job of confidentiality when handling complaints by keeping complaint materials
and records as confidential documents. In case of disclosure the Company will deal with it seriously.
9.3.2 Communication of labor union
At Livzon the labor union is a key bridge between management and ordinary staff. In order to promote mutual
understanding between the enterprise and our staff and enhance their sense of corporate identity the Company’s
labor union gives full play to its bridging role. It holds workers’ representatives conference every year to maintain close
communication with staff. It always adheres to the purpose of serving the staff wholeheartedly striving to enhance
welfare for staff and deliver results for their well-being.During the Year 100% of the Group’s staff participated in labor unions and signed collective contracts.Case
In March 2024 the Company’s labor union organized the 2nd member representatives conference of the 7th Labor
union Committee of the Group which deliberated and voted by secret ballot on the Fund Use System of the Labor
union Committee of Livzon Group the Regulations on Employees’ Love and Mutual Assistance Fund of Livzon
Group and the proposal submitted by the marketing head office for the Implementation of an Irregular Working
Hour System.
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9.3 EMPLOYEE COMMUNICATION (continued)
9.3.3 Employee engagement survey
In 2024 in order to investigate employee satisfaction the Company invited an external third-party professional
organization to carry out a survey on employee engagement with reference to Gallup’s influence model based on 16
driving factors such as organizational support work-life balance career development opportunities diversity and
pluralism performance management and employer brand.In 2024 the content of the employee engagement survey included job satisfaction purpose of work happiness stress
etc. The overall engagement score was 80% a 5% increase from the previous year surpassing the national average by 7
percentage points and the pharmaceutical industry level by 3 percentage points.* The scores across 16 engagement dimensions showed improvement with high levels of employee satisfaction
observed in dimensions such as collaboration employer brand diversity and pluralism and decision-making.* There was a general increase in the scores of all engagement drivers: Scores increased by 11% for employer brand
9% for customer orientation 6% for job content 6% for organizational support 6% for personnel and allocation
and 6% for performance management.* Engagement scores for 14 subsidiaries exceeded the pharmaceutical industry level.Covering all Employee response rate Overall engagement score
permanent employees
100%80%
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1371 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.3 EMPLOYEE COMMUNICATION (continued)
9.3.3 Employee engagement survey (continued)
To enhance employee engagement we carried out improvement activities in the order of priority optimization secondary
optimization and continuous improvement and attained positive results as detailed in the table below:
Priority Key dimensions Improvement outcomes
Priority Career development * A certain proportion of participants in the backup talent training project were
optimization opportunities promoted figured out the direction of their vocational skills improvement and
enhanced their management capabilities.* Improved staff’s self-awareness and professional skills and encouraged staff to
explore their careers aligned with career promotion channels and achieve career
development breakthroughs.Rewards and * Enriched welfare and stimulated employee motivation for self-improvement.recognition
* Increased staff’s confidence and self-efficacy set examples for teams and
departments and motivated staff to pursue higher goals.Secondary Work-life balance * Carried out a series of activities to provide staff with opportunities to release
optimization stress and create chances for interaction with relatives.* Through AI and office system assistance optimized the work flow of staff to
improve their productivity.Employer brand * Through social welfare activities and internal publicity made staff aware
of Livzon’s social responsibility values and the ways of practicing them to
strengthen their sense of belonging.Personnel and * Developed versatile skills of frontline staff to adapt to changes promoted
allocation outstanding frontline staff through internal competition optimized the talent
team and injected new vitality into frontline team management.Continuous Customer * Ensured that customer opinions were regularly solicited and maintained smooth
improvement orientation channels for soliciting opinions.* Improved the service and responsibility awareness of sales personnel and
ensured stable service quality regardless of deadlines.
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9.4 OCCUPATIONAL HEALTH AND SAFETYThe Group adheres to the EHS (Environment Health and Safety) values of “Put life first prioritize safety followregulations and laws protect the environment” instituted an EHS policy and established quantitative targets of “zeroaccidents and zero injuries”. The Group is focused on continually improving the performance of the occupational health
and safety (“OHS”) management system.We strictly abide by relevant domestic laws and regulations and the OHS management system issued by the International
Organization for Standardization (ISO). We have set a series of OHS systems and the Environmental Occupational Health
and Safety Management Policy (including the OHS policy) which along with the related systems cover all enterprises
employees and contractors of the Group.When we formulate the OHS policy and related systems we will first release the drafts for consultation and only formally
publish them after we have consulted with workers and/or workers’ representatives and made improvements and
optimizations. At the same time we integrate OHS standards into procurement and contract terms to ensure that third-
party partners strictly comply with our OHS policy.The Group actively implements the requirements of various provisions of the OHS management system clarifies priority
tasks develops and executes detailed action plans continuously improves the risk assessment and prevention and control
mechanism and strengthens emergency response capabilities. As at the end of the Reporting Period all manufacturing
enterprises of the Group had been certified to GB/T 45001-2020/ISO 45001:2018 Occupational Health and Safety
Management System certification with a certification rate of 100%. In particular 7 manufacturing enterprises obtained
the work safety standardization certificates.The ESG Committee (the “ESG Committee”) under the Company’s Board is responsible for formulating the OHS policy
and other EHS related policies and systems setting annual safety targets developing work plans and supervising and
reviewing the implementation of various measures. To ensure effective policy implementation the Company and its
subsidiaries are equipped with dedicated OHS management teams to provide a solid guarantee for creating a safe and
healthy working environment for all employees. During the Year with the continuous development of the Company’s
business new challenges and higher requirements emerged in areas such as work safety environmental protection and
employee occupational health protection. To further strengthen the internal management of the enterprise we developed
the Regulation on the Administration of Safety Environmental Protection and Occupational Health Appraisal during the
Year. This regulation centered around multi-dimensional assessment criteria covers specific areas such as investigation
and treatment of safety hazards environmental pollution prevention and control measures and employee occupational
health protection which further improves the Company’s safety environmental protection and occupational health
management levels lays a solid foundation for the Company’s sustainable development and creates a safe stable green
and healthy working environment.The Company always adheres to the safety philosophy of “zero accidents and zero injuries” and annually evaluates
and reviews the achievement of OHS targets on a regular basis. During the Reporting Period the Group completed the
quantitative targets of zero major safety accidents and a low rate of minor injury accidents. The annual work targets
and plans for safety and environmental protection of all manufacturing enterprises of the Group have been implemented
effectively. We have also emphasized to all employees through regular safety training the potential safety hazards and
preventive actions to prevent re-occurrence of similar accidents.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1391 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.4 OCCUPATIONAL HEALTH AND SAFETY (continued)
During the Year to further strengthen the Company’s occupational safety management system improve ability to prevent
and control risks and effectively safeguard employees’ life safety and the Company’s stable operations the Company
conducted the identification and assessment of occupational safety risks in an all-round manner and though multiple
measures.? Conducting EHS audits: The Company conducts as least 1 comprehensive EHS audit every year on all
manufacturing enterprises of the Group and continues to follow up on the improvement of each enterprise. During
the Reporting Period the Company conducted internal OHS audits on all manufacturing enterprises of the Group
in accordance with EHS standards and norms. The scope of the audits covered production process operation of
equipment and facilities implementation of safety management systems etc.? External expert inspections: The Company specially engages senior safety experts from the industry to conduct
inspections inside the enterprise. These experts with substantial experience and professional knowledge in
occupational safety management conduct in-depth field investigations at production frontlines. After meticulous
examination of all parts of production and work zones they propose targeted improvement suggestions to further
improve the company’s safety management level.? Cross-checks of subsidiaries: Each subsidiary selects experienced and professionally competent personnel to
form an inspection team which then visits other subsidiaries to conduct inspections so as to promote exchange
of experience and mutual supervision between subsidiaries. This approach not only allows subsidiaries to acquire
excellent management experience of other sister companies but also enables them to identify their own problems
from different perspectives effectively avoiding the limitations in the process of self-inspection.During inspections we focused on key tasks such as identification of hazard sources within the enterprises. We also
thoroughly reviewed the risk identification records of the Company’s subsidiaries verified the rationality of risk level
classification and checked whether the hazard investigation and management had formed an effective closed-loop
management: from the discovery reporting correction to review of hazards every stage was under strict control. For
identified problems we issued correction notices in a timely manner specifying correction requirements correction
deadlines and responsible persons to ensure timely and effective resolution of problems. This series of practical and
effective actions has given us a clearer and more comprehensive understanding of the Company’s occupational safety
risks and provided a strong basis for the subsequent development of targeted risk prevention and control measures and
continuous improvement of safety management.During the Reporting Period Livzon invested an aggregate of approximately RMB34.25 million in OHS the cost input
classification is as follows:
Investment in technology improvement for work safety RMB15.39 million
Investment in operation and maintenance for work safety RMB13.56 million
Investment in occupational health RMB5.31 million
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9.4 OCCUPATIONAL HEALTH AND SAFETY (continued)
9.4.1 Occupational healthLivzon has formulated the Administrative Procedures for Occupational Health and upholding the principles of “prevention-oriented comprehensive planning adapting to local conditions and comprehensive management” continuously optimizes
production equipment and occupational disease protection facilities striving to provide a healthy and safe working
environment for all employees.During the Reporting Period the Group recorded no new occupational diseases suspected occupational diseases or
occupational contraindications.* Occupational hazard investigation
Each manufacturing enterprise of the Group classifies occupational hazards based on their magnitude of impact
and commissions a qualified unit to inspect investigate and evaluate the occupational disease hazard factors
at the production site on a regular basis. At the same time we organize regular occupational health check-ups
for employees every year to implement our principal responsibilities for preventing and controlling occupational
hazards.* Occupational health notification
For job positions with occupational health hazards we inform new employees of the risks of occupational health
hazards and the measures to be taken to prevent and control occupational diseases in their positions through
employment contract before they report for duty. We set up warning signs at prominent locations in workplaces
where occupational health hazards exist to provide necessary information on occupational health hazards and
protective measures.* Labor protection equipment
We equip employees who are exposed to occupational hazards with standardized appropriate and effective
personal labor protective equipment regularly purchase and distribute such equipment for employees’ use and
supervise the use of personal protective equipment to prevent occupational diseases. We set up flushing facilities
in places with corrosive substances such as acid and alkali or potential risk of chemical burns and maintain
upgrade and improve the occupational disease protection facilities.* Occupational health check-up
We arrange pre-job on-job and off-job occupational health check-ups for workers are exposed to occupational
hazards and establish occupational health files for tracking and management.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1411 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.4 OCCUPATIONAL HEALTH AND SAFETY (continued)
9.4.1 Occupational health (continued)
* OHS training
The Group attaches great importance to training and publicity on OHS and regularly provides targeted OHS
training for employees and relevant parties: personnel who are newly recruited change positions and return
to positions need to attend pre-job training and pass the assessment before officially taking up their jobs and
special operation personnel must take up their jobs with certificates. Employees on duty receive training on
occupational health hazard prevention and control and experts provide mental health lectures and psychological
rescue knowledge. For contractors and relevant parties the Group conducts OHS training in accordance with the
Contractor Safety Management System to fully protect employees’ physical and mental health and work safety.Case: Combustible gas centralized alarm system upgrade
Limin Factory upgraded its monitoring system to transmit alarm signals from combustible gas detector control
panels installed in workshops and departments to the factory duty room’s fire monitoring center. These signals
were connected to the monitoring host of the combustible gas alarm system enabling centralized monitoring of
alarm information with 24-hour manned surveillance. Following project completion combustible gas detectors in
the TCM extraction workshop and hazardous material storage of Limin Factory are networked to the duty room fire
monitoring center achieving centralized monitoring and timely alarm response.Livzon always cares about the health and safety of its employees by continuously optimizing the occupational health
protection for employees eliminating potential safety hazards for employees and implementing the protection of
employees’ occupational health interests. During the Reporting Period the number of Livzon’s work-related fatalities and
the number of lost time injuries occurring per 1 million hours worked (lost time injury frequency rate “LTIFR”) are as
follows:
Number of work-related fatalities of employees in 2024 (person) 0
Number of work-related fatalities of contractors in 2024 (person) 0
LTIFR of employees in 2024 (LTIs/million hours worked) 0.26
LTIFR of contractors in 2024 (LTIs/million hours worked) 0.00
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9.4 OCCUPATIONAL HEALTH AND SAFETY (continued)
9.4.2 Work safetyLivzon adheres to the work safety policy of “safety first prevention foremost comprehensive governance totalinvolvement risk control and continuous improvement” and has developed a series of work safety systems. During
the Year to improve the overall safety management level of the Group the Company organized cross-checks among
subsidiaries and developed detailed plans defining the scope content and procedures of these cross-checks. Meanwhile
the Company engaged senior work safety experts to analyze and evaluate identified risk points provided correction
suggestions and conducted safety training for management officers and employees to improved the overall safety
management level.Throughout this process we strictly controlled hazard sources established detailed hazard source inventories designatedresponsible persons and control measures and conducted regular inspections and assessments. We implemented a “zerotolerance” approach to work safety hazards identified by investigation created hazard correction records specifying
correction requirements deadlines and responsible persons to ensure timely and thorough elimination of hazards and
provide a solid safety guarantee for the stable production and sustainable development of each subsidiary.Moreover we regularly review the work safety status of each enterprise of the Group and relevant stakeholders
implement work safety management requirements and rectify any problems identified in a timely manner. In addition
the Company requires each manufacturing enterprise to implement a safety responsibility system and strictly control
production processes. We identify and control danger points by upgrading equipment and introducing automation systems
to prevent work safety accidents caused by human errors and ensure the establishment of work safety. In particular
Ningxia Pharma’s work safety liability insurance covers all its employees.As at the end of the Reporting Period 6 manufacturing enterprises of the Group had conducted HAZOP (Hazard and
Operability) analysis.Laboratory safety management
We have established a biosafety committee implemented strict supervision of biological laboratory safety and developed
comprehensive biosafety management systems. We conduct quarterly self-inspections. Meanwhile the Company develops
contingency plans for biosafety accidents and organizes drills annually to ensure that relevant personnel are familiar
with handling procedures. In terms of biological laboratory management we strictly regulate personal protection sign
warning facility configuration and waste management. We require laboratory personnel to have regular check-ups and
maintain health records and equip the laboratory with sufficient emergency supplies and special equipment to fully ensure
experimental safety.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1431 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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9.4 OCCUPATIONAL HEALTH AND SAFETY (continued)
9.4.2 Work safety (continued)
Laboratory safety management (continued)
Additionally we have established documents such as the Training Management System. We conduct biosafety training
for personnel involved in experiments who are allowed to take up their jobs only after passing the appraisal. We also
conduct monthly training on job-specific operation knowledge to continuously improve the safety awareness and operation
skills of personnel and ensure effective implementation of laboratory safety management.During the Year Pharmaceutical Factory successfully passed the biosafety inspection of pathogenic microorganism
laboratories in Zhuhai in 2024 by the Health Bureau of Zhuhai.Case: Automatic foam fire suppression system project
In 2024 to further improve the safety assurance level of its tank farm Livzon Hecheng invested RMB1.25 million
to upgrade the fire safety of the tank farm by adding an automatic foam fire suppression system. This upgrade
included automatic fire alarm field devices that accurately detect fire hazard and promptly alert; automatic foam
sprinkler systems that rapidly activate during emergencies and provide cooling oxygen deprivation and chemical
suppression to the tank farm to effectively extinguish tank farm fires and incipient ground liquid fires; outdoor fixed
manual fire foam cannon monitors with long-range firefighting capabilities to safeguard against large-scale fires.Following project completion Livzon Hecheng’s fire alarm equipment can respond quickly to gain critical time for
emergency handling; the collaborative operation between sprinkler systems and fixed foam cannon monitors greatly
improves fire suppression efficiency. This upgrade effectively reduces the fire risks of Livzon Hecheng improves the
fire safety performance of the solvent tank farm provides reliable protection for solvent storage and handling and
supports stable production and operations of the company.Management and control of safety risks
We regularly identify and analyze hazard sources in production and R&D activities and products and services grade the
level of risks and formulate corresponding plans and measures for management and control based on the grading results.Safety emergency management
We prepare comprehensive contingency plans special contingency plans and on-site disposal plans covering all
employees conduct regular training and emergency drills for relevant personnel and further improve contingency plans
and disposal plans based on the drill results.Hazard investigation and management
We conduct regular hazard investigation for all factories of the Group. If a hazard is identified we require factories to
complete the correction within a limited period of time and to conduct regular review and appraisal of the factories.
144 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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9.4 OCCUPATIONAL HEALTH AND SAFETY (continued)
9.4.2 Work safety (continued)
Safety training and education
We prepare practical safety training materials according to job characteristics and needs conduct targeted safety
education and organize safety education and publicity for employees at multiple levels. Specifically we require personnel
who are newly recruited change positions and return to positions to attend pre-job training and they can only be
arranged to work after passing the assessment; we conduct qualification training for special operational personnel to
ensure that they work with certificates. At the same time we provide work safety training for all relevant personnel
involved in construction from external parties so as to ensure operation is in compliance with regulations.Safety culture promotion
In order to raise awareness of work safety awareness among all employees we regularly organize various theme activities
around work safety. We designate the 4th 14th and 24th days of each month as the safety reflection days of the Group
and conduct safety reflection activities. By identifying and addressing gaps in work safety activities along with summary
and reflection we actively mobilize the enthusiasm of employees to participate increase the safety awareness of all
employees and collectively promote the building of a safety culture.Case: Watching safety awareness videos and safety knowledge competition
In 2024 to strengthen employees’ understanding of the serious consequences of hazardous chemical accidents
Ningxia Pharma organized all its employees to watch “Safe Passage” and “Safety Awareness Video on MajorHazardous Chemical Accidents”. Based on real cases these educational videos visually demonstrated accident
processes and the resulting huge losses through archival footage. Ningxia Pharma arranged discussion sessions
guiding employees to deeply analyze the causes of accidents and summarize experiences and lessons based on their
work realities. Through this case-based approach Ningxia Pharma effectively strengthened employees’ safety red
line awareness and bottom-line awareness so that they would integrate safety concepts into every part of their
work.Additionally Ningxia Pharma held a work safety knowledge competition covering hazardous chemical storage
transportation usage standards work safety laws and regulations emergency rescue knowledge etc. further
stimulating employees’ proactive safety knowledge learning.Contractor safety management
Livzon is acutely aware of the importance of contractor safety management. During the Year we referenced more relevant
laws and standards issued by the State to update the Contractor Safety Management System thereby further improving
the applicability and completeness of the system.We implement safety management requirements with contractors. We provide safety training for all personnel involved
in construction from external parties supervise their construction establish safety files and conduct regular safety
performance appraisals to improve the safety management level of contractors.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1451 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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GREEN
OPERATION
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Livzon has taken environmental protection as its own responsibility adhering
to green and low-carbon development while actively fulfilling its corporate
social responsibility. Livzon strictly abides by the Environmental Protection Law
of the PRC and other related environmental laws and regulations. We have
revised the Environmental Occupational Health and Safety Management Policy
with reference to the standard requirements of the ISO 14001 Environmental
Management System and kept optimizing our environmental management
system and improving our environmental management levels and ability to
perform responsibilities. We have implemented low-carbon concepts in each
stage of production and operation in response to the national dual carbon goals
contributing to the sustainable development of society and the environment.At the same time we have established an EHS management system specifying
the responsibilities of EHS management at multiple levels and continuously
increased investment in environmental management. In addition we have
conducted practical activities such as energy conservation emission reduction
and environmental protection training to promote and implement environmental
protection awareness practice the concept of low-carbon development and
drive low-carbon green and high-quality development.We have a well-established environmental management system and conduct
coordinated management of wastewater waste gas waste and noise through
the EHS department. We continuously improve environmental management
effectiveness through continuous optimization of treatment processes and
regular monitoring and evaluation. To ensure that our management system
remains up-to-date we track the latest environmental regulations on a monthly
basis. Based on the actual operations of the Group we promptly adjust
and improve relevant systems and ensure that environmental management
requirements are fully implemented.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1471 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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Moreover the Company has established a series of comprehensive internal management systems for each key area of
environmental management (such as air emissions water discharges waste noise and energy) including the Procedures
for Air Emission Management the Procedures for Wastewater Management the Procedures for Solid Waste Management
the Procedures for Noise Emission Management the Procedures for Energy Management etc. and requires each
enterprise of the Group to strictly abide by and implement them. At the same time by signing environmental protection
target and responsibility statements manufacturing enterprises are aware of annual key environmental targets and specific
implementation plans and review and evaluate the achievement of their targets on a regular basis.During the Reporting Period there were no environmental pollution incidents or environmental administrative penalties
waste gas and wastewater were all discharged or reused after being treated to meet the discharge standards no
environmental monitoring items exceeded the standards and wastes were all disposed of or recycled in compliance with
regulations.During the Year Livzon’s investments in environmental protection are as follows:
Investment in maintenance of environmental protection operation RMB63.45 million
Investment in upgrade of environmental protection facilities RMB11.01 million
10.1 ENVIRONMENTAL MANAGEMENT SYSTEMLivzon always adheres to the EHS management policy of “compliance with laws and regulations prevention of riskscontinuous refinements and timely communication” keeps improving the environmental management system and
promotes the standardized and systematic development of the Group’s EHS work. By establishing and improving the
environmental management system we strictly control the discharge of pollutants and increase the efficiency of resource
utilization. At the same time we have established a comprehensive supervision and assessment mechanism to regularly
review the operation status of the environmental management system of each production base and assess the achievement
of environmental management indicators to ensure the continuous and effective operation of the environmental
management system.As at the end of the Reporting Period all manufacturing enterprises of the Group had established the internal
environmental management system (EMS). All manufacturing enterprises of the Group had been certified to the GB/T
24001/ISO 14001 Environmental Management System (EMS) (100% certification rate).
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10.1 ENVIRONMENTAL MANAGEMENT SYSTEM (continued)
10.1.1 Management structure
To ensure the efficient operation of environmental management system and continuous improvement of EHS management
performance we have established a hierarchical management structure clearly dividing EHS management responsibilities
to ensure that the primary responsibility is effectively implemented thereby providing a strong foundation for the further
promotion of EHS management of the Group.* Strategy level: The ESG Committee of the Board is responsible for establishing policies and systems related to
EHS such as environmental management and use of resources reviewing the performance on a regular basis and
reporting to the Board on the progress.* Management level: The production technology head office of the Company is responsible for the planning and
implementation of the overall EHS work and supervising and guiding EHS-related work of the subsidiaries.* Implementation level: The subsidiaries have EHS departments responsible for the implementation of energy
conservation and emission reduction three-waste (wastewater waste gas and solid waste) discharge management
climate risks management carbon emission management and control environmental protection technology
upgrade and investment assurance occupational health and work safety etc.
10.1.2 Certification
The Company has made active efforts to facilitate its subsidiaries to obtain ISO environmental management system
certifications implement cleaner production apply for accreditation of green factory etc. in order to strengthens
environmental management in a standardized and systematic manner and comprehensively improve the environmental
management level of its subsidiaries.As at the end of the Reporting Period all manufacturing enterprises of the Group had been certified to GB/T 24001-2016/
ISO 14001:2015 Environmental Management System (EMS) (100% certification rate).Among all manufacturing enterprises of the Group 10 had completed the cleaner production audit 3 had obtained the
certification for “National Green Factory” and 1 had obtained the certification for “Provincial Green Factory”.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1491 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.1 ENVIRONMENTAL MANAGEMENT SYSTEM (continued)
10.1.3 Regular audit
According to the requirements of ISO 14001 environmental management system each manufacturing enterprise of
the Group operates and maintains the effectiveness of the system in a method of “Plan – Do – Check – Act” (PDCA).Meanwhile we have established a sound supervision mechanism regularly conduct internal and external audits to assess
the operation status and effectiveness of the EHS management system of each subsidiary and accordingly develop targeted
improvement measures to further improve the EHS management level of the Group.Internal Audit
Livzon has established the EHS internal audit system and conducts regular environmental management audits on all
manufacturing enterprises of the Group. Audits mainly include contents such as EHS compliance implementation of the
“three-simultaneous” system operation of pollution treatment facilities etc.The frequency of internal audit is as follows:
* The production technology head office of the Company conducts as least 1 comprehensive EHS audit every year on
all manufacturing enterprises of the Group and continues to follow up on the improvement of each enterprise;
* The API business department of the Company conducts 3 to 4 EHS cross-checks every year for the API
manufacturing enterprises of the Group and continues to follow up on the improvement of each enterprise;
* All manufacturing enterprises of the Group conduct at least 1 EHS meeting and inspection at the corporate level
every month and rectify findings in a timely manner;
* All enterprises of the Group that have obtained the ISO management system certification conduct at least 1
EHS comprehensive internal audit every year and carry out management reviews according to the audit results.Accordingly the management of the Company evaluate and make improvement suggestions on the applicability
adequacy and effectiveness of the operation of the management system.External Audit
All of our manufacturing enterprises that have been certified to ISO 14001 have established a regular audit mechanism:
Independent third-party certification institutions conduct supervisory audits once a year and audits of recertification
(certificate renewal) once every three years so as to ensure the standardized and regulated operation of the environmental
management system.
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10.1 ENVIRONMENTAL MANAGEMENT SYSTEM (continued)
10.1.4 Compensation linked to ESG performance
We have established a mechanism that links ESG performance to compensation. We have included ESG indicators with
a 10% weighting into the management’s performance appraisal. Failure to meet ESG appraisal targets directly impacts
the annual performance bonuses of the management. In addition we extend ESG indicators to the operation performance
appraisal of our subsidiaries to ensure the effective implementation of the Group’s environmental management
requirements carbon neutrality goal and green and low-carbon commitments. The details of implementation are as
follows:
Appraisal mechanism for * Set an ESG ind icator (weighted at 10%) cover ing the
ESG Working Team achievement of environmental targets and carbon emission
reduction goals and ESG governance effectiveness in the
personal performance appraisal of the members of the ESG
Working Team.* Failure to meet ESG appraisal indicators will result in proportional
deductions from the annual performance bonuses.Appraisal mechanism for * Set ESG and EHS related appraisal indicators respectively in
EHS management and subsidiaries the operation performance of the head of the Company’s EHS
department the EHS management of each subsidiary and each
subsidiary which include environmental targets and carbon
emission reduction goals ESG governance and EHS performance.* The ESG appraisal of the head of the Company’s EHS department
carries a weight of 10% and the amount of EHS bonuses is
determined for subsidiaries based on the appraisal score.Special incentive mechanism for * Due to the relatively high amount of energy consumption and
API enterprises emissions of the API enterprises the Company has set up special
bonuses for API enterprises. Those that achieve the emission
reduction targets will receive rewards based on the set criteria so
as to encourage the API enterprises to actively engage in energy
conservation and emission reduction.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1511 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.1 ENVIRONMENTAL MANAGEMENT SYSTEM (continued)
10.1.5 Environmental risk management
In order to further strengthen the management and control of environmental risk the Company has formulated systems
including the Identification and Assessment Requirements of Environmental Factors the Guidelines for Management of
EHS Changes etc. Taking into account the requirements of ISO 14001 Environmental Management System we regularly
identify and review the environmental risk factors and optimize and improve risk control measures. By practicing
environmental management upgrading standards for environmental protection facilities and equipment and enhancing
emergency response capabilities for environmental emergencies we continuously strengthen our risk prevention and
control levels and comprehensively improve our environmental risk control capabilities.* Identification of major environmental factors: By conducting a comprehensive review of the environmental
factors that may be involved in production and operation activities and evaluating the risk levels with rating
methods we have formed a list of major environmental factors and developed corresponding management
strategies and control measures to minimize environmental risks and prevent the occurrence of environmental
accidents.Environmental Factors Identi cation Flow Chart
Energy consumption
Air emissions
Water consumption
Chemical consumption Products
Production and operation
Raw materials consumption activities of the Company Use of land
Common consumables
consumption Social interaction
Waste water discharge Solid waste production
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10.1 ENVIRONMENTAL MANAGEMENT SYSTEM (continued)
10.1.5 Environmental risk management (continued)
During the Year the Company deeply assessed and actively addressed potential environmental risks in production and
operations. To effectively prevent and respond to environmental risks the Company conducted a thorough environmental
risk assessment and taking into account production processes equipment facilities and management models the
Company accurately identified risks from both internal and external dimensions.* External environmental risks include damage to facilities and environmental protection equipment due to natural
disasters (e.g. rainstorms floods and earthquakes) and the impact of accidental emissions from surrounding
enterprises on the air quality and water bodies of the Company; internal environmental risks are predominantly
associated with production processes with a focus on the identification and evaluation of the storage
transportation and use of hazardous chemicals and the treatment of wastewater waste gas and solid waste.We have identified that environmental risks primarily stem from chemical leaks and abnormal waste discharge. For
example hazardous chemicals such as acetone methanol ethanol and ethyl acetate used in production if exposed to
fire sources high heat or static electricity may cause fires and produce accident wastewater and secondary pollutant
gases. If the accident wastewater is not properly treated it can severely pollute surrounding water bodies. A failure or
operation error in air emissions treatment facilities may lead to excessive emissions of volatile organic compounds (VOCs)
generating unpleasant odors that may affect the lives of surrounding residents.To address these possible environmental risks the Company takes a multi-pronged approach to ensure rule-based and
orderly environmental risk management. Specific measures on risk management and control:
* Conducting regular environment monitoring: Each of the Company’s manufacturing enterprises strictly
abides by relevant domestic laws and regulations and conducts regular environmental monitoring work based on
its actual conditions to have timely knowledge of the discharge status of pollutants. The monitoring results are
quickly disclosed to the public to ensure oversight by regulatory agencies and society.* Sufficient equipment and resource assurance: The Company is equipped with sufficient and applicable
emergency supplies. We have stocked materials for handling chemical leaks such as oil-absorbing mats sealing
materials and neutralizers as well as various protective equipment to ensure the safety of emergency responders.Additionally emergency supplies are regularly inspected maintained and updated to ensure they remain in good
standby condition. During the Year the Group’s total investment in environmental protection was approximately
RMB74.46 million.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1531 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.1 ENVIRONMENTAL MANAGEMENT SYSTEM (continued)
10.1.5 Environmental risk management (continued)
* Strengthening emergency response capabilities: Each manufacturing enterprise of Livzon has set up
an emergency response leading team and working team formulated the Contingency Plan for Environmental
Emergency which covers various potential environmental emergency scenarios and developed detailed emergency
response procedures such as emergency reporting command disposal personnel evacuation and environmental
monitoring. Furthermore we have established different response measures and resource allocation plans for
environmental emergencies of varying severity ensuring rapid and effective disposal in the event of an emergency
to minimize environmental damage. We conduct regular professional training and emergency drills to improve our
emergency response capabilities for crisis events.As at the end of the Reporting Period each manufacturing enterprise of the Group had prepared contingency plans
for environmental emergencies tailored to their specific circumstances established their own environmental emergency
response organizations developed environmental emergency response procedures equipped themselves with
comprehensive emergency disposal supplies and formulated effective emergency protective measures. The Company’s
contingency plans for environmental emergencies had been reviewed by experts and filed accordingly. Similarly the
Company’s environmental monitoring plans had been reviewed and approved by experts before being filed with regulatory
authorities with no major deficiencies identified.During the Year the Group did not experience any major environmental incidents nor did it receive any significant
administrative penalties or criminal liability from ecological and environmental departments or other relevant departments
due to environmental incidents.
10.2 ENVIRONMENTAL MANAGEMENT TARGETS
Livzon established and published the Environmental Management Targets of Livzon Group for 2021-2025 according to
the Reporting Guidance on Environmental KPIs of the ESG report issued by Hong Kong Stock Exchange with reference to
the management practices of domestic and overseas peers and combining its own operation characteristics in order to
achieve the Group’s refined management on pollutants discharge and use of resources. This document clearly regulates
the quantitative targets of each indicator and action plans which the Group will take to achieve the targets and specifies
the people in charge of each step.The production technology head office of the Company follows up the achievement of indicators of the Group and its
subsidiaries on a quarterly basis and the ESG Committee regularly reviews the environmental management strategy and
performance provides improvement suggestions and reports to the Board on a regular basis. Moreover the Company
based on set environmental management targets promotes and regularly checks pollutant emissions and discharge and
resource utilization.
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10.2 ENVIRONMENTAL MANAGEMENT TARGETS (continued)
Livzon’s Environmental Management Targets for 2024-2025 and Achievements in 2024
Item Indicator Targets for 2024-2025 Change in 2024 compared
with the base yearNote
Sulphur dioxide (SO2) Amount of emission per To decrease by 2.2% compared Up 57.12%
RMB10000 of output value with the previous year
Chemical Oxygen Amount of emission per To decrease by 2.2% compared Down 31.59%
Demand (CODcr) RMB10000 of output value with the previous year
Hazardous waste Amount of disposal per To decrease by 0.5% compared Down 13.05%
RMB10000 of output value with the previous year
Non-hazardous waste Amount of disposal per To decrease by 0.5% compared Down 12.89%
RMB10000 of output value with the previous year
Water Amount of consumption per To decrease by 3% compared Down 14.02%
RMB10000 of output value with the previous year
Electricity Amount of consumption per To decrease by 3% compared Down 2.67%
RMB10000 of output value with the previous year
Ammonia nitrogen Amount of emission per To decrease by 2.0% compared Down 39.63%
RMB10000 of output value with the previous year
VOCs Amount of emission per To decrease by 2.0% compared Down 7.35%
RMB10000 of output value with the previous year
Nitrogen oxides (NOX) Amount of emission per To decrease by 2.0% compared Up 5.64%
RMB10000 of output value with the previous year
Particulate matter Amount of emission per To decrease by 2.0% compared Down 45.91%
RMB10000 of output value with the previous year
Note: The base year for water electricity chemical oxygen demand (COD) sulfur dioxide and hazardous waste is 2020 while the
base year for the remaining five environmental management targets is 2021.To actively respond to the national dual-carbon goals of “achieving carbon peaking by 2030 and carbon neutrality by
2060” Livzon established the targets for carbon dioxide emission reduction and carbon neutrality (scope 1 & scope 2)
in 2021. In 2024 for the first time the Company conducted a scope 3 greenhouse gas inventory to thoroughly assess
carbon emissions in the upstream and downstream value chains of the Company and actively implement the concept of
low-carbon operations. During the Year Livzon Group’s total greenhouse gas emissions amounted to 2246725.29 tCO2e
with scope 1 and scope 2 emissions totaling 537229.11 tonnes and scope 3 emissions totaling 1709496.18 tonnes.
(Discrepancies between this inventorying result and Appendix 12.2 arise primarily from improved scope 1 emission source
coverage in this carbon inventory process including scope 1 emission sources such as fire extinguishers refrigeration
equipment and process-related sources that were previously excluded from the calculation).Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1551 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.2 ENVIRONMENTAL MANAGEMENT TARGETS (continued)
The Company’s carbon dioxide emission reduction targets and their achievement in the Year and carbon neutrality targets
are shown in the table below:
Indicator Targets
Carbon dioxide * 2024: To decrease amount of emission per RMB10000 of output value by 22% as compared with 2020
emissions (The target for 2024 was not met representing an actual decrease of 14% from 2020)
(Scope 1 &
scope 2) * 2025: To decrease amount of emission per RMB10000 of output value by 26% as compared with 2020
To achieve carbon neutrality by 2055
10.3 POLLUTANTS CONTROL
The Group strictly abides by environmental protection laws and regulations comprehensively controls the discharge and
emissions of pollutants strictly supervises waste gas wastewater solid waste etc. and takes measures such as reducing
and limiting production for heavy pollution weather. In addition for new construction modification and expansion
projects we strictly implement the environmental protection “Three-Simultaneous” system. We regularly engage third-
party institutions for environmental monitoring and proactively accept social supervision to make sure that pollutants are
treated in compliance with regulations and discharged after meeting the standards.According to the requirements of environmental information disclosure the Group reports on the discharge and emissions
of pollutants:
* Major pollutants: Regarding water pollutants we focus on monitoring key indicators such as chemical oxygen
demand five-day biochemical oxygen demand ammonia nitrogen suspended solids total nitrogen total
phosphorus and pH; the Group’s air pollutants include volatile organic compounds non-methane total
hydrocarbons nitrogen oxides particulate matter and sulfur dioxide.* Characteristic pollutants: Pollutants involved by the Group include dichloromethane hydrogen chloride
acetonitrile and volatile phenols.* Regarding the management of controlled substances under international environmental conventions based on
the Catalogue of Controlled Ozone Depleting Substances in China currently the Group mainly uses refrigerants
R22 (chlorodifluoromethane) and R123 (1 1-dichloro-222-trifluoroethane). During the Year 2.24 tonnes and
1.3 tonnes of these substances were replenished respectively both of which were consumed. The Group did not
directly discharge any controlled substances in the Catalogue.
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10.3 POLLUTANTS CONTROL (continued)
The Group attaches great importance to the potential impact of pollutant discharge on employees and local communities.We conduct in-depth analyses and develop comprehensive risk assessment and control plans. Through continuous
technological innovation strict environmental management and active risk prevention and control we have minimized
the potential adverse impacts of pollutant emissions and discharge on employees communities and the ecological
environment.* Regarding employees’ occupational health the waste gas generated during the pharmaceutical manufacturing
of the Group contains volatile organic compounds (VOCs) which may pose potential risks to employees’ health.Long-term exposure to these pollutants may lead to respiratory irritation lung diseases and other occupational
health issues. Therefore the Group has implemented strict occupational health protection measures including
advanced ventilation systems personal protective equipment and regular occupational health checks to minimize
the risk of occupational exposure for employees.* For the surrounding communities the Group’s production activities may impact the quality of air and water bodies.Therefore we have established a comprehensive environmental monitoring and treatment system to ensure that
pollutant emissions and discharge strictly comply with national environmental standards and regularly conduct
environmental impact assessments.* Regarding ecosystems pollutant emissions and discharge of the Group may lead to ecological risks such
as changes in soil pH and heavy metal contamination. The Company adopts advanced pollution treatment
technologies to ensure that waste gas wastewater and solid waste are effectively treated and minimize the
impact on surrounding ecosystems.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1571 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.3 POLLUTANTS CONTROL (continued)
10.3.1 Treatment of air emissions
Livzon strictly abides by relevant domestic laws and regulations. The Company has formulated the Procedures for Air
Emission Management as the guideline of air emission management for the whole Group. In addition in combination with
their own actual conditions each manufacturing enterprise of the Group has established and implemented specialized
management systems for air emission and continuously promotes air emission reduction on the foundation of ensuring
emission after reaching standards ensuring that the environmental management targets will be achieved successfully.At present the Company’s primary waste gas treatment methods include RTO incineration sodium hypochlorite spraying
water spraying biphasic hydrogen peroxide spraying micro-nano bubble spraying microbial treatment and other
processes or their combination. Each manufacturing enterprise of the Group has established air emission monitoring and
management systems enabling the monitoring and management of various air emissions.During the Year the manufacturing enterprises of the Group updated their waste gas treatment devices eliminated older
equipment with long operation life low treatment efficiency and high maintenance costs and introduced new equipment.On the basis of updating the main equipment the manufacturing enterprises tackled technological challenges associated
with difficult-to-treat components in waste gas. For organic waste gas treatment the Company adopted advanced
technologies such as condensation treatment. In addition we were equipped with efficient condensation equipment to
ensure the full condensation and recovery of organic waste gases and in combination with adsorption combustion and
other subsequent treatment processes we effectively reduced the content of organic pollutants in tail gas to meet the
national emissions standards. Additionally we conducted training on environmental awareness and professional skills
for relevant personnel to improve their air emission management concepts and professional capabilities. Through these
updates and specialized treatment measures the manufacturing enterprises made remarkable progress in air emissions
treatment.The Group’s air emissions treatment facilities are regularly inspected and maintained by professional teams. We engage
qualified third-party testing agencies to sample and test each air emission point monthly. After professional testing the
pollutant indicators of the Group’s air emissions are better than the national and local emission standard limits. Livzon’s
major air pollutants (i.e. VOCs nitrogen oxides sulphur dioxide and particulate matter) emission data for the Year are
detailed in Section 12.2 of the Report.
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10.3 POLLUTANTS CONTROL (continued)
10.3.1 Treatment of air emissions (continued)
Major Air Emissions Treatment Improvement Cases
Company Type of air Program description
name emissions
treatment
improvement
program
Fuzhou Fuxing Equipment During the Year Fuzhou Fuxing constructed a low-temperature refrigeration system
replacement and for organic solvent tail gas from the low-temperature water recycling workshop to
technological reduce the volume of organic solvent tail gas entering the RTO. Through technical
upgrade means such as low-temperature cooling and increased heat exchange surface
area the project reduces the volume of tail gas while also reducing solvent usage
resulting in annual solvent cost savings of approximately RMB350 million.Gutian Fuxing Equipment During the Year Gutian Fuxing improved its air emissions treatment processes by
replacement adding air emissions treatment procedures replacing facilities and equipment and
other means further improving air emissions treatment efficiency.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1591 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.3 POLLUTANTS CONTROL (continued)
10.3.2 Wastewater management
Livzon strictly abides by domestic laws and regulations concerning water pollution prevention and control. The Company
has formulated the Procedures for Wastewater Management as the guideline of wastewater management for the whole
Group. Taking into account their actual conditions each manufacturing enterprise has formulated and implemented
specialized management systems to continuously strengthen wastewater management and ensure compliant discharge
and continuously improving the proportion of reuse. Each manufacturing enterprise of the Group has designated a
specific responsible department for wastewater management. These responsible departments analyze the types discharge
concentrations discharge limits and other information of wastewater pollutants produced by each manufacturing
enterprise and lead the formulation of effective wastewater management measures taking into account the Company’s
wastewater management policies.We operate the wastewater treatment systems in strict accordance with their technological procedures. We conduct
daily inspections of each treatment step at the wastewater stations. All of our key pollutant discharge subsidiaries have
installed on-line wastewater monitoring instruments at the discharge outlets of wastewater connecting the on-line
systems with government supervising authorities to realize real-time monitoring and share the discharge data of processed
wastewater so as to monitor on a dynamic basis that wastewater is discharged after reaching the standards. Additionally
each manufacturing enterprise of the Group actively cooperates with local bureaus of ecology and environment in the
investigation of the implementation of pollutant discharge permits and regularly monitors discharged wastewater
according to the monitoring frequencies required by these permits. We also engage third-party testing agencies to test the
wastewater treatment performance to verify the effectiveness of our wastewater management. Through the combination
of perfect wastewater treatment facilities and professional operation teams the Group has achieved effective treatment
and control of wastewater during production.In wastewater treatment the Company strictly controls wastewater discharge at the source while continuously optimizing
wastewater treatment processes to improve wastewater treatment efficiency and effectively reduce wastewater discharge.Furthermore in response to the problem of high-concentration wastewater treatment the Company has introduced
pretreatment devices. The high-concentration wastewater first undergoes pretreatment to improve water quality through
a complex treatment process before entering subsequent treatment processes. This relieves the load pressure on later
treatment units and avoids system instability due to the impact of water quality thus improving the overall wastewater
treatment efficiency. The upgraded treatment system ensures stable treated water quality with pollutant indicators well
below national discharge standards. The Company also makes great efforts on technological breakthrough projects of
wastewater reuse to effectively reduce total wastewater discharge. Livzon’s wastewater and major water pollutants (i.e.COD and ammonia nitrogen) discharge data for the Year are detailed in Section 12.2 of the Report.
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10.3 POLLUTANTS CONTROL (continued)
10.3.2 Wastewater management (continued)
Major Wastewater Treatment Improvement Cases
Company Type of Program description
name wastewater
treatment
improvement
program
During the Year Tobramycin production involved a large amount of ammonia
water resulting in an average increase of 70 mg/L in ammonia nitrogen
concentration in the influent at the wastewater station. Xinbeijiang Pharma
Xinbeijiang Technological
constructed two new nitrogen and phosphorus removal tanks to reinforce the
Pharma upgrade
denitrification process improve the efficiency of ammonia nitrogen treatment
and ensure the discharge of ammonia nitrogen after reaching the standards at the
wastewater station.During the Year Jiaozuo Hecheng reduced the discharge of fluoride ions in
wastewater by making breakthroughs in wastewater treatment processes. This
Technological measure not only reduced the fluoride ion content in the workshop wastewater
Jiaozuo Hecheng
upgrade but also resulted in a monthly consumption reduction of 16.5 tonnes of quicklime
and 60 tonnes of polyaluminum chloride generating an economic benefit of
approximately RMB30000 per month.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1611 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
10.3 POLLUTANTS CONTROL (continued)
10.3.3 Waste management
The Group strictly complies with the requirements of relevant domestic laws and regulations. The Company has formulated
the Procedures for Solid Waste Management and the “Three-Waste” and Noise Management System as the guideline of
waste management for the whole Group. In addition in combination with their own actual conditions each manufacturing
enterprise of the Group has formulated and implemented specialized management systems for waste. Meanwhile each
manufacturing enterprise of the Group has established a responsible department for the prevention of environmental
pollution from solid waste. These departments are responsible for overseeing waste generation disposal transfer and
other processes to make sure all waste is appropriately disposed of.The Company attaches great importance to the standardized management of waste. In strict accordance with the national
laws and regulations the Company builds special temporary storages of waste and classifies and segregates waste for
temporary storage based on its nature hazard level etc. After temporary storage waste is transferred to qualified third
parties for treatment. The third parties utilize high-temperature incineration methods and develop advanced treatment
technologies to eliminate harmful substances in the waste.To reduce the waste discharge during the operation we conduct waste management improvement programs across all
operations of the Group every year. During the Year we increased investment in the application of relevant technologies
conducted in-depth research on waste resource utilization technologies and tried to reduce waste generation at the
source. Through enterprise-university-research institution cooperation the Company has established close partnerships
with university research teams to jointly explore treatment technologies for the harmlessness and reduction of mycelium
residue. At present some technological achievements have entered the small-scale test phase and are expected to
improve the efficiency of waste treatment and environmental protection in an innovative way. Meanwhile the Group
headquarters has conducted internal waste audits at each manufacturing enterprise assessing waste generation including
the types quantities treatment and disposal methods of waste generated by each department. The audits also check the
implementation of relevant management systems and the compliance of the relevant processes and operations with the
established management procedures especially the management and disposal of hazardous waste.In addition the Company has been working with qualified third parties to explore ways of resource utilization for coal
ash pharmaceutical residues and other wastes. Through the conversion of renewable resources we reduce emissions
alleviate environmental pressure achieve resource recycling and generate economic benefits. Livzon’s waste (including
non-hazardous waste and hazardous waste) disposal data for the Year are detailed in Section 12.2 of the Report.
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10.3 POLLUTANTS CONTROL (continued)
10.3.3 Waste management (continued)
Case: Alumina recycling
During the Year Fuzhou Fuxing conducted an alumina recycling project through experimental cooperation with
third parties. In the project waste alumina was processed into aluminum sulfate which will be used as a floctant
for water treatment. The project is in progress and once completed it will reduce the amount of hazardous waste
disposal in Fuzhou Fuxing while saving disposal costs.
10.3.4 Noise management
The Company has formulated the Procedures for Noise Emission Management and the “Three-waste” and Noise
Management System as the guideline of noise management for the whole Group. In addition in combination with their
own actual conditions each manufacturing enterprise has formulated and implemented noise management systems.All manufacturing enterprises of the Group conduct regular monitoring of noise inside the factory and continuously carry
out noise management work to reduce the noise pollution from the Group’s production and operation process and improve
the environmental quality.During the Year we phased out older equipment that generated excessive noise during operation and introduced a series
of new equipment using advanced noise reduction technology. In terms of noise source management the Company built
soundproof facilities in key areas. For example multi-layer composite soundproof walls were installed in specific areas
of the factory offering excellent sound absorption and insulation properties effectively preventing noise transmission.For some large equipment soundproof enclosures were specially built to greatly reduce the diffusion of noise into the
surrounding environment.Moreover the Company widely used sound-absorbing cotton damping soundproof panels and other efficient acoustic
materials in the soundproofing processes of buildings and equipment. These materials were applied to workshop walls
ceilings and key parts of equipment effectively absorbing sound energy and reducing noise intensity. These efforts not
only provided a quieter and more comfortable working environment for employees but also minimized the noise impact
on the surrounding communities.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1631 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.3 POLLUTANTS CONTROL (continued)
10.3.4 Noise management (continued)
Case: Noise management improvement measures
The fermentation projects I and II of Fuzhou Fuxing faced serious noise problems primarily caused by sterilization
steam discharge air discharge and airflow noise within the pipelines. To improve the working environment and
protect employees’ hearing health Fuzhou Fuxing implemented three-phase noise management:
In the first phase the small discharge gas collection system of the tank replenishment system was optimized and
directed into a sealed funnel and quick-connect clamps were used to reduce the noise of gas discharge; in the
second phase a pipeline network was laid on the second floor to connect the small discharge system of the air
filter and tail gas was centrally directed into a treatment system to avoid noise diffusion; in the third stage the
fermenter air pipes were soundproofed by wrapping them with heat and sound insulation cotton and covering them
with aluminum sheets.Through these measures the noise in Fuzhou Fuxing workshops was reduced by 11.5dB and 7.2dB respectively
which significantly improved the quality of the working environment.
10.3.5 Reducing environmental impact
When heavy pollution weather warnings occur Livzon proactively cooperates with requirements of local governments to
reduce production volume so as to reduce discharge of pollutants such as VOCs nitrogen oxides particulate matter and
sulphur dioxide and to minimize the impact of corporate operations on the environment as much as possible.Due to the excellent environmental management performances of the Group Xinbeijiang Pharma is rated as a VOC key
regulatory Class-A corporate which can carry out autonomous emission reduction in heavy pollution weathers. Jiaozuo
Hecheng is rated as a Class-B corporate in key industry performance rating under heavy pollution weather in Henan
Province which is not required to reduce production volume in yellow warning and is only required to conduct appropriate
emission reduction in orange or above warnings of heavy pollution weather according to the requirement of heavy
pollution weather control.
10.4 RESOURCE USE MANAGEMENT
Livzon integrates the concept of sustainable development into the entire production and operation process strictly
complies with laws and regulations related to energy conservation water resources and circular economy and has
established an energy management system. The Company has formulated the Procedures for Energy Management and
other management documents as the general guideline of resource use for the Group and requires each enterprise
to strictly implement them. The Company has set forth the Environmental Management Targets for 2021-2025 to
continuously optimize how to use resources through management improvement and technological upgrading. Taking into
account their actual conditions each manufacturing enterprise formulates resource management systems implements
systematic management regularly reviews the achievement of targets and comprehensively improves the efficiency of
resource use.
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10.4 RESOURCE USE MANAGEMENT (continued)
10.4.1 Water resource management
Livzon remains focused on effectively promoting water management and proactively addressing water risks throughout
its operations. We implement a stringent management system keep strengthening the awareness of preventing water
resource risks internally and conduct water resources management improvement programs across all operations of the
Group to reduce water consumption and to continuously improve the Group-wide capability to address water resource
risks.During the Reporting Period Livzon did not encounter any issue in sourcing water that is fit for purpose. Livzon’s water
consumption data for the Year are detailed in Section 12.2 of the Report.Water risk assessment
In order to identify the potential risks associated with access to water resource at all operations of the Group all
manufacturing enterprises of the Group conduct water risk assessment at least once a year. Using the WRI Aqueduct1 tool
we analyzed risks from 17 dimensions to identify potential risks and develop response plans. Based on the assessment
results we set water-saving targets and implemented supervisory measures to ensure the sustainable management of
water resources. We regularly report the assessment results and the implementation of improvement measures to the ESG
Committee ensuring the safety and sustainability of water resource management.In 2024 our specific assessment dimensions are as follows:
Livzon’s Water Risk Assessment Dimensions
Overall water risk Physical risks-quantity Water stress
Water depletion Interannual variability Seasonal variability
Groundwater table decline Riverine flood risk Coastal flood risk
Drought risk Physical risks-quality Untreated connected wastewater
Coastal eutrophication potential Regulatory and reputational risk Unimproved/no drinking water
Unimproved/no sanitation Peak country ESG risk index
1 Aqueduct a water risk atlas tool developed primarily by the World Resources Institute aids enterprises investors and
government departments in understanding current and future water risks in various regions through the use of open-source
data.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1651 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.4 RESOURCE USE MANAGEMENT (continued)
10.4.1 Water resource management (continued)
Water risk assessment (continued)
Based on the overall water risk scores for each operation from the WRI’s water stress analysis tool we classified the water
risks of each operation into five levels: low medium-low medium-high high and very high. The water risk assessment
results for the operations of the Group’s manufacturing enterprises in 2024 are as follows:
Water risk level Low Medium-low Medium-high High Very high
Number of operations 0 3 6 2 4
Water Resource Management Measures
To address potential risks and impacts related to water resources the Group has developed a series of management
measures focusing on five dimensions: water security water quality control emergency plan internal and external
monitoring and training and promotion. In water security we optimize production processes and upgrade water-saving
equipment to ensure efficient use of water resources. In water quality control we establish a water quality monitoring
system and we regularly test and ensure water safety. We have developed detailed contingency plans for natural disasters
such as floods droughts and high temperatures or emergencies such as extreme weather to ensure rapid response and
effective handling. At the same time we strengthen the transparency and compliance of water resource management
through a combination of internal supervision and external audits. In addition the Group regularly conducts water
resource management training to enhance employees’ awareness of water conservation and promotes the concept of
green water use through publicity activities.? Water resource recycling
Each manufacturing enterprise of the Group actively conducts projects of reclaimed water and cooling water recycling to
improve the utilization efficiency of water resources. Highlight cases are as follows:
Fuzhou Fuxing: environmental heavy water reuse program
During the Year Fuzhou Fuxing recycled the heavy water produced from the water production process. The heavy
water was used for the preparation of chemical agents for wastewater treatment in the wastewater station.After the implementation of the program 100 tonnes of heavy water can be recycled per day while reducing the
consumption of water resources.
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10.4 RESOURCE USE MANAGEMENT (continued)
10.4.1 Water resource management (continued)
Water Resource Management Measures (continued)
? Water consumption reduction
Each manufacturing enterprise continuously develops and optimizes water-efficient processes and equips themselves
with water-efficient facilities to reduce the water consumption in daily production and operations. Highlight cases are as
follows:
Fuzhou Fuxing: chromatography reclaimed water recycling program
During the Year Fuzhou Fuxing used ammonia wash water regenerated from chromatography for the acid washing
of some demineralization columns and adsorption columns. Upon completion the program can save an average of
80 tonnes of water per day.
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1671 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.4 RESOURCE USE MANAGEMENT (continued)
10.4.2 Energy management
Paying great attention to the conservation and consumption reduction of energy Livzon has formulated and strictly
implemented management systems such as the Procedures for Energy Management and the Procedures for Resources
Management. We keep improving our internal energy management system and implement programs to reduce energy
consumption and carbon emissions such as reduction of greenhouse gas emissions energy efficiency improvements and
use of renewable sources across all operations of the Group continuously strengthening energy management and control
levels.During the Year the Company actively promoted the transition to clean energy collaborating with wind power suppliers
to purchase renewable energy. These wind power sources are connected to the Company’s power grid through stable
transmission lines providing green power for production and operations which can effectively reduce carbon emissions
and promote green development.In terms of energy utilization the Company achieves efficient recycling of resources from multiple perspectives. For
example for the waste heat from air compressors high-efficiency heat exchangers and circulating pipelines are installed
to use the heat energy generated during the operation of air compressors to preheat production water and provide heating
for office areas; the heavy water produced by the water production system is recycled and used to prepare wastewater
treatment agents thus reducing the use of fresh water resources and lowering wastewater discharge. The Company also
installs differential pressure power generation equipment on steam transmission pipelines to generate electricity by using
the differential pressure of steam to achieve cascade utilization of energy.In addition for high power-consuming manufacturing enterprises that cannot yet fully transition to new energy sources
we employ advanced monitoring systems to assess energy conservation potential and perform measurement analysis and
appraisal of electricity use. In accordance with the national Catalogue of Obsolete Mechanical and Electrical Equipment
Eliminated due to High Energy Consumption we conduct comprehensive inspections to eliminate obsolete equipment and
use energy-efficient equipment to reduce energy consumption.Through innovative practices such as renewable energy utilization waste heat recovery and water resource recycling the
Company has achieved results in the field of circular economy laying a solid foundation for sustainable development of
the enterprise and setting a good example for the industry.As at the end of the Reporting Period the Company’s subsidiary Fuzhou Fuxing had been certified to ISO 50001:2018/
RB/T 114-2014 Energy Management System and Livzon Hecheng had been certified to GB/T 23331-2020/RB/T 114-2014
Energy Management System.Livzon’s energy consumption and major greenhouse gas emissions data for the Year are detailed in Section 12.2 of the
Report.
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10.4 RESOURCE USE MANAGEMENT (continued)
10.4.2 Energy management (continued)
Livzon’s Implemented or Planned Key Clean Energy Programs as at the end of 2024
Company Program Program Program description Description of effects
name name input
(RMB’0000)
Livzon Photovoltaic 180 The program uses monocrystalline silicon To be implemented the
Hecheng power solar cells as photovoltaic conversion program will generate
generation devices. Photovoltaic power generation 500000 kWh of electricity
systems are installed atop the carport and per year upon completion.warehouse roofs while the corresponding
access system is configured according to the
construction site plan. The program will be
funded and constructed by Livzon Hecheng
itself and all electricity will be generated
for its own use.Sichuan Photovoltaic 600 In the program photovoltaic power Implementation commenced
Guangda power generation systems are installed atop the the program will generate
generation carport and plant roofs. The program was 2170000 kWh of electricity
funded and constructed by a third party per year upon completion.who gave Sichuan Guangda electricity
concessions with a fixed unit price of
RMB0.49/kWh.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1691 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.4 RESOURCE USE MANAGEMENT (continued)
10.4.3 Material management
True to the principle of minimizing resource consumption and pollutant discharge at source Livzon continuously
optimizes the use of materials. In the process of product manufacturing we promote the recycling of industrial materials
through technological transformation to effectively improve the utilization of production resources. At the same time we
continuously improve our product packaging design make active efforts such as recycling of green packaging boxes and
simplify packaging materials provided that market demand and production requirements are met achieving a win-win
result of improving economic benefits and conserving resources.Livzon’s data of packaging material use for the Year are detailed in Section 12.2 of the Report.Case: Program to improve ethanol recovery rate
During the Year Sichuan Guangda improved the ethanol recovery rate by implementing technological upgrade
of ethanol distillation columns single-effect concentrators and distillation residue. After the completion of the
program the ethanol recovery rate increased from 80% to 92%. Sichuan Guangda can save approximately
RMB430000 in ethanol costs annually significantly reducing ethanol consumption.
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10.5 ADDRESSING CLIMATE CHANGE
Globally climate change has become one of the major risks. A constant threat to human health it also poses a challengeto business operations. As a pharmaceutical company Livzon keeps in mind the mission of “prioritizing the quality of lifeof patients” and actively fulfills its social responsibilities. We help mitigate global climate change by reducing greenhouse
gas emissions and are also focused on addressing the health problems caused by climate change in order to minimize
the negative impact of climate change on the environment and human health.During the Year we managed and disclosed climate change impacts in accordance with the recommendations of the Task
Force on Climate-related Financial Disclosures (“TCFD”) and completed the 2024 CDP Climate Change Questionnaire.
10.5.1 Governance
Attaching great importance to climate-related risks and opportunities Livzon has established a governance structure and
a working mechanism for climate-related matters where managing climate-related risks is integrated into the Group’s
overall risk management.The ESG Committee is responsible for leading climate change management reporting to the Board at least once a year
overseeing the identification assessment and management of climate-related risks and opportunities developing and
overseeing the implementation of climate targets and response plans and integrating them into the Company’s long-term
development strategy.As the executive body of the ESG Committee the ESG Working Team is responsible for collaborating with each
department unit and subsidiary of the Company to fully implement the management of climate change issues regularly
sorting out and summarizing the progress and results of the Group’s related work and reporting to the ESG Committee.The production technology head office and the general managers of subsidiaries of the Company are responsible
for managing and monitoring the implementation of climate-related work. The general managers of each subsidiary
advance and supervise the joint implementation of climate-related work by the functional departments of their respective
enterprises and ensure effective communication and action at the implementation level.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1711 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.1 Governance (continued)
Board of Directors
ESG Committee
ESG Working Team
Livzon’s
Climate Production technology head of ce of the Company
Governance
Framework General managers of each subsidiary of the Company
Functional departments:
production departments quality departments
supply chain departments nance departments
market development departments EHS departments
and other relevant departments
10.5.2 Strategy
Livzon strives to fully integrate climate risks into the Group’s ESG risk management system while seizing the development
opportunities presented by climate change. We conduct a detailed analysis of the financial impact of related risks and
opportunities and ensure that climate change issues are thoroughly considered in the Company’s strategic decisions.
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Introduction to climate strategy and scenario analysis
During the Reporting Period the Group conducted a comprehensive assessment of the climate change risks (including
physical risks and transition risks) and opportunities facing its business with full reference to the recommendations of the
TCFD. Meanwhile the Group conducted climate scenario analysis to assess the adaptability of various parts of its value
chain to climate scenarios the materiality of climate-related risks and the possible impact on the Group of potential
opportunities in the process of transitioning to a lower emissions future.Low-emission scenarios: SSP 1-2.6 and IEA NZE 2050
In assessing physical risks we have selected the climate scenario of SSP 1-2.6. This scenario envisions a sustainable
society dominated by clean energy where countries recognize the severity of climate change intensify climate actions
and enact strict climate policies striving to reduce carbon emissions and keep global warming well below 2oC.With technological progress and increased public awareness the world transitions to lower carbons and low energy
consumption greatly reducing carbon dioxide emissions. Despite the slow pace of emissions reduction net-zero emissions
could be achieved after 2050 and the temperature increase of within 1.8o C is expected to be achieved by 2055 a time
span that aligns with the Company’s goal of achieving operational carbon neutrality by 2055.In assessing transition risks we have selected the scenario of IEA NZE 2050 where the global community strives to
achieve the net-zero emissions target by 2050. Governments and industries take proactive climate actions developing
and implementing a series of new climate policies that promote the widespread application of clean energy and the
improvement of energy efficiency. Technological innovation and increased public awareness facilitate the transition
of enterprises to a low-carbon economy leading to a significant reduction in global CO2 emissions. Despite potential
challenges in the emissions reduction process net-zero emissions will eventually be achieved by 2050. By 2100 there is
at least a 50% probability that the global average temperature increase will be limited to 1.5oC.High-emission scenarios: SSP 5-8.5 and IEA STEPS
In assessing physical risks we have selected the scenario of SSP 5-8.5 which follows a “business as usual” emission
pathway focuses on the climate impacts of physical risk factors and involves no strict climate policies issued by countries.Under this scenario global temperatures are expected to rise by more than 2.5oC by 2055 potentially leading to sea level
rise changes in weather patterns and more intense and frequent extreme weather events.In assessing transition risks we have selected the scenario of IEA STEPS which reflects the global energy and climate
development pathways based on current policies. In this scenario governments promote the optimization of energy
structures and the development of clean energy technologies according to existing policy frameworks and plans. The STEPS
scenario which can be used to assess the potential and limitations of current policies in achieving the net-zero emissions
target by 2050 represents a more gradual pace of emissions reduction than the scenario of NZE 2050. Global CO2
emissions are reduced in this scenario but more time and effort will be needed to achieve the same emissions reduction
as in the scenario of NZE 2050. By 2100 there is a 50% probability that the global average temperature increase will be
limited to 2.4oC.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1731 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Major uncertainty factors
Low-emission scenarios
1. Policy continuity doubts: Although countries establish active emission reduction policies in the short term
changes in political landscapes may lead new governments to be influenced by economic interest groups causing
them to adjust or abandon existing policies. For example some countries influenced by lobbying from traditional
energy industries reduce renewable energy subsidies hindering project progress.
2. Risk of technological breakthrough delays: The research and development of renewable energy technologies
is full of uncertainties. Key technologies such as efficient solar cell materials and long-life energy storage batteries
may fail to overcome challenges on time delaying energy transition. Even with technological breakthroughs
funding shortages and market entry restrictions could impede their commercial promotion.
3. Obstacles to global cooperation: Addressing climate change requires close cooperation between countries.
However there are big differences between developed and developing countries in distribution of carbon emission
reduction responsibility technology sharing and financial assistance. The game of interests can easily hinder
cooperation threatening the achievement of global emission reduction targets.High-emission scenarios
1. Geopolitical shocks: Geopolitical conflicts can cause fluctuations in the global energy market. Wars in major oil-
producing countries can cut off oil supply and drive up oil prices. In the short term countries due to difficulties in
energy transition may have to increase the extraction of fossil energy sources such as coal exacerbating carbon
emissions.
2. Unexpected technological breakthroughs: Even though overall technological development may be slow
unexpected breakthroughs may still occur in certain key areas. For example if low-cost high-efficiency carbon
capture and storage technologies are rapidly applied on a large scale they could change the high-emission energy
production model and reverse the emissions trend.
3. Public awareness shift: As the impacts of climate change intensify public awareness of environmental
protection may rapidly awaken creating strong public opinion pressure. This will push governments to increase
environmental protection investment and carbon emission regulation while businesses will adjust strategies to
reduce emissions due to changes in consumer preferences.
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Major uncertainty factors (continued)
High-emission scenarios (continued)
At the same time with respect to the assumptions regarding carbon emissions pricing in each scenario we are not
currently impacted by carbon emissions pricing but a significant increase in the prices of carbon emissions under these
scenarios may influence our expenditures through value chain transmission. Therefore we still consider carbon emissions
pricing in our scenario analysis and incorporate these considerations into our climate strategy. While improving our energy
efficiency comprehensively we will continue to increase the proportion of renewable energy usage thereby reducing
carbon emissions.In addition based on the above scenario analysis we also summarize the significant economic social and environmental
impacts of climate change factors:
Economic impacts Economic impacts mainly manifest in policy uncertainty technological breakthrough delays
and obstacles to global cooperation. Policy uncertainty may lead to instability in renewable
energy project investments increasing operating costs for enterprises. Technological
breakthrough delays could delay the energy transition leading to increased reliance on
traditional energy and higher operating costs for enterprises. Obstacles to global cooperation
may affect international supply chains and market expansion for enterprises. Moreover
the carbon emissions pricing could significantly rise in the future impacting corporate
expenditures through value chain transmission and increasing operational pressure.Social impacts In terms of social impacts climate change may lead to shifts in public awareness and
policy adjustments impacting social structures. Policy adjustments may cause shifts in the
employment structure of the traditional energy industry with employees needing to transition
to the renewable energy sector. The rapid awakening of public awareness of environmental
protection may create public opinion pressure pushing enterprises to adjust production
methods to suit consumer preferences. In addition climate change may trigger extreme
weather events increasing social instability and affecting the stability of corporate supply
chains.Environmental impacts In terms of environmental impacts climate change is directly related to the sustainable
development of enterprises. In low-emission scenarios technological breakthrough delays
may result in slow development of renewable energy causing enterprises to still rely on fossil
energy increasing carbon emissions and raising environmental pressure. In high-emission
scenarios geopolitical conflicts may lead to increased fossil energy extraction further
exacerbating carbon emissions and environmental destruction.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1751 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities
In 2024 we rated the climate risks and opportunities in different scenarios from the dimensions of “impact level”
and “expected time of occurrence”. Based on the climate score the impact levels of climate risks and opportunities
were classified into five levels: high medium-high medium medium-low and low. For the climate-related risks and
opportunities that significantly impact the Group we developed and implemented specific action plans.
1. Physical Risk Impact Analysis and Response Measures
Risk Type Risk Name Climate Score in Expected
Different Scenarios Time of Risk
Occurrence
Low-emission High-emission
Scenarios Scenarios
Physical risks Acute Typhoons
Floods Low Medium Short-term
Rainstorms
Heatwaves/Cold waves Low Medium-low Short-term
Drought Low Low Medium-term
Chronic Rising mean temperatures Low Medium-low Long-term
Air pollution Low Medium-low Medium-term
Lack of water Low Low Short-term
Humid air Low Low Medium-term
Note: Time dimension (expected time of risk occurrence): short-term (0-3 years) medium-term (3-10 years) long-term (10-30 years)
176 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
1. Physical Risk Impact Analysis and Response Measures (continued)
Acute-Extreme weather (typhoons floods rainstorms)
Risk description:
The Group’s production bases are widely distributed in the regions of northwestern southwestern southern eastern and
central China. Extreme weather events caused by climate change include but are not limited to typhoons rainstorms
droughts and floods. Under the 1.5oC global warming scenario the frequency of 1-in-20-year heavy precipitation events
increases by 10% and the frequency of 1-in-100-year heavy precipitation events increases by 20%; under the 2oC global
warming scenario the frequency of 1-in-20-year heavy precipitation events increases by 22% and the frequency of 1-in-
100-year heavy precipitation events increases by more than 45%.
Risk impacts:
Natural disasters such as rainstorms floods and strong typhoons may have lasting impacts on the Group. During extreme
weather events transportation of raw materials and products will be impeded employee commutes will be inconvenient
and risks of power and water outages and suspended steam supply could also arise. For example some of the Group’s
production bases located in coastal cities are affected by tropical air currents in the northern hemisphere. From May to
October several typhoons may potentially make landfall nearby leading to production stoppages and property losses. In
addition during the rainy season there may be several instances of rainfall at the red alert level for rainstorms causing
impediments to the transportation of production materials inconvenience to employee commutes and damage to
corporate assets thereby affecting production schedules and increasing facility maintenance costs.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1771 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
1. Physical Risk Impact Analysis and Response Measures (continued)
Acute-Extreme weather (typhoons floods rainstorms) (continued)
Response measures:
? Emergency system development: Develop systems such as the Contingency Plans for Extreme Weather establish
a contingency command system and set up an emergency office with defined responsibilities of personnel who
coordinate with production departments for safety inspections and logistics departments for material support.? Response to extreme weather
* Before extreme weather events: monitor the weather implement safety inspection corrections provide
protective and emergency equipment and make arrangements for personnel attendance material
transportation and production and delivery.* During extreme weather events: reduce production stop outdoor operations shut down as needed
arrange for shift duty and ensure personnel safety and sufficient supplies.* After extreme weather events: assess the loss in time summarize the experience and speed up the
resumption of production.? Fixed asset protection: regularly inspect and maintain equipment and facilities insure assets in high-risk locations
and take additional protective measures to reduce force majeure losses.? Water quality safety management: Use water purification system to ensure the safety of production water and
regularly test the quality of domestic and drinking water.
178 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
1. Physical Risk Impact Analysis and Response Measures (continued)
Acute-Extreme weather (heatwaves cold waves)
Risk description:
Due to human activities the probability of cold wave occurrences has decreased to a certain extent but there is an
increasing trend in intensity. Cold waves can bring drastic temperature drops strong winds rain and snow frost and
other disasters impeding the Group’s raw material production logistics transportation power operation etc. Meanwhile
heatwaves and heavy precipitation-heatwave combined extreme events are becoming more frequent and intense in the
context of global warming. This leads to an increase in residential electricity loads which could cause industrial electricity
restrictions for our enterprises during certain periods.Risk impacts:
Under extreme heat the Group may need to enhance ventilation and cooling in production plants and offices resulting in
higher energy consumption and operating costs; meanwhile the normal production may be impacted by power outages
due to possible peak demand on the power grid. In extreme cold weather the Group may increase demand for heating in
production plants and offices resulting in higher energy consumption and operating costs; road icing due to cold weather
may lead to insufficient supply of raw materials directly resulting in production delays or stagnation; dry weather easily
causes fires explosions spills poisonings and other accidents; extremely low temperature may cause property losses
such as equipment failure and increase maintenance costs for various facilities. Moreover cold waves or heatwaves may
increase the severity and scope of diseases such as cardiovascular disease malaria or heat stroke threatening employees’
health.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1791 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
1. Physical Risk Impact Analysis and Response Measures (continued)
Acute-Extreme weather (heatwaves cold waves) (continued)
Response measures:
? Energy management: make arrangements for off-peak power use before peak demand and prepare backup energy
and contingency plans.? Hazardous material management: in summer schedule deliveries for hazardous materials to avoid the high
temperature period and reduce the risk of fire.? Supply chain management: analyze supplier risks develop inventory strategies for key raw materials and
strengthen cooperation.? Safety protection and inspection: implement preventive measures provide protective equipment and set up
warning signs; conduct regular inspections of equipment such as boilers and slippery areas and require all plants
to maintain winter insulation to prevent freezing damage to equipment.? Accident prevention: Develop contingency plans for accidents such as fires and explosions.
180 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions index
10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
1. Physical Risk Impact Analysis and Response Measures (continued)
Chronic-Lack of water
Risk description:
The Group’s production process requires a significant amount of water resources for multiple steps such as raw material
processing product synthesis and equipment cleaning. As the issue of global water scarcity becomes increasingly severe
especially in certain arid and water-stressed regions the impact of water scarcity risks on production stability and cost
control for pharmaceutical enterprises is becoming more pronounced.Risk impacts:
The Group’s water sources include surface water and groundwater. Water scarcity may force us to scale down or halt
production or take additional water resource management measures such as recycling water resources and applying
water efficiency technologies which may result in increased production costs or reduced operating income. At the same
time the Group’s supply chain may be dependent on water resources in certain regions and water scarcity risks may lead
to instable supply of critical raw materials affecting the stability of the entire supply chain.Response measures:
? Risk assessment and response: continually conduct water risk assessments for the Group’s manufacturing
enterprises set reasonable water conservation targets and countermeasures and take and implement improvement
measures (for details please refer to Section “10.4.1 Water resource management” in this chapter).? Dynamic monitoring and emergency response: monitor geographic and climatic information and initiate
contingency plans when the water levels reach the risk line.? Water usage control: set water conservation targets reduce fresh water consumption and increase wastewater
reuse.? System development: Establish and improve the water resources management system and appraisal system
develop contingency plans and prepare buffer production water tanks.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1811 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
1. Physical Risk Impact Analysis and Response Measures (continued)
Chronic-Rising mean temperatures
Risk description:
Analysis of the China Meteorological Administration’s global surface temperature dataset shows that global warming has
continued since 2015 with records for the “hottest year on record” continually being broken. Rising mean temperatures
caused by global warming may pose a series of challenges to the production activities raw material supply product
quality control and employee health and safety of pharmaceutical enterprises. Temperature changes may impact the
production processes storage conditions transportation chain and stability of drug efficacy especially for temperature-
sensitive drugs and biological products.Risk impacts:
Temperature changes may impact the synthesis and production processes of certain drugs which requires adjustments to
production parameters or addition of temperature control measures thereby increasing production costs. In some regions
experiencing high temperatures continuous temperature rise requires the Group to enhance ventilation and cooling
measures in production plants and offices resulting in higher energy consumption and operating costs. It also reduces
production efficiency due to increased likelihood of heat stroke and other sudden heat-related illnesses among employees.Response measures:
? Energy-saving improvement: improve air-conditioning and ventilation systems in production plants and offices for
energy conservation to increase energy efficiency.? Employee care: provide employees with adequate supplies for heatstroke prevention in summer and arrange
annual health check-ups.? Safety training: include heat response knowledge in employee training and conduct emergency drills for heat
stroke and other heat-related illnesses.? Work safety: avoid working outdoors at midday in hot weather to ensure work safety.? Power management: Plan for off-peak power use in advance.
182 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions index
10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
2. Transition Risk Impact Analysis and Response Measures
Risk Type Risk Name Climate Score in Expected
Different Scenarios Time of Risk
Occurrence
Low-emission High-emission
Scenarios Scenarios
Transition risks Policy and Legal Enhanced mandates on
and regulation of existing Low Low Medium-term
products and services
Risk of litigation Low Low Medium-term
Technology Substitution of existing
products and services with Low Low Medium-term
lower emissions options
Unsuccessful investment in
Low Low Medium-term
new technologies
Costs to transition
to lower emissions Low Low Medium-term
technology
Markets Changing customer
Low Low Short-term
behavior
Uncertainty in market
Low Low Long-term
signals
Increased cost of raw
Low Medium-low Short-term
materials
Reputation Stakeholder concern or
negative stakeholder Low Low Short-term
feedback
Stigmatization of sector Low Low Medium-term
Note: Time dimension (expected time of risk occurrence): short-term (0-3 years) medium-term (3-10 years) long-term (10-30 years)
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1831 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
this report message the company governance compliance healthcare
10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
2. Transition Risk Impact Analysis and Response Measures (continued)
Policy and Legal-Increased pricing of GHG emissions
Risk description:
The Group has not yet been included in the industries covered by the national emissions trading system and has set
emission reduction targets to achieve carbon neutrality by 2055. In a future low-emission scenario if the country
continues to promote stricter emission reduction policies for which the Group is likely to be included into the carbon
quota trading market the Group may be affected by carbon quotas and need to take more aggressive emission reduction
measures or utilize carbon emission rights trading to ensure greenhouse gas emission compliance.Risk impacts:
As the pricing of greenhouse gas emission rights increases the Group’s expenditures in carbon trading may continue to
rise impacting the Group’s financial performance. Also the increased pricing of carbon emissions will have a significant
impact on the power and chemical industries resulting in rising energy prices or short supply of raw materials which will
indirectly increase the Group’s operating costs.Response measures:
? Strategic planning and management: establish a greenhouse gas emission management framework and define
energy conservation and consumption reduction targets and carbon emission reduction targets.? Production technology innovation: improve production efficiency and the yield of products through technological
upgrading thus reducing the raw material input and energy consumption per unit of product.? Operational energy efficiency control: conduct a comprehensive review of energy-consuming equipment and
energy usage in production and operations replace or upgrade high-energy-consuming equipment for energy
conservation and strengthen energy control.? Resource recycling: promote resource recycling install facilities for reclaimed water reuse alcohol waste liquid
recycling etc. and carry out acid-base recovery projects to achieve efficient resource circulation.? Energy structure optimization: promote projects such as photovoltaic power generation and increase the share of
clean and renewable energy such as purchasing wind power and obtaining green electricity certificates.
184 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
2. Transition Risk Impact Analysis and Response Measures (continued)
Policy and Legal–Environmental mandates on and regulation of existing products
Risk description:
Currently China has introduced policies and regulations such as the Action Plan for Carbon Dioxide Peaking Before 2030
and the 14th Five-Year Plan for Development of Pharmaceutical Industry. In the future as domestic and international
carbon emission trading becomes interconnected and related efforts continue to deepen more detailed implementation
rules for coordinated emission reduction of greenhouse gases and other pollutants may be introduced in environmental
pollution prevention and control.Risk impacts:
Stricter environmental policies in the future may lead to write-offs asset impairment and early retirement of existing
assets and may also increase related insurance costs. Meanwhile to meet policy requirements the Group may need to
invest in R&D of new technologies and new processes of low energy consumption thus increasing R&D expenditures;
alternatively due to policy requirements the Group may need to purchase new equipment thus increasing capital costs.Moreover environmental compliance costs may also rise.Response measures:
? Business product optimization: replace high-energy-consuming high-polluting low-value-added products with
low-energy-consuming low-polluting high-value products to reduce regulatory impact.? Carbon reduction in transportation: increase loading rates use more new energy for transportation and control
cost increases caused by increased carbon emission pricing.? Energy efficiency improvement: assess energy conservation status such as performance rating for heavy pollution
weather conduct on-site surveys develop correction plans and work with third-parties to prepare rating plans so
as to reduce energy costs and avoid policy risks.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1851 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
2. Transition Risk Impact Analysis and Response Measures (continued)
Technology-Unsuccessful investment in new technologies
Risk description:
In the process of responding to climate change and reducing environmental impacts the Group may need to invest in
new technologies and production processes such as more environmentally friendly raw materials more energy-efficient
production equipment or lower emissions logistics solutions. These investments are aimed at reducing the carbon
footprint of the enterprise and complying with increasingly stringent environmental regulations. However the R&D
and implementation of these new technologies carry uncertainties and the investments may fail due to failure of these
technologies to achieve expected outcomes low market acceptance cost overruns or extended implementation timelines.Risk impacts:
The capital investments associated with technology development new procedures and new processes may result in
higher product costs and the risk of losing some market share due to price disadvantages. Meanwhile investing in new
technologies requires substantial R&D capital input with uncertainties as to their effective conversion into productivity
and given the long technology replacement cycles may affect the production capacity of existing products; the
introduction of new technologies may also require the elimination of old equipment leading to write-offs and early
retirement of existing assets. Additionally if customers do not recognize new processes after technology reform it may
lead to reduced revenue from possible reduced demand for products.Response measures:
? R&D innovation: Accelerate the R&D of new technologies and intensify marketing efforts for new products that
apply new technologies to develop new growth points of profit.? Upgrading: Modify and refine old products continuously optimize material processes develop green and lower
emissions production techniques reduce production costs and increase profit margins.? Parallel processing: Operate new technology and old processes at the same time to avoid the slow sales of
products caused by technology update.? Risk prevention and control: when investing in new technologies or transition fully evaluate input-output and
feasibility select mature technologies conduct pilot applications and control risks through small pilot and batch
tests.? Employee training: Provide training on new technology/process operation to help employees become familiar with
the new process.
186 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions index
10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
2. Transition Risk Impact Analysis and Response Measures (continued)
Market-Changes in raw material costs
Risk description:
The Group’s raw materials involve a variety of types including chemical raw materials biomaterials APIs and traditional
Chinese medicinal materials. During periods of heat in summer and cold in winter or under extreme weather conditions
the production of some suppliers of raw materials and auxiliary materials may be restricted resulting in production
reductions or shutdowns which could potentially lead to shortages and price increases for some materials supplied to
the Group. Meanwhile under the influence of climate change global energy transition etc. the prices of energy sources
water and raw materials may fluctuate and some biological raw materials are hardly available and some raw material
suppliers are closing down; climate change may also turn essential resources for production into scarce resources.Risk impacts:
With climate change and energy transition undertaken by countries in response to climate change the yield and quality of
raw materials for the Group’s products may be affected by factors such as extreme weather pests and energy shortages
resulting in insufficient raw material supplies and higher prices thereby raising the Group’s production costs.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1871 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
2. Transition Risk Impact Analysis and Response Measures (continued)
Market-Changes in raw material costs (continued)
Response measures:
? Technological and resource innovation: actively carry out technological innovation and identify alternative raw
materials and energy sources; improve production technology to promote product yield reduce consumption of
raw materials and energy sources and control costs.? Innovative cooperation models: explore new cooperation models invest in the joint construction of cultivation
bases to ensure raw material quality and supply and stabilize prices.? Supplier management: regularly assess supplier risks and increase the inventory from key suppliers. Sign long-term
contracts to stabilize bulk raw material prices develop multiple alternative suppliers and reduce dependence on a
single supplier.? Raw material reserves: reserve raw materials in advance according to market trends. For materials with large
consumption and long shelf life monitor their prices stockpile in advance or sign annual agreements to prevent
supply disruptions.? Energy structure adjustment: increase electricity generated from renewable energy to address possible rising
electricity costs due to increased coal prices.? Packaging optimization: stay informed about new eco-friendly materials select those with a cost advantage
optimize packaging forms and improve packaging efficiency using automated equipment.
188 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
2. Transition Risk Impact Analysis and Response Measures (continued)
Market-Uncertainty in market signals
Risk description:
Given climate change and its broad socioeconomic impacts uncertainties related to market demand regulatory
environments competitive landscapes and technological advancements may increase. For example evolving policies
and regulations aimed at addressing climate change could affect the manufacture packaging and distribution of
pharmaceutical products.Risk impacts:
Under the influence of climate change or national carbon peaking and carbon neutrality policy sudden power and water
rationing and outages and higher electricity prices could occur potentially reducing product output and thereby disrupting
normal production and timely supply to customers. Moreover raw material prices may rise or supplies become delayed
due to power and water rationing and outages and sudden increases in electricity prices leading to increased production
costs.Response measures:
? Information monitoring: keep a close eye on market trends and energy policies to ensure timely access to
information.? Emergency preparedness: develop contingency plans and make arrangements to reduce the impact of sudden
power/water rationing.? Collaborative response: Establish a communication mechanism with various departments of power supply and
distribution and establish systems for emergency response to power outages. Allocate emergency generators and
emergency pools and adopt off-peak power use when electricity prices rise to cope with the change of policies
such as staggered power outages and emission restrictions.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1891 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
2. Transition Risk Impact Analysis and Response Measures (continued)
Market and reputation-Changing customer behavior/stakeholder concern or negative stakeholder
feedback
Risk description:
As public awareness of climate change and environmental protection increases customer requirements and preferences for
pharmaceuticals and services may also evolve in the future. In a low-emission scenario in the future an increasing number
of customers are likely to gradually prefer pharmaceutical enterprises and their products that have a lower environmental
impact and use sustainable production methods. At the same time in a low-emission scenario future stakeholders other
than customers may have higher expectations of the Group’s environmental performance.Risk impacts:
In a low-emission scenario in the future as regulations and requirements on carbon emissions tighten gradually
customers’ requirement for lower emissions products or the consideration of ESG performance as a review point for
cooperation may lead to decreased demand for existing products and retirement of inventories. As the Group’s ESG
performance has attracted great attention from the capital markets any ESG downgrade and reputational damage may
result in reduced capital availability. The Group’s production sites are exposed to reputational damage in the event of
complaints from residents. In terms of partnerships negative impacts on workforce management and planning may lead
to reduced revenue or increased costs. Failure to promptly address ESG concerns during customer audits could have
an impact on sales. As government environmental regulations become more stringent expansions of energy-intensive
factories may not be approved by the government in the future which could affect the Group’s production.Response measures:
? Market and product strategy: flexibly adapt market strategies and product portfolios pay attention to consumer
preferences and focus on the development of green and lower emissions products.? Target setting and implementation: set and strive to achieve carbon emission and energy management targets.? Stakeholder engagement: proactively respond to inquiries from capital market stakeholders such as investors and
rating agencies.? Internal management improvement: improve ESG governance levels and conduct ESG training for employees.? Environmental management and compliance: disclose climate-related risks opportunities and response
measures in ESG reports and implement energy conservation and carbon emission reduction measures to reduce
environmental impact and ensure EHS compliance.? Brand and employee management: Build green factories improve climate risk protection and enhance brand value
and employee satisfaction.
190 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
3. Opportunity Impact Analysis and Response Measures
Opportunity Climate Score in Opportunity Impacts
Factor Different Scenarios
Low-emission High-emission
Scenarios Scenarios
Resource Low Low * Reduced operating costs
Efficiency
* Increased production capacity resulting in increased
revenues
* Increased value of fixed assets
* Benefits to workforce management and planning
resulting in lower costs
Resource Source Low Low * Reduced operating costs
* Reduced exposure to future fossil fuel price increases
* Reduced exposure to greenhouse gas emissions and
therefore less sensitivity to changes in trading price of
carbon
* Improved reputation and increased demand for products
Products and Low Low * Increased revenue through new solutions to climate
Services adaptation needs
* Better competitive position to reflect shifting consumer
preferences resulting in increased revenues
Markets Low Low * Increased revenues through access to new and
emerging markets
* Increased diversification of financial assets (e.g. green
deposits) to spread risks
Resilience Low Low * Increased market valuation of infrastructure land and
buildings through resilience planning
* Increased business operation resilience through resource
substitutes and other means
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1911 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
3. Opportunity Impact Analysis and Response Measures (continued)
Resource Efficiency
Considering the potential future risks of rising raw material costs increasing labor costs logistics disruptions etc.the Group can improve its overall resource efficiency by increasing the level of automation in production and storage
equipment moving to more energy efficient buildings and using more efficient modes of transport to provide more
higher value-added and more sustainable products and services with less resource consumption. Moreover by using
more efficient production and distribution processes recycling resources and reducing water usage the Group can not
only reduce energy and material consumption but also increase production capacity and meet increasingly stringent
environmental requirements.Response measures:
? Production technology optimization: improve the yield of products through technological refinement thus reducing
the raw material and energy consumption; optimize high-risk and energy-intensive inspection methods to ensure
employee safety and efficiency.? Product structure adjustment: replace high-energy-consuming high-polluting low-value-added products with
low-energy-consuming low-polluting high-value products such as the construction of afoxolane（r 阿福拉納）
production lines and the elimination of colistin（粘桿菌素）production.? Supply chain upgrading: improve supply chain management capabilities strengthen communication with
the market and centralize production scheduling and reduce the risk of inventory by shortening the cycle of
procurement and production.? Carbon reduction and efficiency improvement in transportation: increase the loading rate of containers and trains
use new energy vehicles and low-carbon technologies for transportation and use electric forklifts for in-plant
transportation.
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
3. Opportunity Impact Analysis and Response Measures (continued)
Resource Source
At present the energy used by the Group remains the primary source of carbon emissions. As the price of fossil fuels
may fluctuate along a lower emissions development pathway initiatives such as the development of photovoltaics and
the promotion of clean production plans can better facilitate the Group’s achievement of its emission reduction targets.On another front against the backdrop of China’s active promotion of energy transition coupled with the increasingly
competitive operating costs of renewable energy the Group can secure stable long-term returns from energy transition
and participation in the carbon trading market.Response measures:
? Energy transition: promote the construction of photovoltaic power generation projects in various manufacturing
enterprises and explore other applicable clean energy sources.? Audit mechanism: regularly conduct cleaner production audits and continuously apply the comprehensive
environmental protection strategy to the production and product processes.? Incentive assurance: establish an incentive mechanism for cleaner production to promote emission reduction and
increase the profit potential of carbon trading.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1931 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
3. Opportunity Impact Analysis and Response Measures (continued)
Products and Services
By developing new products and introducing lower emissions goods and services the Group can not only meet the
growing environmental demands of consumers and enhance its competitiveness in the market but also create new
revenue streams and improve its brand image. This environmentally friendly innovation not only helps the Group build an
image as a sustainable and responsible enterprise and attract greater attention from consumers and investors but also
reduces operating costs and improves efficiency and profitability through optimized energy and resource use.Response measures:
? Drug R&D: give subsequent consideration to the R&D of drugs to treat tropical infectious diseases (e.g.antiparasitic drugs).? Product upgrading: actively pay attention to consumer preference trends in the market focus on the development
of green and low-carbon products and build a green manufacturing system.Markets
Climate change may lead to changes in disease patterns and epidemiology affecting the demand for specific medicines.For example temperature changes may expand the range of transmission of certain infectious diseases increasing the
demand for related drugs and presenting new market opportunities. Meanwhile the impact of climate change on public
health may prompt governments and international organizations to take further actions. The Group can improve its
brand image and explore new markets and business opportunities by participating in these public health projects and
collaborations. In the future the development of green finance may also bring about new financing opportunities.
194 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions index
10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
3. Opportunity Impact Analysis and Response Measures (continued)
Markets (continued)
Response measures:
? Market expansion: pay continuous attention to new markets and actively prepare for new markets and businesses
brought about by emerging diseases caused by climate change.? Green finance: proactively pay attention to the green finance market and explore green deposits and other
financial products.? Government subsidies: increase efforts to track environment-related policies such as applying for subsidies in a
timely manner through measures such as building green factories and conducting energy efficiency certification.Resilience
As the risks of climate change escalate leading to more frequent extreme weather events whose intensity becomes
increasingly unpredictable strengthening climate resilience is particularly important to avoid the loss of life and property
caused by climate risks. The Group can increase the future market valuation of assets by strengthening the climate
resilience of infrastructure optimize the supply chain and diversify sourcing to mitigate the risk of unstable raw material
supply and invest in green and efficient production technologies to reduce negative environmental impacts. These
measures help our enterprises maintain operational flexibility and efficiency in the face of challenges posed by climate
change while also enhancing our environmental sustainability and market competitiveness.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1951 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Climate risks and opportunities (continued)
3. Opportunity Impact Analysis and Response Measures (continued)
Resilience (continued)
Response measures:
? Green production and asset appreciation: select environmentally friendly materials and processes and build green
factories and office buildings to increase the market valuation of fixed assets.? Energy structure optimization: vigorously promote photovoltaic power generation and explore other clean energy
sources to enhance the reliability of energy supply.? Supplier management upgrading: improve the supplier management process for pharmaceutical plants assess
and classify their ability to respond to climate risks and plan ahead accordingly to reduce the risk of supply
disruptions.? Exploration of energy efficiency projects: investigate the feasibility of energy efficiency projects such as
photovoltaic cell energy storage to secure power supply for production and improve business operation resilience.Financial impacts of climate risks and opportunities
During the Reporting Period we conducted a financial impact assessment of three climate risks and opportunities: physical
risk–typhoons transition risk–changes in raw material costs and opportunity–use of energy-efficient technologies under
the premise that information is reasonably accessible and costs are affordable.Physical risk-Typhoons
1. Potential financial impacts: approximately RMB28 million including:
* Asset loss: typhoons may cause damage to the buildings equipment inventories and other assets of
subsidiaries located in typhoon-prone areas resulting in asset impairment or payment of repair costs.* Production interruptions: typhoons may lead to production line shutdowns affecting product production
and delivery which in turn causes a decline in sales revenue and customer loss.* Additional expenditure: to resume production the Company may need to pay for additional overtime
rental of replacement equipment or temporary production sites.
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Financial impacts of climate risks and opportunities (continued)
Physical risk-Typhoons (continued)
2. Risk response costs: approximately RMB1.6 million including:
* Insurance costs: insure the premises of the Company against all risks of property and casualty to obtain
insurance compensation in the event of asset damage. Insurance costs are determined based on the
insured amount and premium rate.* Emergency supplies reserve: purchase and stock typhoon emergency supplies in advance such as sandbags
tarps and generators. The cost of these suppliers is calculated based on the quantity purchased and the
unit price.* Emergency drill costs: organize employees for typhoon emergency drills to improve preparedness for
typhoon events. Drill costs include site rental fees equipment usage fees personnel training fees etc.Transition risk-Changes in raw material costs
1. Potential financial impacts: approximately RMB8.6 million including:
* Rising direct material costs: rising raw material prices leads to increased product costs which in turn
impacts the Company’s profits.* Rising energy costs: rising energy prices lead to increased production costs which in turn impacts the
Company’s profits.
2. Risk response costs: approximately RMB0.32 million including:
* Alternative material costs: finding and purchasing alternative materials may require additional R&D costs
testing costs and procurement costs.* Costs of energy-saving improvement projects: conduct energy-saving improvement projects with costs
including equipment purchase fees installation and debugging fees personnel training fees etc.* Supply chain management costs: strengthen cooperation with suppliers to ensure stable supply of raw
materials. This may require the payment of additional supply chain management costs.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1971 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.2 Strategy (continued)
Financial impacts of climate risks and opportunities (continued)
Opportunity–Use of energy efficient technologies
1. Potential financial impacts: approximately RMB5.9 million including:
* Energy cost savings: substantial energy cost savings are expected through the implementation of energy-
saving improvement projects.* Government subsidies and tax incentives: using energy-efficient technologies may qualify the Company for
government subsidies and tax incentives further increasing the Company’s profits.
2. Costs of achieving the opportunity: approximately RMB8.3 million including:
* Costs of energy-saving improvement projects: including equipment purchase fees installation and
debugging fees personnel training fees etc.* Production delay costs: energy-saving improvement projects may lead to temporary shutdowns of
production lines resulting in certain production delay costs. Delay costs include employee wages
equipment depreciation fees etc. during downtime.* Technology introduction and R&D costs: if the Company needs to introduce or research and develop new
energy-efficient technologies it may be required to pay additional technology introduction fees or R&D
costs.
10.5.3 Risk management
To address potential risks and opportunities arising from climate change Livzon under the leadership and supervision of
its Board and the ESG Committee has established a process and framework of climate-related risk management and has
integrated climate-related risks into the Group’s overall risk management.We annually conduct identification of climate-related risks and opportunities on a regular basis assess the climate-related
risks and opportunities with the help of external experts to develop and implement response plans and regularly report on
work results to the ESG Committee every year.Our specific climate risk management steps are as follows:
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.3 Risk management (continued)
Step I: Prepare a list of potential climate risks
* Prepare a preliminary list of the Group’s potential climate risks based on industry research reports
relevant policies issued by regulatory agencies peer benchmarking stakeholder surveys interviews with
business departments interviews with executives external information search etc.* Interview the heads of all relevant business departments (“executives”) to collect a list of potential
climate risks that executives consider exist to obtain a comprehensive and unbiased list of risks.Step II: Assess climate risks
Conduct climate-related scenario analysis and assessment for each climate risk and opportunity across the
following two dimensions and rate each comprehensively to understand the potential impact of various risk and
opportunity factors on the Group’s operations.* Time dimension (expected time of risk occurrence)
Short-term (0-3 years) medium-term (3-10 years) long-term (10-30 years)
* Impact dimension (degree of impact of a risk on business performance)
High medium-high medium medium-low low
Step III: Develop response measures
According to the results of the climate risk assessment relevant business departments jointly discuss and develop
response measures to form the Climate Risk Response Action Plan. After approval by the general manager of
each operation the relevant business departments are responsible for implementation.Step IV: Oversee and report
* All relevant business departments report to the general manager of each operation on the
implementation of response measures on a semi-annual basis and adjust actions in a timely manner
according to the actual situation.* The Group prepares an Annual Report on Climate Risk Management every year which is submitted to
the ESG Committee for review after approval by the general manager of each enterprise and the ESG
Working Team.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 1991 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.5 ADDRESSING CLIMATE CHANGE (continued)
10.5.4 Metrics and targets
Based on a well-developed framework of governance strategy and risk management we have set the metrics and targets
for climate-related risks and opportunities management and conduct routine oversight and appraisal. For details please
refer to Section “10.2 ENVIRONMENTAL MANAGEMENT TARGETS” in this chapter.
10.6 BIODIVERSITY PROTECTION
Livzon is deeply aware of the importance of biodiversity protection strictly complies with relevant domestic laws and
regulations and international conventions and clearly defines biodiversity protection requirements in the Environmental
Occupational Health and Safety Management Policy. “Zero deforestation” has been incorporated as a special clause
into the environmental management system to contribute the Company’s efforts to ecological environment protection.In addition we continuously reduce our negative impact on ecosystems through sustainable management of natural
resources and raw materials in our supply chain so as to fulfill our commitment to biodiversity conservation.To conserve biodiversity we assess the dependencies and scope of impacts of our business operations on natural
resources continuously reduce the adverse impacts of our business operations on biodiversity actively promote the
sustainable use of natural resources and maintain the balance and stability of ecosystems. Additionally we apply a
“mitigation hierarchy” approach namely “avoidance reduction restoration offsets” to work towards “No Net Loss” of
biodiversity. Specifically:
? Avoidance ? Reduction ? Restoration ? Offset
at the project planning during operations adopt for ecological damage for unavoidable ecological
stage give priority to eco-friendly technologies to caused initiate the impacts achieve ecosystem
avoiding ecologically minimize adverse impacts on restoration mechanism in a balance through professional
sensitive areas and choose ecosystems; timely manner; ecological compensation
construction programs programs.with minimal impact on
biodiversity;
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10.6 BIODIVERSITY PROTECTION (continued)
In the resource acquisition process we use no species listed in the Convention on International Trade in Endangered
Species of Wild Fauna and Flora (CITES). Meanwhile through continuous internal training and ecological awareness
education we cultivate an ecological protection mindset among all employees and promote the joint performance
of biodiversity protection responsibility within the enterprise and with supply chain partners. In addition based on
the characteristics of the TCM industry we develop biological resources in a scientific and reasonable manner on the
basis of protecting ecosystem integrity so as to achieve a dynamic balance between ecological benefits and industrial
development.* Guaranteeing the source of raw materials for genuineness and quality: We implement a strict
procurement quality management system. Through order-based procurement from producing areas of genuine
medicinal materials strict raw material quality audit self-construction + joint construction of medicinal material
bases and other measures we guarantee from the source that all medicinal raw materials are sourced in a legal
and compliant way and in good quality. We also prevent from the source any flow of traditional Chinese medicinal
materials from unknown sources into the production link. To a certain extent we have suppressed excessive and
exploitative farming and cultivation in the production of traditional Chinese medicinal materials.* Constructing medicinal material plantation bases: We thoroughly assess the supply chain’s impact on
biodiversity adhere to sustainable supply of raw materials and continuously reduce the negative impact on
biodiversity. Through the development of methods and standards for medicinal material plantation and processing
in producing areas and introduction of a model of joint construction of bases among other methods we construct
demonstration bases for the cultivation of traditional Chinese medicinal materials by integrating traditional
cultivation experience with modern agricultural technologies in Shanxi Shaanxi Gansu and other genuine
producing areas to promote the sustainable development of traditional Chinese medicinal materials.* Protecting germplasm and germplasm resources: Site locations for constructing the Group’s medicinal
material plantation bases are selected rationally in strict accordance with the suitable environment for medicinal
material plantation the historical plantation experience and other factors. By enterprise-university-research
institution cooperation self-construction of seedling experimental areas and strict control over the germplasm
resource and seedling quality of medicinal materials we are preventing from the technical source problems such
as the weakening of species’ germplasm resources and varieties and the invasion of alien species.* Insisting on green and scientific planting: In the process of planting medicinal materials we insist on greenand scientific planting. Datong Livzon Qiyuan Medicine Co. Ltd（. 大同麗珠芪源藥材有限公司）(“DatongLivzon”) the Company’s subsidiary cultivates its Astragalus membranaceus in simulated wild conditions without
the use of fertilizers or pesticides to protect the land and water resources. Datong Livzon has obtained the
organic product certification the certification of the cultivation base of genuine high-quality medicinal materials
(Astragalus membranaceus) and 5A-grade Astragalus membranaceus cultivation base (artificially sown andnaturally grown) certification for its products. Longxi Livzon Shenyuan Medicine Co. Ltd（. 隴西麗珠參源藥材有限公司）(“Longxi Livzon”) the Company’s subsidiary has obtained the certification of organic conversion and the
demonstration base of genuine high-quality medicinal materials (Codonopsis pilosula) certification. As at the end
of the Reporting Period all the varieties involved in the traditional Chinese medicine business department of the
Company complied with the relevant international convention (Convention on International Trade in Endangered
Species of Wild Fauna and Flora (CITES)).Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 2011 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.6 BIODIVERSITY PROTECTION (continued)
* Exit mechanism within the red line of ecological protection: The Company’s construction of medicinal
material bases including self-built bases and jointly built bases with suppliers does not involve areas with
important ecological functions or ecologically sensitive and fragile areas. Land selection is required to comply
with requirements of national and local laws and regulations ensuring that medicinal materials are not planted
in environmentally sensitive areas or within the red line of ecological protection. Generally barren mountains
forested land wasteland and land used for common economic crops are chosen. If any ecological protection red
line areas are found during inspections the Company will immediately exit the cultivation bases of medicinal
materials restore the land to its original use and maintain ecosystem integrity.* Promoting sustainable use of raw materials: With the technical support from the R&D platforms of medicinal
material plantation enterprises under the traditional Chinese medicine business department of the Company and
the center for medicinal material resources of our traditional Chinese medicine research institute we are actively
conducting research on the germplasm resources and cultivation technology of medicinal materials methods and
standards for processing in producing areas full-process information tracing and comprehensive utilization and
development of medicinal material resources to ensure the quality of medicinal materials and make the most
of medicinal material resources maintain the ecological balance of medicinal materials and prevent the loss
degradation and overexploitation of ecological resources thereby ensuring the sustainable use of traditional
Chinese medicinal resources and protecting the genetic diversity of medicinal materials and the biodiversity of
cultivation bases.In addition facing the issue of wild resource depletion due to the continuous growth of market demand we actively
explore sustainable development solutions. With the technical support of the expert team from Sichuan Academy of
Traditional Chinese Medicine we have conducted in-depth cooperation with local pharmaceutical enterprises and
successfully established a base for Acorus tatarinowii cultivated in simulated wild conditions of which 1500 mu has been
completed. It is planned to expand to more than 4000 mu in 3 years.To ensure the quality of medicinal materials we have collaborated with local enterprises to construct standardized
cleaning processing workshops in the producing areas. Through unified processing technology we effectively guarantee
the stable and uniform quality of Acorus tatarinowii. This not only alleviates the pressure on wild medicinal resources
but also provides useful references for the protection and development of other medicinal materials achieving a win-win
situation for both ecological protection and industrial development.
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10.6 BIODIVERSITY PROTECTION (continued)
Case: Biodiversity indicator monitoring
The medicinal material plantation bases of the Company always pay attention to plant community diversity
surrounding animal diversity and soil biodiversity. The Astragalus membranaceus base in Datong Livzon for
example is located in a remote mountainous area which is itself a natural habitat for wild animals providing a
near-pristine growth environment for Astragalus membranaceus. We track and record the number and distribution
of species around the base assess the impact of field management measures on the ecosystem and adopt an eco-
friendly field management model. Only manual weeding is carried out in the field management in the principle
of “removing large and leaving small”. We use no pesticides and fertilizers and are committed to building an
ecosystem in which animals plants and humans coexist in harmony.Case: Protecting biological genetic resources
Datong Livzon has established an Astragalus membranaceus germplasm resource nursery in Hunyuan County
focusing on the protection of biological genetic resources. Through careful observation and classification of the
morphological characteristics of Astragalus membranaceus plants Datong Livzon has successfully collected over 20
varieties of wild Astragalus membranaceus germplasm resources within the genuine producing area. To ensure the
scientific management and protection of germplasm resources Datong Livzon has maintained detailed record of the
origin location information of all germplasm including collection sites times altitude longitude and latitude and
growth method (cultivated or wild) supplemented by photography and specimen making. This preserves original
data for these resources providing valuable basic data for research on biological genetic diversity.Case: Protecting the ecological system of the Codonopsis pilosula cultivation base
To ensure the sustainability of the ecological environment of the Codonopsis pilosula cultivation base Longxi Livzon
has conducted an in-depth analysis of the current ecological environment of the Codonopsis pilosula cultivation
base and its causes and has formulated the Environmental Biodiversity Conservation Plan for the Codonopsis
Pilosula GAP Cultivation Base. In 2024 Longxi Livzon’s Codonopsis pilosula base successfully passed the inspection
of compliance with the Good Agricultural Practice for Chinese Crude Drugs. Longxi Livzon pays particular attention
to the use of pesticides fertilizers and plant growth regulators throughout the medicinal material plantation
process strictly implements GAP standards continuously strengthens biodiversity protection measures and strives
to build a more sustainable and eco-friendly planting model.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 2031 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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10.6 BIODIVERSITY PROTECTION (continued)
We promote the concept of biodiversity protection to all enterprises of the Group and actively implement various
ecological conservation measures while ensuring normal production and operations. By optimizing greening layout of the
factory area and other means we minimize the potential impact of operations on biodiversity and promote harmonious
coexistence between our enterprises and the natural environment.Enterprise Biodiversity Conservation InitiativesNingxia Pharma Intensified greening of In April 2024 Ningxia Pharma launched a volunteer activity of “Revivefactory area & Thrive: Clean Up for Civilized Progress”. Ningxia Pharma leaders
and volunteers fertilized the factory’s green plants and cleaned up the
environmental garbage in the factory. Everyone brought their own cleaning
tools and protective gear to pick up garbage reducing environmental
pollutants and improving the cleanliness of the working environment.This activity effectively enhanced the company’s environmental protection
image and raised employees’ awareness of ecological protection.
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10.6 BIODIVERSITY PROTECTION (continued)
Enterprise Biodiversity Conservation Initiatives
Limin Factory Tree planting and In March 2024 the CYL committee of Limin Factory actively responded
greening to the call of the municipal CYL committee and convened more than 20CYL members in the factory to participate in the “Planting Fresh GreeneryCultivating Dreams for Tomorrow: Youth Pioneers Lead the ‘Green &Beautiful Guangdong’ 10000-Youth Forest Event”. The tree-planting
event not only enhanced the appeal cohesion and unity of grassroots CYL
organizations but also improved the development concept of protecting
the ecological environment and practicing ecological civilization amongCYL members. A strong atmosphere of “universal engagement in greeninginitiatives: collaborative efforts to build a land of lucid waters and lushmountains”.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 2051 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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SOCIAL
CONTRIBUTIONS
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Bearing in mind its public welfare mission Livzon in strict accordance with
external laws and regulations and the internal Management System for
Charitable Donation assumes its social obligations to serve the society by
utilizing its own resources and strengths. Proactively engaging in public welfare
projects we empower rural revitalization by assisting the industries help solve
the problem of imbalance in educational resources by donating to teachers and
students in need and take initiative to coordinate resources for disaster relief
and disaster reduction thereby making more contributions to promoting the
construction of a healthy China and realizing common prosperity.The Group takes the initiative to assume social responsibility and continues to
increase investment in public welfare activities. During the Year the expenditure
of charitable donation of the Group amounted to RMB12.98 million including
cash donation of RMB10.90 million and in-kind donation worth RMB2.08
million.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 2071 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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11.1 RURAL REVITALIZATIONTo facilitate the sustainability of the rural economy the Company has formulated and implemented the plan of “AstragalusMembranaceus（黃芪）Industry Revitalization”. Adopting the model of “Company + Base” and “Company + SpecialtyCooperative” to build Astragalus membranaceus self-built bases and jointly built bases the Company aims to drive
local cultivation and processing of Astragalus membranaceus build a genuine medicinal material industry for Astragalus
membranaceus adapted to local conditions and accelerate the construction of the “Chinese Medicine Ecological Base”.In this way a long-lasting and pillar industry for wealth generation will be created and a new path to prosperity through
the development of the distinctive Astragalus membranaceus industry will be forged.The “Astragalus Membranaceus Industry Revitalization” plan has continued since 2017. Datong Livzon Qiyuan Medicine
Co. Ltd（. 大同麗珠芪源藥材有限公司）(“Datong Livzon”) a subsidiary of the Company has built and jointly
built Astragalus membranaceus cultivation bases of over 20000 mu. Datong Livzon regularly provides on-site technical
guidance and GAP training for managers and leading farmers of the bases every year and conducts practical training
on the traceability of traditional Chinese medicinal materials. At present all bases have been included in the Company’s
Good Agricultural Practice for Chinese Crude Drugs production management traceability system sharing advanced
technical resources with the Company.During the Reporting Period Datong Livzon’s co-built and jointly built Astragalus membranaceus cultivation bases planted
about 1000 mu of Astragalus membranaceus excavated about 3500 mu of Astragalus membranaceus and harvested
about 709 tons of fresh Astragalus membranaceus. In cooperation with the village committee of Mazhuang Village in
Guan’er Township Hongyuan County of Datong City in Shanxi Province Datong Livzon also carried out the project of
“Joint Construction by Village and Enterprise” to build a local Astragalus membranaceus processing workshop which was
put into use in 2023. By 2024 the workshop has solved the employment of about 120 local farmers.In July 2024 Datong Livzon’s self-built and jointly built Astragalus membranaceus bases passed the extended inspection
of pharmaceutical work safety in Guangdong Province (inspection of compliance with the Good Agricultural Practice for
Chinese Crude Drugs).
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11.2 SOCIAL AND PUBLIC WELFARE
* Public Welfare Project for Prevention and Treatment of Chronic Diseases
Since 2018 Livzon and its controlling shareholder Joincare Pharmaceutical Industry Group Co. Ltd haveworked together to continuously implement deep in rural areas the “Public Welfare Project for Prevention andTreatment of Chronic Diseases”. The project aims to provide assistance to needy people suffering from common
chronic diseases such as high blood pressure hyperlipidemia cardiovascular and cerebrovascular diseases and
stomach diseases in remote areas and to relieve the medical burden of patients’ families in financial difficulties by
contributing necessary therapeutic medicines.As at the end of the Reporting Period the Company had entered into a total of 31 agreements in relation to the
Public Welfare Project for Prevention and Treatment of Chronic Diseases covering 9 provinces and 4 autonomous
regions across the country and had benefited more than 30000 low-income people with chronic diseases.Chaotian District of Guangyuan City Jinkouhe District of Leshan City Songpan County of Ngawa Tibetan
and Qiang Autonomous Prefecture Jiange County and Pingwu County in Sichuan Province; Hunyuan County
Guangling County and Lingqiu County of Datong City in Shanxi Province; Dongxiang County Tianzhu County
Linze County Shandan County and Huining County in Gansu Province; Xianghai National Nature Reserve in
Jilin Province; Machun District of Jiaozuo City in Henan Province; Huangshan District of Huangshan City in Anhui
Province; Suining County in Hunan Province; Fenyin County in Jiangxi Province; Ziyuan County in the Guangxi
Zhuang Autonomous Region; Kashgar City in Xinjiang Uyghur Autonomous Region; Chayu County in Tibet
Autonomous Region; Bairin Left Banner and Togtoh County in Inner Mongolia; Jiangshan City (County-level) of
Quzhou City in Zhejiang Province; Gaize County of the Ngari Prefecture in Tibet Autonomous Region; Shandan
County of Zhangye City in Gansu Province; Sunnan Yugur Autonomous County of Zhangye City in Gansu Province;
and Bomi County of Nyingchi City in Tibet Autonomous Region.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 2091 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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11.2 SOCIAL AND PUBLIC WELFARE (continued)
* Education Support
Livzon actively responds to the national call for supporting high-quality education development of the country
through a series of public welfare activities such as endowment to schools. The Company has established long-
term education scholarship projects with well-known colleges and universities such as China Pharmaceutical
University Shenyang Pharmaceutical University and Sichuan University to support scientific research and teaching
efforts and the growth of outstanding students. During the Year the Group also made charitable endowment to
the Education Development Charity Association of Jinwan District Zhuhai City Ningxia Women and Children’s
Development Foundation etc. to promote the balanced distribution of educational resources with practical
actions.In September 2024 the Company donated RMB100000 to the Education Development Charity Association of
Jinwan District Zhuhai City (as part of an agreement to donate a total of RMB300000 with annual payment of
RMB100000) intended for education scholarships and other activities.
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11.2 SOCIAL AND PUBLIC WELFARE (continued)
* Disaster Relief
Livzon always cares about the welfare of society and actively fulfills its social responsibilities. In the face of sudden
natural disasters the Group acted quickly and efficiently mobilized internal and external resources. We provided
emergency supplies including medicines to the affected areas as soon as possible and fully engaged in disaster
relief efforts. Through a professional and prompt response mechanism Livzon has demonstrated its responsibility
in times of crisis.In June 2024 when heavy rain in Meizhou City Guangdong Province severely affected Meixian District Pingyuan
County and Jiaoling County Livzon immediately donated medicines worth approximately RMB510000 to the
affected areas.* Volunteer Activities
To further promote the volunteer spirit the Company established the Livzon Volunteer Association in 2022. As at
the end of the Reporting Period the total number of registered volunteers of the association reached 79 and the
total volunteer service hours exceeded 800.Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 2111 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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APPENDIX
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
A1. Emissions Environmental Protection Law of the PRC Identification and Assessment Requirements of Environmental
Factors
Law on the Prevention and Control of Environmental Pollution by Solid
Waste of the PRC Procedures for Air Emission Management
Water Pollution Prevention and Control Law of the PRC Procedures for Noise Emission Management
Atmospheric Pollution Prevention and Control Law of the PRC Procedures for Solid Waste Management
Environmental Protection Tax Law of the PRC Procedures for Hazardous Chemicals Management
Soil Pollution Prevention and Control Law of the PRC Procedures for Wastewater Management
Regulations on the Prevention and Control of Environmental Pollution by Soil Pollution Hazard Investigation System
Solid Waste of Guangdong Province
Guidelines for Management of EHS Changes
National Catalogue of Hazardous Wastes (2021)
“Three-Waste” and Noise Management System
Administrative Regulations for Urban Construction Waste
Hazardous Waste Management System
Environmental Impact Assessment Law of the PRC
Environmental Occupational Health and Safety Management
Administrative Rules of Environmental Protection for Construction Projects Policy
Standard for Pollution Control on Hazardous Waste Storage (GB 18597-
2023)
Technical Guideline for Deriving Hazardous Waste Management Plans and
Records (HJ1259-2022)
Administrative Measures for Hazardous Waste Transfer
Self-monitoring Technology Guidelines for Pollution Sources–General Rule
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 2131 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
A1. Emissions Self-monitoring Technology Guidelines for Pollution Sources–
Pharmaceutical Industry Chemical Synthesis Products Category
Standard for Pollution Control on the Non-Hazardous Industrial Solid
Waste Storage and Landfill (GB18599-2020)
Guideline for Deriving General Industrial Solid Waste Management
Records (Interim)
Measures for the Administration of Pollutant Discharge Permits
Guidelines for the Identification of Potential Soil Pollution Hazards in Key
Regulatory Units (Interim)
Administrative Measures for the Legal Disclosure of Enterprise
Environmental Information
Administrative Measures for the List of Key Units Subject to Environmental
Supervision
Guideline on Available Techniques of Pollution Prevention and Control
for Pharmaceutical Industry–Active Pharmaceutical Ingredients
(Fermentation Chemical Synthesis Extraction) and Preparation
Categories (HJ1305-2023)
Discharge Standard of Water Pollutants for Pharmaceutical Industry
Fermentation Products Category (GB 21903-2008)
Emission Standards for Odor Pollutants (GB14554-2018)
Technical Specifications for Collection Storage Transportation of
Hazardous Waste
Emission Standard for Industrial Enterprises Noise at Boundary
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
A2. Use of Resources Energy Conservation Law of the PRC Procedures for Resources Management
Circular Economy Promotion Law of the PRC Procedures for Energy Management
Energy Management System
Environmental Occupational Health and Safety Management
Policy
A3. The Environment and Environmental Protection Law of the PRC General Requirements of EHS Management System
Natural Resources
Energy Conservation Law of the PRC Environmental Hygiene Management System for Factory Area
Forestry Law of the PRC Soil Pollution Hazard Investigation System
Regulations on the Implementation of the Forestry Law of the PRC Contingency Plan for Environmental Emergency
Regulations on Restoring Farmland to Forest EHS “Three Simultaneous” Management System for
Construction Projects
Measures for the Administration of Regenerative Felling of Forests
Environmental Protection Responsibility System
Water Law of the PRC
Environmental Performance Appraisal and Reward and
Regulations of the PRC on the Protection of Wild Plants Punishment System
Regulations on Protection of Wild Medicinal Resources Environmental Occupational Health and Safety Management
Policy
Law of the People’s Republic of China on the Protection of Wildlife
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 2151 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
A4. Climate Change Opinions of the Central Committee of the Communist Party of China and Contingency Plans for Extreme Weather
the State Council on Completely Accurately and Comprehensively
Implementing the New Development Concept and Doing a Good Job in Abnormal Weather Management Regulations
Carbon Peaking and Carbon Neutrality
Contingency Command Plans for Typhoon Prevention
Action Plan for Carbon Peaking Before 2030
Contingency Plans for Production Safety Accidents
14th Five-Year Plan for Development of Pharmaceutical Industry
Climate Change Management System
Administrative Measures for Contingency Plans for
Emergency
B1. Employment Labor Law of the PRC Labor Employment Management System
Labor Contract Law of the PRC Recruitment Management System
Social Insurance Law of the PRC Employee Retirement Reward Scheme
Provisions on the Prohibition of Using Child Labor Board Diversity Policy
Individual Income Tax Law of the PRC Remuneration Management System
Administrative Measures for Remuneration Adjustment
Provisions on the Base Salary of Fresh Graduates
Administrative Measures for Job Grades
Code of Labor Employment and Ethical Conduct
Administrative Measures for Technical Sequence Positions
Administrative Measures for the Performance of Functional
Head Offices
Employee Grievance Management System
216 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions index
12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
B2. Health and Safety Labor Law of the PRC General Requirements of EHS Management System
Labor Contract Law of the PRC Administrative Measures for EHS Accidents
Social Insurance Law of the PRC EHS Meeting and Inspection Management System
Work Safety Law of the PRC Administrative Measures for EHS Information and
Communication
Law of the PRC on the Prevention and Control of Occupational Diseases
Management System for Identifying Hazard Sources and
Fire Prevention Law of the PRC Grading and Controlling Safety Risks
Construction Law of the PRC Regulations on Work Safety Penalties
Biosecurity Law of the PRC Work Safety Training Management System
Special Equipment Safety Law of the PRC Work Safety Responsibility Management System
Regulations on the Supervision and Administration of the Implementation Administrative Measures for Contingency Plans for
of Safety Responsibility by Special Equipment Users Emergency
Administrative Procedures for Occupational Health
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
B2. Health and Safety Regulations on Reporting Investigation and Handling of Special Contingency Plans for Production Safety Accidents
Equipment Accidents
Contingency Command Plans for Typhoon Prevention
Standards for Determining Major Accident Hazards in Industrial and Trade
Enterprises EHS Culture of Livzon Group
General Rules for the Storage of Hazardous Chemicals in Warehouses Management System for Investigating and Managing
Accidental Hazards
Regulations on the Safety Management of Hazardous Chemicals
Contractor Safety Management System
Code for Fire Protection Design of Buildings (GB50016-2014) 2018
Edition EHS “Three Simultaneous” Management System for
Construction Projects
Fire Protection Standards for Engineering Design of Fine Chemical
Enterprise (GB51283-2020) Administrative Procedures for EHS Targets and Indicators
Standard for Fire Prevention Design of Petrochemical Enterprises Ten Prohibitions for Work Safety
(GB50160-2008) 2018 Edition
Environmental Occupational Health and Safety Management
General Code for Fire Protection of Buildings and Constructions Policy
(GB55037-2022)
Regulations on the Administration of Safety Environmental
Standard of Construction Safety Inspection Protection and Occupational Health Appraisal
218 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
B3. Development and Training Labor Law of the PRC Work Safety Training Management System
Labor Contract Law of the PRC Administrative Measures for Administrative and Technical
Sequences
Social Insurance Law of the PRC
Quarterly Assessment and Incentive Plan for R&D Units
(Interim)
Administrative Regulations on Employee Learning and
Growth
Training Management System
Administrative Procedures for Training Appraisal and
Evaluation
Administrative Procedures for Quality Control Laboratory
Training
Administrative Procedures for Personnel Qualification
Confirmation
B4. Labor Standards Labor Law of the PRC Labor Employment Management System
Labor Contract Law of the PRC Recruitment Management System
Social Insurance Law of the PRC Code of Labor Employment and Ethical Conduct
Special Regulations on Labor Protection of Female Employees Employee Grievance Management System
Provisions on Medical Treatment Period for Enterprise Employees with
Illness or Non-Work-Related Injuries
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
B5. Supply Chain Management Company Law of the PRC Administrative Procedures for Supplier Standard
E-commerce Law of the PRC Administrative Procedures for Supplier Audit
Tendering and Bidding Law of the PRC Administrative Measures for Material Procurement
Implementation Guide for Traditional Chinese Medicine Traceability System Material Management System
Traditional Chinese Medicine Traceability Information Requirements – Rules on Integrity in Bid Evaluation
Cultivation of Traditional Chinese Medicinal Materials
Administrative Measures for Joint Audit of Suppliers
Traditional Chinese Medicine Traceability Information Requirements –
Production of Traditional Chinese Medicine Tablets Administrative Measures for Supplier Entry
Good Agricultural Practice for Chinese Crude Drugs Administrative Measures for Supplier Classification
Maintenance Risk Assessment and Annual Appraisal
Guideline for Cold Chain (Transportation Storage) Management of
Medical Devices Administrative Measures for Electronic Procurement
Supplier Risk Management System
Administrative Procedures for Energy Conservation and
Emission Reduction for Suppliers
Administrative Procedures for Supplier EHS Audit
Code of Conduct for Suppliers
Administrative Measures for Construction Project Suppliers
Anti-Corruption and Anti-Commercial Bribery Regulations
Administrative Measures for Whistleblowing and Complaint
Staff Commitment for Anti-Corruption and Anti-Commercial
Bribery
Administrative Measures for Cooperative Service Providers
220 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
B6. Product Responsibility Patent Law of the PRC Procedures for Establishment of Independent Research and
Development Projects
Trademark Law of the PRC
Quality Management System
Copyright Law of the PRC
Procedures for Drug Inspection and Acceptance
Drug Administration Law of the PRC
Unqualified Product Management System
Good Manufacturing Practice (GMP)
Adverse Drug Reaction Reporting and Monitoring
EU GMP Annex 1: Manufacture of Sterile Products (13th Edition) Management System
Good Laboratory Practice (GLP) Returned Product Management System
Good Clinical Practice (GCP) Drug Traceability Management System
Good Supply Practice (GSP) Ten Prohibitions on QC Laboratory Management
Pharmacopoeia of the PRC Administrative Measures for Quality Incidents
Provisions for Drug Registration Contingency Handling Procedures for Sampling Inspection
Provisions for the Supervision and Administration of Drug Manufacturing Measures for Cross-examinations among R&D Enterprises
Administrative Measures for Drug Recalls Measures for Cross-examinations among Drug Preparations
Manufacturing Enterprises
Regulations on Protection of Traditional Chinese Medicines
Management System for Marketing Authorization Holder
Advertising Law of the PRC
Administrative Procedures for Quality Internal Audit
Implementation Rules on the Drug Administration Law of the PRC
Administrative Procedures for Quality Complaints
Provisions for Drug Package Inserts and Labels
Administrative Procedures for Quality Information
Provisions for the Change Management of Post-approval Drugs (Interim)
Management Rules for Qualified Persons
Good Pharmacovigilance Practice (GVP)
Administrative Procedures for TCM Pre-treatment and
Administrative Measures for Drug Inspection (Interim) Extraction Workshop Shared among Enterprises within
Livzon Group
Vaccine Administration Law of the PRC
Administrative Measures for Clinical Audit and Procedure
Personal Information Protection Law of the PRC
Administrative Procedures for Quality Risks
Operating Procedures for Product Recalls
Contingency Plans for Material Product Safety Incidents
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
B6. Product Responsibility Law of the PRC on Traditional Chinese Medicine Administrative Measures for Joint Audit on Commissioned
Research Institution
Technical Guideline for the Revision of Safety Information Items in
Package Inserts of Marketed Traditional Chinese Medicines (Interim) Administrative Measures for Joint Audit of Material Supplier
Technical Guidelines for the Compilation of Information Related to Management Procedures for Design Audit Purchasing and
Children’s Drug Use in the Instructions of Chemical Drugs and Use of Package Inserts and Labels
Therapeutic Biological Products (Interim)
Management Procedures for Design Review and Printing of
Regulations on the Supervision and Administration of Medical Devices Product Packaging
Regulations on the Administration of Veterinary Drugs Administrative System of Quality Enquiry
Good Manufacturing Practice for Veterinary Drugs Administrative System of After-sale Quality Complaints
Good Clinical Practice for Medical Devices Procedures for Adverse Event Monitoring and Control
Administrative Regulations on the Package Inserts and Labels of Medical Code of Conduct for Interaction with Healthcare Professionals
Devices
Administrative Regulations on Meetings Related to
Administrative Measures for Veterinary Drug Package Inserts and Labels Healthcare Professionals
Chinese Veterinary Pharmacopoeia Anti-Corruption Code of Conduct in the Marketing System
Measures for the Registration of Veterinary Drugs Responsible Marketing Policy of the Sales Center of API
Business Department
Administrative Measures for Medical Advertisements
222 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
B6. Product Responsibility Measures for Drug Advertisement Review Packaging Design and Verification Workflow for Overseas
Sales of Drug Preparations
Implementation Measures for Early Settlement Mechanism of Drug Patent
Disputes (Interim) Workflow for Protection of Drug Clinical Trial Data
Provisions on Several Issues Concerning the Application of Law in the Trial Administrative Procedures for Printing and Packaging
of Civil Cases Involving Patent Disputes Related to Drugs of Which Materials
Applications for Registration are Filed
Patent Workflow and Trademark Management System
General Data Protection Regulations (GDPR)
Administrative Procedures for Contamination Control Strategy
Work Procedures for Drug Registration Inspection (Trial) (CCS) of Pharmaceutical Products
Key Points and Determination Principles of Drug Registration Inspection Management Procedures for the Handling of Individual Case
(Pharmacological and Toxicological Study) (Trial) Safety Reports of Pre-approved Drugs
Key Points and Determination Principles of Drug Registration Inspection Standards of Vulnerability Management
(Drug Clinical Trials) (Trial)
Standards of Password Management
Key Points and Determination Principles of Drug Registration Inspection
(Pharmaceutical Development and Manufacturing Site) (Trial) Standards of Special Account Management
Quality Management System–Requirements (GB/T 19001-2016) Standards of Internet Security Management
Regulations for the Administration of Affairs Concerning Laboratory Administrative Regulations on Network Access
Animals
Provisions of Document Encryption
Guidance Suggestions for the Care and Use of Laboratory Animals
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 2231 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
B6. Product Responsibility Biosecurity Law of the PRC Standards of E-mail System Intrusion Analysis and Emergency
Response
Civil Code of the PRC
Administrative Procedures for Quality Risks
Measures for the Quality Supervision and Administration of the
Distribution and Use of Medicinal Products Procedures for Laboratory Animal Ethics Management
National Medical Products Administration Announcement on Responsible Marketing Policy of Livzon Group
Strengthening Supervision and Management of Contract Manufacturing
by Marketing Authorization Holder Information System Operation and Maintenance Management
System
Regulations on the Supervision and Administration of Marketing
Authorization Holder Implementing Main Responsibility of Drug Quality Information System Management System
and Safety
Emergency Response Management System
Notice on the Standard Use of Drug Names in Drug Advertisements
Incident Response Plan of Data Breach
Administrative Measures for the Clinical Application of Anti-bacterial
Drugs Procedures for Management of QR Codes for Active
Pharmaceutical Ingredients (APIs)
Guidelines for the Clinical Application of Anti-bacterial Drugs
Directories for the Classification Management of Clinical Application of
Anti-bacterial Drugs
Notice on Further Strengthening the Management of Anti-Microbial Drugs
to Suppress Drug Resistance
Detailed Rules for Drug Packaging and Labeling Standards
Provisions for Supervision and Administration of Online Medical Device
Sales
224 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
B6. Product Responsibility Provisions for Supervision and Administration of Medical Device Standard Operating Procedures for the Collection and Upload
Manufacturing of QR Codes for Veterinary Drugs
Good Manufacturing Practice for Medical Devices Standard Operating Procedures for the Use and Maintenance
of QR Codes
Provisions for Supervision and Administration of Medical Device
Distribution Management System for Hazard Investigation
Good Agricultural Practice for Chinese Crude Drugs Contingency Plans for Work Safety
Administrative Measures for Pharmaceutical Qualified Persons of Administrative Procedures for Pharmacovigilance System
Guangdong Provincial Medical Products Administration
Administrative Procedures for Drug Safety Information
Notice on Matters Related to Further Strengthening Supervision and
Administration of Contract Drug Manufacturing in Guangdong Province Operating Procedures for Reporting Post-Approval Individual
Case Safety of Drugs
Technical Guidelines for Research on Overfilling of Chemical Generic Drug
Injections Operating Procedures for Handling Drug Safety Incidents
Special Regulations on the Management of Traditional Chinese Medicine Administrative Procedures for Pharmaceutical Changes of
Standards Innovative Drugs During Clinical Trials
Technical Guidelines for Quality Control Research of Oral Traditional Administrative Procedures for Contract Manufacturing
Chinese Medicine Preparations During Manufacturing (Trial)
Administrative Procedures for Change Control
Technical Guidelines for Pharmaceutical Research on Compatibility and
Stability of Chemical Drug Injections (Trial) Administrative Procedures for Qualified Persons
Technical Guidelines for Pharmaceutical Research on Compatibility and
Stability of Chemical Drug Injections (Trial)
Technical Guidelines for Pharmaceutical Changes of Innovative Drugs
(Chemical Drugs) During Clinical Trials (Trial)
Technical Guidelines for Pharmaceutical Research and Changes of
Biological Products During Clinical Trials (Trial)
Technical Guidelines for Pharmaceutical Change Research of Marketed
Vaccines (Trial)
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
B7. Anti-corruption Criminal Law of the PRC Interim Provisions on Anti-Fraud
Anti-Unfair Competition Law of the PRC Anti-Corruption and Anti-Commercial Bribery Regulations
Interim Provisions on Banning Commercial Bribery Code of Conduct for Sales Personnel of Livzon Group
Notice on Serious Investigation and Punishment and Proactive Prevention Management System for Construction Projects
of Duty Crime in Food and Drug Supervision
Administrative Measures for Major Construction Project
Audit Law of the PRC Implementation
Regulations of the Audit Office on Internal Audit Work Material Management System
Labor Law of the PRC Administrative Measures for Material Procurement
Labor Contract Law of the PRC Administrative Measures for Approval of Allocation and
Write-off of Idle Materials (Interim)
Company Law of the PRC
Management System for Centralized Procurement of
Basic Standard for Enterprise Internal Control Materials
Application Guidelines for the Accounting Standards for Business Code of Professional Ethics for Employees
Enterprises
Internal Audit Work System
226 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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12.1 LIST OF LAWS AND REGULATIONS AND POLICIES (continued)
ESG areas Major laws and regulations policies and standards observed Some internal policies of the Company
B7. Anti-corruption Administrative Measures for Whistleblowing and Complaint
Corporate Internal Control Guidelines
Code of Professional Ethics for Internal Auditors
Staff Commitment for Anti-Corruption and Anti-Commercial
Bribery
Supplier Commitment for Operating with Integrity
Labor Employment Management System
Code of Labor Employment and Ethical Conduct
Administrative Measures for Supplier Classification
Maintenance Risk Assessment and Annual Appraisal
Employee Grievance Management System
Administrative Regulations on Staff Integrity
B8. Community Investment Charity Law of the PRC Management System for Charitable Donation
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS
ESG Indicator Unit 2022 2023 2024
A Environmental1
A1 Emissions2
A1.1 Types of emissions and respective emission data
Industrial wastewater tonne 4530994.9 4921781.5 4853012.5
Chemical Oxygen Demand (CODcr) tonne 259.0 246.3 247.2
Ammonia nitrogen tonne 9.3 10.6 8.7
Volatile organic compounds (VOCs) tonne 26.4 35.5 44.2
Nitrogen oxides (NOX) tonne 101.2 81.6 142.7
Sulphur dioxide (SO2) tonne 29.4 34.1 84.3
Particulate matter tonne 16.5 12.4 12.8
A1.2 Direct (Scope 1) and energy indirect (Scope 2) greenhouse gas emissions and intensity
Direct greenhouse gas emissions (Scope 1)3 CO2 equivalent (in tonnes) 196398.1 155807.28 194440.58
Indirect greenhouse gas emissions (Scope 2)4 CO2 equivalent (in tonnes) 369261.9 358525.65 326718.79
Total greenhouse gas emissions CO2 equivalent (in tonnes) 565660.0 514332.93 521159.37
5 CO2 equivalent (in tonnes)/Intensity of greenhouse gas emissions 0.395 0.365 0.422
RMB10000
1 Environmental data disclosure covers all production companies of Livzon.
2 Disclosure of major pollutants/emissions by type and respective emission data according to the production characteristics of
enterprises.
3 Scope 1 greenhouse gas (“GHG”) emissions are mainly derived from direct GHG emissions from the consumption of fossil fuels
in the company’s operations/production processes (e.g. gasoline diesel natural gas etc.). Emission factors and calculation
methods refer to the Guidelines for Accounting and Reporting of Greenhouse Gas Emissions from Industrial Enterprises in Other
Industries (Trial). The formula used is: CO2 emissions from fossil fuel = fuel consumption × low level heat generation × carbon
content per unit of calorific value × fuel carbon oxidation rate × 44/12.
4 Scope 2 GHG emissions are mainly derived from indirect GHG emissions from purchased electricity and steam consumed bythe company’s operations/production processes calculated with reference to the document “Appendix 2: Reporting Guidanceon Environmental KPIs” of the Hong Kong Stock Exchange. Specifically the power emission factor for 2022 adopts the gridemission factor 0.5810 tCO2/MWh in the “Corporate Greenhouse Gas Emission Accounting Methodology and Reporting Guidefor Power Generation Facilities” (Huan Ban Qi Hou [2021] No. 9) and the power emission factor for 2023 adopts the grid
emission factor 0.5703 tCO2/MWh in the Notice on Carrying out Greenhouse Gas Emission Reporting and Verification for
Selected Key Industries for the Years 2023-2025.
5 The intensity in 2022-2024 was calculated based on RMB10000 of output value.
228 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
A Environmental1
A1 Emissions2
A1.3 Total hazardous waste produced and intensity
Total hazardous waste6 tonne 3532.3 2708.2 2791.0
Hazardous waste intensity5 kg/RMB10000 2.5 1.92 2.3
Of which: medical waste (HW02) and waste
tonne 1954.0 1676.1 1728.8
medicines (HW03)
Other hazardous waste7 tonne 1578.3 1032.0 1062.2
Disposal method:
Total hazardous waste recycled/reused tonne 844.3 423.0 546.2
Total hazardous waste disposed tonne 2688.0 2285.2 2791.0
A1.4 Total non-hazardous waste produced and intensity
Total non-hazardous waste8 tonne 114580.9 103491.2 100364.7
Non-hazardous waste intensity5 kg/RMB10000 80.0 73.40 81.16
Disposal method:
Total non-hazardous waste recycled/reused9 tonne 10830.5 47261.9 24139.9
Total non-hazardous waste disposed tonne 103750.4 56229.3 99544.2
6 Total hazardous waste = Total hazardous waste recycled/reused + total hazardous waste disposed
7 During 2022 to 2024 no highly radioactivity waste was released.
8 Total non-hazardous waste = Total non-hazardous waste recycled/reused + total non-hazardous waste disposed
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
A Environmental1
A2 Use of Resources
A2.1 Direct and indirect energy consumption by type in total and intensity
I. Non-renewable energy
1. Direct energy
Gasoline liter 219086.4 266040.5 217607.7
Diesel liter 165774.7 206607.4 209661.6
Coal tonne 88244.2 66894.5 83607.5
Natural gas 10000 cubic meters 584.5 689.8 737.4
Liquefied petroleum gas tonne 6.8 3.7 0.55
2. Indirect energy
Purchased electricity kWh 423624184.5 416608822.9 413542489.2
Of which: Intensity of purchased
kWh/RMB10000 295.9 295.48 334.43
electricity5
Purchased steam tonne 416061.3 411261.6 357611.3
Total non-renewable energy consumption MWh 1324392.2 1199298.2 1256136.2
230 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
A Environmental1
A2 Use of Resources
A2.1 Direct and indirect energy consumption by type in total and intensity
II. Renewable energy
1. Direct energy
Alcohol based liquid fuel tonne 0.0 0.0 0.0
Biomass fuel tonne 9.9 1004.0 3668.25
Solar power (self-use) kWh 1044773.0 431250.0 25388.0
2. Indirect energy
Solar power (purchased) kWh 235701.0 1192325.8 1496252.0
Total renewable energy consumption MWh 1320.8 5708.2 16445.4
III. Total energy consumption9
1. Direct energy consumption10 MWh 580898.6 472417.4 584692.15
2. Indirect energy consumption11 MWh 744814.4 732589.0 687889.36
Total energy consumption9 MWh 1325713.0 1205006.4 1272581.51
Intensity of total energy consumption5 MWh/RMB10000 0.9 0.85 1.03
9 Total energy consumption = total non-renewable energy consumption + total renewable energy consumption
10 Direct energy consumption (unit: MWh) is derived from gasoline diesel coal natural gas and other relevant direct energy
consumption.
11 Indirect energy consumption (unit: MWh) is derived from purchased electricity purchased steam and solar power (purchased)
which were calculated by referring to the “General Rules for Calculation of The Comprehensive Energy Consumption” (GB2589-
2020).
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
A Environmental1
A2 Use of Resources
A2.2 Water consumption in total and intensity
Consumption of municipal water supplies
tonne 5189580.3 4452079.5 4119908.25
(or from other water utilities) (A)
Fresh surface water consumption (B) tonne 243835.0 179227.0 207101.0
Fresh groundwater consumption (C) tonne 215184.0 1573530.0 1597948.0
Fresh water consumption = A+B+C tonne 5648599.3 6204836.5 5924957.25
Alternative water consumption12 tonne 0 0 0
Total water consumption13 tonne 5648599.3 6204836.5 5924957.25
Intensity of water consumption
tonne/RMB10000 4.0 4.40 4.8
(fresh water)5
Reclaimed water consumption tonne 64836 91952.0 66257.0
Water recycling rate % 4.79 3.21 3.7
A2.5 Total packaging material used for finished products and with reference to per unit produced
Paper packaging material tonne 4829.83 6128.75 5050.76
Other packaging material tonne 8288.08 7988.44 7704.12
Total packaging material used tonne 13117.91 14117.20 12754.89
Intensity of packaging material used5 kg/RMB10000 9.16 10.01 10.31
12 Alternative water sources include seawater brackish water rainwater and gray water.
13 Total water consumption = fresh water consumption + alternative water consumption
232 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
B Social
B1 Employment
B1.1 Total workforce by gender employment type age group and area
Total number of employees person 9005 8933 9067
Male person 4728 4703 4764
Gender
Female person 4277 4230 4303
General manager and above person 80 81 94
Employee Director person 168 183 184
category Manager person 908 897 904
Other employees person 7849 7772 7885
30 and below person 3424 3226 3183
Age 31-49 person 5066 5156 5306
50 and above person 515 551 578
China’s mainland person 8991 8921 9060
Area Hong Kong Macao and Taiwan person 3 2 0
Overseas areas person 11 10 7
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
Diversity
Number of minority staff14 person 540 547 559
Ratio of minority staff % 6.0 6.1 6.1
Ratio of minority staff in management % 3.4 3.1 3.0
Number of women in management person 397 415 438
Ratio of women in management % 34.3 35.8 37.0
Number of senior officers person 8 7 8
Number of female senior officers person 2 2 2
Ratio of female senior officers % 25.0 28.6 25.0
Average ratio of female senior officers over the past
%25.026.226.2
three years
Ratio of women at general manager and above % 27.5 32.1 29.8
Ratio of women at director % 31.0 29.5 33.7
Ratio of women at manager % 35.6 37.4 38.4
Ratio of women holding managerial roles in
%24.925.928.7
revenue-generating functions
Ratio of women in STEM-related positions % 60.2 58.0 58.1
14 The top three minorities of Group are Hui (2.7%) Zhuang (1.2%) and Miao (0.5%). The ratio of Hui Zhuang and Miao in the
Group’s management is 0.42% 0.84% and 0.08% respectively.
234 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
Years of employment
Average years of service for female staff year/person 7.7 7.7 8.0
Average years of service for male staff year/person 9.7 9.5 10.1
New recruits
Total number of new recruits person 2443 2238 2021
Male person 1298 1210 1101
Gender
Female person 1145 1028 920
General manager and above person 3 3 4
Employee Director person 12 8 19
category Manager person 186 167 181
Other employees person 2242 2060 1817
30 and below person 1578 1457 1285
Age 31-49 person 852 765 730
50 and above person 13 16 6
China’s mainland person 2439 2236 2019
Area Hong Kong Macao and Taiwan person 2 1 1
Overseas areas person 2 1 1
Employment absorption
Number of newly recruited staff through recruitment
person Not disclosed Not disclosed 246
absorption
Number of newly recruited staff through flexible
person Not disclosed Not disclosed 60
recruitment
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
Internal recruitment
Percentage of internal recruits15 % 19.08 26.98 31.7
Male % 57.29 53.93 56.70
Gender
Female % 42.71 46.07 43.30
General manager and above % 0.17 1.81 2.87
Employee Director % 5.21 4.96 3.62
category Manager % 23.78 24.55 22.23
Other employees % 70.83 68.68 71.28
30 and below % 37.50 34.70 38.30
Age 31-49 % 59.55 61.79 56.49
50 and above % 2.95 3.51 5.21
China’s mainland % 99.83 100.00 99.79
Area Hong Kong Macao and Taiwan % 0.00 0.00 0.00
Overseas areas % 0.17 0.00 0.21
15 The internal recruitment ratio is calculated as: total number of vacancies taken by the Group’s own staff during the year/the
total number of vacancies of the Group during the year.
236 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
B Social
B1 Employment
B1.2 Employee turnover rate by gender age group and area16
Total employee turnover rate % 10.82 13.45 10.38
Male % 10.09 12.26 9.99
Gender
Female % 11.64 14.78 10.82
30 and below % 12.98 17.66 14.28
Age 31-49 % 9.60 10.79 7.93
50 and above % 4.03 3.95 4.67
China’s mainland % 10.81 13.45 10.37
Area Hong Kong Macao and Taiwan % 25.00 25.00 33.33
Overseas areas % 18.18 8.33 9.09
General manager and above % 1.15 2.41 10.59
Employee Director % 9.79 2.27 6.44
category Manager % 13.90 13.49 14.84
Other employees % 10.60 13.73 9.96
16 The employee turnover rate is calculated as: the number of resignations (in the specified category) / total number of staff at the
beginning of the period (in the specified category) + new recruits (in the specified category).Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 2371 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
B Social
B2 Health and Safety
B2.1 Number and rate of work-related fatalities that occurred in each of the past three years (2022-2024)
Number of work-related fatalities person 0 0 0
Rate of work-related fatalities % 0 0 0
B2.2 Lost days due to work injury
Lost days due to work injury day 143 21 498
Investment in work injury insurance and safety liability insurance
Amount invested in staff injury insurance RMB10000 Not disclosed Not disclosed 520.74
Amount invested in work safety liability insurance RMB10000 Not disclosed Not disclosed 24.55
Coverage of injury insurance for workers % Not disclosed Not disclosed 99.91
B3 Development and Training17
B3.1 Percentage of trained staff by gender and staff category
Percentage of trained staff in total staff % 100 100 98.40
Male % 52.50 52.65 52.49
Gender
Female % 47.50 47.35 47.51
General manager and above % 0.89 0.91 1.03
Employee Director % 1.87 2.05 2.08
category Manager % 10.08 10.04 10.14
Other employees % 87.16 87.00 86.75
17 The calculation of training related data of B3 refers to the Hong Kong Stock Exchange’s Appendix III: Guidelines for Reporting
on Social Key Performance Indicators.
238 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions index
12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
B3.2 Average number of training hours per employee by gender and employee category
Average number of training hours per employee hour/person 80.1 74.3 102.3
Male hour/person 80.1 69.2 100.2
Gender
Female hour/person 80.1 80.1 104.6
General manager and above hour/person 51.6 12.0 17.0
Employee Director hour/person 71.0 28.8 45.6
category Manager hour/person 68.0 31.8 43.6
Other employees hour/person 82.0 81.0 111.5
Average number of training hours per staff by age area and type of training
30 and below hour/person 77.5 106.6 145.4
Age 31-49 hour/person 82.0 55.1 77.1
50 and above hour/person 79.4 65.4 92.8
China’s mainland hour/person 80.1 74.4 102.4
Area Hong Kong Macao and Taiwan hour/person 82.3 30.7 94.0
Overseas areas hour/person 77.9 26.4 11.4
Average length of training per staff involved in
hour/person 3.6 21.3 20.3
management training
Average length of training per staff involved in
hour/person 4.6 36.7 47.3
leadership training
Staff training expenditure
Per capita expenditure on staff training and
RMB/person 478.45 598.88 501.79
development
Employee engagement survey
Proportion of staff who expressed "very satisfied" and
"satisfied" in the employee engagement survey among % 72.39 75 80
total staff
Target of the year set for the proportion of staff who
expressed "very satisfied" and "satisfied" in the % 75 76 /
employee engagement survey among total staff
Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report 2391 About 2 Chairman‘s 3 About 4 ESG 5 Operation 6 Access to
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12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
B Social
B5 Supply Chain Management
B5.1 Number of suppliers by region
Total number of suppliers nos 1877 2086 2059
Number in Southern China nos 667 709 744
Number in Eastern China nos 724 797 779
Number in Northern China nos 188 194 193
Number in Central China nos 131 187 159
Region
Number in Northeastern China nos 31 30 23
Number in Northwestern China nos 92 111 110
Number in Southwestern China nos 36 47 44
Number in foreign countries nos 8 11 7
B6 Product Responsibility
B6.1 Percentage of total products sold or shipped subject to recalls for safety and health reasons
Percentage of such products to total products sold
%000
and/or shipped
B6.2 Number of products and service related complaints received
Product-related complaints nos 77 80 87
Medication queries nos 20 17 21
Major liability incidents related to safety and quality
of products and services
Major safety and quality liability accidents related case Not disclosed Not disclosed 0
to products and services
Amount involved in administrative penalties caused RMB Not disclosed Not disclosed 0
by major liability incidents related to safety and
quality of products and services
Amount involved in damages caused by major RMB Not disclosed Not disclosed 0
liability incidents related to safety and quality of
products and services
240 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions index
12.2 DATA LIST OF KEY PERFORMANCE INDICATORS (continued)
ESG Indicator Unit 2022 2023 2024
B Social
B7 Anti-corruption
B7.1 Number of concluded legal cases regarding corrupt practices brought against the Company or its employees during the reporting
period and the outcomes of the cases
Number of brought and concluded legal cases
case 0 0 0
regarding corrupt practices
B7.3 Anti-corruption training provided to directors and staff
Number of directors who participated in anti-
person 11 11 9
corruption training
Total length of anti-corruption training provided to
hour 22 22 22.5
directors
Number of staff who participated in anti-graft
person 9005 8933 8922
training
Total length of anti-graft training provided to staff hour 22422.5 17020.7 18190.0
B8 Community Investment
B8.2 Resources contributed to the focus areas
Cash donation RMB10000 373.1 1349.8 1089.7
In-kind donation RMB10000 624.7 348.3 208.0
Total investment in charitable donations RMB10000 997.8 1698.1 1297.7
Of which: Investments in health RMB10000 330.8 261.2 457.8
Investments in education RMB10000 61.5 560.2 561.0
Investments in disaster relief RMB10000 322.1 625.1 47.2
Investments in rural revitalization and
RMB10000 254.7 196.1 222.3
industrial assistance
Other investments RMB10000 28.7 55.5 9.4
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CONTENT INDEX
242 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions index
13.1 CONTENT INDEX OF “ENVIRONMENTAL SOCIAL AND GOVERNANCE REPORTING CODE”
OF THE HONG KONG STOCK EXCHANGE
Subject Areas Aspects General Disclosures and Key
Corresponding Section(s)
Performance Indicators (“KPI”)
A. Environmental
Aspect A1: General disclosure 10.3 12.1
Emissions
KPI A1.1 12.2
KPI A1.2 12.2
KPI A1.3 12.2
KPI A1.4 12.2
KPI A1.5 10.2 10.3 10.4
KPI A1.6 10.2 10.3
Aspect A2: General disclosure 10.4 12.1
Use of Resources
KPI A2.1 12.2
KPI A2.2 12.2
KPI A2.3 10.2 10.4
KPI A2.4 10.2 10.4
KPI A2.5 12.2
Aspect A3: General disclosure 10.6 12.1
The Environment and
Natural Resources KPI A3.1 10
Aspect A4: General disclosure 10.5 12.1
Climate Change
KPI A4.1 10.5
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13.1 CONTENT INDEX OF “ENVIRONMENTAL SOCIAL AND GOVERNANCE REPORTING CODE”
OF THE HONG KONG STOCK EXCHANGE (continued)
Subject Areas Aspects General Disclosures and Key
Corresponding Section(s)
Performance Indicators (“KPI”)
B. Social
Employment and Labor Practices
Aspect B1: General disclosure 9 12.1
Employment
KPI B1.1 9.1 12.2
KPI B1.2 9.1 12.2
Aspect B2: General disclosure 9 12.1
Health and Safety
KPI B2.1 9.4 12.2
KPI B2.2 12.2
KPI B2.3 9.4
Aspect B3: General disclosure 9 12.1
Development and Training
KPI B3.1 12.2
KPI B3.2 12.2
Aspect B4: General disclosure 9 12.1
Labor Standards
KPI B4.1 9.1
KPI B4.2 9.1
244 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance Report7 Product 8 Responsible 9 Take human as 10 Green 11 Social 12 Appendix 13 Content
responsibility supply chain the foremost operation contributions index
13.1 CONTENT INDEX OF “ENVIRONMENTAL SOCIAL AND GOVERNANCE REPORTING CODE”
OF THE HONG KONG STOCK EXCHANGE (continued)
Subject Areas Aspects General Disclosures and Key
Corresponding Section(s)
Performance Indicators (“KPI”)
B. Social
Operating Practices
Aspect B5: General disclosure 8 12.1
Supply Chain Management
KPI B5.1 8 12.2
KPI B5.2 8.1 8.3
KPI B5.3 8.1 8.3 8.4 8.5
KPI B5.4 8.5
Aspect B6: General disclosure 5 7 12.1
Product Responsibility
KPI B6.1 7.5 12.2
KPI B6.2 7.5 12.2
KPI B6.3 5.3
KPI B6.4 7.3 7.4 7.5
KPI B6.5 5.1 5.2 7.5
Aspect B7: General disclosure 5 8 12.1
Anti-corruption
KPI B7.1 5.1 12.2
KPI B7.2 5.1 8.3
KPI B7.3 5.1 12.2
Community
Aspect B8: General disclosure 11 12.1
Community Investment
KPI B8.1 6 11 12.2
KPI B8.2 12.2
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13.2 CONTENT INDEX OF SELF-REGULATORY GUIDELINES NO. 17 FOR COMPANIES LISTED
ON SHENZHEN STOCK EXCHANGE - SUSTAINABILITY REPORTING (TRIAL)
No. Topic Corresponding Article(s) Corresponding Section(s)
Environmental
1 Climate response Articles 21 to 28 10.5
2 Pollutant discharge Article 30 10.2 10.3
3 Waste disposal Article 31 10.3
4 Ecosystem and biodiversity protection Article 32 10.6
5 Environmental compliance management Article 33 10.1 10.2
6 Energy utilization Article 35 10.4.2
7 Water resources utilization Article 36 10.4.1
8 Circular economy Article 37 10.4.2
Social
9 Rural revitalization Article 39 10.6 11.2
10 Social contributions Article 40 11
11 Innovation driven Article 42 6
12 Ethics of science and technology Article 43 5.1
13 Supply chain security Article 45 8
14 Equal treatment of SMEs Article 46 8
15 Product and service safety and quality Article 47 7
16 Data security and customer privacy protection Article 48 5.2
17 Employees Article 50 9.4
Sustainability-related Governance
18 Due diligence Article 52 4
19 Stakeholder engagement Article 53 4.3
20 Anti-commercial bribery and anti-corruption Article 55 5.1 8.3
21 Anti-unfair competition Article 56 5.1 8.3
246 Livzon Pharmaceutical Group Inc. 2024 Environmental Social and Governance ReportStock Code 股份代號 : 1513
(A joint stock company incorporated in the People’s
Republic of China with limited liability)（在中華人民共和國註冊成立的股份有限公司）麗珠世界生命常青
Evergreen Life
Bright Future & Wisdom
www.livzon.com.cn 2024
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