ABOUT THIS REPORT
12025 Sustainability Report ABOUT THIS REPORT
2 32025 Sustainability Report ABOUT THIS REPORT
ABOUT THIS REPORT
This report marks the second sustainability report issued by Yunnan Baiyao Group Co. Ltd. We have previously published welfare in accordance with the principles of standardization transparency objectivity and
corporate social responsibility (CSR)/ESG reports for 18 consecutive years. It gives stakeholders information on Yunnan comprehensiveness.Baiyao's social responsibility practices and performance in the areas of management environment society and public
Reference Standards Report Reliability Assurance
This report is prepared in accordance with Self-Regulatory Guidelines No. 17 for Companies Listed on Shenzhen This report was put together by Yunnan Baiyao Group Co. Ltd's Social Responsibility
Stock Exchange—Sustainability Report (For Trial Implementation) and other reporting standards. Management Team and was considered and approved by the Company's Board of Directors
(the "Board"). The Board of Directors and all the directors guarantee that this report contains
no false records misleading statements or significant omissions and they accept individual
Report Scope and joint responsibility for its truthfulness accuracy and completeness.The report covers Yunnan Baiyao Group Co. Ltd as well as its subsidiaries and branches.Statement Explanation
For the sake of simplicity and readability "Yunnan Baiyao Group Co. Ltd." is referred to as
Report Period "Yunnan Baiyao" "Baiyao" "the Company" or "we" in this report.The report covers the period from January 1 2025 to December 31 2025 and serves as the annual report.Report Format
Data Sources This report is available in both printed and online versions. The online version is available for
viewing and can be downloaded at www.yunnanbaiyao.com.cn and the Juchao Information
Unless otherwise specified the financial data in this report comes from the annual financial data of Yunnan website (www.cninfo.com.cn).Baiyao Group Co. Ltd and its subsidiaries. Other data is sourced from internal statistics and manual
compilation. Unless otherwise specified the currency type and amount mentioned in this report are
denominated in RMB.
01 022025 Sustainability Report MESSAGE FROM THE CHAIRMAN
MESSAGE FROM THE CHAIRMAN
Governance as the cornerstone we build a solid base for development. Under the guidance of Party building Yunnan
Baiyao has systematically optimized its governance structure establishing a robust institutional foundation for strategy
execution and high-quality development. We have clearly defined the roles of each governance body: the Committee
of the Communist Party of China ("Party Committee") sets the direction manages the overall situation and ensures
implementation;" the Board of Directors "formulates strategy makes decisions and prevents risks;" and the management
team "plans operations drives execution and strengthens management." Over the past year we have consistently
integrated Party building with corporate governance refined our three-tier ESG governance architecture spanning
"decision-making management and execution" and earned recognition as a 2025 Best Practice Case of Internal Control
among Listed Companies. Grounded in our operational realities and responsive to industry attributes and social concerns
we established material issue lists of sustainability with targeted improvement plans embedding social responsibility
and sustainable development principles throughout our production and operations. Through these efforts we are
progressively building a comprehensive sustainability governance system and cultivating a win-win sustainability model
that creates shared value for all stakeholders.Green as our foundation we fulfill our ecological responsibilities. We have embedded green concepts into our corporate
strategy building a robust foundation for green development across our entire value chain. This year we intensified
efforts in pollution prevention energy conservation emission reduction low-carbon transformation and environmental
protection driving high-quality growth through greater resource efficiency. Benchmarking against Industry 4.0 standards
we established an end-to-end green production system. The Yunnan Baiyao Intelligent Factory was named a "World's
Lighthouse Factory in Manufacturing Industries" by the World Economic Forum (WEF) the first "lighthouse factory" in
Yunnan Province and the first "lighthouse factory" globally in the TCM health products sector. This achievement provides
Zhang Wenxue a replicable and implementable transformation model for high-quality development across the TCM industry. Through
Party Committee Secretary and green-intelligent manufacturing spanning our entire production chain we are not only empowering local ethnic brands to
Chairman of Yunnan Baiyao Group compete on the world stage but also advancing the TCM health products sector and the manufacturing upgrade of Yunnan Province.Responsibility as our core we share the fruits of development. As the "chain leader" driving high-quality development
of Yunnan's TCM materials industry we remain firmly rooted in our "pharmaceutical" foundation while advancing the
deep integration of primary secondary and tertiary industries. We will strengthen and elevate our competitive position
in the sector catalyze the clustered growth of Yunnan's biomedical industry and contribute to the modernization of
Yunnan's industrial system. We export our green development expertise to the industry sharing mature practices from our
intelligent factory in carbon governance green production and full-chain traceability. Through the "Digital Intelligence of
When winds surge and clouds gather it is time to row hard and strive to be first. The year 2025 marks a pivotal Yunnan TCM" platform Yunnan Baiyao will lead and expand the construction of standardized cultivation demonstration
milestone for Yunnan Baiyao as we iterate our "3+2" strategy for the 15th Five-Year Plan period and advance bases across Yunnan Province covering more regions and varieties. By establishing and implementing standards we will
toward becoming a hundred-billion-level modern pharmaceutical industry group. Over the past year Yunnan promote our operational models and digital platform management practices engaging more farmers in standardized
Baiyao has maintained firm confidence confronted challenges head-on and focused on strategic planning and cultivation and collectively advancing the sustainable development of the TCM materials industry. While pursuing high-
development while strengthening Party building to ensure implementation. We have continued to refine and quality development Yunnan Baiyao has consistently fostered the mutual growth of employees and the enterprise
optimize our principal businesses leveraging our proven management capabilities to navigate the uncertainties establishing a skill-oriented compensation system that incentivizes technological innovation and enhances the sense of
of the external market. We have consistently upheld our founding mission of "to guard life and health." Aligned fulfillment among professional technical and skilled personnel. During the reporting period employee compensation
with Yunnan Province's "3815" strategic development goals we have advanced governance enhancement through achieved double-digit growth overall.Party building driven industrial transformation through innovation practiced sustainable development through
green initiatives and demonstrated corporate commitment through social responsibility. In this spirit of honoring The journey ahead is long and only through perseverance can we succeed. As we stand at the starting point of the 15th
tradition while embracing change we are accelerating the journey of the century-old Baiyao to elevate from Five-Year Plan in 2026 Yunnan Baiyao will deeply embrace the concept of sustainable development and remain guided by
"outstanding" to "excellence." our strategy breaking new ground in R&D innovation elevating green development and intensifying industrial synergy.We will advance hand in hand with all stakeholders staying true to our original aspiration of inheriting and innovating
TCM courageously shouldering the mission of industrial upgrading in this new era. Together we will strive to build a
modern pharmaceutical industry group that leads domestically and ranks among the world's best contributing even
greater Baiyao strength to Healthy China and the high-quality development of Yunnan!
03 042025 Sustainability Report AbBoOuUt TY uTnHnISa nR EBPaOiyRaoT
About Yunnan Baiyao Honors and Awards
Ranked 69th in the Kantar Top 50 of 2025 Global
BrandZ Top 100 Most Valuable Pharmaceutical
Chinese Brands in 2025 Enterprises
Brand Finance Pharm Exec in USA
Company Profile 2025 First Session of the Advanced Intelligent
Best Practice Case of Factory of Yunnan
Internal Control among Province 2025
Yunnan Baiyao was first founded in 1902. As a China time-honored brand the Company is dedicated to its corporate Chinese Listed Companies Department of Industry
mission of "to guard life and health." Centered on its four principal businesses i.e. pharmaceuticals TCM resources health and Information
products and pharmaceutical business the Company extended its presence in diverse fields including natural medicines China Association for Technology of Yunnan
health products and medical equipment. The Company has multiple leading core products in niche market with its brand Public Companies Province
value constantly ranking among the top in the industry. Looking forward the Company will adhere to its development (CAPCO)
principle of "strengthening principal businesses stabilizing growth and ensuring sustainability" be committed to
becoming a leading brand in the healthcare sector and drive this century-old brand to step forward to the world's firs-
class modern healthcare industry group.Business Presence Best Practice in Management Accounting Award at CGMA Annual Best Practice Case for
Awards 2025 Sustainable Development
Yunnan Baiyao formulated four strategic positions based on the Company's overall strategic objectives which were The Chartered Institute of China Association for
divided into four segments. Management Accountants Public Companies
(CIMA) (CAPCO)
TCM Resources Pharmaceuticals
Brand Finance Among the first batch of High- Best Practice Case of the
The "chain leader" with high- The "leading" brand of pain Top 33rd Most Valuable Level Quality Management Board of Directors among
qualitydevelopment of Yunan TCM managementin the field of Global Pharmaceutical Ability Enterprises" Listed Companies
resources traumatology Brands in 2025 Ministry of Industry China Association for
Business Brand Finance and Information Public Companies
Segment Technology (CAPCO)
and Strategic
Positioning
Health Products Pharmaceutical Business Yunnan Baiyao Intelligent
Factory was certificated as Manufacturing-oriented 5A-level
The "leading" tier of high-quality The "leading" enterprise in "World's Lighthouse Factory in Supply Chain Service Enterprise
healthlifestyle products pharmaceutical distribution and Manufacturing Industries" China Federation of
innovative services World Economic Logistics & Purchasing
Forum (WEF) (CFLP)
05 062025 Sustainability Report Materiality Analysis
Materiality Analysis Communications with Stakeholders
We have continuously refined our sustainable development issue management process systematically executing our In terms of sustainable development Yunnan Baiyao consistently values stakeholder voices listening to and addressing
"identify-research-analyze" methodology. Adhering strictly to the dual materiality principle we comprehensively identify their concerns through diverse communication channels and systems. The Company maintains close engagement with
internal and external concerns and widely gather stakeholder input through scientifically designed questionnaires and internal and external stakeholders via online interactive platforms official media email shareholders' meetings investor
other channels. Through comprehensive analysis and evaluation we pinpoint material issues that significantly impact hotlines and other avenues and continuously promotes two-way information flow and effective conveyance of feedback
both the Company and our stakeholders. This approach guides our sustainable development practices and information thus enabling the Company to respond promptly to stakeholder needs and remain committed to building an open
disclosure enabling us to more effectively respond to stakeholder expectations. transparent and mutually beneficial sustainable development ecosystem.Mechanism for Communication with Stakeholders
Process to Evaluate the Dual Materiality
Stakeholders Key Topics Communication Channels
Impact Materiality
Based on the connection between business and macro policies we investigate the all-round * Standardized operation * Information disclosure
Identifying impact of related policies and regulations on the overall operation. In combination of the industry * Information disclosure * On-site communication and report at
core issues and its own business characteristics we identify the compliance fields to which we need to pay Shareholders and investor * Risk control shareholders' meetings
key attention. institutions * Reasonable return on * On-site phone email interactive platform and
investment other forms of research
* Cash dividend
Evaluating We collect feedback from employees customers suppliers and other core stakeholders online and
the impact via offline to comprehensively measure the of impact of issues on them including its severity scope
questionnaires * Consumer rights protection * Customer satisfaction surveyand sustainability. * Guarantee of product quality * Product recall system
Customers and consumers and safety * Integrated customer service system
Setting a We define clear standards and set appropriate thresholds to examine and assess significant * Customer privacy protection * Product service and quality assurance
threshold for impacts. Based on such standards and thresholds we screen and prioritize significant actual and * Intellectual property protection
sorting potential impacts.* Integrity in business * Standardized management and
* Supply chain sustainability implementation of contracts and agreements
Based on the research results and the threshold the conclusion on impact materiality is drawn.Forming a basis Business partners * Timely communication * Regular conferences and networking events
for decision The issues of industry consensus can be directly identified. This can provide a basis for us to * Strict implementation of the bidding system
develop our strategic adjustments and action plans. * Collaboration in social responsibility
* Good working environment * Workers' congress
Financial Materiality * Welfare and benefits * Training lectures salons and other
Employees * Career development communication activities
* Thematic networking activities
We systematically sort out the Company's financial records identify the data clues that relate to the Sorting out * Employee satisfaction questionnaires
sustainable development issues and analyze its actual effect on the financial composition during financial
the current accounting period. connection * Compliance with laws and * Information disclosure
regulations * Fulfilling all obligations in accordance with
We analyze the continuity of resource supply chain dependency and other factors based on the Governmental departments * Compliance operation laws and regulationsAnalyzing
likelihood of risks and opportunities and the degree of the financial impact to assess the potential financial / Regulators * Paying taxes in accordance with * Association activities and communications
impact on the financial statements. impact the law
* Joint development
We set thresholds through qualitative levels or quantitative indicators to determine the financial Setting * Financial performance * Press releases and publications
materiality which are used as the clear standards for measuring whether the impacts are standards for Media and * Enterprise management * Media interviews
significant. determination community public * Information disclosure
* Community relations * Volunteer services
We compare the assessment results of issues with the thresholds to determine their financial Putting out * Inclusive healthcare * Community activities
materiality before forming a conclusion which further provides a reference for us to make decisions assessment Communities and NGO * Public welfare donations
in terms of financial strategies and sustainable development business plans. conclusions
07 082025 Sustainability Report Materiality Analysis
Dual Materiality Analysis Matrix
Conclusion on Materiality Analysis
2025 Sustainability Dual Materiality Matrix of Yunnan Baiyao
High materiality
Issues of both financial Innovation driven
and impact materiality
Energy utilization Data security and customer
privacy protection
Innovation driven
Safety and quality of products and services Environmental compliance
Ecosystem and biodiversity
management protection
Supply chain Addressing climate
Employee safety change Safety and quality of products and services
Anti-unfair
competition Circular economy
Pollutant discharge Energy utilizationPollutant Employee
Anti-commercial bribery Rural Social discharge
and anti-corruption revitalization contribution
Ecosystem and biodiversity protection Technology ethics Communication with
stakeholders
Issues of impact Data security and customer privacy Due diligence
Waste disposal
materiality but without protection Environment compliance management
financial materiality
Addressing climate change Circular economy
Supply chain safety Communication with stakeholders
Water resource utilization
Equal treatment for small and medium-
Social contribution Anti-unfair competition sized enterprises
Rura revitalization Anti-commercial bribery and anti-corruption
Waste disposal Technology ethics
Due diligence
Low materiality Financial materiality to the Company High materiality
Issues of financial Water resource utilization
materiality but without Environmental Social Governance
impact materiality
Identification of Material Issues
Issues without financial Equal treatment for small and medium-sized enterprises Environmental Social Governance
materiality and impact
materiality Addressing climate change Rural revitalization Due diligence
Pollutant discharge Social contribution Communication withstakeholders
Waste disposal Innovation driven Anti-commercial bribery and anti-corruption
Ecosystem and biodiversity
protection Technology ethics Anti-unfair competition
Environment compliance
management Supply chain safety
Energy utilization Equal treatment for small and medium-sized enterprises
Water resource utilization Safety and quality of products and services
Circular economy Data security and customer privacy protection
Employee
0910
Impact materiality to ESG2025 Sustainability Report Sustainability Management
Sustainability Management Sustainability Training
To constantly improve its sustainability governance Yunnan Baiyao actively responded to external trends and carried
Yunnan Baiyao has built a systematical sustainability management structure. By virtue of its defined three-tier governance out special training systematically in 2025. Focusing on core issues such as sustainability policy trends climate change
structure the Company integrates its sustainability concept into its corporate strategy and daily operation. We integrate response and governance system development the Company organized four specialized training sessions throughout
our sustainability requirements into our ability system construction and via a perfect risk management and goal the year. Covering key personnel at all levels these sessions effectively deepened understanding of sustainability
decomposition mechanism we ensure to steadily advance and effectively implement our long-term strategies. and enhanced practical capabilities providing a solid foundation for the systematic advancement and long-term
implementation of the Company's sustainability efforts.Governance
Strategies
Sustainability Management System Yunnan Baiyao has deeply embedded sustainability into its new "15th Five-Year Plan" strategic framework. Grounded
in stakeholder feedback and industry trend insights the Company leverages dual materiality assessments to identify
Yunnan Baiyao continues to optimize its sustainability management and control system with a three-tier structure substantive issues ensuring scientifically informed strategic decision-making. We embrace a "dual-wheel drive" model
of "decision - management -implementation" and systematically organizes to advance the implementation of its that balances intensive growth with extensive expansion integrating environmental social and governance requirements
sustainability strategies. This system clarifies the duties and responsibilities of all tiers and the mechanisms for their co- into business operations and capability building through our closed-loop strategic management cycle of "planning
work which ensures the orderly advancement and closed-loop of related work. decoding monitoring review and performance." This approach ensures that as we pursue steady growth we fulfill our
mission of safeguarding life and health while continuously fortifying the resilience essential for long-term development.Sustainability Management Structure
Assessment of Risks of Dual Materiality Issues
Personnel Composition:The vice chairman and the president lead the team
with the Chief Financial Officer and Secretary of the Board of Directors serving
as vice directors and the top managers of functional departments and business Risk Category Definition of Sustainability Risks Related Impacts Plan Strategy and Method
groups as team members to jointly lead and be responsible for the Company's
Leading Level ESG efforts. * The collection and cultivation * Key ingredient supply is not stable * We will plan to advance
ESG Leading Team Main Responsibilities:Responsible for reviewing and approving the Company's of TCM materials disturbs or its quality fluctuates which selection of improved seeds
sustainability strategies objectives and core policies monitoring the effective ecosystems and may lead to less may affect the product quality and standardized cultivation of
running of the sustainability risk management and internal control system biodiversity; and production continuity; medicinal materials to less rely on
of the Company and assessing the overall sustainability performance and * Being highly reliant on some wild * The Company may face the the wild resources;
developing goal plans. medicinal material resources may compliance risks and potential * We will strength the supply chain lead to excessive collection and punishments brought by ecology management and clarify
Biodiversity Risk unsustainable utilization risks; stricter ecological environment the environmental protection
* Due to insufficient ecology regulation; responsibilities of the suppliers
Personnel Composition:Composed of professionals from the sustainability protection measures taken * It may trigger ecological damage and their access standards;
related departments serving as the central management team for the production and operation related discussions thus * We will improve the ecological
Company's sustainability. activities may generate an impact impacting the Company brand protection and restoration
Management Main Responsibilities:Responsible for the daily sustainability advancement on the surrounding environment. image and social responsibility mechanism and advance the ESG Promotion
Office and professional supports specifically including developing plans organizing
evaluation. implementation of the biodiversity
internal and external communications coordinating resource allocation protection measures.following up the progress of fulfilment of the objectives and advancing the * Inadequate disposal of waste * The Company may face * We will strengthen the
effective implementation of all systems and measures. water waste gas and solid waste punishments by environmental management and control of
during the production process protection regulators and is the whole pollutant discharge
may lead to excessive discharge required to rectify which may processes and improve our
Personnel Composition:By profession it covers strategic planning external risks; increase the operation cost and capabilities to dispose the waste * Unstable running of pollution compliance pressure; water waste gas and solid wastes;
coordination information disclosure financial security legal patent risk control Excessive governance facilities may have an * It may generate unfavorable * We will enhance the running and
brand publicity quality control employee caring supply ecology construction Pollutant impact on continuous standard impacts on the surrounding maintenance of the environmental
Implementation green environmental protection coordination and other key functions. Discharge Risk emissions; environments thus triggering protection facilities to ensure
Level Main Responsibilities:Responsible for executing sustainability-related * Imperfect environment ecological and social risks; stable and standard emissions;
ESG Working measures in their own fields including meeting and training organization management and monitoring * It may trigger negative discussions * We will improve our
Groups information collection and report compiling special project advancement mechanism may lead to about the environment which environmental management and
internal and external communication coordination and follow-up and feedback inadequate compliant will damage the Company brand monitoring system to improve our
of the implementation effects so as to ensure the fulfilment of the Company's implementation risks. image and social responsibility compliance management level.evaluation.overall sustainability objectives.
11 122025 Sustainability Report Sustainability Management
In addition based on the Company's business and industry characteristics we conducted systematic assessments
Risk Category Definition of Sustainability Risks Related Impacts Plan Strategy and Method of relevant emerging risks and developed targeted response strategies in 2025 to enhance our forward-looking risk
management capabilities and establish a foundation for identifying and controlling potential challenges.* Insufficiently optimized energy * Low energy utilization efficiency * We will optimize our energy
utilization structure with much may increase the production structure and increase clean Assessment of Emerging Risks
room for improvement of clean costs thus impacting the energy utilization ratio step by
energy proportion; Company operation efficiency; step; Risk Category Definition of Sustainability Risks Related Impacts Plan Strategy and Method
* Refined energy management level * The Company may face * We will enhance refined energy * Disconnection of digital * Technology investment returns may * We need strengthen synergy effect
Insufficient is not high which may lead to low compliance pressure and management and increase energy technology application fall short of expectations which between top-level design and business
Energy energy utilization efficiency; constraints brought by the stricter efficiency level and utilization with the business may increase operation costs; to ensure accurate and effective
Utilization * Inadequate implementation of energy conservation and emission efficiency;
Efficiency demands leads to low * The Company may face data technology application;energy saving and consumption reduction policies; * We will drive the transformation of
reduction measures may lead to * It may improve the carbon energy conservation technologies input-output efficiency; compliance algorithmic fairness * We need to perfect the data security and
waste of energy resources. emission level thus impacting and improve our management Digitalization * There may be data and other legal and reputation risks; AI governance system and establish its
the Company's green to reduce output energy Risks leakage algorithm bias * It may lead to patients' incorrect use standards and ethics guidelines;
transformation and sustainability consumption per unit. and other security and medication use which may affect * We need to strengthen internal and
performance. ethics risks; the medication use effect and brand external communications clarify the
* AI-assisted diagnosis may reputation. assisted position and limitation of AI
* Production line automation * The occurrence of employee work * We will actively introduce
features insufficient coverage injury and occupational disease interlocking devices alarm cause patients' incorrect tools.with some processes featuring may increase which may directly devices detection devices and medication use.high-risk and high labor intensity lead to increase in the medical other safety facilities to effectively * Remote healthcare * Traditional business model and * We need to actively extend our
still rely on labor. This may cause and compensation costs and loss reduce the accident risk hazards at personalized treatment organization capabilities may presence into emerging business fields
E mployee's musculoskeletal disease and of work hours; the production sites; among other new cause the Company to fail to adapt to accelerate innovative technology
Occupational occupational strain in a long term; * It may have an impact on the * We will offer three more models constitutes an to the market change thus losing R&D and application;
Transformation
Health Risk * Employee health promotion employee's morale retention rate examination items in our impact on current service the development opportunities; * We need to systematically upgrade
and stress management employer brand attractiveness employee annual free physical Risks processes resource * The skills and cognitions of our organization capabilities and carry
system has not been perfect thus increasing the recruiting and examination package to allow the allocation and personnel healthcare professionals lag out personnel training to improve our
with a mechanism to identify training costs. employees to pay more attention capabilities. which may affect the landing capabilities to adapt to and control
and support work-related to and better maintain their own efficiency of the new technologies. new models.psychological risk to be improved. health. * Climate change may * The increase in ingredients * We need to drive a diversified
* If not 100% upstream suppliers * Defects of ingredients or * We will constantly enhance our impact the environment constitutes a challenge of the presence of supply bases and
of TCM materials excipients etc. production processes may lead quality risk management and of the medicinal material procurement stability; construct a resilient supply chain;
are subject to quality audit and to unqualified product batches dynamically monitor any changes producing areas which * Supply chain disruption make affect * We need to develop emergency plan
process control there may lead to thus triggering customer biases and other potential risk may lead to unstable the product delivery; for response to extreme weather and
raw material quality fluctuation complaints returns and failure of events in all operation links; supply and lower quality * Product quality consistency risk optimize our logistics networks;
Quality Risk risk; sampling inspection by market * We will constantly drive the of key medicinal material increases. It also may affect the ESG * We need to upgrade our warehouse
of the Entire * There have been blind spots supervisors; construction of quality culture Climate Change
Industry Chain in term of monitoring the * Any quality and safety events systematically carry out quality ingredients; performance and the investors' facilities and environmental
quality assurance capabilities may trigger product recall awareness training and help Risk * Frequent extreme climates confidence. management and control
in the down streams such as compensation severe damage of employees deeply understand the disrupt logistics and capabilities;
logistics distribution (specially brand reputation and decline in major significance of quality to the transportation; * We need to coordinate with the
temperature-controlling market shares. Company development. * Temperature and humidity suppliers to explore climate-
products). fluctuations over time adaptable cultivation technologies.* There have been biases between * Return on R&D investments may * We will regularly carry out increase the difficulty
the cutting-edge technology be lower than expectations dynamic assessment and priority and cost of warehouse
research direction and the actual which may impact the Company's ranking of the R&D projects based management.market demands clinical value profitability and the confidence of on the market potential clinical * The Company's core * It may cause direct economy loss * We need to build an intellectual
or production feasibility which the shareholders in the Company; demands and transformation patents technology and weaken the product market property right risk control system
leaded to failure of effective * The Company may face long- feasibility. secrets and other competitiveness; covering the entire life cycle;
transformation of research term risks of aging of the current * We will constantly strengthen the assets are at risk of * It damages innovation image and * We need to regularly carry out risk
Technology R&D resource investments into product life cycles and growth integration of the basic research infringement; brand reputation; investigation and audit;
Transformation competitive products; fatigues due to lagging behind of with the innovation capabilities Intellectual * The Company may * It may trigger legal actions and * We need to strengthen all staff
Risk * Internal R&D pipeline innovation in key technologies. actively introduce cutting-edge Property Right unintentionally infringe market access limitation. training and contract management
management mechanisms are technologies construct high-level Risks on the intellectual (i.e. the intellectual property rights
not agile enough with insufficient R&D platform systems and fully property rights of others clauses are set out specifically in the
decision to promptly terminate improve R&D efficiency and core
or change the purposes of the competitiveness. in its R&D activities procurement contracts.);
failed projects which may cause cooperation activities * We need to proactively safeguard our
the resource accumulation and etc. rights via administrative judicial and
opportunity cost increase. other channels.
13 142025 Sustainability Report Sustainability Management
Impact and Risk Management Indicators and Objectives
Yunnan Baiyao systematically advances the identification and management of sustainability-related risks through a three- Yunnan Baiyao has deeply integrated its sustainability into its long-term development blueprint and systematically
tier linkage risk management architecture covering all business units. The Company has fully embedded sustainability risk constructed a multi-dimensional objective system covering environment society and governance. This objective system
issues into its existing risk management processes establishing normalized mechanisms for identification assessment has fully integrated into the Company's operation management and business development links. We keep systematically
and response. Furthermore sustainability requirements have been integrated into investment decision-making and advance our practice and innovation in related key fields. Meanwhile via technology-driven we advance our R&D
business analysis to mitigate major risks and enhance overall risk management and decision-making quality. breakthrough and product upgrade be committed to create long-term values for stakeholders and solidify a foundation
for the Company's sustainability.Risk Management Sustainability Indicators and Objectives
Issues Objectives Progress during the Reporting Period
By 2027 to master the artificial We have successfully researched and developed "Panax notoginseng
domestication and large-scale liquid-phase chip" realizing the leap from "empirical breeding" to
cultivating techniques for 3-5 "precision breeding." We also have constantly invested in R&D of
wild medicinal plants establish a reproductive technology for Paris polyphylla and successfully realized
Risk Identification Risk Assessment Risk Response perfect biodiversity conservation the domestication of wild Paris polyphylla vigorously promoting the
Ecosystem and monitoring system and realize industrialization and large-scale development of this rare Chinese
The Company focuses on The Company bases on its The Company bases on the biodiversity dynamic tracking of core species. medicinal material.
010203
sustainability-related risks business realities and macro risk assessment results to conservation To enlarge our ecological As at the end of the reporting period promoted by the Company nearly
in the Company's daily trends to select the key develop and implement cultivation base area so that by 150000 mu of Yunnan authentic Chinese medicinal materials have been
operations and its business sustainability related risks. It corresponding risk easing 2030 we will realize a coverage cultivated. Building upon the establishment of standardized cultivation
fields; it also includes these uses qualitative analysis and strategies and specific control rate of up to 80% of ecological demonstration bases within Yunnan Province the Company has
related risks in the Company's quantitative tools to assess measures for the key risks cultivation of core species. initiated the construction of similar bases outside the province.risk database and maintains these risks from their likelihood that the Company needs to
and updates the database of occurrence potential impact focus on. 100% compliant discharge of 100% compliant pollutant discharge has been achieved.regularly. level and the current control pollutants.effectiveness to finally identify Pollutant To lower our wastewater discharge
the risk priority. discharge intensity per RMB 10000 output In 2025 the Company's wastewater discharge intensity was 0.77 tons
value in 2030 by 7% compared to per RMB 10000 output value.our 2025 baseline.To lower our energy consumption
Energy intensity per RMB 10000 output In 2025 our energy consumption intensity was 0.016 tons of standard
utilization value in 2030 by 7% compared to coal per RMB 10000 output value.our 2025 baseline.* In 2025 the Company had a total of 704 R&D personnels including 48
people with a doctoral degree or above 290 people with a master's
degree 325 people with a bachelor's degree and 41 people with
below a bachelor's degreeaccounting for 7.58% of the total regular
employees of the Company;
To build our high-quality talent * The Company has established benchmarking market and pay system
teams and enable the value that emphasizes the post value and personal contribution and also
creators to truly share the fruits of connect the employee's personal income growth with the Company's
our development. development via performance linkage;
Employees
* In 2025 the Company offered a total of 337162.92 hours of training
for employees with a total of 59557 employees covered when the
same employee attended two sessions of training we counted as two
employees were trained and so on with an average of 36.31 training
hours per employee.To identify safety risks so as to * The Company invested a total of RMB 9.1258 million in safety and
achieve safety production and carried out 342 sessions of safety examination work with 2762
reduce safety production accidents. hidden dangers found out and up to 100% of rectification rate.
15 162025 Sustainability Report Sustainability Management
Issues Objectives Progress during the Reporting Period Issues Objectives Progress during the Reporting Period
* For more than 80% of self-operated business quality system To continue to advance the * The managements and employees of key posts have entered into
management certifications have been obtained and Yunan construction of normalization and more than 2000 copies of Commitment to Integrity Practice;
Pharmaceutical Co. Ltd the Company's subsidiary has successfully systematization of the integrity
Safety and To safeguard the health of Business * For hundreds of projects integrity tips have set up on the front line of passed ISO 9001:2015 quality management system certification; education and strengthen
quality of consumers trusted by consumers ethics business;
products and and guided by full life cycle-based * We provided a total of 1973 sessions with a total of 781.2 hours
the integrity awareness and
* Suppliers have entered into more than 1000 pieces of integrity
services quality management. of due quality training for related personnel of all operation units
compliance literacy of cadres and
agreements.with a total of 80104 personnels covered when the same personnel employees.attended two sessions of training we counted as two personnels were
trained and so on;
Currently there have been 18 TCM major varieties involved in To actively participate in social
redevelopment with the following major projects included. Social welfare undertakings to respond In 2025 the Company offered a total of about RMB 3.56 million for
contribution to the nation's rural revitalization external donations.* For PSQ project data collection for 704 cases in Phase II clinical trials strategies.To drive the redevelopment of has been completed pharmaceutical research has been finalized and
traditional products. production processes have been solidified;
* For Fuqi Guben Ointment project the initiation of 17 research centers
for Phase III clinical trials has been completed and 486 subjects have
been enrolled.Innovation
driven
* The initiation of 29 research centers for Phase III clinical trials
has been completed for the INR101 injectable diagnostic
To scientifically make short-term radiopharmaceutical project with 239 subjects enrolled;
medium-term and long-term
innovative R&D plans and ensure * For INR102 therapeutic radiopharmaceutical project the enrollment
sustainable transformation of and dosing of 3 subjects in the low-dose cohort of Phase I/IIa clinical
innovation achievements. trials has been completed along with enrollment and dosing of 1
subject in the mid-dose cohort; 2 subjects have completed screening
for INR101.To lower our carbon emission
Climate
intensity per RMB 10000 output * In 2025 our carbon emission intensity was 0.046 tons per RMB 10000
change
value in 2030 by 7% compared to output value.response
our 2025 baseline.* Via "832 Platform" we procured a total of 8862 piece of agricultural
byproduct of Weixi County at a total of RMB 886200 helping farmers
increase their income;
* We constantly carried out "Golden Autumn Scholarship" program.Specifically we invested a total of RMB 164000 in 2025 which helped
To systematically plan and 92 college students and junior college students continue their studies;
constantly carry out rural
Rural * In 2025 Yunan Baiyao "Digital Intelligence of Yunnan TCM" platform
revitalization project by virtue of
revitalization with 23000 online users has recorded a total of RMB 2.1 billion of
our own industry resources and turnover supported more than 410000 growers covering nearly
professional capabilities. 1300000 mu of bases. Agricultural linkage helped closely connect
the origin warehouse operation and standardized cultivation
demonstration base construction with industrial support which
not only helped retain output value and tax revenue for the local
governments but also helped retain the key industrial upgrading
links and employment opportunities.
17 182025 Sustainability Report Topic 1: Lighthouse Factory: The World's First Benchmark for Intelligent Manufacturing of ATBCOMU HTe TalHthIS P RrEoPdOucRtTs
Topic 1 Lighthouse Factory:
The World's First Benchmark for Intelligent
Manufacturing of TCM Health Products
As manufacturing undergoes rapid convergence of digital The Company has deployed over 40 Fourth Industrial Revolution (4IR) solutions at its Intelligent Factory including
intelligent and green technologies Yunnan Baiyao proactively technologies such as satellite remote sensing Industrial Internet of Things (IIoT) and Large Language Models (LLMs)
charts a new course with forward-looking strategic vision. the Yunnan Baiyao Intelligent Factory finally leading to a sharp decline in raw material return rates inventory days and stockout rates. The factory by virtue of Through the establishment of the Yunnan Baiyao Intelligent an innovation model combining "intelligent manufacturing + green park + industry chain collaboration" redefined the
Factory the Company has implemented end-to-end digital was successfully named to the World modern TCM production standards setting a new benchmark for national brands in global competition.innovation and industry chain collaboration achieving a deep Economic Forum's
integration of traditional agriculture with modern technology. Transformation goals End-to-end supply assurance End-to-end delivery agility enhancement
This has resulted in the creation of an intelligent manufacturing "Global Lighthouse
system that is "visible tangible and traceable." In September Factory" Planting Market insight
2025 the Yunnan Baiyao Intelligent Factory was successfully list demand data R&D data
named to the World Economic Forum's "Global Lighthouse Design | Experimentation | Market launch
Factory" list becoming the first "Lighthouse Factory" in the TCM Planting Raw materials Manufacturing SalesValue stream Sourcing | Site Harvesting | Warehousing | Processing Market data
health products sector both in Yunnan Province and worldwide. becoming the first establishment | Procurement | Production | Packaging | collectionCultivation Transportation
This factory with a total investment of more than RMB 2 billion Integration plan
and a coverage of an area of 113 mu is not only a key presence "Lighthouse Factory" Procurement Production-sales-supply collaboration | Production |
by which Yunnan Baiyao responded to "Made in China 2025" in the TCM health products sector demand data Allocation Product demand data
strategy but also more importantly a milestone that shows the
Solutions Medicinal material planting Planting assistant & fresh Paste formula Integration One-click paste Quality Inventory Demand forecasting
transformation of TCM industry from traditional manufacturing detection & yield forecasting processing platform development plan preparation release allocation
to intelligent manufacturing.Full Chain Transformation Scheme of Lighthouse Factory
Digital Intelligence Empowerment: Full-chain Digital
Production System
Addressing the manufacturing characteristics of TCM health products including diverse formulations complex processes
and high quality sensitivity Yunnan Baiyao has leveraged its Intelligent Factory as a platform to systematically build an
end-to-end digital-intelligent manufacturing system spanning R&D production supply chain quality control and logistics.Through the deployment of large-scale sensing and data acquisition systems at critical nodes real-time monitoring and
centralized management of production processes have been achieved driving the shift in manufacturing decision-making
from experience-based to data-driven approaches.At the production organization level the Company with flexible
manufacturing as the core modularly restructured its traditional
processes breaking down the production processes into standardized
functional units. Also the Company achieved a rapid shift among
products with multiple formulations and multiple specifications via
parameterized configurations which effectively improved the running
efficiency of the parallel production of multiple varieties of products.At the quality management level digital intelligence capabilities were
embedded in the production process with introduction of intelligent
audit and online detection technologies allowing quality control to
be conducted in process management but not post inspection. This
Yunnan Baiyao Intelligent Factory significantly improved the detection efficiency and quality consistency. Yunnan Baiyao Factory Production Lines
19 202025 Sustainability Report Topic 1: Lighthouse Factory: The World's First Benchmark for Intelligent Manufacturing of ATBCOMU HTe TalHthIS P RrEoPdOucRtTs
Digital-intelligence Empowered Core Initiatives
Management Dimension Digital-intelligence Initiatives
Carbon Inventory In the refined organization carbon inventory by relying on digital carbon management system
The Company deployed more than 7500 sensors to construct a whole-process digital Automation the Company systematically captured the emission data established high quality factor
Digital operation management system covering "R&D-production-supply-sale" realizing the real-time Standardization matching rules one-click generated standardized organization carbon inventory and product
in the whole monitoring and intelligent scheduling from ingredient traceability and finished product carbon footprint report and constantly mined the potential opportunities of carbon reduction
process
outbound. from multidimensions.The production processes were broken down into 56 minimal functional units which Visualization Multidimensional visible analysis of organization carbon emission structure product carbon
realized "one-click switch" via graphical parameter orchestration. This satisfied the Analysis of Carbon footprint in each stage of the full life cycle and supply chain carbon emissions.needs for production line switch of 42 ointment formulations and 558 SKUs shortening Data
the production parameter adjustment duration from 20 minutes to 1 minute.Flexible The Company constructed a "digital-intelligence driven full-chain quality traceability Intelligent
production model" and introduced AI intelligent audit and machine learning shortening the The intelligent factory discharged over Management of
and efficiency product release for audit duration by 55%. 40000 tons of reverse osmosis concentrated Water Resource
improvement water annually. By intelligent calculation of
The application of online near-infrared spectroscopy detection technology shortened water volume and matching of water quality
the duration for testing the active ingredients in toothpaste from 710 minutes the Company found that it met the standard
to 2 minutes. This improved the detection efficiency by 355 times and drove the fo r wa ste wate r p ret reat m e n t s y ste m
transformation of quality detection from "batch sampling inspection" to "real-time and other systems. According to this the Company added a new intelligent constant-
intelligent control." pressure water supply device and renovated
the pipeline network to achieve precise
recycling of concentrated water. After the
Green Intelligence Manufacturing: A Sustainable project was put into use the Company saved
Development Path Centered on Low-Carbon and 33600 tons of water reduced 33600 tons Reverse Osmosis Concentrated Water of wastewater discharges and recorded a Renovation for Reuse
Environmental Protection new income of RMB 630000 with a synergic
carbon reduction of 360 tons.In the construction and operation of its Intelligent Factory Yunnan Baiyao has integrated green and low-carbon
requirements into the overall design of the manufacturing system. Through digital means energy and resource
management has been transformed from experience-based control to refined systematic management. Leveraging a 01 02 03 04 05
unified digital platform the Company has implemented online monitoring and dynamic analysis of carbon emissions
across the value chain and embedded energy conservation and consumption reduction requirements into the full product Raw material Manufacturing Transportation Consumer use Product end-
lifecycle—from production to disposal. On the premise of ensuring production stability and product quality resource acquisition & low- & production of-life disposal
consumption intensity and environmental impact have been continuously reduced. Meanwhile green management carbon design
requirements have been progressively extended to upstream and downstream supply chain partners driving the Low-carbon process Fine-grained Rail-truck Recyclable/
formation of a green operating model throughout the entire value chain. optimization for intelligent energy multimodal Product carbon biodegradable
materials management transport label visualization material exploration
Core Initiatives of Intelligent Green Management
Online Monitoring We have established an intelligent energy management system that enables "clear visibility Low-carbon raw Distributed PV Increasing NEV fleet Low-residue paste Establishment of packaging recycling
of Value Chain effective control and optimal refinement." By deploying IoT networks covering water material selection deployment ratio product design system
Carbon Emissions electricity gas and steam we have connected the "nerve endings" of energy systems
achieving data transparency and fine-grained energy consumption management.The Company established digital PDCA closed loop realizing energy consumption prediction
objective breaking down abnormal warning and rapid processing. For key units such as air
compressor station refrigeration station the Company customized an AI intelligent control
system. On the premise of ensuring production this helped realized precise scheduling of
energy on demand. Finally it helped achieve a decline of energy consumption by the air
compressor system and the refrigeration system by 10% and 27% respectively and a reduction
of annual electricity of nearly one million kilowatt-hours. Initiatives for Carbon Reduction in Full Life Cycle of the Product
21 222025 Sustainability Report Topic 1: Lighthouse Factory: The World's First Benchmark for Intelligent Manufacturing of ATBCOMU HTe TalHthIS P RrEoPdOucRtTs
Industrial Synergy: From "Intelligent Factory Manufacturing" Standardized Cultivation Demonstration and Shared Fresh Processing Supported by
Multimodal Large Model
to "Ecological Breakthrough"
Centered on the Intelligent Factory Yunnan Baiyao has extended its digital-intelligence capabilities from "intra-factory As the "chain leader" in the TCM industry Yunnan Baiyao is committed to driving upgrades across the entire industry
manufacturing" to "industry-chain synergy" driving integrated optimization across the "agriculture-industry-market" chain. Addressing challenges such as quality fluctuations in TCM materials significant technical disparities among farmers
value chain. and extensive preliminary processing the Company has pioneered digital management of standardized cultivation
demonstrations. We introduced "Lei Gong" a multimodal large language model serving as an agricultural technology
assistant to support mobile task management input product whitelist/blacklist control and task execution tracking
At the upstream end the Company leverages digital means to enhance the visibility predictability and controllability with audit trails. We established origin-based fresh processing and shared platforms along with automated processing
of TCM materials supply reducing the impact of raw material fluctuations on quality and delivery. production lines achieving processing standardization and quality traceability. Through the integrated approach of
"digital management + intelligent tutoring + shared processing services" we empower farmers with digital capabilities. Via
an AI-powered agricultural task service mobile application farmers receive guidance on scientific standardized cultivation
Production Volume Prediction of TCM Materials and Precise Procurement of TCM Materials
Empowered by Satellite Remote Sensing and AI practices driving standardization across upstream industries. This has led to a 40% reduction in ingredient defect rates
ensuring product quality from the source and realizing our commitment to "good medicines from good ingredients."
"Lei Gong" multimodal large model
At the cultivation end the Company leverages satellite
remote sensing and AI technologies to monitor the Knowledge base
entire cultivation process of TCM materials enabling * Medicinal material FAQ
cultivation
cultivation planning and yield forecasting. An end- * Medicinal material
to-end supplier management system has been processing
* GAP standards
established driving the transformation of production Pest and disease identification
volume prediction from experience-based estimation
to model-based approaches. This provides support Technology Service for Farmers Based on Multimodal Large Model
for reducing reliance on high safety stock improving
procurement planning precision and enhancing cross- Multispectral-assisted Satellite Remote Sensing for Greenhouse At the processing end high synergy among fresh processing flexible production lines and intelligent logistics helped us be
regional coordination efficiency. Identification able to handle massive big orders and also promptly respond to personalized small batch needs sharply shortening the
order delivery cycle reducing inventory backlog and improving the operation efficiency of the whole chain.Shared processing services Automated processing line
* Industry qualification
Washing Slicing Drying Screening
certification
* Socialized services 5-stage Machine vision
* Digital production + automated washing equipment
record system process Intelligent sorting
Shared Platform Model for Origin-based Fresh Processing
At the consumer end the Company created an end-to-end quality traceability platform. Each product can be traced by
scanning QR code. Consumers can see the data about the origin of the ingredients of that product the product production
process and the inspection results. The Company enhances consumer trust by improving traceability and information
transparency mechanisms while using changes in market demand to drive optimization of R&D procurement and
production planning creating a closed-loop positive cycle of "market-production-R&D."
Looking ahead Yunnan Baiyao Intelligent Factory plans to replicate and extend its "intelligent manufacturing"
model to product lines including TCM health products and wellness foods driving efficiency improvements
across the entire industry chain. Concurrently the Company will systematically document its intelligent
manufacturing solutions sharing technical expertise in multi-category production switching end-to-end
quality traceability and other capabilities with the broader industry. This will help more manufacturing
enterprises reduce transformation costs overcome technical bottlenecks and collectively propel the TCM
industry toward a new era of high-quality development.
23 242025 Sustainability Report Topic 2: Reshaping the "Frontline Workshop": Innovating New Mechanisms to Engage aAnBdO SUuTp TpHoIrSt RFaErPmOeRrTs
Topic 2 Reshaping the "Frontline Workshop":
Innovating New Mechanisms to Engage and
Support Farmers
Faced with long-standing challenges in Yunnan's TCM In Shuangbai County Chuxiong Prefecture Yunnan Baiyao's processing center which focused on "Yunnan-origin Poria
industry such as fragmented production value leakage and "Standardized Industrial cocos" has achieved efficient conversion from fresh raw materials to standardized finished products. In Pingbian County difficulties in quality control and traceability Yunnan Baiyao Honghe Prefecture an innovative "initial drying + sweating + secondary drying" process tailored to the characteristics of
has systematically restructured the upstream segment of the Products" Amomum villosum has reduced the traditional drying time from 60 hours to 30 hours. These processing facilities rooted
industry chain using the "origin warehouse" model as its in their local regions have effectively reduced the time and distance required to transform medicinal materials from
central pillar. By deeply integrating standardized processing harvest to finished products. They have facilitated a significant leap in value transforming agricultural byproducts into
digital monitoring and control and local production the value transformation standardized industrial goods and laid a solid foundation for ensuring the quality of medicinal materials at the source and
Company has not only established a fully controllable system stabilizing the supply of key raw materials.covering the entire process from "breeding to planting
harvesting and processing" but has also used this as a "Primary Agricultural In 2025 Yunnan Baiyao deeply integrated and effectively facilitated the
foundation to innovatively create a close-knit and diversified seamless alignment of top-level planning with grassroots implementation Products"
mechanism for engaging and supporting local farmers. This in industrial development translating provincial strategic objectives into
practice has fundamentally driven the value transformation concrete industrial actions. The Company fully implemented the "Six Ones"
of TCM materials from "primary agricultural products" project and use this as a framework to promote the implementation of the sustainable
to "standardized industrial products" firmly anchoring "Frontline Workshop"
"One Variety One Chain" model in key production areas.the industry's development in its production regions and for the high-quality development of the TCM industry. In terms of industrial development we have invested in origin warehouses
establishing a solid sustainable "Frontline Workshop" for the and processing centers in key production areas such as Weishan Carthamus
high-quality development of the TCM industry. tinctorius and Pingbian Amomum villosum establishing a dedicated
modern "Frontline Workshop" for each variety ("One Variety"). In terms of
resource management we adopted large-scale centralized procurement
Innovative Model: From Origin Warehouses to a Seamless and stockpiling for crops such as Carthamus tinctorius Amomum villosum
"One Variety One Chain" System and Panax notoginseng which has served as a "stabilizing force" in the
industrial chain ("One Chain") helping to stabilize the fundamentals of
specific industrial chains and safeguard the incomes of medicinal material
farmers. This has not only established a strategic direct link between
"production areas" and "markets" but also strengthened the control
over core resources within the industrial chains ("One Chain") for specific Carthamus tinctorius procurement and
varieties such as Poria cocos and Bletilla striata. stockpiling site in Weishan
From unified planting plans and seed supply to standardized processing
procurement and sales and on to centralized digital management this
system has been successfully implemented for specific crop varieties. We
have established a fully controllable supply chain from seed to product
achieving a win-win outcome for all stakeholders by boosting corporate
efficiency upgrading the industry increasing farmers' incomes and
generating additional tax revenue for the government. This involves not
only the physical construction of factories and warehouses but also the
establishment of a modern industrial system centered on product variety
and aimed at full-chain collaboration. It is a mutually beneficial industrial
ecosystem. This model is leading the transformation of Yunnan's TCM
industry from a fragmented "resource dividend" toward an intensive and
efficient "system dividend" and "innovation dividend" injecting a powerful Amomum villosum procurement and
"Digital Intelligence of Yunnan TCM" (Pingbian) Processing Center dose of "Yunnan TCM" vitality into rural revitalization. stockpiling site in Pingbian
25 262025 Sustainability Report Topic 2: Reshaping the "Frontline Workshop": Innovating New Mechanisms to Engage aAnBdO SUuTp TpHoIrSt RFaErPmOeRrTs
Platform Empowerment: "Digital Intelligence of Yunnan The "Digital Intelligence of Yunnan TCM" 2.0 platform has established a comprehensive digital intelligence system covering the entire supply chain from cultivation and processing to trading and management driving the transformation of the
TCM" Driving a New Ecosystem of Multi-Chain Collaboration TCM material industry toward standardization intensification and intelligent operations. In 2025 Yunnan Baiyao's "Digital
Intelligence of Yunnan TCM" platform had recorded cumulative transaction volume exceeding RMB 2.1 billion with 23000
As physical hubs origin warehouses are deeply integrated with the "Digital Intelligence of Yunnan TCM" platform jointly registered users. The platform has supported over 410000 farmers and covers nearly 1.3 million mu of cultivation bases.establishing a traceability and trust system that spans every stage from cultivation to trading thereby creating an open
and collaborative service-oriented ecosystem. For every batch of medicinal materials processed at the origin warehouse
information regarding their origin cultivation harvesting processing and quality inspection can be traced via QR codes
and other means. This not only enhances market confidence in the quality of "Yunnan TCM" but also provides a solid
foundation for ensuring that higher quality commands higher prices and for building the "Yunnan TCM" brand.Lobby of the Digital Intelligence of Yunnan TCM (Pingbian) Trading Center
Tackling Seed Source Challenges: The Cornerstone of
Standardized Cultivation and Management Systems
Staff members introducing the "Digital Intelligence of Yunnan Client interface of "Digital
TCM" platform to Amomum villosum farmers Intelligence of Yunnan TCM" Deeply aware of the principle that "good medicines from good ingredients" we are actively advancing the R&D of more key
platform products in accordance with the Opinions on Improving the Quality of TCM and Promoting the High-Quality Development
of the TCM Industry and the Implementation Plan for the High-Quality Development of the TCM Industry (2026–2030).Faced with the challenge of breeding Panax notoginseng a key medicinal material Yunnan Baiyao successfully developed
the "Panax notoginseng liquid-phase chip" marking a transition
from "empirical breeding" to "precision breeding." This provides
a fundamental guarantee for ensuring traceability and improving
quality throughout the entire Panax notoginseng supply chain.For the past 25 years Yunnan Baiyao continuously invested in
R&D of Paris polyphylla cultivation techniques successfully
domesticating this wild plant and effectively promoting the
industrialization and large-scale development of this rare
medicinal material. In 2025 Yunnan Baiyao Yunyao Seed Valley -
Southeast Yunnan Seed Breeding Center was built consolidating
the development of medicinal materials in southeastern Yunnan.Going forward Yunnan Baiyao will use the Southeast Yunnan
High-Quality Seed Breeding Center as a model to accelerate the
development and deployment of its five core seed source bases
thereby continuing to strengthen the central role of "seed chips" Inside the Yunyao Seed Valley - Southeast Yunnan Seed
in the industry. Breeding Center
27 282025 Sustainability Report Topic 2: Reshaping the "Frontline Workshop": Innovating New Mechanisms to Engage aAnBdO SUuTp TpHoIrSt RFaErPmOeRrTs
Yunnan Baiyao is fully committed to advancing the development and promotion of standardized cultivation demonstration
bases leading the establishment of industry standards and implementing ecological cultivation guidelines. The Company Sharing and Mutual Benefit: Creating Value Through
has integrated standardized management throughout the entire process from site selection and cultivation to harvesting Collaboration and Mutual Support
ensuring the uniformity consistency and safety of medicinal materials from the source. Standardized demonstration
bases established independently or through partnerships in core production areas and outside the province serve as Yunnan Baiyao has actively explored and implemented various models for engaging and supporting farmers closely
models driving standardized farming practices among local farmers. Yunnan Baiyao's cultivation practices are not merely integrating the operation of origin warehouses the development of standardized planting demonstration bases and
a set of production standards but rather a sustainable development system guided by scientific research and centered on industrial assistance to create a virtuous cycle of "boosting agriculture through production and improving quality through
ecological conservation. technology." By combining direct procurement with platform-based purchasing we not only ensure a stable supply of
high-quality raw materials for businesses but also provide farmers with convenient and reliable sales channels.The Company directly translates research findings into conservation actions and cultivation standards The "tobacco-style procurement and storage mechanism" adopted from Pingbian County has achieved widespread
ensuring that raw materials from the "Frontline Workshop" are not only of superior quality but also sustainably coverage of procurement services and price transparency through the establishment of both fixed and mobile purchasing
sourced thereby practicing the principle of "good medicines from good ingredients" right from the source. stations. The "minimum price plus market price" linked procurement strategy implemented in Weishan County and other
areas has effectively stabilized farmers' income expectations and enhanced their ability to withstand market risks. In
response to the practical challenges posed by the complex mountainous terrain and difficult transportation conditions
in Pingbian County drones were innovatively introduced to assist with harvesting and transportation. By doing so we
extended the daily effective harvesting time by at least two hours increased overall harvesting efficiency by 30% and
reduced the rate of damaged fruit during transport from 15% to less than 5%.The construction of origin warehouses promoted by Yunnan Baiyao
has systematically shifted processing operations to the source
regions retaining not only output value and tax revenue but "Deepening Industrial
more importantly securing critical links in industrial upgrading
and employment opportunities. It has driven a fundamental Value"
transformation in the TCM material industry shifting the focus
from "selling raw materials" to "deepening industrial value". We Fundamental
have established a "four-win" model that increases income for shift
farmers improves efficiency for businesses boosts tax revenue for
the government and adds value to the industry. This is the win-win
outcome resulting from the integration of industrial chains and it "Selling Raw Materials"
also represents Yunnan Baiyao's concrete action in response to the
"Rural Revitalization" strategy.Enabling Yunnan's abundant TCM resources to truly serve as a "source of vitality" that drives regional economic
development and promotes rural industrial revitalization.UAV "Smart Transport Hub" is currently executing a transport mission
29 302025 Sustainability Report ABOUT THIS REPORT
31 322025 Sustainability Report Governance as Foundation: Strategic Leadership and Sound Operations
In 2025 Party committees at all levels within Yunnan Baiyao organized
Guiding with Party building a total of and a total of with
Taking Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as its guiding principle the Party
Committee of Yunnan Baiyao Group has thoroughly implemented the spirit of the 20th National Congress of the 64 centralized study sessions 184 sessions of Party classes 5127participants
Communist Party of China and the Third and Fourth Plenary Session of the 20th Central Committee of the Communist for their leading groups on special topics covered
Party of China ("CPC"). The Company regards the study and implementation of General Secretary Xi Jinping's important
speeches and directives delivered during his inspection tour of Yunnan as a key political task and has proactively aligned
itself with Yunnan Province's "38151" strategic development goals. In practice the Company has established and adhered Nurturing the Spirit Through Learning Deepening Theoretical Education
to the "13462" overall approach to Party building. By fully and deeply integrating Party building into all aspects of corporate
governance and the entire production and operations process we have effectively transformed the Party's political and
organizational strengths into developmental competitive and innovative advantages for the Company. In 2025 Yunnan Baiyao hosted the "Siqi Lecture Series - Uniting Hearts and Minds Continuing the Struggle" a thematic
lecture series for the industrial sector focused on studying and implementing the spirit of the Fourth Plenary Session of the
Yunnan Baiyao's Party-building Initiatives 20th CPC Central Committee. Through activities such as centralized briefings and interactive exchanges it has effectively
promoted a deeper understanding and thorough implementation of the spirit of the plenary session within the Company
Governance Framework and Institutional Development further consolidated the shared ideological consensus among management and staff and ignited their enthusiasm for
* Integrate the Party's leadership into corporate governance in an institutionalized and standardized manner; incorporate Party work and innovation providing firm political guidance and ideological momentum for the Company's development.building into the articles of association; optimize the composition of the Party Committee the Commission for Discipline
Inspection and the Board of Directors; establish and improve the decision-making system for "major decisions important
personnel appointments major projects and large-scale expenditures" as well as a list of matters requiring prior review and
discussion by the Party Committee; and clarify the boundaries of authority and responsibility.* Establish a closed-loop accountability system centered on the annual conference on Party building and Party conduct and
integrity the responsibility list for exercising full and rigorous Party self-governance the Party building liaison point system
and the signing of responsibility agreements at all levels.* Optimize the structure of grassroots Party organizations and ensure that full-time and part-time Party affairs staff are fully
staffed and strengthened; establish model Party branches at different levels and in different categories to promote the
standardized and regulated development of Party branches.Ideological Development and Education and Training
* Strictly implement the Regulations on the Study Sessions of the Party Committee's Theoretical Study Group and the "First
Agenda Item" study system and strengthen theoretical education through the "Yunnan Baiyao Party School" as well as online
and offline platforms. Briefing on the Spirit of the Fourth Plenary Session of the 20th CPC Central Committee
* Develop and implement a public opinion risk management system establish a tiered response and routine monitoring
mechanism and maintain the initiative in ideological work.* Enrich educational platforms through various initiatives including study groups specialized Party lectures revolutionary
history education thematic presentations and the distribution of study materials. Driving Results Through Action Enriching Educational Practice
* Adhere to the principles of the Party's leadership over cadre management and talent development improve market-oriented
mechanisms for selecting cultivating managing and utilizing personnel and systematically conduct specialized training for In 2025 Yunnan Baiyao continued to strengthen Party member education and invigorate the organization through a
Party affairs cadres and key operational staff. variety of themed activities including commemorative gatherings special Party lectures revolutionary education and
Integrating Practice and Value Creation visits to extend condolences. The Company held a grand ceremony to commemorate the founding of the Communist
Party of China which included an oath-taking ceremony
* Deeply integrate Party-building requirements into the implementation of the Company's "1346" overall framework and "3815" for new Party members a special lecture on Party
strategic objectives thereby driving the deepening of our core business and the cultivation of a "second growth curve." discipline and a screening of a retrospective film on
* Strengthen the guiding and supporting role of Party building in key areas such as optimizing business deployment reforming Party-building work. More than 300 people attended the
organizational mechanisms developing the entire industrial chain and promoting rural revitalization. event including members of the leadership team middle
* Establish Party member "posts zones and teams" and implement "projects led by Party branch secretaries" and "innovation management and Party member representatives. Titled
projects by Party branches" focusing on key production and operational tasks. Upholding Political Principles Embracing Responsibility
* Further strengthen the role of Party building in guiding trade union and Communist Youth League development and invigorate Strengthening Execution and Observing Discipline the
mass organizations by advancing reforms to build a strong industrial workforce organizing labor competitions and skills special Party lecture deepened the education on Party
contests and conducting distinctive cultural and sports activities. discipline by integrating it with practical development
1The "3815" strategic development goals outline a phased approach of "significant progress in three years comprehensive development in needs. It also set forth clear requirements for team
eight years and a leap forward in fifteen years" guiding Yunnan toward socialist modernization. building and strategic implementation effectively
2 "1" refers to Party-building leadership which involves establishing a deliberative and consultative mechanism guided by Party-building enhancing the Party organization's cohesion combat
principles; "3" refers to three foundational measures including assembling members establishing platforms and defining the scope of effectiveness and rallying power. Yunnan Baiyao Holding the "July 1" Commemorative
consultation; "4" refers to four consultation formats combining in-person online expert review and roundtable discussions; "6" refers Ceremony
to a six-step process covering collection determination research deliberation publicity and supervision to safeguard the rights and
interests of the public and ensure the legality and validity of the consultation.
33 342025 Sustainability Report Governance as Foundation: Strategic Leadership and Sound Operations
Board Oversight and Effectiveness
By constantly refining its governance system Yunnan Baiyao has established an efficient governance structure Yunnan Baiyao adheres to the provisions of the Articles of Association and the Rules of Procedure for
characterized by clearly defined responsibilities standardized operations and effective checks and balances. Through Shareholders' Meetings effectively exercising the decision-making power of the shareholders' meeting
the lawful fulfillment of duties and coordinated operations by all governance bodies we have continuously enhanced on major matters of the Company. The Company follows principles of fairness transparency and
the soundness of our decision-making and the transparency of our operations and effectively safeguarded shareholder Shareholders' rationality in convening conducting and voting at shareholders' meetings. To facilitate shareholder
interests laying a solid foundation for the Company's long-term steady development. Meeting participation the Company offers both online and in-person channels for attending meetings and
casting votes thereby effectively safeguarding shareholders' rights and interests. During the reporting
period the Company held 3 shareholders' meetings.Corporate Governance Yunnan Baiyao actively promotes the standardized and efficient operation of the Board of Directors
in strict accordance with the relevant provisions of the Articles of Association the Rules of Procedure
Yunnan Baiyao strictly complies with the relevant laws regulations and regulatory requirements such as the Company for Board of Directors and the Work System for Independent Directors . Directors of the Company are
Law of the People's Republic of China the Securities Law of the People's Republic of China and the Guidelines on elected by the shareholders' meeting. The term of office for directors is three years and they may be re-
Corporate Governance for Listed Companies issued by the CSRC. Based on the current state of development we will revise elected and re-appointed upon the expiration of their term. The Board of Directors has established four specialized committees: the Strategy Committee the Nomination Committee the Audit Committee
the Articles of Association as appropriate to continuously improve our governance standards. We have established and and the Remuneration and Appraisal Committee. Each committee performs its duties in accordance
continue to refine our corporate governance framework clearly defining the responsibilities and authorities at every level with its operating procedures. Additionally a mechanism for separate meetings of independent
aiming to ensure that the Company's sustainable development and the interests of our investors advance in tandem. directors has been established to strengthen oversight and checks and balances. During the reporting
period the Company held 9 Board meetings with a 100% attendance rate among directors effectively
implementing the principle of diligent and responsible governance.Shareholders' Meeting
Independence: The Company places great emphasis on the Diversity and Expertise: Board members
Board of Directors independent oversight function of the Board of Directors possess diverse professional backgrounds
viewing it as a cornerstone for protecting shareholder and extensive industry experience covering
Board of Directors interests and achieving sustainable development. The key areas such as strategic investment Company's 11th Board of Directors consists of 12 members financial auditing pharmaceutical R&D
including 4 independent directors. To strengthen the system and corporate governance. Professional
of checks and balances the Company has established a competence industry experience and
system of dedicated meetings for independent directors to structural considerations are taken into
conduct prior review and oversight of major matters such as account in the selection of directors.Strategy Committee Audit Committee Nomination Committee Remuneration and Appraisal related-party transactions. Independent directors play a role Currently the Board includes one female Committee in decision-making oversight and providing professional employee director and brings together
advice within the Board of Directors safeguarding the senior professionals from various fields
Company's overall interests and effectively ensuring the including industry academia and capital
fairness of decisions and the legitimate rights and interests markets.Management of minority shareholders.Governance Structure
Investor Communication
In 2025 Yunnan Baiyao continued to refine its investor communication mechanisms striving to build a transparent
efficient and multi-channel communication platform. We ensured that shareholders can fully exercise their rights
to information participation and voting by issuing notices of shareholder meetings in advance in accordance with
the law and providing both online and offline channels for participation and voting. In addition we maintained close
communication with the market through various channels such as regularly holding earnings briefings and actively
conducting investor outreach to promptly convey our strategic direction and operational progress.During the reporting period
the Company held a total of organized and received more than
3 earnings briefings 40 roadshows (both online and offline) 150 investors
We place great importance on investor concerns and have provided thoughtful responses to 104 questions through the
"irm.cninfo.com.cn" platform effectively ensuring smooth and efficient communication channels with shareholders and
the broader investor community.
3536
362025 Sustainability Report Governance as Foundation: Strategic Leadership and Sound Operations
Risk and Compliance Specialized Empowerment Training on "Risk Governance and Enhanced Internal Controls"
Management In 2025 focusing on risk and internal control practices the Company organized a specialized training program titled
"Specialized Empowerment for Annual Risk Management and Internal Control Assessment." The course covered four main
modules: an in-depth analysis of key aspects of internal control regulation an examination of typical issues the dynamic
Yunnan Baiyao has been continuously promoting the maintenance of risk databases and practical procedures for internal control evaluation. The training covered a total of
construction and improvement of its risk management 231 employees across departments such as internal control audit and key business management. The Company also
and internal control system. Through measures such as simultaneously converted the training materials into online courses to support continuous learning for all employees
routine risk assessments specialized audit oversight thereby effectively enhancing the practical skills of relevant personnel in risk identification assessment and management
and risk awareness training the Company has integrated and strengthening the effective implementation of the internal control system.risk management requirements into every aspect of its
operations to enhance its overall risk resilience and ensure
sustainable development.Internal Control
Management System Yunnan Baiyao in accordance with the Management System for Internal
Control System Operation and the internal audit related standards entrusts
In accordance with the Basic Standards for Enterprise the Audit Department with independently performing internal audits fully
Internal Control and relevant regulations Yunnan Baiyao exercising its internal supervisory authority. The Company keeps optimizing
has established management systems such as the its auditing workflow and closed-loop management mechanism combining
Comprehensive Risk Management System to continuously comprehensive auditing with specialized auditing based on the previous
advance the systematic and standardized development achievements of full coverage auditing and continuously strengthening上市公司内部控制最佳实践
of its risk management framework. The Company has supervision over key business areas critical funds projects and the
designated the Board of Directors as the highest decision- implementation of major decisions.making body for risk management. Under the Board an In response to the issues identified during the audit the Company has 云南白药集团股份有限公司：
Audit Committee has been established to oversee the risk 荣获2025年上市公司内部控制 最佳 实践案例，特发此证。established a closed-loop management mechanism to oversee correctivemanagement. The Audit Department has been authorized actions. The Audit Department will continue to monitor and review the
to carry out specific internal control evaluations and corrective actions to ensure that all risk factors are effectively mitigated and 中国上市公司协会
2025年09月
risk management tasks and to submit special reports to that audit recommendations are fully implemented.the Board of Directors thereby creating a coordinated 证书编号：CAPCONK2025000538
organizational mechanism that ensures synergy. In addition the Company conducts regular internal control evaluations and
incorporates the results of these evaluations and key performance indicators
The Company has established a routine risk management into the relevant performance appraisal system in accordance with regulations
framework. We regularly review our internal and external such as the Internal Control Evaluation Management System to ensure the Award of "Best Practice Case of
risk environments to compile a risk inventory. After continuous and effective operation of the internal control system. In 2025 Internal Control among Listed
conducting a multi-dimensional assessment we identify Yunnan Baiyao was awarded the "Best Practice Case of Internal Control among Companies"
key areas and risks requiring focused attention and Listed Companies" by the China Association for Public Companies.develop targeted risk response plans accordingly. We
also implement dynamic monitoring and adjustments to
establish and refine a closed-loop management system for
risk identification assessment response and monitoring.To ensure the effective operation of the management Information Security and Privacy Protection
system the Company has incorporated the effectiveness
of its risk control system and the performance of key
positions into its performance evaluation system with Yunnan Baiyao places information security and user privacy
the aim of reinforcing accountability and motivating all protection at the core of its operations integrating these
employees to take a proactive role in risk prevention principles throughout the entire process from data collection
and control. In addition we have established an online storage and transmission to usage. We are committed to
learning platform that complements our in-person continuously providing users with a secure and reliable data
training programs with the aim of comprehensively environment.enhancing our employees' risk awareness.
37 382025 Sustainability Report Governance as Foundation: Strategic Leadership and Sound Operations
Information Security Privacy Protection
Yunnan Baiyao places a high priority on information and data security management. The Company strictly complies with Yunnan Baiyao regards the protection of user privacy as the foundation of user trust. We strictly comply with laws and
relevant laws and regulations including the Cybersecurity Law of the People's Republic of China the Personal Information regulations such as the Personal Information Protection Law of the People's Republic of China and have established
Protection Law the Data Security Law and the Consumer Rights Protection Law. It has also established management internal policies to clearly define users' rights regarding access to correction of and deletion of their information. The
systems such as the Data Security Risk Management Measures and the Personnel Information Security Management Company has established a comprehensive protection system that includes prevention monitoring and response. As part
Measures which clearly define management standards for data classification and grading storage transmission and of this system we have developed clear and actionable contingency plans to address potential customer privacy breaches
access. The Company has established a systematic information security management framework to ensure that all data ensuring that we minimize the impact and effectively safeguard user rights.processing activities are conducted in a lawful and compliant manner and that risks are effectively managed. Building
on this foundation we have further developed a business continuity plan implemented a redundant architecture for Emergency Response Steps for Customer Privacy Breach Events
core network equipment and conducted regular drills for primary-to-standby failover. Additionally we have designed
system redundancy and data backup and recovery mechanisms tailored to the specific characteristics of our operations
to address risks such as ransomware attacks and system failures thereby ensuring the continuous and stable operation of
our business. Incident Detection To systematically record the details of the incident including key elements such as the time and Logging the types of information involved and the volume of data.Information Security Governance Structure
Institution Functions Responsibilities
Data Governance and Preliminary To quickly assess the potential impact and immediately implement technical and managerial
Security Management Leading body Overall planning coordination demand management Assessment and measures to contain the situation and prevent further spread.Taskforce inspection and evaluation etc. Containment
Responsible for reporting on digital security management to
Digital Security Professional Control Body the Company's office meeting and conducting the Company's Group digital security management work in accordance with the To compile information regarding the incident and submit a formal report to the competent Compliance
decisions made. Reporting authority in accordance with relevant laws and regulations.Digital Security Execution Execution Body Responsible for implementing the relevant decisions and work Group arrangements of the Company.The team is composed of members from the Digital Security User Notification To notify affected users through appropriate channels and conduct a post-incident review
Digital Security Response Permanent Virtual Execution Group according to actual needs. Its main and Summary and process improvements.Team Organization responsibilities are to respond to analyze and handle
information security incidents.Through its information security management mechanisms Yunnan Baiyao has combined routine risk assessments with Specialized Training on Information Security and Privacy Protection
emergency preparedness to continuously strengthen its information security capabilities. In addition the Company has
established a comprehensive information security incident response plan and clearly defined procedures for reporting and
responding to such incidents. Upon discovering a suspected information security incident or vulnerability all employees In 2025 Yunnan Baiyao systematically conducted
may submit a report through the internal OA system. The Information Security Manager will then conduct a tiered review information security training organizing quarterly
and forward the report to the Digital Security Team. Matters involving classified information or requiring regulatory specialized sessions using a variety of formats including
reporting will be handled in accordance with applicable regulations. "online and in-person" and "lectures combined with hands-
on exercises." A total of 8150 employees participated in
the training throughout the year and the relevant content
During the reporting period the Company regularly conducted various security tests and inspections was incorporated into the mandatory curriculum for new
including penetration testing cyber-attack and defense drills and data security emergency drills. employees. The Company has simultaneously established
A total of during which a certification system for digital security officers. Through
security risk assessments security risks were identified and rectified systematic learning practical training and comprehensive 60 were completed 1084 enabling the early identification and assessments the Company is cultivating a core team of
mitigation of potential risks. security professionals further strengthening the human-
based foundation of its information security and promoting
the full coverage and deep integration of a security culture
In 2025 throughout the organization. Specialized Training on Information Security and Privacy
Protection
the Company received no complaints regarding user information security and the overall information security situation remained stable.
39 402025 Sustainability Report Governance as Foundation: Strategic Leadership and Sound Operations
Business Ethics and Integrity Building Integrity Building
Yunnan Baiyao keeps refining its business ethics management system which centers on institutional frameworks Yunnan Baiyao keeps promoting the regularization of integrity education conducting diverse forms of integrity education
oversight and corporate culture and places a strong emphasis on the comprehensive prevention and control of integrity and outreach for all employees. The Company has launched integrity-themed education programs organizing lectures
risks throughout the entire process. The Company has strengthened oversight of whistleblowing and conflict-of-interest on anti-corruption in the healthcare sector to thoroughly analyze typical industry risks and key preventive measures.management resolutely preventing and eliminating commercial bribery and unfair competition. Upholding the principles It regularly conducts specialized training on ethical conduct and anti-commercial bribery combining case studies and
of ethical business conduct we are committed to maintaining a fair and healthy market environment. policy analysis to reinforce behavioral standards for each position. Additionally the Company organizes online and offline
integrity knowledge competitions to promote learning through competition and action through learning thereby fostering
Management System a corporate culture of integrity and transparency and effectively enhancing all employees' awareness of discipline and
commitment to compliance.Yunnan Baiyao strictly complies with national laws and regulations including the Company Law of the People's Republic of China
the Anti-Unfair Competition Law of the People's Republic of China and the Anti-Monopoly Law of the People's Republic of China. In 2025 the Company conducted
We have established a comprehensive internal integrity management system including the Work Regulations of the Commission for The training coverage rate for
Discipline Inspection and the Measures for the Prevention and Control of Integrity Risks. The Company has constantly strengthened a total of with over personnel in key positions reached
the implementation of its policies in accordance with 12 inspection-related regulations including the Implementation Measures for specialized anti-corruption
Inspection Work (Trial) and comprehensively standardized business ethics management and reinforced integrity safeguards through
systematic oversight and accountability mechanisms. 11 training sessions for managers 720 participants 100 %
and personnel in key positions
In 2025 Yunnan Baiyao organized nine compliance training sessions totaling more than 20 hours and reaching over 1600 participants.In accordance with regulations such as the Compliance Guidelines for Pharmaceutical Companies on Preventing Commercial Bribery
Risks issued by the State Administration for Market Regulation in January 2025 the Company has drafted and issued the Anti-Fraud and Promotion of Business Ethics and Combating Unfair
Anti-Commercial Bribery Compliance Management Measures applicable to the Company and all employees clarifying the definitions
of fraud and commercial bribery prevention and control mechanisms compliance requirements and prohibited conduct for ten key Competition
control links as well as compliance reporting and handling procedures strengthening closed-loop management of the entire process of
"prevention control reporting and handling" for fraud and commercial bribery. In 2025 the Company conducted specialized research integrating legal theory and practical experience in the fields of
The Company is actively establishing and refining a "comprehensive oversight" framework to foster a coordinated oversight effort. intellectual property and antitrust law. It developed and published two compliance blue books: the Intellectual Property
Under the unified leadership of the Party Committee we will establish a working mechanism in which Party organizations at all levels Compliance Blue Book - Patent Volume and the Antitrust Compliance Blue Book. These books provide all employees with
assume tiered responsibilities inspection bodies organize and implement the work and departments such as discipline inspection and in-depth cutting-edge compliance insights and practical guidelines establishing a comprehensive and authoritative
organization work in concert with the active participation of staff and the public to effectively strengthen supervision and inspection repository of professional compliance knowledge and reference materials.of Party conduct and integrity. In addition upholding the Code of Business Ethics the Company strictly prohibits all employees from
engaging in any form of corruption bribery unfair competition or conflicts of interest and maintains a "zero-tolerance" policy toward In 2025 through communication channels such as the Legal Affairs Bulletin we provided compliance interpretations
violations to ensure operational compliance. company-wide regarding the Compliance Guidelines for Pharmaceutical Companies on Preventing Commercial Bribery
The Company continues to promote the regularization and systematization of integrity education and offers educational campaigns Risks the Guidelines for the Supervision of Medical Advertising the Key Points for Correcting Unethical Practices in the
for all employees through various forms such as organizing expert-led seminars conducting specialized training on ethical conduct Procurement and Sales of Pharmaceuticals and Medical Services in 2025 as well as key legal compliance considerations
and anti-commercial bribery and holding knowledge competitions thereby continuously strengthening their awareness of integrity related to the Company's deployment of AI models and anti-bribery requirements in the newly revised credit evaluation
and compliance. In 2025 the Company organized relevant personnel to sign more than 2000 copies of the Commitment to Integrity system for pharmaceutical procurement and sales.Practice in connection with the appointment and removal of executives and the identification of key positions. Integrity reminders have
been posted at hundreds of project sites on the front lines and more than 1000 integrity agreements have been signed with suppliers. Yunnan Baiyao strictly complies with the Anti-Unfair Competition Law of the People's Republic of China and resolutely
We have established a "1+X" integrity culture matrix centered around the "Integrity at Baiyao" column on the Baiyao Ding platform.This matrix includes sections on Party discipline cautionary case studies and integrity awareness campaigns with nearly 100 articles opposes unfair competition practices such as false advertising monopolistic conduct and the infringement of trade
published to date and over 10000 page views. secrets. Based on the regulatory requirements such as the Compliance Guidelines for Pharmaceutical Enterprises on
Preventing Commercial Bribery Risks the Company has fully integrated anti-unfair competition requirements into its
business processes conducts ongoing reviews of internal policies and specialized training and implements targeted
Reporting Management controls and special rectification measures for high-risk areas such as bidding and marketing. We strictly prohibit
In accordance with relevant national laws and regulations Yunnan Baiyao any violations and deal with them severely. We are committed to maintaining a fair transparent and healthy market
continues to refine its processes for receiving verifying and addressing environment ensuring the accuracy and reliability of information protecting intellectual property rights and promoting Reporting Channels of Yunnan Baiyao
public complaints and reports of issues and is committed to enhancing the the sustainable development of the industry. As of the end of the reporting period the Company had not engaged in any
standardization and legal compliance of these operations. We have established acts of unfair competition nor had it incurred any financial losses because of such violations.clear and transparent reporting channels and encourage employees * Address: Yunnan Baiyao Discipline
customers and other stakeholders to monitor and report any violations of Inspection Commission No. 3686
rules discipline or laws. Yunnan Baiyao Street Chenggong
The Company strictly adheres to the relevant provisions of the Work System District Kunming
of Discipline Inspection Commission and implements strict confidentiality * Tel: 0871-66203262
measures regarding the information of whistleblowers and the content of their
reports. Without the whistleblower's consent their personal information and * Website: http://www.yunnanbaiyao.the details of their report shall not be disclosed in any form. By implementing a com.cn/
series of mechanisms including confidentiality protocols recusal procedures
and accountability measures the Company has established a comprehensive * Email: byxfjb@ynby.cn
whistleblower protection system to resolutely prevent any potential retaliation
and ensure that reporting channels remain open and effective.
41 422025 Sustainability Report Innovation Empowerment: Product Excellence and Industry Collaboration
43 442025 Sustainability Report Innovation Empowerment: Product Excellence and Industry Collaboration
Full Lifecycle Quality Management Practices of Yunnan Pharma
Yunnan Pharma strictly implements the Quality Risk Management System continuously strengthens quality risk
Yunnan Baiyao places product quality and safety at the forefront of its corporate development ensuring they are management dynamically monitors potential risk events such as changes and deviations at every stage of operations
integrated into every stage of the process from R&D through production to delivery and consistently providing consumers and identifies existing and potential risks through a combination of forward-looking and retrospective approaches. We
with reliable health protection. conduct a qualitative assessment of risks based on their likelihood of occurrence and severity of impact classify them into
risk levels and implement differentiated management strategies for each level.Quality Risk Management Process
Quality Management System
Risk rating Control measures
Yunnan Baiyao has established a Technical and Quality Management Committee to strengthen the quality and safety
responsibilities of each business division promote cross-departmental coordination in technical and quality management "High" "Very high" Communicate promptly with relevant parties develop and approve control measures
and ensure the standardized implementation of the quality management system across the entire industrial chain. At the "Extremely high" and effectively mitigate avoid or transfer risks
same time the Company is actively advancing the development of a drug safety governance system. In 2025 the Company "Very low" "Moderate" Accept and continue to monitor
formally established the "Drug Safety Committee" with the aim of improving the drug safety coordination mechanism
clarifying the responsibilities terms of office and organizational structure of the chairperson and committee members Inherent risks that cannot be Develop corresponding emergency response and preventive measures
and establishing standardized procedures for meetings reporting decision-making and workflows. Focusing on the eliminated
assessment and response to major drug safety incidents the committee aims to strengthen the protection of clinical trial
participants and patients and effectively identify alert and control drug safety risks. In 2025 Yunnan Pharma conducted a total of 13 routine risk analyses and produced 11 risk assessment reports. The
assessment results indicate that 3 items were classified as "moderate" risk which Yunnan Pharma has accepted and will
The Company has established a comprehensive management system covering the entire supply chain including continue to monitor; for the 7 items classified as "high" risk and the 1 item classified as "very high" risk Yunnan Pharma
procurement receipt inspection storage maintenance sales shipping and transportation. This system includes key has implemented effective control measures. Following a re-evaluation the risks for all these items have been reduced to
documents such as the Pharmaceutical Procurement Management System the Pharmaceutical Receipt and Inspection "moderate" or lower and the overall risk level is now within acceptable limits.Management System the Pharmaceutical Storage Management System the Cosmetics Production Quality Management
Manual and the Safety Management Procedures thereby ensuring closed-loop control over the entire process of operating
pharmaceuticals medical devices and health products. In 2025 the Company comprehensively advanced the systematic At the same time Yunnan Pharma conducted a total of 10 internal audits (1 comprehensive internal
revision of quality management system documentation for pharmaceuticals medical devices and other product audit and 9 specialized internal audits) covering key areas such as the operation of the quality
categories. Focusing on supplementing and optimizing policies related to controlled substances and in conjunction with management system changes in key personnel coordination among multiple warehouses and the
organizational restructuring we carried out comprehensive updates to ensure that policy design aligns closely with actual management of special-use drugs. 5 deficiencies were identified all of which have been rectified. A
operations. total of 8 external audits were conducted 6 of which were inspections by regulatory authorities. A
total of 19 deficiencies were identified all of which have been fully rectified.Quality Management Initiatives Yunnan Pharma has installed warehousing equipment and set up 480 automatic temperature and humidity monitoring
points in the storage areas to ensure end-to-end temperature control and traceability. Leveraging its proprietary
Each of the business divisions continues to implement quality control measures tailored to their specific operations pharmaceutical distribution platform V3.0 Yunnan Pharma has implemented standardized management across the entire
making every effort to ensure product quality and safety. During the reporting period more than 80% of the Company's process including procurement receipt storage and sales and strictly enforced compliance reviews for new product lines
operations have obtained quality management system certification. In particular the Company's subsidiary Yunnan and qualification checks for new suppliers. Upon receipt of goods Yunnan Pharma conducts batch-by-batch inspections
Pharma Co. Ltd. has successfully obtained ISO 9001:2015 quality management system certification. The scope of stores them according to category and condition and conducts regular quality inspections. During the sales process
certification covers the sale of pharmaceuticals (including controlled substances and refrigerated/frozen pharmaceuticals) Yunnan Pharma strictly reviews the qualifications and business scope of purchasing entities to ensure that the distribution
medical devices prepackaged foods (including cold chain products) special foods disinfection and family planning channels are authentic lawful and traceable.products cosmetics and electronic products as well as cold chain services (GSP validation). This comprehensive
coverage of the entire business chain marks a new phase of standardization and normalization in the Company's quality Yunnan Pharma has established standard operating procedures for product recalls to ensure that responsibilities are
management. clearly defined throughout the process. The Quality Department of Yunnan Pharma will determine the scope of the recall
and issue a notice within one working day; the Marketing Department will immediately suspend sales and assist with
returns; the Logistics Department will transport the drugs back and after quality inspection they will be stored according
to their status. For products that need to be returned the procurement department will coordinate and handle the
process in accordance with the agreement or regulatory requirements. The Quality Department will verify sales recall and
inventory figures to ensure full traceability. In 2025 Yunnan Pharma recalled a total of 37 batches of products.Over the past four years Yunnan Pharma has undergone a total of 20 inspections by regulatory
authorities at various levels all of which were routine or special inspections conducted by the Yunnan
Provincial Drug Administration and the Kunming Municipal Market Supervision Administration. None
of the deficiencies identified or corrective actions recommended during these on-site inspections
involved any serious issues.
45 462025 Sustainability Report Innovation Empowerment: Product Excellence and Industry Collaboration
Practices of Pharmaceutical Business Group Quality Culture Construction
The Pharmaceutical Business Group has established a full-industry-chain "5P" quality management model covering
R&D production distribution and monitoring incorporating standard systems such as GAP GLP GMP GSP and GVP. In
response to production anomalies the Pharmaceutical Business Group has established the Deviation Handling Procedure The Company continuously promotes the development of a quality culture and systematically conducts quality awareness
and the Nonconforming Product Control Procedure to ensure a rapid response to deviations from process specifications training to help employees gain a deeper understanding of the importance of quality to the Company's development.material balances quality standards testing methods or operating procedures and to promptly implement corrective The Company strictly implements its annual quality training plan and established a three-pronged training system
and preventive actions. For materials that do not meet internal control standards the Pharmaceutical Business Group covering "pharmaceuticals non-pharmaceuticals and specialized topics." Focusing on laws and regulations quality
conducts investigations analyses and risk assessments; develops and monitors the implementation of corrective actions; management systems and practical skills the Company continuously enhances all employees' regulatory awareness
and ensures that issues are resolved through a closed-loop management process. quality literacy and professional competence through regular and systematic training ensuring that staff fully meet the
In accordance with relevant regulations such as the Drug Administration Law of the People's Republic of China the Good requirements of their positions in terms of qualifications knowledge and capabilities.Manufacturing Practice for Drugs and the Measures for the Administration of Drug Recalls the Pharmaceutical Business
Group has formulated the Drug Recall Management Procedure based on its actual operations to ensure that recalls can be In 2025 the Company conducted quality training sessions for relevant personnel across all business units
initiated immediately when necessary thereby swiftly and effectively removing defective drugs and those posing safety totaling reaching and accumulating
risks from the market. The Pharmaceuticals Business Group regularly conducts simulated recall drills to test the feasibility
of procedures enhance employees' emergency response capabilities and ensure rapid efficient and orderly execution in
the event of an actual incident. 1973 sessions 80104 participants 781.2 hours
During the reporting period
the Pharmaceutical Business Group did not initiate any voluntary recalls which fully demonstrates the
robust operation of its quality management system and its risk prevention and control capabilities. "Quality Month" Campaign Demonstrated Commitment to Quality and Responsibility Through
Concrete Actions
In 2025 the Pharmaceutical Business Group underwent a total of 11 inspections by regulatory authorities and completed
all required corrective actions. The Pharmaceutical Business Group strictly enforced audit procedures for its two contract In 2025 the Company organized a series of "Quality Month" activities centered on the theme of "Strengthening Quality
manufacturing organizations conducting 2 annual audits and 10 routine inspections throughout the year. Yunnan Awareness Improving Quality Standards and Safeguarding Public Health" with the aim of inspiring all employees to
Baiyao Group Dali Pharmaceutical Co. Ltd and Yunnan Chuxiong Tianli Pharmaceutical Co. Ltd had 7 and 8 deficiencies take an active role in quality management and fostering a sense of responsibility. The campaign included organizing
identified respectively all of which have been rectified under supervision. subsidiaries and Xinte Pharmacies to jointly participate in the "Posters Light Up Yunnan" initiative; and collaborating
with the Pharmaceutical Business Group to visit retail outlets such as Xinte Pharmacies Yixintang Jianzhijia Huaideren
Practices of Health Products Business Group Pharmacies Yunnan Baiyao Pharmacies and Baiyao Life+ to carry out the "Quality at the Point of Sale Health with
e-Support - Quality Promotion e-Link" campaign. Through case studies and hands-on training on mini-programs the
The Health Products Business Group conducted a comprehensive review of the quality management systems at its three Company continuously enhanced the professional skills of its store staff. By combining product demonstrations with
manufacturing sites in accordance with the Good Manufacturing Practice for Cosmetics and inspection guidelines. A total presentations on quality culture it fostered a stronger sense of commitment among frontline employees. At the same
of 466 findings were documented with 15 minor non-conformities identified regarding documentation facilities and time the Company collected feedback from stores through surveys to provide a basis for future quality improvements and
equipment and materials management. Of these 13 have been rectified and 2 are currently being addressed. No major business optimization.risks affecting product safety were identified and the systems are operating normally.In 2025 the Health Products Business Group innovatively launched an internal auditor cultivation and quality synergy
enhancement initiative. Prior to the launch of the annual internal audit the Health Products Business Group organized
systematic training for all internal audit administrators and prospective internal auditors nominated by various
departments. The training covered regulatory requirements audit techniques and operational standards. The Health
Products Business Group specially invited managers with hands-on experience in highly specialized yet often overlooked
management areas such as warehousing logistics and equipment maintenance to deliver lectures. This not only
enhanced the comprehensive judgment capabilities of internal auditors but also prompted the lecturing departments
to proactively conduct self-inspection and self-correction during course preparation identifying potential management
blind spots. During the training the Health Products Business Group held an "Outstanding Trainee" selection to boost
enthusiasm and promote cross-departmental knowledge sharing and knowledge retention.Health Products Business Group Conducted a Full-Scale Mock Recall Drill
In October 2025 the Health Products Business Group selected representative products including Yunnan Baiyao toothpaste and the
Yangyuanqing series to conduct a simulated recall drill. Following a risk assessment the recall team promptly initiated a simulated recall
instructing relevant dealers to immediately halt sales and shipments and compared the number of units reported as recoverable by the
dealers with the expected quantity to confirm that the recall completion rate was approaching the target. This exercise was conducted
in strict accordance with the Product Recall Management Procedure covering key steps such as channel response product collection Scene from the "Quality Month" series of events
quantity tallying and results evaluation. The process was well-defined the response was swift and coordination was highly efficient.
47 482025 Sustainability Report Innovation Empowerment: Product Excellence and Industry Collaboration
R&D and Innovation Development of R&D Platforms
In 2025 the Company had established six R&D centers and operated seven national-level innovation platforms and
Yunnan Baiyao is actively investing in cutting-edge technologies closely monitoring global trends in pharmaceutical R&D three provincial-level innovation platforms thereby forming a multi-tiered comprehensive R&D support system. A high-
and continuously optimizing its product development strategy. By accelerating the development of its R&D pipeline the throughput computing center leveraging big data analysis target bioinformatics and AI-assisted drug design was put
Company leverages technological innovation as a driving force to advance product upgrades and achieve technological into operation significantly accelerating the drug discovery and screening process. At the same time the Center for Drug
breakthroughs thereby comprehensively empowering the healthcare sector and striving to provide the public with higher- Safety Evaluation at Yunnan Institute of Materia Medica a subsidiary of the Company successfully passed the NMPA's
quality more sustainable solutions for health and well-being. periodic GLP re-inspection. It is now capable of providing non-clinical drug safety evaluation services that meet national
standards thereby providing strong support for regional innovative drug R&D. In addition the Company's wholly-owned
subsidiary Yunhe Pharmaceutical (Tianjin) Co. Ltd has successfully obtained a Radiation Safety License issued by the
R&D and Innovation Strategies Tianjin Municipal Bureau of Ecology and Environment marking the Company's acquisition of the key capabilities required
to conduct R&D of radiopharmaceuticals and produce clinical samples.Based on an innovation-driven development strategy Yunnan Baiyao keeps enhancing investment in R&D scientifically
structures its short- medium- and long-term R&D plans and promotes the deep integration of its R&D system with
sustainable development goals. Through a comprehensive systematic approach to R&D the Company has not only The Kunming Center of the Central Research Institute has successfully passed the acceptance inspection and obtained key certifications including license for the use of laboratory animals
strengthened its capacity for technological innovation but has also actively fulfilled its corporate social responsibility by 3 one
advancing the "Healthy China" initiative and improving public health and well-being. and 2 registration certificates for laboratories handling pathogenic microorganisms related to human
health further strengthening the compliance foundation of its research infrastructure.Yunnan Baiyao's Short- Medium- and Long-term R&D Strategy
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and medical devices to strengthen technological empowerment and market synergy and 凭证 凭证 凭证 凭证 凭证 凭证 凭证 凭证 凭证 凭证 凭证 凭证 凭证 证 证 证 证 证备案 备案 备案 备案 备案 备案 备案 备案 备案 备案 备案 备案 备案验室 与验?室 体健验室康有关验室的病原验室微?物验室 实验室验室 验室 验室 验室 与验?室 体健验室康有关验室的病原微案凭 ?物案实凭 验室案凭 案凭 案凭室备 室备 室备 室备 室备物实 实 实 实 实 实 实 实 实 实 实 实 实 实验 实验 实验 实验 实验微? 微?物 ?物 物 物 物 物 物 物 物 物 物 物 物 物 物 物 物原 原 原微 原微? 微? 微? 微? 微? 微? 微? 微? 微? 微? 微? 微? 微? 微? 微?家病 家病 家病国 国 国 备国家病 案 原家病 凭 家病原证 家病原 原 原 原 原 原 原 原 原 原 原 原国 国 国 国家病 病 病 病国家 国家 国家 国家病 备家病 案 家病 凭 家病证 家病 病 病国 国 国 国 国家 国家证证证证证证证证证证证证证证证证证证备案凭凭凭凭凭凭凭凭凭凭凭凭凭凭凭凭凭凭备案备案备案备案备案备案备案备案备案备案备案备案备案备案备案备案备案
enhance product competitiveness and commercial value. 室 室 室 室 室 室 室 室 室 室 室 室 室 室 室实验 实验 实验 实验 实验 实验 实验 实验 实验 实验 实验 实验 实验 实验 实验 实验室 验室 验室?物 ?物 ?物 物 物 物 物 物 物备案凭证? 编号：SYS530?114430004 ? ? ? ? ?物 物 物 物 物 物 物 物实 物实原微 微 微 微 微 微 微 微 微 微 微? 微? 备案凭微证? 编号：SYS53微0?114430003 微? 微? 微? 微?家病 家病原 病原 病原 病原 病原 病原 病原 病原 病原 病原 病原 病原 病原 病原 病原 病原 原国 国 国家 国家 国家 病国家 国家 国家 国家 国家 国家 国家 国家 国家 国家 国家 国家 国家凭证凭证凭证凭证凭证凭证凭证凭证凭证凭证凭证凭证证证证证证证备案备案备案备案备案备案备案案案案案案案凭案凭案凭案凭案凭案凭备备备备备备备备备备备实验
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Focusing on cutting-edge areas such as innovative drugs and improved new drugs in the 国 国 国 国 国 国 国 国 国 国 国 国 国 国 国 国 国 国证 涉及的证病原微?物及其证实验活动范围：凭 凭 凭 凭证 凭证 凭证 凭证 凭证 凭证 证 涉及的证病原微?物及其证实验活动范围证： 证 证 证 证 证备案 凭 凭 凭 凭 凭 凭 凭 凭 凭室 肠室沙备案 备案 案 案 案 案 案 案验 验 ??菌：活菌验操室作、?感染性材料备的实验 备 备 备 备 备 备案 备案 案 案 案 案 案 案 案验室 验室 验室 验室 验室 验室 验室 伴验室放线菌团聚杆菌：室活备 菌操作；阴道加室备验 验 德纳?菌：活菌验室操备作；幽?螺杆验菌室：备 活菌操作；肺验炎室备 室备 室备验 验
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Medium term clinical development stage of 3-4 years as well as transdermal formulations to accelerate凭证凭证凭证凭证凭证凭证凭证案案案案案案案案凭
证凭证证秕?拉?证菌：活菌操作凭凭凭证凭证证证证证证备备备备备备备备备案备案备案备案备案备案凭案凭案凭案凭案凭验室验室室室室室室室室室室室室室室备室备室备室备物实物实物实验实验实验实验实验实验实验实验实验验验验验物物物物物物物物物实物实物实物实物实验验验
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the commercialization of innovative achievements and support sustainable business 室备 经室审备核，你单位递室备交的材料和信室息备，符合有关备验 验 验 验 验室备案基本要求，室同备意备案。 室备 备验 验 验室 验室备 室备 经室审备核，你单位递室备交的材料和信室息备，符合有关备室备案基本要求，室同备意备案。 室备 室备 备实 实 实 实 实 实 实 室?物 ?物 ?物 ?物 ?物 ?物 ?物 ?物实 物实 实验 实验 实验 实验 实验 实验 实验 实验 实验原微 原微 原微 原微 原微 原微 原微 原微 原微? 微?物 ?物 ?物 ?物 物 物微 微 微 微? 微? 微?物 微?物 物微?国家病 家病 病 病 病国 国家 国家 国家 国家病 家病 家病 家病 原 原 原国 国 国 家病 家病 家病 家病原 病原 病原 病原 病原 原国 国 国 国 国家 国家 国家 国家 国家病审核部门：昆明市卫?健康委员会
证审核部门：昆明市卫?健康委员会案凭案凭证凭证证案案凭案凭证证案凭案凭证凭证凭证案案凭证凭证凭证凭证凭证凭证凭证凭证证室备室备室备室备室备备备备备案案案案案案案案案凭实验实验验备备备备备备备备备
备案有效期验：2025年12?0室室室室物物物实物实物实
4验?—2030年12实?验04?实验实验实验验室验室验室备案有效期验：室2025年12?04验?室—2030年12?验0室4?验室验室验室
growth by leveraging technology to drive the upgrading of healthcare products. ? 物 物 物 物 实 实 实 实 实 实 实 实 实原微 原微? 微? ?原 原微 原微? 微? ? ? ?原 原微 原微 原微 微?物 ?物 ?物 ?物 ?物 物 物 物 物病 病 病 病 病 病 病 病 病 原 原微 原微 原微 原微 原微? 微? 微?原 原 原微?国家 国家 国家 国家 国家 国家 国家 国家 国家 家病国 国家病 国家病 家病 家病 家病 家病 家病 病国 国 国 国 国 国家案凭证凭证案案凭证案凭证凭证凭证凭证凭证证案案案案案凭凭证证证证证证证证证室备室备室备室备室备室备室备室备室备备案备案凭案凭案凭凭凭凭凭凭验验验验验验验验验室室室备室备室备案备案备案备案备案物实物实实实室室室室
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Looking ahead to the innovative drug and biopharmaceutical R&D for the next 5-8 years Kunming Center Successfully Obtained Three Key Certifications
Long term to vigorously promote the commercialization of new TCMs with clinical value focus on addressing major public health needs and developing proprietary products and establish
long-term technological barriers.R&D Talent Development
Guided by its short- medium- and long-term R&D strategies the Company has systematically established six key R&D Yunnan Baiyao keeps optimizing the composition of its R&D talent pool systematically building an innovative R&D system
priorities: the High-Quality Development Program for TCM Materials; the Re-Innovation Project for Yunnan's Distinctive aligned with the Company's strategic goals and consistently recruiting and cultivating industry-leading R&D professionals
TCM materials and Ethnic Medicines; the development of holistic wellness and consumer products (including medical to provide a solid foundation for the Company's long-term innovative development.devices); the R&D of innovative TCMs; the development of innovative radiopharmaceuticals and biologics; and the
integration and application of AI and cutting-edge technologies. All projects are proceeding smoothly according to
schedule and have achieved interim results effectively supporting the development of our new product pipeline and the In 2025 Education Level Structure of R&D Personnel
enhancement of our technical capabilities.the Company had a total of
Above Master Master
R&D and Innovation Management 704 R&D personnel 48 290
Yunnan Baiyao adheres to key management regulations such as the Regulations on the Management of Funds for accounting for
Commissioned Research Projects the Internal Management Measures for Commissioned Research in R&D Projects of
Yunnan Baiyao Group and the Central Research Institute Management Measures for Government-Funded R&D Projects Below
of Yunnan Baiyao Group . The Company has continued to strengthen the integration of basic research and innovation 7.58 % Bachelor Bachelor
capabilities actively introduced cutting-edge technologies built a high-level R&D platform system and comprehensively of the total regular employees
enhanced R&D efficiency and core competitiveness. 41 325
49 502025 Sustainability Report Innovation Empowerment: Product Excellence and Industry Collaboration
The Company continues to refine its training system for R&D personnel and has established a tiered and categorized The Company has spearheaded an evidence-based upgrade of Qixuekang Oral Liquid collaborating with Peking University
training mechanism that covers both management and frontline staff. Shougang Hospital to conduct clinical research which verified its significant efficacy in improving vascular endothelial function.The findings were published in an SCI-indexed journal. In the field of radiopharmaceutical R&D the Company has partnered
R&D Talent Training System of Yunnan Baiyao with Professor Yang Xing's team at Peking University People's Hospital to advance INR101 through Phase I/IIa clinical trials and
has established a pipeline of eight radiopharmaceutical candidates three of which have already entered the clinical stage. In the
Training targets Training contents field of oral health the Company has partnered with Professor Deng Xuliang's team at Peking University School of Stomatology
to establish the "Joint Oral Health Laboratory". Based on ion-blocking theory they have developed a new type of desensitizing
In collaboration with Peking University we organized an advanced training program featuring toothpaste and a tooth desensitizer. The desensitizer has obtained a medical device registration certificate marking the
Mid-to-senior level over 20 specialized seminars focused on cutting-edge topics such as the interpretation of successful commercialization of this technological achievement.R&D managers innovative drug policies and AI-assisted R&D with the aim of comprehensively enhancing
strategic thinking and compliance decision-making capabilities.We organized hands-on training sessions for both the on-premises and cloud-based versions of
Frontline R&D staff the DeepSeek system to help researchers efficiently conduct patent searches manage data and
analyze literature thereby driving the intelligent transformation of R&D processes.In 2025 the Company's Central Research Institute continued to optimize the development of its R&D talent pipeline and
systematically carried out the recommendation and nomination of high-level talent. The Company's Central Research
Institute successfully nominated one candidate for the Leading Talent Program of the Ministry of Science and Technology
three for the Young Elite Talent Program three for the Industrial Innovation Talent category under "Talents for Revitalizing
Yunnan" Program and two for its Young Talent category. Additionally two employees were selected as experts for the
Yunnan Provincial Evaluation of Modern Enterprise Management Innovation Achievements and two received special
allowances from the Yunnan Provincial Government. Furthermore three employees were included in the expert database Images related to the Company's industry-academia-research collaboration
for innovative drug R&D of China National Center for Biotechnology Development and two were included in the expert
database for TCM of the State Administration of TCM. At the same time the Company's Central Research Institute
completed the nomination of the third batch of Yunnan Provincial Industry Mentors from Kunming Medical University and R&D and Innovation Achievements
submitted the basic information of 286 individuals to the talent pool of Yunnan Provincial State-owned Assets Supervision
and Administration Commission continuing to expand its influence in talent development and industry engagement. Yunnan Baiyao consistently adheres to the strategic principle of "driving development through innovation" continuously
building an R&D innovation system covering short-term implementation mid-term breakthroughs and long-term layout
Integration of Industry Academia and Research and systematically advancing the coordinated development of R&D projects.The Company actively promotes the deep integration of industry academia and research building a multi-level multi- By 2025 with annual R&D investments amounting to
dimensional collaborative framework to continuously enhances its scientific research and innovation capabilities. In 2025 the Company had undertaken a total of over approximately RMB
leveraging the "Peking University-Baiyao International Medical Research Center" the Company focused on cutting-edge
fields such as oncology reproductive medicine and trauma orthopedics and deepened the collaboration in basic research
and clinical translation. In 2025 the center published a total of 42 high-impact papers and its research influence continued 140 R&D projects 423 million
to grow. The Company has established the "School of Modern Biomedical Industry" in collaboration with Kunming
Medical University and the "Collaborative Innovation Platform for Drug R&D" in partnership with Yunnan University of
TCM. It is also actively involved in the "Yunnan Provincial Expert Talent Industry Service Group" facilitating the two-way
flow of high-level talent and the collaborative enhancement of local research capabilities thereby contributing to the
development of the regional pharmaceutical innovation ecosystem. In addition the Company has partnered with leading
experts such as Academician Jiang Baoguo and Academician Qiao Jie to conduct clinical research and translation thereby
continuously expanding the R&D team's cutting-edge perspectives and practical capabilities."Peking University-Baiyao International Medical Research Center" Published High-Impact Papers
51 522025 Sustainability Report Innovation Empowerment: Product Excellence and Industry Collaboration
R&D of Innovative TCM Progress of Health Products R&D Projects
The Company has continued to advance the development of innovative products such as Pan-Panax notoginseng Tablets
and the Fuqi Guben Ointment as well as the redevelopment and optimization of classic best-selling products like Oral Laboratory Project Hair Care Laboratory Project
Qixuekang Shulie'an and Gongxuening. These drugs have demonstrated significant improvements in both efficacy and
safety offering better and more reliable options for clinical treatment. In particular Qixuekang has transitioned from a * The Company has successfully developed * Yangyuanqing the Company's hair care brand
traditional tonic product to a modern treatment regimen for cardiovascular diseases. As the only TCM candidate drug that "Minimalist Children's Toothpaste" technology. has completed the registration of two new anti-
combines both the treatment and prevention of altitude sickness it has already been approved for development. By taking into account the oral anatomy and hair loss products: Refreshing Anti-Dandruff
physiological characteristics of children across and Anti-Hair Loss Shampoo and Anti-Hair Loss
Progress on Redevelopment Projects for Major TCM Products different age groups it has created a gentle Soothing Scalp Care Serum.formula that scientifically incorporates fluoride and
incorporates innovative whitening technology to * The Anti-Hair Loss Soothing Scalp Care Serum Project Name Project Progress During the Reporting Period
achieve a "dual-action whitening" effect. incorporates "Paris Fargesii Extract" a new
ingredient independently developed by Yunnan
Currently 18 major TCM varieties are undergoing redevelopment. Key projects include: * Using this technology the Company has Baiyao. Combined with active anti-hair loss
* Qixuekang: A clinical research paper titled Effectiveness and Safety of Qixuekang Oral Liquid completed the development of the first-generation ingredients it can sooth the scalp revitalize hair
on Vascular Health which examines the effects of Qixuekang Oral Liquid on improving "Shimmering Diamond White" product. follicles and promote keratin production in the
heart and vascular health has been published in the Journal of Translational Internal follicles thereby strengthening hair strands and
Medicine; reducing hair loss.Redevelopment Projects * Gongxuening Redevelopment Project: A paper on post-abortion bleeding has been
for Major TCM Products published in a core journal; a clinical trial summary report on the treatment of abnormal
uterine bleeding has been completed; a clinical trial summary report on reducing vaginal In 2025 the Caizhiji R&D team established a system of botanical ingredients that combines Yunnan's unique characteristics
bleeding after medical abortion has been completed; a pharmacoeconomic study on with scientific principles. The project on the development of Caizhiji's botanical active ingredients and their application in
post-abortion bleeding has been completed; and a network pharmacology trial has been skincare products had resulted
completed;
* Shulie'an: The clinical trial summary report for the Prostatitis Treatment with Shulie'an in the submission of and
Capsules has been received.
3 4 patent applications had been drafted and passed the Data collection for 704 cases in the Phase II clinical trial has been completed generating a Pan-Panax notoginseng SCI papers preliminary examinationsummary report;
Tablets (PSQ project)
Pharmaceutical-related research has been completed with the production process finalized.Radiopharmaceutical R&D
Phase III clinical trials have been initiated at 17 research centers with 486 participants
Fuqi Guben Ointment
enrolled. The Company continuously monitors global technological trends and is focusing its efforts on developing a pipeline of
nanobodies and cyclopeptide-based radiopharmaceuticals targeting new therapeutic targets thereby accelerating the
efficient progress of related R&D projects.R&D of Transdermal Formulations and Medical Devices
Progress of Radiopharmaceutical R&D Projects
The Company has accelerated the technological upgrade of its transdermal formulations strengthening its market
competitiveness in the short to medium term. In particular the Yunnan Baiyao gel plaster has received project funding
from the Yunnan Provincial Department of Science and Technology and has completed preliminary stability testing. The INR101 Injection Diagnostic INR102 therapy
process validation for the Flurbiprofen Cataplasms project has been completed and PK-BE studies are currently underway; Radiopharmaceutical Project Radiopharmaceutical Project
the Loxoprofen Sodium Cataplasms project has obtained approval for clinical trials and process validation is currently
underway; the Yunnan Baiyao gel plaster project has completed the preparation of pilot-scale samples and the quality Phase III clinical trials have been initiated at 29 Three subjects in the low-dose group and one
evaluation of small-scale samples with different formulations; and the Yunnan Baiyao hot-melt adhesive patch project of the 32 designated research centers with 239 subject in the medium-dose group have been
has completed small-scale studies. In terms of medical devices the disposable sterile hemostatic clips have received the subjects enrolled (153 treatment-naive patients enrolled and dosed in the Phase I/IIa clinical trial
national classification determination notice for Class II medical devices and the emergency hemostatic bandage has and 86 relapsed patients). and two subjects have completed screening for
obtained the Class II medical device registration certificate. INR101.R&D of Innovative Health Products
The Company has formulated and implemented the R&D Project Management Measures of the Health Products Business Monoclonal Antibody R&D
Group of Yunnan Baiyao Group to standardize the R&D process and enhance the efficiency of innovation. Meanwhile
the Company actively participated in the establishment of industry standards and was involved in the formulation of In 2025 preclinical studies in pharmacology toxicology and pharmacokinetics were completed for the INB301 monoclonal
standards such as the Functional Toothpaste (QB/T 2966-2025) promoting the standardized development of the industry. antibody program for the treatment of cancer cachexia and preparations for an IND application were started.
53 542025 Sustainability Report Innovation Empowerment: Product Excellence and Industry Collaboration
Intellectual Property Status of the Company in 2025
Governance of Technology Ethics
Indicators Unit Data for 2025
The Company continues to refine its governance system for technology ethics and is fully committed to promoting the
standardization institutionalization and internationalization of its research activities. In 2025 the Company officially established The amount of expenses incurred due to the filing of intellectual RMB 10000 107.56
the "Experimental Animal Management and Use Committee" (the "Committee") which is fully responsible for the review decision- property rights registration
making and supervision of the use of experimental animals and animal welfare ethics in scientific research activities. To enhance Number of patent Invention patent / 42
management efficiency the Company in line with practical operational needs has completed the transition of the Committee applications filed during the
and revised the Charter of the Experimental Animal Management and Use Committee thereby further improving its operational year Utility model patent / 12
mechanisms.The Committee performs its duties independently in strict accordance with its charter fully implements national laws and Number of patent grants
Invention patent / 30
regulations as well as international ethical standards. It has established an ethics review system comprising 24 policies and during the year Utility model patent / 12
procedures and effectively conducts project reviews and routine oversight.Invention patent / 132
In 2025 the Company completed a total of 92 ethical reviews of laboratory animal welfare and Utility model patent / 232
organized 2 on-site inspections of laboratory animal facilities effectively ensuring that research
activities remained compliant ethically traceable and with animal welfare under control thereby Patent for appearance design / 69
providing solid support for innovation and R&D. Number of valid patents
during the year Total / 433
Number of valid patents per RMB 1
Training on Technology Ethics million revenue Per/RMB 1 million revenue 0.011
The Company systematically advanced training in technology ethics and professional competencies organizing laboratory animal Number of software copyrights per RMB
personnel to participate in two provincial and municipal continuing education training sessions throughout the year. A total of 116 1 million revenue Per/RMB 1 million revenue 0.003
participants attended these sessions effectively enhancing their professional qualifications and awareness of regulatory standards.Focusing on key issues such as laboratory animal biosafety ethical review of animal welfare and occupational health the Company
conducted 11 internal and external training sessions reaching a total of 275 participants. The content was closely aligned with The Company has established a "three-dimensional hierarchical and scenario-based" empowerment system. By taking
practical research needs and served to strengthen the Company's ability to ensure compliance throughout the entire process. standardized tools such as the Intellectual Property Compliance Blue Book as the starting point we released cutting-edge
promotional short videos process guidance videos and conducted three special training sessions precisely covering all
The Company places a strong emphasis on cultural leadership and humanistic care. On World Laboratory Animal Day (April 24) it business segments and positions and enhancing the intellectual property awareness of all employees. The Company has
organized a flower-laying ceremony titled "In Memory of Laboratory Animals" for all staff members across the institute and launched been granted a patent for the invention titled the Nanodots Based on Natural Polyphenols and Their Preparation.six social support services related to laboratory animals to extend the research service chain and enhance its comprehensive support
capabilities. Focusing on core products such as "toothpaste" "aerosols" "woundplast" and "Qixuekang Oral Liquid" the Company
proactively initiated infringement claim lawsuits. Throughout the year we successfully resolved more than 80 intellectual
property protection cases with a particular emphasis on cracking down on counterfeit packaging trade dress and
Intellectual Property Protection trademark infringement. Notably the lawsuits filed against eight manufacturers of counterfeit "Yunnan Baiyao Aerosol"
products served as a significant deterrent in the legal arena effectively strengthening the brand's legal defenses.The Company consistently adheres to international standards and fully complies with laws and regulations such as the Patent
Law of the People's Republic of China and the Trademark Law of the People's Republic of China . We continuously improve In 2025 the Company was selected as the sole enterprise to join the first cohort of the "Brand Guardian" government-
our intellectual property lifecycle management system in accordance with the Intellectual Property Management System. The enterprise collaboration organized by the State Administration for Market Regulation helping to establish a coordinated
Company has established standardized procedures for key areas such as patent portfolio planning trademark management rights protection mechanism linking the national local and corporate levels. The Company has received the "Intellectual
technology commercialization and risk prevention and control driving the evolution of intellectual property management Property Rights Protection Grant" from the Yunnan Provincial Intellectual Property Rights Protection Assistance Center for
toward institutionalization standardization and strategic planning thereby providing a solid foundation for its innovation-driven three consecutive years making it the only enterprise in the province to receive this honor.development.In 2025 the Company comprehensively advanced the refinement of its intellectual property management with a focus on
standardizing patent application procedures. We fully implemented online patent approval processes across all subsidiaries and
branches and unified the approval standards and operational guidelines. The Company has established a software copyright
management system launched a software copyright management module and completed the migration of historical data thereby
laying the groundwork for an information-based management system. Regarding incentive mechanisms the Company strictly
implements the Patent Management Measures and promptly awards incentives to eligible inventors thereby effectively enhancing
their sense of achievement from innovation.During the reporting period
Yunnan Baiyao held and
433 valid patents 131 software copyrights
55 562025 Sustainability Report Innovation Empowerment: Product Excellence and Industry Collaboration
Customer Relationship Management Customer Satisfaction
Yunnan Baiyao remains committed to a customer-centric approach integrating customer rights protection throughout The Company has established a standardized customer satisfaction survey process and conducts targeted surveys focused on key
the entire service chain and is dedicated to providing a safe convenient and trustworthy experience. By optimizing our clients and healthcare institutions with significant issues. The process includes the following stages: requirements confirmation
customer service mechanisms and upholding the principles of responsible marketing we will continuously enhance the collaboration with functional departments development of investigation plans implementation through various methods
professionalism and transparency of our services. issue collection communication of solutions customer feedback process documentation and follow-up visits ensuring a closed-loop management system. The Company's satisfaction survey employs a combination of questionnaires on-site focus
groups and telephone interviews to comprehensively assess more than 10 core service dimensions including order response
Customer Complaint Management product availability blank form management point-of-delivery service fulfillment of commitment letters logistics timeliness
and accuracy after-sales service delivery personnel's operational standards and service quality as well as the professional
competence and support provided by hospital staff and sales representatives.Yunnan Baiyao strictly adheres to the Customer Response Management System which systematically standardizes the
processes for receiving assigning resolving and providing feedback on customer inquiries ensuring that every complaint In 2025 all the marketing departments of the Company achieved customer satisfaction scores of 90 or higher in the
is documented followed up on and resolved. In addition based on the Internal Communication and Handling Mechanism pharmaceutical sector demonstrating comprehensive improvements in areas such as on-time delivery fulfillment of service
for Complaints Regarding New Products at Yunnan Baiyao and the Detailed Rules for Customer Complaint Management commitments and logistics timeliness and accuracy.at Yunnan Baiyao Group Co. Ltd the Company has further optimized cross-departmental collaboration mechanisms and
improved response times and resolution efficiency for issues related to new products in order to ensure rapid responses
to customer feedback and precise closure of cases and continuously drive the iterative improvement of service quality. In Responsible Marketing
2025 all complaints received by the Company were effectively resolved with a complaint resolution rate of 100%. The Company strictly adheres to the Advertising Law of the People's Republic of China and other relevant laws and regulations.
It has established guidelines such as the Brand Guidelines of Yunnan Baiyao Group (2025 Edition) the Marketing Service
Customer Complaint Handling Process of Yunnan Baiyao Procurement Management Measures of Yunnan Baiyao Group and the 2025 Brand IMC Operation Guidelines and Expense
Management Standards for the Pharmaceutical Business Group. Through these measures the Company has systematically
built a modern responsible marketing governance system characterized by clear delineation of responsibilities standardized
Type of Complaint Customer Complaint Handling Process processes controllable risks and efficient collaboration. Through institutionalized standardized and transparent management
mechanisms the Company ensures that all marketing activities are conducted in strict accordance with the law guaranteeing
The Company has established a comprehensive customer complaint handling mechanism to ensure that compliance and the accurate dissemination of information.Complaints issues are addressed efficiently and resolved effectively. Complaints are accepted via multiple channels The Company implements a multi-tiered review mechanism known as the "three-review three-proofreading" process. All
Regarding Drug including phone WeChat and in-person visits with an initial response time of within one hour. The promotional contents particularly sensitive information such as efficacy claims data citations and comparative statements
Manufacturing Pharmaceutical Business Group is fully committed to rolling out and implementing the LTC system using must be supported by original literature test reports or authoritative data sources to ensure that every claim is substantiated
digital tools to streamline customer communication channels and improve response times. traceable and verifiable. At the same time the Company maintains records of promotional material releases and compliance
The Company implements a tiered and categorized management system based on the severity of the files to ensure full-process traceability thereby providing strong support for external oversight and internal audits. During the
issue. General complaints are handled by the local team while significant complaints are escalated to the reporting period the Company's product labeling complied with regulations and its promotional content was truthful and
Complaints department head. For urgent or crisis-level complaints the emergency response mechanism is activated compliant; there were no incidents of non-compliant labeling violations of promotional regulations or false marketing.Regarding the within one hour and a cross-departmental task force is established to coordinate the resolution. We In 2025 the Company focused on building core capabilities within its marketing system systematically advancing a training
Sale of Medicines conduct 100% follow-up on all complaints with satisfaction surveys completed within 24 hours of issue and empowerment program for responsible marketing that targets key roles such as frontline sales associates supervisors and
resolution. Any cases where the customer is dissatisfied are automatically returned to the resolution internal trainers.process to ensure continuous improvement.The Company ensures that communication channels and complaint mechanisms for health product
customers are diverse and accessible; consumers may submit various requests via the customer service Throughout the year the Company conducted 153 training sessions totaling over 400 hours and
hotline mail fax the official website and online platforms. Reception staff immediately record all reaching 11124 participants. This ensured comprehensive training coverage for key positions and
complaint details in full. For inquiries regarding product authenticity or usage instructions they provide solidified the foundation of the marketing talent pipeline. The training contents were closely aligned
immediate responses through anti-counterfeiting verification guides and explanations of the user manual. with actual business operations emphasizing compliance and practicality and reinforcing the
Complaints For quality-related issues where the cause can be clearly identified if the problem is effectively resolved implementation of responsible marketing principles.About Health following an explanation the ticket is closed immediately.Products If there are potential product quality risks we will immediately refer the matter to the quality complaint
management team and if necessary guide the customer to send a sample or arrange for a representative
to visit the customer's location to conduct a thorough investigation. Based on the findings of the audit
report and regulatory requirements the team will provide a unified explanation and response to the
client. For matters requiring further verification we will conduct on-site or telephone follow-ups to ensure
a closed-loop management process.In 2025 the Company achieved an average call connection rate of 82.55% and a complaint resolution rate of 100%
with 85% of complaints receiving an immediate response. For quality-related complaints and adverse reaction reports
response times were kept within 36 hours resulting in a comprehensive improvement in the efficiency of addressing
customer concerns and overall service satisfaction.
57 582025 Sustainability Report Innovation Empowerment: Product Excellence and Industry Collaboration
Medical Accessibility Supply Chain Management
Yunnan Baiyao is committed to improving access to healthcare. Our Yunnan Baiyao with compliance as its foundation digital empowerment as its driving force and collaborative
business groups and subsidiaries leverage resources from headquarters In 2025 the platform innovation as its goal continues to refine its comprehensive supplier management system. The Company has deepened
to enhance distribution at the grassroots level strengthen IT support and successfully launched its sustainable supply chain practices by integrating green principles throughout the entire process of evaluation
foster collaboration with clients thereby significantly improving product medical consortia management and collaboration and is committed to building a secure resilient and inclusive supply chain ecosystem.12
availability and service response efficiency. including those in
In response to the policy requirements outlined in the Certain Measures Lianghe Dongchuan Supply Chain Management System
for Reforming and Improving the Coordinated Management Mechanism Lancang Yongsheng
for Medicines at the Primary Care Level issued by Yunnan Provincial Health Shangri-La and Linxiang Yunnan Baiyao strictly adheres to laws and regulations such as the Product Quality Law of the People's Republic of
Commission the Company has independently developed Yunnan's exclusive bringing the total number China the Bidding and Tendering Law of the People's Republic of China the Drug Administration Law and the Good
"Medical Consortium Intelligent Medication Management Platform" which of consortia across the Manufacturing Practice for Drugs . The Company has continuously refined its procurement and supplier management
implements "five unifications": a unified medication directory unified province to 33. It has systems reviewed and issued the Detailed Rules for Daily Procurement Management of Legal and Compliance Affairs
procurement review unified stockpiling and allocation unified usage become a key driver and the Guidelines for Independent Procurement by the Central Research Institute and updated the Procurement
monitoring and unified pharmaceutical services. This platform provides in improving access Management Manual of Yunnan Baiyao Group. These measures include but are not limited to clear requirements for
comprehensive support for the development of central pharmacies within to medicines at the suppliers regarding environmental responsibility the protection of labor rights and business ethics. The Company has
medical consortia. grassroots level. expanded the use of its digital platforms and shifted its management focus from cost control to enhancing supply chain
security and resilience while continuing to optimize its Supplier Relationship Management (SRM) system integrating big
Focusing on common diseases and vulnerable populations Yunnan Pharma actively explored new models of digital health data and artificial intelligence technologies to enhance data insights and risk early-warning capabilities. By promoting
management. Given that Yunnan Province has the highest number of patients with pulmonary arterial hypertension the systematic integration and interoperability of data across procurement logistics and energy the Company
in the country Yunnan Pharma provided the Yunnan Fuwai Hospital of Cardiovascular Diseases with IT support for the provides robust support for end-to-end supply chain visualization and refined management thereby enabling dynamic
management of these patients and established a closed-loop system covering screening follow-up and medication management across the entire supply chain and laying the foundation for a collaborative robust and sustainable supply
management thereby improving patient adherence and treatment continuity. In addition guided by the principle of chain ecosystem."patient-centered care and wholehearted service to patients" Yunnan Pharma has assisted hospitals in providing home
delivery services for peritoneal dialysis solutions to uremia patients who have signed free delivery agreements. It has also Supplier Management System
provided Kunming Medical University Second Affiliated Hospital with information management services for peritoneal
dialysis solutions for nephrology patients thereby implementing an integrated management system featuring "online
scheduling smart delivery and end-to-end traceability." Patients can use the mini-program to independently check Supplier Access and Supplier Assessment
delivery status and sign for deliveries online while hospitals can scan and upload prescriptions process orders with a Classification and Evaluation Supplier Audits
single click and track pharmacy tasks throughout the entire cycle significantly improving medical efficiency.In terms of logistics management in 2025 the Company launched an internal supply chain collaboration program for one-
stop direct delivery Yunnan Pharma brought together the Pharmaceutical Business Group and Yunnan Pharma. With a Yunnan Baiyao has The Company has established The Company has developed
focus on process reengineering resource coordination and data-driven intelligence we are driving the implementation of established six specialized a routine supplier performance and implemented an annual
"multi-warehouse coordination and direct delivery to end customers." To date nearly 15000 direct shipments have been procurement committees evaluation mechanism conducting on-site supplier audit plan.completed reducing inventory holding time and streamlining the process from seven steps to three thereby establishing based on the nature of its semi-annual and annual Based on the audit results we
a replicable model for supply chain collaboration. Yunnan Pharma continued to advance the upgrade of its SPD system3 procurement operations comprehensive assessments. The will collaborate with suppliers
optimizing operational workflows and response times and has successfully implemented the system at several hospitals
including Lincang People's Hospital and Yunnan Provincial First People's Hospital. Yunnan Pharma has developed its each responsible for supplier evaluation criteria cover quality cost to prepare the Supplier On-
own "Precision Management System" to improve the accuracy of picking shelving and inventory counting effectively qualification management in delivery service innovation and Site Audit Evaluation Report
preventing errors caused by similar product names or appearances. Yunnan Pharma also rolled out its "Fast Stocking" its respective field. Multiple sustainability metrics. Based on the systematically analyze the
streamlined module expanding the coverage to 54 hospitals in 2025 thereby significantly improving distribution factors will be evaluated evaluation results we implement a identified issues set forth
efficiency and access to medications. in the onboarding process differentiated management approach: clear corrective action
comprehensively including we reward high performers urge requirements and monitor
Through its efficient emergency delivery system and innovative logistics solutions Yunnan Pharma has significantly supplier qualifications those with shortcomings to make the implementation of these
improved access to healthcare. In terms of emergency deliveries as of the end of the reporting period Yunnan Pharma industry standing and past improvements and take graduated measures. As of the end of the
had completed a total of 2284 emergency deliveries serving 313 clients at 768 locations and delivering 4285 shipments of
medication across 11 major therapeutic areas for critical and life-threatening clinical conditions. Through various methods performance and external corrective measures against those reporting period the Company
including dedicated vehicles high-speed rail and dedicated couriers for ride-hailing services we make best efforts to data platforms are used for who consistently fail to meet had conducted on-site audits of
ensure the timely delivery of medications during critical times such as at night on holidays and in remote areas. We risk screening. The supplier standards. We have also established a total of 93 suppliers including
guarantee delivery within 24 hours in prefecture-level cities 48 hours in districts and counties and 72 hours in townships. onboarding process for an appeal mechanism to ensure the 60 in the pharmaceutical sector
Our delivery coverage includes urban areas county seats townships villages and certain mountainous regions. the Core Procurement fairness of the evaluation process. 32 in the health products sector
Committee is now fully and 1 in the TCM resources
conducted online. sector.
3SPD refers to the refined management of hospital logistics. It is a refined management model developed in the healthcare sector for
the management of pharmaceuticals and medical supplies comprising Supply Processing and Distribution. It aims to achieve refined
management of hospital supplies by integrating supply chain resources.
59 602025 Sustainability Report Innovation Empowerment: Product Excellence and Industry Collaboration
Supply Chain Compliance
* Clearly state that suppliers are strictly prohibited from using child labor or any form of forced labor.Yunnan Baiyao has deeply integrated business ethics and compliance requirements As of the end of the * Assess the extent to which it safeguards employees' fundamental human rights (such as labor
into every stage of its supplier management process. The Company strictly requires reporting period rights and freedom of association).that all procurement transactions exceeding RMB 20000 be conducted through its * Review whether the working conditions it provides (such as working hours and layoff measures)
electronic procurement platform and regularly conducts on-site supplier audits. the contract signing Social are legal and compliant.It has fully digitized the supplier onboarding process for the Core Procurement rate for supplier Performance * Ensure that it pays its employees lawful and fair wages.Committee and standardized its procedures. Furthermore we require suppliers to procurement had * Focus on evaluating the effectiveness of its occupational health and safety management system.strictly comply with environmental standards labor rights and business ethics reached
and we include specific clauses regarding integrity in our procurement contracts.We require all newly onboarded suppliers to sign procurement contracts thereby 100%
strengthening institutional safeguards and enhancing control at the source. In
addition we remain committed to protecting small and medium-sized enterprises
strictly adhere to contractual terms and ensure timely payment. * Assess the supplier's business ethics and anti-corruption mechanisms and practices.* Review the compliance of its overall operations.Number of Suppliers for Yunnan Baiyao
* Assess the sophistication of its internal supply chain management policies and systems and
Corporate
Indicator content Data for 2025 promote sustainable governance practices throughout its supply chain. Governance
Total number of suppliers 310
Suppliers in Yunnan 45
Domestic
Domestic suppliers (other provinces and regions in In addition Yunnan Baiyao continues to refine its sustainability training program for suppliers. By offering customized suppliers
mainland China excluding Yunnan) 263 content and practical hands-on training the Company is committed to ensuring that training outcomes are effectively translated into concrete sustainability efforts in suppliers' day-to-day operations.Overseas suppliers (including Hong Kong Macau and Taiwan) 2
Key suppliers 154
Sustainable Supply Chain
The Company is committed to building a sustainable supply chain During the reporting period
ecosystem. We implement differentiated management based on suppliers'
sustainability performance recognizing and rewarding high-performing
suppliers while taking graduated measures to adjust cooperation with 80%
suppliers that consistently fail to meet standards thereby driving of suppliers held
continuous improvement in the sustainability of the supply chain. In sustainability certifications
addition the Company continues to optimize its supplier sustainability and there were no
training program. By offering customized content and hands-on training operational downtime or
we ensure that training outcomes are effectively translated into suppliers' financial losses attributable
operational practices thereby continuously enhancing the overall to supplier-related factors.sustainability competitiveness of the supply chain.Key Points for Supplier Sustainability Assessment
* Assess whether the supplier's operations products and services meet environmental standards.* Assess its resource efficiency greenhouse gas emissions pollution control and waste management
practices.* Pay attention to the measures it has taken to protect biodiversity and the environmental
Environmental certifications it has obtained.Performance * Examine whether it has established and implemented a sustainable procurement policy that covers
energy and resource efficiency.
61 622025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
63 642025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
Climate-Related Risks and Mitigation Measures for Yunnan Baiyao
Addressing Climate Change
In the face of increasingly severe climate challenges Yunnan Baiyao actively responds to the national "dual carbon" Risk type Risk description Countermeasures
strategic goals and the temperature control targets established by the Paris Agreement and systematically implements
measures to address climate change. In accordance with the exchange's implementation guidelines and the relevant Frequent occurrence of extreme weather such as floods * To continuously monitor weather
requirements of International Financial Reporting Standard on Sustainability Disclosure No. 2 (IFRS S2) - Climate-related high temperatures and typhoons which will lead to: alerts to stay informed about extreme
Disclosures the Company has continuously improved its climate change management system within a framework 1.Damage to the power and water supply systems weather conditions and improve
covering governance strategy risk management and metrics and targets. We actively identify assess and address resulting in production disruptions and affecting the internal early warning and response
climate-related risks and opportunities strengthen the Company's climate resilience and deepen our green and low- operational stability and continuity of Yunnan Baiyao; mechanisms;
carbon transformation to contribute to the achievement of the global Sustainable Development Goals. 2.Adverse impact on the supply of TCM materials * To make a comprehensive
making it more difficult to obtain raw materials and consideration of retail and large
consequently causing price fluctuations in medicinal suppliers in the selection of
Climate Governance materials and products; suppliers so as to ensure supply
Acute risks stability.In full recognition of the impact of climate change on the Company's long-term development Yunnan Baiyao has 3.Logistics and transportation disruptions which may
identified climate change as a material issue and incorporated it into its ESG governance framework. By clarifying cause delays or even interruptions in shipping affecting * To develop emergency response the coordination of upstream and downstream plans for extreme weather establish
responsibilities strengthening internal coordination and maintaining ongoing oversight we are driving the effective operations; emergency response teams conduct
implementation of initiatives related to addressing climate change. Focusing on key areas such as strategy formulation regular drills and raise employees'
risk identification risk management key performance indicators and information disclosure the Company has continued 4.Rising risks in the workplace posing a threat to employees' occupational health and personal safety. awareness of safety precautions.to refine its management processes and operational mechanisms to enhance the systematic and standardized nature of
its climate governance. Physical
Risks Global warming and the resulting rise in sea levels
which will lead to:
Climate Strategy 1.Changes in the growing environment of TCM * To stay tuned for warming trends
materials which may affect their quality and the take actions to address climate
Yunnan Baiyao has incorporated climate factors into its strategic analysis and business decision-making. We have actively stability of their medicinal properties and in turn impact change and enhance the Company's product quality; resilience to climate change.taken measures to reduce energy consumption and emissions steadily promoting the Company's green and low-carbon
transformation and striving to enhance the Company's climate adaptability. 2.Global changes in water quality and the emergence * To conduct conservation and
of new pollutants putting pressure on the safety of adaptation studies on key medicinal
Each year the Company conducts an analysis of climate change risks and opportunities. Taking into account the industrial water supplies and operational compliance; materials explore artificial
characteristics of the TCM industry and the Company's actual operating conditions we systematically identify and assess Chronic risks 3.Increase in hot weather during the summer requiring cultivation and planting trials and
the impacts of climate change risks and opportunities on our business strategy and finances from both physical and more energy to regulate the temperature for production ensure consistent herb quality;
transition perspectives. This enables us to optimize our business structure and management measures thereby laying a and operations which leads to increased operating * To implement energy-saving retrofit
solid foundation for the Company's long-term steady growth. costs; projects to improve the efficiency of
4.Rising risk of extreme events such as heat waves energy systems and reduce carbon
droughts and wildfires which could trigger safety emissions.incidents and cause business disruptions thereby
impacting revenue.* To monitor changes in domestic and
Regulatory bodies both domestically and international policies dynamically
internationally are imposing increasingly stringent and make early preparations for
requirements on the Company's ability to address measures to address climate change;
climate change and manage greenhouse gas emissions
and as carbon emission restrictions tighten the * To drive theCompany's low-carbon
compliance and legal risks the Company faces in transformation and promote the
addressing climate change are rising accordingly. synergistic advancement of green
Transition operations and lean management.risks
Policy and
legal risks * To conduct research on alternative medicinal ingredients to mitigate
As regulations on wildlife conservation continue to supply risks associated with reliance
tighten this may restrict the sourcing and use of certain on a single source;
TCM materials thereby increasing compliance costs * To implement advance stockpiling
and affecting the stability of product supply. and processing plans for key TCM
materials to strengthen supply
security.
65 662025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
Risk type Risk description Countermeasures While identifying and addressing climate change-related risks Yunnan Baiyao also recognizes the development
opportunities that climate change may present and is actively exploring ways to transform these opportunities into new
* To develop and utilize clean energy drivers of long-term value growth for the Company.As policies such as carbon trading carbon taxes sources such as photovoltaic
and environmental protection taxes are gradually power generation and other green Climate-related Opportunities for Yunnan Baiyao
implemented the cost of corporate carbon emissions electricity applications gradually
continues to rise. The Company needs to continuously increase the share of clean energy; Opportunities Description of opportunities
increase its investments in energy conservation and * To give priority to low-energy-
emissions reduction to cope with the pressures of consumption and renewable- Opportunities to As low-carbon and energy-saving technologies continue to advance the Company
the carbon market; otherwise we will face multiple energy equipment when purchasing improve energy can improve resource and energy efficiency in its production and operations by
challenges including rising compliance costs and equipment; efficiency adopting advanced processes and management practices thereby driving cost
declining market competitiveness. * To conduct energy saving renovation Energy reductions and efficiency gains.of the existing equipment. Supply
Opportunities With the support of the national new energy system and related incentive policies
* To enhance the Company's digital in Clean Energy the Company can steadily advance the adoption of clean energy in line with its Policy and management and strengthen its Utilization specific energy consumption patterns thereby alleviating the cost pressures legal risks capabilities in data collection and associated with the transition to a low-carbon economy.Regulatory authorities are imposing stricter analysis. Green products and green manufacturing are gaining increasing recognition
requirements on the accuracy completeness and Industry
level of detail of companies' environmental data * To monitor key environmental Products development from regulators and consumers alike. The Company can incorporate these green
reporting thereby increasing the risks associated indicators in the process of and Services opportunities attributes into its products and brand communications to enhance the market
with the collection management and compliance of production and operation. appeal and competitive advantage.environmental information. * To disclose environmental and
climate-related information
in accordance with regulatory Developing a Specialized Flood Control Plan to Strengthen Response Capabilities for
requirements. Extreme Precipitation
In 2025 the Yuhua Formulation Center explicitly incorporated the Special Emergency Response Plan for Flood Control
* To continuously promote the into its Emergency Response Plan for Production Safety Accidents to systematically address torrential rains flooding
The government is placing increasing emphasis transformation to low-carbon and and secondary disasters caused by extreme precipitation. The contingency plan clearly defines its scope of application
Transition on corporate low-carbon transition and green energy-saving technologies. response procedures and key measures including the construction of sandbag dikes the clearing of drainage channels
risks development encouraging companies to adopt energy- * To reduce the costs of the low-
efficient equipment clean energy and low-carbon carbon transition through process hourly inspections of electrical equipment the relocation of moisture-sensitive materials 24-hour on-site monitoring and
Technical technologies. As a result the Company is facing greater optimization and resource recycling;
the evacuation of personnel. It will comprehensively strengthen disaster prevention and emergency response capabilities
demands for low-carbon investments in its production during extreme weather events effectively safeguards production and personnel safety and provide robust support for risks * To give preference to energy- efficient
and operations. and environmentally friendly raw enhancing the Company's climate resilience.materials and suppliers.* To monitor market trends and Yunnan Pharma Implemented Warehouse Insulation System Upgrade
flexibly adjust our business strategy
An increasing number of consumers are opting for and product portfolio;
environmentally friendly products and services and the In 2025 Yunnan Pharma carried out thermal insulation upgrades on its standalone warehouses focusing on improving
market's preference for green options is placing higher * To promote the transition to thermal insulation in key areas such as skylights glass windows and roofs. These upgrades effectively enhanced the
demands on the Company's ability to engage in low- greener and lighter packaging to overall thermal performance of the warehouses and resolved the issue of sensor overheating in areas such as the
Market risks carbon production and green operations. demonstrate the achievements of
green development to the market consolidation zone order picking zone and automated storage and retrieval system (AS/RS) which had been caused by
and consumers. light penetration through the skylights. Following the renovation
the temperature of the skylight strip dropped from 50° C to
19° C the temperature of the glass windows fell from 44° C to
* To enhance communication with 31° C and the temperature of the warehouse ceiling decreased
stakeholders to fully understand their from 26° C to 19° C resulting in a significant improvement in the
Stakeholders including investors customers regulators opinions and suggestions on the warehouse's temperature-controlled environment. The improved
and the general public are paying increasing attention Company's climate change-related thermal insulation has significantly reduced the operational load
to how companies address climate change. If the work. on the air conditioning system resulting in an annual reduction
Company fails to address these concerns in a timely of approximately 536000 kWh in air conditioning electricity
Reputational manner it may damage its reputation which could in * To actively disclose the Company's
turn have a negative impact on its brand image market measures and outcomes in consumption compared to the previous year. This has led to a Risks
recognition and long-term value. addressing climate change such reduction of approximately 298 metric tons of carbon dioxide
as green packaging sustainable equivalent in emissions contributing to the achievement of green
procurement and circular economy. and low-carbon operations in pharmaceutical warehousing. The renovated warehouse
67 682025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
In 2025 the Company developed the ESG-E Environmental Data Statistics Guidelines and the Greenhouse Gas Emissions
Conducting Specialized Training on Carbon Management and Climate Change Verification Guidelines which clearly define the scope of data collection data collection methods accounting standards
and verification procedures for each unit thereby ensuring the accuracy consistency and continuity of the data. Guided
In May 2025 the Company conducted a training session In December 2025 the Company conducted further by the guidelines the Company has for the first time achieved a comprehensive accounting of its Scope 1 and Scope
on carbon management involving nearly 100 people specialized training on climate change with nearly 70 2 emissions. At the same time the Company organized a special review of the collection scope of Scope 3 emissions
from various units. The training focused on topics such employees from relevant departments participating. This data conducting in-depth discussions on the collection scope of Scope 3 emissions data for key stages such as raw
as carbon emission accounting emission reduction training session focused on the strategic significance material procurement upstream in the value chain and product transportation downstream. This provided insights and
strategies and carbon asset management. Its aim was of climate change within the framework of sustainable methodologies for the subsequent development of an emissions accounting system.to deepen employees' systematic understanding of development providing an in-depth analysis of policy Currently leveraging the opportunity presented by the construction of lighthouse factories the Health Products Business
carbon management and enhance their professional trends risk identification and opportunities for transition Group has taken the lead in establishing a data collection and accounting platform for Scope 3 emissions. Based on its
capabilities so as to lay a foundation for the subsequent with the aim of enhancing the team's understanding of current carbon emissions status and business development plans the BG has set the following dual carbon strategy goals:
comprehensive promotion of carbon management work climate issues and their ability to address them. "reach carbon peak by 2028; achieve operational carbon neutrality and 100% renewable energy use by 2030; and achieve
of the Group. carbon neutrality across the value chain by 2050"4. To achieve these goals the Health Products Business Group has
established clear climate change response targets conducts annual monitoring and evaluation regularly reviews progress
toward the "dual carbon" goals and continuously improves and optimizes related efforts.Peak
Base year Operational
year Carbon
Neutrality
Value Chain
Carbon
Neutrality
Carbon Management Business Training Climate Change Training
2022202820302050
Dual-Carbon Strategic Goals of Health Products BG of Yunnan Baiyao
Climate Risk Management
Yunnan Baiyao continues to strengthen its climate change risk management focusing on mitigating the potential impacts At the same time we continue to increase our investment in climate change response focusing on carbon reduction
of climate change on its TCM materials supply chain and regularly conducts climate risk identification assessment and efforts such as energy-saving technological upgrades green office practices and the use of eco-friendly packaging
management activities. The Company has integrated climate risk management into every aspect of its operations focusing materials. We are thoroughly exploring internal opportunities for carbon reduction to provide strong support for the
on identifying and analyzing potential climate risks in key stages such as the cultivation harvesting and storage of TCM implementation of the nation's "dual carbon" goals. Going forward the Company will further refine its climate metrics
materials. It has developed corresponding prevention strategies and response measures and is working to ensure that all and target management mechanisms strengthen collaboration with stakeholders jointly explore diverse pathways for
functional departments and subsidiaries implement these measures in accordance with their respective responsibilities. emissions reduction and steadily advance its transition toward a green and low-carbon future.The Company plans to further improve its climate risk management system clarify its management structure collect 2025 Greenhouse Gas Emissions of Yunnan Baiyao5
and analyze its carbon emissions data and dynamically optimize management strategies and operational mechanisms
based on the analysis results to ensure the sustainability of core operations such as the supply of TCM materials and Indicator Unit Data for 2025
pharmaceutical production.Direct Greenhouse Gas Emissions (Scope 1) Tons of CO2 equivalent 34718.58
Indirect Greenhouse Gas Emissions (Scope 2) Tons of CO2 equivalent 56028.10
Climate Indicators and Goals
Total Greenhouse Gas Emissions Tons of CO2 equivalent 90746.68
Yunnan Baiyao places a strong emphasis on monitoring Emission reduction target of Yunnan Baiyao
progress in its climate change response efforts. By Greenhouse Gas Emission Density
Tons of CO2 equivalent/Operating revenue
of RMB 10000 0.022
setting carbon reduction targets aligned with the By 2030 the carbon intensity per RMB 10000
Company's strategic plan and tracking key climate of output value will be reduced by at least
4
change indicators we have strengthened oversight and Basis for selecting the base year and target year for carbon emission reduction goals: 2022 is the first year for which the Health Products
7% Business Group has complete and accurate carbon emission accounting data; therefore 2022 has been designated as the base year for continuous improvement of our climate change response setting carbon emission reduction targets. In alignment with the timeline and decarbonization roadmap of the national "Dual Carbon"
thereby enhancing the effectiveness of carbon reduction goals the short-term target year has been set as 2030 and the long-term target year as 2050.management. compared to the 2025 baseline 5The basis for calculating the 2025 greenhouse gas emissions: ISO 14064-1:2018 Greenhouse Gases - Part 1: Specification with Guidance at
the Organization Level for Quantification and Reporting of Greenhouse Gas Emissions and Removals and the Greenhouse Gas Protocol:
Corporate Accounting and Reporting Standard along with other relevant national standards.
69 702025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
After a systematic assessment 21 candidate varieties passed the review. For approved varieties the evaluation
Ecological Conservation and Biodiversity simultaneously proposed accompanying mitigation measures requiring management arrangements such as native
vegetation retention zones and crop rotation buffer zones to minimize the impact of cultivation activities on regional
Based on the characteristics of the TCM industry Yunnan Baiyao has incorporated the sustainable use of biological biodiversity. All evaluation findings and supporting documentation have been incorporated into the germplasm resource
resources such as medicinal materials into its corporate development strategy and places a high priority on the management records and will serve as a key basis for future planting plans and base management.protection of ecosystems and biodiversity. Leveraging its expertise in plant research and conservation the Company
engages in a wide range of biodiversity conservation practices promotes the harmonious development of production
operations and natural ecosystems and contributes to the nation's efforts to build an ecological civilization. Building a Treasury of TCM materials
The Company strictly complies with laws and regulations such as the Wildlife Conservation Law of the People's Republic TCM material resources are not only a key production factor for enterprise development but also an integral part of
of China the Regulations on the Protection of Wild Plants of the People's Republic of China the Implementing Regulations biodiversity conservation. With the goal of achieving synergy between industrial development and ecological conservation
of the Drug Administration Law of the People's Republic of China the Measures for the Administration of Drug Registration Yunnan Baiyao will leveraging Yunnan's indigenous medicinal materials capitalize on our resource advantages and meet
of the People's Republic of China the Law of the People's Republic of China on Traditional Chinese Medicine and the domestic production needs. The Company has long been committed to the introduction and domestication of medicinal
Chinese Pharmacopoeia (2025) . In the planning processing and production of TCM materials the Company adheres materials research into cultivation techniques the breeding of high-quality varieties and the promotion of cultivation
to the principles of authenticity and the natural distribution patterns of these materials strengthens the protection striving to ensure the long-term conservation and sustainable use of medicinal material resources.and production management of authentic medicinal resources and promotes ecologically friendly and economically
sustainable methods of cultivation and harvesting. The Company implements the "Three Zeros and One Full" control In 2025 to lay a solid foundation for the development of its treasury of TCM materials Yunnan Baiyao systematically
standards in its cultivation operations supplemented by a system of environmental impact assessments for its growing conducted research on these resources focusing on "assessing the current status of resources and optimizing conservation
sites and a testing regime for agricultural inputs to strengthen process control and quality assurance while minimizing the strategies." Through continuous sample collection data analysis and dynamic monitoring the Company has gradually
impact on the local ecosystem. In terms of supply chain collaboration the Company establishes ecological compliance developed a systematic understanding of the distribution patterns ecological risks and utilization potential of key TCM
requirements through mechanisms such as supplier audits and training. When signing cooperation agreements with materials. It has established specialized conservation mechanisms for three key categories providing a foundation for
partner farmers and others the Company includes specific commitments to refrain from deforestation as well as time- subsequent tiered resource management and scientific research planning.bound targets for ending logging and providing compensation thereby indirectly regulating the ecological practices of its
partners. Special Protection Mechanisms for Key Varieties
Conducting Biodiversity Impact Assessment Endangered wild medicinal Varieties Prone to Crop Regionally Distinctive
plants Rotation Problems Varieties
In 2025 Yunnan Baiyao conducted a biodiversity impact assessment in accordance with the requirements of regulations
such as the Regulations of the People's Republic of China on the Protection of Wild Plants and the Regulations on * Establish a three- * Establish a conservation * Establish a conservation
Traditional Chinese Medicine of Yunnan Province and in reference to the Technical Specifications for Genetic Evaluation of pronged conservation mechanism comprising mechanism combining
Medicinal Plant Germplasm Resources and the relevant industry standards for the application of omics technologies. The mechanism combining in- "crop rotation planning + "resource surveys variety
assessment was conducted according to standardized procedures covering multiple dimensions such as the preservation situ conservation ex-situ soil improvement + genetic registration and standardized
of genetic diversity ecosystem compatibility interactions among species and potential impacts on indirect biodiversity conservation and artificial optimization" divide the cultivation" conduct quarterly
factors such as soil microbial communities and surrounding vegetation following planting. breeding; designate 10 in-situ area into three crop rotation dynamic monitoring of
conservation zones within zones and specify the rotation resources and establish a
Biodiversity Impact Assessment Process of Yunnan Baiyao the species' native range and cycles and crop combinations database of variety resources;
prohibit illegal collection; based on soil fertility maps * Promote the application
Traceability of To collect information on the origin geographical and ecological characteristics and genetic developed through field
Germplasm * Expand the scale of ex situ process for geographical
and Verification background of candidate varieties to determine whether the germplasm originates from wild native conservation by leveraging the surveys;of Basic indication products and
Information species or legally domesticated varieties. germplasm resource garden; * Promote the use of bio-organic standardize cultivation
* Continue to improve fertilizers and soil-improving standards;
microbial agents to enhance
Genetic To capture a number of genetic variation loci and comprehensively assess the genetic diversity and domestication techniques * Collaborate with local
Diversity variation characteristics of the germplasm using omics technologies such as simplified genome to reduce reliance on wild
soil biodiversity; governments to protect natural
Testing sequencing and transcriptome sequencing. resources. * Select varieties with tolerance habitats and preserve the
to continuous cropping from unique genetic characteristics
the germplasm repository for of the species.Ecological breeding and promotion.To analyze the suitability of selected crop varieties for the native ecosystems of the planting area and
Impact
Assessment assess whether there is a risk of invasive species or whether they will crowd out native species.Based on the existing inventory of TCM materials and their ecological characteristics Yunnan Baiyao has established a
systematic research pathway covering "collection and preservation of germplasm resources-domestication of wild species
and ecological adaptation-modern breeding and screening-variety evaluation and promotion." We have launched a series
Comprehensive
Assessment To clarify the feasibility of variety selection and outlines risk mitigation measures based on the genetic of research projects focused on resource conservation sustainable production and improved breeding efficiency. Through
and Decision- diversity data and the results of ecological impact analyses.Making these efforts we facilitate the transition from wild resources to controlled cultivated supplies and enhance the scientific
rigor and stability of elite variety selection and promotion with data-driven precision-based tools thereby effectively
protecting TCM material resources and reducing the risk of species extinction.
71 722025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
Progress in Germplasm Conservation and Breeding Research of Yunnan Baiyao
Building a Mutually Beneficial and Shared Ecosystem
Research
Research content Research achievement
direction Through multi-stakeholder collaboration Yunnan Baiyao continues to build a mutually beneficial and shared ecosystem
for the TCM industry promoting the coordinated advancement of ecological conservation industrial development and
* To conduct research on the collection and * We established the world's largest and most increased income for farmers.conservation of medicinal plant germplasm comprehensive ex situ conservation garden for Paris
resources and use omics technologies to screen polyphylla germplasm and successfully collected 54 The Company is expanding its diverse cooperation models and exploring approaches
for core germplasm focusing on optimizing in accessions of 21 Paris polyphylla species covering the such as "company + village collective + farmers" and "company + government
vivo conservation conditions for the genus Paris vast majority of Paris polyphylla species distributed platform company + farmers." Through demonstration projects and mechanisms Conservation
polyphylla and medicinal plants from northwestern across China. We utilized liquid nitrogen cryopreservation Planters for sharing benefits it aims to promote local industrial development and increase and Yunnan; technology to preserve genetic material and established farmers' incomes. In terms of cooperation with growers the Company provides Preservation an integrated conservation mechanism combining farmers with high-quality artificially domesticated seedlings along with training in
of Medicinal * To construct provincial-level medicinal plant "ex situ conservation germplasm preservation and Industrial ecological cultivation techniques. Through a contract-based purchasing system we
Plant Genetic resource gardens and systematically carry out ex propagation"; enterprises encourage farmers to adhere to ecological cultivation standards thereby ensuring
Resources situ conservation and resource collection. Medical herb the quality of medicinal materials while preventing farmers from harvesting wild * The Yunnan Provincial Medicinal Plant Collection in base Varieties resources.Northwest Yunnan was established and expanded of medical
housing more than 150 species of medicinal plants Scientific herbs At the same time the Company strengthens the support capabilities of its ecosystem
including over 50 rare species and more than 20 research through scientific research collaboration and policy coordination. Through
distinctive species. institutes collaboration with research institutes we continue to advance the identification
Governmental of medicinal plant germplasm resources and the optimization of domestication * To conduct research on the artificial cultivation * We mastered the techniques for the artificial departments techniques thereby enhancing the scientific rigor of resource conservation
Research and domestication of rare and endangered domestication and large-scale propagation of endangered and utilization. The Company also works with local governments to implement
on the wild medicinal plants including Psammosilene medicinal plants including Fritillaria cirrhosa regulations such as the Yunnan Provincial Regulations on Traditional Chinese
Domestication tunicoides and Yunnan Paris polyphylla; Psammosilene tunicoides fully replacing the harvesting Medicine participates in regional planning for the conservation of medicinal plant of wild resources with cultivated products;
and Ecological * To conduct research on the ecological adaptability Ecosystem for the Mutual Benefit and Sharing resources in northwestern Yunnan and undertakes government-led demonstration
Adaptability of of TCM material cultivation including the * We overcame the challenges of continuous cultivation of of TCM Resources projects for the conservation of medicinal plant resources.Wild Medicinal domestication of wild species improvements Panax notoginseng and promoted research on protected
Plants in high-yield cultivation techniques studies on cultivation techniques to reduce the impact of chemical Focusing on the seed industry as a core component the Company is systematically advancing the development of the "Yunyao Seed ecological adaptability and the protection of soil fertilizers and pesticides on the soil and surrounding 6 7
microbial communities. wildlife. Valley" innovating the "1+1+3–5 " seed industry development model and the "321 Project" strategic framework. By integrating expert teams core bases and research platforms the Company is promoting the integrated development of breeding propagation and
commercialization and building an open ecosystem for seed source innovation.* To conduct traditional breeding of multiple * We obtained use authorization for the "Yunhong No. 13"
Research on species including Paris polyphylla and Angelica Carthamus tinctorius variety; received certificates for two
the Selection sinensis; high-quality/new varieties of Paris polyphylla; and had
and Breeding three high-quality varieties of Angelica sinensis enter the Focusing on the Seed Industry for High-Quality Development: Yunnan Baiyao Hosted the First * To conduct ecological adaptability assessments evaluation process; "Yunyao Seed Valley: The Source of Authenticity" Development Forumof High-Quality for specific varieties such as Lithospermum
Varieties of erythrorhizon and Atropa belladonna in the * We established technical guidelines for seed collection
TCM Materials introduction areas and establish technical and production for two distinctive varieties laying the In May 2025 Yunnan Baiyao hosted the first "Yunyao Seed Valley: The Source of Authenticity" Development Forum
and Traditional guidelines for seed collection and production; foundation for research on the layout of core seed source engaging 15 experts on the seed sources of the "Top Ten Yunnan Medicinal Materials" and certifying 14 "Top Ten Yunnan
Breeding bases.* To conduct research on crop diversity and Medicinal Materials" seed source bases thereby promoting the standardized and large-scale development of the
Methods ecological adaptability and establish core Yunnan medicinal material seed industry. Focusing on the development of an open ecosystem for the "Yunyao Seed
germplasm repositories. Valley" Yunnan Baiyao has pooled expert resources and established collaborative innovation mechanisms with research
institutions such as the Institute of Medicinal Plants and the Institute of Cash Crops at the Yunnan Academy of Agricultural
* To establish a high-density molecular marker- * We established a molecular marker-assisted breeding
assisted breeding system; develop KASP markers system systematically validated the association between Sciences to jointly undertake research on germplasm conservation elite variety breeding and cultivation techniques. Research
on Modern to conduct large-scale preliminary screening of genotypes and phenotypes of Panax notoginseng and In terms of science and technology projects Yunnan Baiyao took the lead in or participated in the implementation of
Molecular Panax notoginseng germplasm resources; and preliminarily established a "genotype–phenotype– the Yunnan Provincial Major Science and Technology Special establish a core germplasm evaluation population; environment" coupling model framework;
Breeding and Project "Science and Technology Support for the Development
Precision * To develop liquid-phase chip technology for * We successfully developed a liquid-phase chip for Panax of the Yunnan Medicinal Plant Seed Industry." The first batch
Screening Panax notoginseng to perform precise screening notoginseng. of six key projects has been launched focusing on 13 major
Technologies and in-depth genotyping of candidate materials and obtain self-pollinated seeds via bagging self- Yunnan medicinal varieties including Yunnan Angelica sinensis
pollination single plant isolation etc. and Dolomiaea costus . These projects aim to advance the
breeding of high-quality varieties the formulation of standards
and full-chain quality traceability thereby providing scientific
For more than two decades the Company has devoted itself to researching authentic medicinal materials from the Yunnan and technological support for the high-quality development of
region continuously accelerating the process of breeding high-quality herb varieties and focusing on addressing issues the Yunnan medicinal plant seed industry.such as severe genetic degradation poor uniformity and a shortage of superior strains. As of the end of the reporting
period the Company's promotional efforts had facilitated the cultivation of nearly 150000 mu of authentic Yunnan Scene from the forum
medicinal materials. Building on the establishment of standardized cultivation demonstration bases within Yunnan
Province the Company has initiated the construction of such bases outside the province and completed the installation of 6
more than 20 sets of IoT equipment to enable digital and intelligent capabilities across cultivation bases covering an area Each priority crop will be assigned a dedicated team of experts and 3–5 core sites will be selected in ecologically suitable regions to establish seed collection seedling propagation and demonstration bases.of over 30000 mu. 7To establish three bases for seed production seedling propagation and demonstration planting; set up two platforms for high-quality
variety selection and seed production; and establish one center for seed and seedling quality testing traceability and evaluation.
73 742025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
Ensuring the Ecological Sustainability of the TCM Industry * To use domesticated varieties instead of wild ones as raw materials for medicinal production and???
Chain strictly implement biodiversity protection for wild and protected species.* To optimize the energy mix in production processes improve energy efficiency and reduce
Taking a whole-industry-chain perspective Yunnan Baiyao has systematically integrated ecological and environmental carbon emissions;
protection requirements into key stages such as Chinese medicinal material breeding base construction cultivation * To promote the model of on-site processing of medicinal materials by moving certain processing
production and processing thereby promoting the development of an operational model for the TCM industry chain Production steps to the production areas. This approach ensures that the value added from processing
oriented towards ecological priority resource conservation and environmental friendliness. Through source optimization remains in the local community while reducing energy consumption and environmental pollution
at the front end standardized cultivation and process control at the mid-stage and clean production and resource at the source of the supply chain.recycling at the back end the Company continues to minimize the impact of its industrial activities on ecosystems and
enhance the overall ecological resilience and sustainability of the TCM material supply chain.Ecological Environment Management of the TCM Industry Chain * To promote fresh processing techniques to reduce resource waste and environmental pollution
caused by repeated drying and reprocessing of medicinal materials.* To leverage molecular marker-assisted selection technology to reduce the number of ineffective * To introduce precision sorting equipment such as color sorters to reduce raw material waste
field trials and lower the consumption of land and water resource; during processing;
* To study seed sources and soilless cultivation with genetic engineering enhance disease Processing * To promote the resource utilization of processing waste such as returning medicinal waste to
resistance and growth rates of TCM materials select suitable environmental conditions and fields as organic fertilizer to improve the overall utilization rate of waste.Breeding breeding techniques effectively cultivate high-quality TCM materials and significantly reduce
reliance on wild resources
Moving forward Yunnan Baiyao will continue to center on the TCM material industry chain in the biodiversity
management focusing on medicinal plants endemic to Yunnan as well as rare and endangered species. Based on
* To give priority should be given to non-ecologically sensitive areas and avoid national and assessments of production-area risks and dependencies the Company will advance the conservation of genetic resources
provincial-level biodiversity conservation areas when establishing new bases; the domestication of endangered species and the promotion of ecological cultivation. Furthermore it will integrate
* To implement a differentiated layout across different ecological zones to fully leverage biodiversity requirements into its supply chain management and standards systems to foster the development of a
geographical advantages and crop adaptability thereby avoiding the waste of resources and the sustainable closed-loop management mechanism.Base Site risk of failure associated with introducing crops unsuited to local conditions;
Selection * To explore substrate cultivation and soil-replacement technologies to reduce reliance on and Yunnan Baiyao's Biodiversity Conservation Goals
disturbance of topsoil.* To reasonably plan cultivation areas implement high-standard cultivation techniques for medicinal
materials select and breed varieties with high medicinal compound content significantly increase By 2027 we aim to master the techniques for domestication and large-scale cultivation of 3-5
output per unit area and replace the traditional model of land expansion with a highly efficient and
intensive production model to achieve increased production without expanding land use; conservation monitoring system and enable dynamic tracking of key species.* To conduct soil testing and implement classified management applying differentiated agricultural
practices based on indicators such as soil fertility microbial community structure and heavy metal
content;
* To comprehensively promote the ecological farming model of "ecological buffer zones + crop rotation +
biological control": We aim to expand the area of ecological cultivation bases to achieve an 80%
To maintain a 3–5-meter-wide strip of native vegetation around the site to protect the habitats of ecological cultivation coverage rate for core varieties by 2030.associated wildlife;
To ban highly toxic pesticides nitrate-based fertilizers and unregistered fertilizers; promote green
plant protection technologies; and reduce the use of chemical inputs such as chemical fertilizers
and pesticides;
Planting When chemical control is necessary use the minimum effective dosage and select highly efficient
low-toxicity and low-residue pesticides;
To implement crop rotation and deep plowing to optimize soil structure reduce the occurrence of
pests and diseases promote natural balance between crops restore soil nutrients and biodiversity.* To promote ecological cultivation models under forest canopies to avoid competing with food crops for
land and to leverage the forest ecosystem's natural ability to maintain the quality of medicinal materials
* To establish strict harvesting guidelines for wild medicinal materials mandating the practice of
"rotational harvesting" and "harvesting larger specimens while leaving smaller ones behind" to allow
the resources time to recover.
75 762025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
Environmental Compliance Management
Upholding a green development approach Yunnan Baiyao has established and improved its environmental management
system and operational mechanisms and integrated pollution prevention and control as well as environmental Environment Management Structure
risk management into its daily operations. The Company is refining its process control and emission management
requirements for air water and solid waste; driving the effective implementation of environmental protection measures;
continuously enhancing its environmental governance capabilities and compliance management standards; promoting Manufacturing Safety and Environmental Operations Center
the synergistic advancement of business development and ecological conservation; and contributing to the achievement * To develop the Company's environmental protection strategy annual plans and special programs; define
of higher-quality sustainable development in the TCM industry. objectives and tasks; and organize the implementation supervision and evaluation of their execution across all
departments;
Environmental Management System * To improve the Company's environmental management system formulate and revise relevant standards
specifications and procedures guide all departments in establishing rules and regulations and ensure that
Yunnan Baiyao pays close attention to the relevant policies and strategic developments of national environmental protection. It environmental protection work is carried out in accordance with established standards;
strictly complies with laws and regulations such as the Environmental Protection Law of the People's Republic of China the Air * To conduct supervisory inspections of environmental protection policies facility operations and pollutant
Pollution Prevention and Control Law of the People's Republic of China the Water Pollution Prevention and Control Law of the discharge at various units; urge the rectification of issues; and oversee the resolution of major safety hazards;
People's Republic of China the Law of the People's Republic of China on the Prevention and Control of Environmental Pollution * To establish a regular communication mechanism with environmental protection authorities implement
by Solid Waste the Noise Pollution Prevention Law of the People's Republic of China and the Law on the Prevention and Control government environmental protection requirements and coordinate internal environmental protection matters
of Radioactive Pollution to ensure that its business operations are in line with environmental management requirements. Within across units and departments;
the Company a series of management systems have been established including the Environmental Protection Management * To keep abreast of developments in environmental protection technology promote advanced technologies
System (2025) the Measures for the Management of Environmental Risk Early Warning (2025) and the Emergency Response Plan processes and equipment and provide environmental protection consulting and services;
for Environmental Incidents. These systems are designed to oversee and coordinate environmental protection efforts across all * To evaluate the progress of each unit toward achieving environmental protection goals and support the
units clarify responsibilities for environmental protection delineate overlapping areas strengthen emergency response and Company's environmental decision-making;
risk management for environmental protection as well as the management of environmental protection facilities and pollutant * To take charge of compiling summarizing analyzing and reviewing the Company's environmental data and
discharge. Environmental protection responsibilities are assigned to each business unit with annual environmental target submitting relevant forms and reports as required.responsibility agreements signed requiring all production units to implement environmental protection in accordance with the
law. The business units have also established 55 management regulations including environmental protection management
measures facility operation and inspection management systems and radioactive waste management regulations further
strengthening the Company's environmental management system. ESG-E Coordination Group
Environmental Management System of Yunnan Baiyao * Responsible for the overall management of E-dimension work including establishing mechanisms developing
plans conducting research and analysis coordinating management driving implementation evaluating
Pharmaceuticals Health Products outcomes and making recommendations for incentives;
* Responsible for compiling organizing and reviewing information about E-dimension work; regularly collecting
* Formulated the Environmental Management Measures for * Developed the Clean Production Regulations and organizing data and analyzing progress;
the Pharmaceutical Business Group (Trial) which clearly to strengthen the clean production. * To coordinate the feasibility studies design resolution of technical challenges and dissemination of results for
defines the organizational structure and responsibilities for key projects in the E dimension.environmental protection as well as the tasks and requirements.The management content includes prevention of new pollution
sources management of pollution sources environmental
approval management emergency management publicity Each unit
education and training and day-to-day management.* To implement national environmental protection laws regulations and policies and carry out the tasks and
* Developed the other secondary management systems requirements assigned by government environmental protection authorities;
and supporting SOPs such as the Management Details * To conduct business operations in compliance with laws and regulations; prevent environmental pollution and
for Environmental Online Monitoring Equipment of the ecological damage; implement the Company's environmental protection strategic objectives and accountability
Pharmaceutical Business Group and the Management Details for requirements; and assume primary responsibility for environmental violations in accordance with the law;
Emergency Response Plan for Environmental Incidents of the * To obtain approval documents filing certificates or permits issued by the competent environmental protection
Pharmaceutical Business Group to enhance environmental risk authorities in accordance with the law and ensure their validity;
control and urge all responsible entities to fulfill their duties. * To develop and file emergency response plans for environmental incidents procure emergency supplies and
equipment and conduct regular emergency drills to enhance emergency response capabilities;
* To organize and carry out inspections and rectification of environmental hazards actively cooperate with the
In 2025 to clarify the allocation of responsibilities for environmental management and ensure the effective implementation of Company's environmental inspections and promptly complete the rectification of identified hazards;
related tasks the Company updated its environmental management structure. The Manufacturing Safety and Environmental
Operations Center was designated as the department responsible for the Company's environmental protection efforts and an * To conduct pollutant discharge testing in accordance with established procedures; submit environmental data and materials to regulatory authorities and the Company on time; and assume responsibility for their authenticity
ESG-E Coordination Group was established to drive cross-departmental environmental efforts. Each unit is required to establish a and accuracy;
dedicated environmental management department based on operational needs staffed with full-time or part-time environmental
personnel to oversee coordinate and advance environmental efforts within their respective units. In addition the Company * To conduct regular environmental protection training to enhance relevant personnel's understanding of regulations policies and technical expertise; strengthen environmental awareness among all employees; and
has established clear meeting communication and decision-making procedures for the ESG-E Coordination ensuring efficient ensure they master the necessary environmental protection knowledge.coordination and implementation of ESG environmental dimension work.
77 782025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
Qidian Industrial Zone Systematically Strengthened Environmental Safety Measures
Mission and vision
To become a pioneer in green low-carbon and environmental protection In 2025 the Yunnan Baiyao Qidian Industrial Zone conducted a series of environmental protection training sessions and
practical activities centered on three key areas: compliance management proactive risk mitigation and emergency
Environment management objectives: compliant and legal business operation compliant pollutant response capacity building. The industrial park regularly organized specialized training sessions on environmental
discharge comprehensive utilization of resources green and low-carbon development regulations and standards inviting experts from regulatory agencies to provide policy interpretations and practical
Target Compliance Technical Risk control Green and Legal
guidance. In addition the industrial zone conducted an emergency drill to address a sudden environmental incident
system system system low-carbon system involving a blocked sewage pipeline and the mixing of stormwater and sewage. Participants strictly followed the "early
warning-containment-clearing-monitoring" procedure swiftly completing risk assessment sewage diversion pipeline
clearing and environmental monitoring. Through a series of measures the Qidian Industrial Zone has effectively enhanced
all employees' awareness of environmental compliance and their ability to respond to environmental emergencies.Clear target Systematizing Strong equipment Enhanced tiered Pollution Strong legal
responsibilities policies and technology control company- reduction at the awareness
clear boundary standardizing information- wide correction of source recycling participation by
and scope business processes based control problems of resources all employees
The drill site
Areas of focus: sensitive areas in residential communities and schools danger area in rivers and lakes key
areas for environmental supervision complicated areas with large quantities and wide varieties
Build a comprehensive system establish and improve a long-effect mechanism continuously optimize the Specialized Training on "Corporate Environmental Responsibility and Risk Management for
business participate in process improvement lead low-carbon operation Environmental Regulations"
Environmental Management System of Yunnan Baiyao In 2025 the Company organized a specialized training session on "Corporate Environmental Responsibility and Risk
Prevention and Control in Compliance with Environmental Regulations." The session focused on changes in environmental
policies and regulations as well as methods for identifying managing and mitigating environmental risks. It was
Emergency Drill and Training for Sudden Environmental Incidents in the Pharmaceutical
Business Group attended by more than 80 participants including environmental protection officers managers and technical staff. The
training enhanced the team's understanding of environmental regulations and their ability to manage risks laying a solid
In September 2025 the Pharmaceutical Business Group of Yunnan Baiyao organized a training session for emergency drill foundation for the Company's environmental compliance management.simulating abnormal water levels in a treated wastewater well. As a preparatory step for subsequent emergency drills
this training focused on the functions of reclaimed water wells and the criteria for identifying abnormal liquid levels. As of the end of the reporting period Yunnan Baiyao had not experienced any significant incidents involving litigation
It provided an in-depth analysis of the causes of water accumulation in idle reclaimed water wells and the associated or penalties resulting from environmental violations nor had there been any instances where pollutant discharge
environmental risks thereby enhancing the pollution prevention and control awareness of relevant personnel. This laid a had adversely affected local residents. The Company and its 12 subsidiaries subject to environmental protection
solid theoretical foundation for emergency response drills addressing abnormal liquid levels in reclaimed water wells and administrative licensing have all completed the necessary pollution discharge procedures in accordance with regulations.confined space operations. In compliance with the requirements of their pollution discharge permits they conduct self-monitoring on schedule
engage CMA-certified third-party testing agencies to regularly test wastewater exhaust gases and noise levels and issue
relevant data reports. They promptly report this data to the National Pollution Source Monitoring System to ensure that all
indicators remain within the prescribed limits. In addition Yunnan Pharma and Wenshan Qihua have successfully passed
the ISO 14001 Environmental Management System certification audit following an evaluation by a qualified third-party
assessment body.In 2025
the Company invested RMB
24.0149 million in pollution control
and conducted a total of
Training site Environmental Management Environmental Management
159 third-party environmental System Certification for System Certification for inspections Yunnan Pharma Wenshan Qihua
7980
Full participation
Philosophy and
awareness
Legal compliance
Pollutant discharge
benchmarking
Low-carbon operation
Comprehensive utilization
Risk pre-warning
Supervision and
examination
Tiered control
Intelligent control
Equipment update
Technical upgrade
Compliance evaluation
Business process
System requirement
Boundary and scope
Target responsibilities
Strategic planning2025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
In 2025 to achieve environmental targets all units in the Company strictly implemented national laws and regulations Wenshan Qihua Completed Volatile Organic Compound Emission Collection and Treatment
on pollution prevention and control thoroughly identified all pollution discharge points and environmental risks with High Standards
strengthened the management and maintenance of pollution control facilities improved pollution treatment efficiency
ensured the compliant discharge and disposal of wastewater exhaust gases solid waste and hazardous waste and In December 2025 Wenshan Qihua actively embraced green and environmentally friendly principles by launching
maintained accurate records in relevant ledgers. a compliance initiative to meet the Standards for Fugitive Emissions of Volatile Organic Compounds . The Company
completed the collection and treatment of volatile organic compound (VOC) emission points at the extraction building
Achievement of Environmental Goals by Yunnan Baiyao in 2025 wastewater treatment plant underground tank farm and comprehensive quality inspection building and added four new
standard emission points. Monitoring results show that post-treatment VOC emissions met stringent emission standards
100% compliant discharge of 100% compliant disposal of general 0 occurrence of environmental marking a significant milestone in the Company's efforts to control volatile organic compound emissions and further
pollutants solid waste and hazardous waste pollution incident enhancing the systematic approach and compliance level of its environmental management.Achieved Achieved Achieved
Yunnan Baiyao Successfully Included in Kunming's 2025 Positive List for Ecological and
Environmental Supervision and Law Enforcement
In 2025 Yunnan Baiyao was successfully included in Kunming's 2025 Positive List for Ecological and Environmental
Supervision and Law Enforcement thanks to its outstanding performance in pollutant discharge control and
environmentally compliant operations. This selection represents an authoritative endorsement by regulatory authorities
of the Company's achievements in emissions control and its environmental management system confirming that the
Company's emissions management meets high environmental standards and has no adverse impact on the working
environment of its employees or the living environment of local residents. By leveraging the positive list policy the
Company is able to effectively reduce environmental compliance costs and improve production stability.VOC Treatment System for Underground Tank Farm VOC Treatment System for Extraction Tower
Exhaust Gas Management
The exhaust gases generated during Yunnan Baiyao's production and operations primarily consist of sulfur dioxide VOC Treatment System for Extraction Tower
nitrogen oxides and particulate matter. The Company strictly complies with national laws regulations and standards
such as the Air Pollution Prevention and Control Law of the People's Republic of China the Comprehensive Emission Indicator Unit 2025
Standard for Air Pollutants the Emission Control Standard for Volatile Organic Compounds from Industrial Enterprises
3
and the Emission Standard for Air Pollutants from the Pharmaceutical Industry . All business divisions are required to Total exhaust gas emission 10000 m 37707.64
implement comprehensive control measures throughout the entire exhaust gas emission process construct and operate Particulate matter Ton(s) 0.80
the necessary environmental protection facilities in accordance with regulations establish clear monitoring indicators
and conduct regular inspections and testing at emission points. End-of-pipe treatment equipment must be installed at key NOx Ton(s) 5.41
locations with high emission volumes and maintained in stable operation. Additionally qualified third-party organizations
must be commissioned to conduct regular monitoring to ensure that exhaust gas emissions consistently meet standards SOx Ton(s) 0.29
and to eliminate the risk of fugitive emissions. The Company has simultaneously advanced process optimization and the Volatile Organic Compounds (VOCs) Ton(s) 4.21
transition to clean energy such as replacing coal-fired furnaces with natural gas boilers and adopting advanced adsorption
catalytic combustion methods for exhaust gas treatment thereby reducing the generation and emission intensity of Exhaust gas emission density 10000m
3/Operating revenue of RMB
exhaust gases at the source. 10000 0.0092
In 2025
the Company achieved a
100% compliance rate for exhaust gas emissions
81 822025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
Wastewater Management Implementation of Two-Stage Concentrate Water Recycling in the Pharmaceutical Business Group
Yunnan Baiyao's wastewater mainly comes from discharges generated from the production process of pharmaceuticals In 2025 the Pharmaceutical Business Group of Yunnan Baiyao implemented a secondary concentrated wastewater
and health products and domestic sewage. The Company conducts wastewater treatment operations in strict compliance recycling project systematically advancing closed-loop water resource management with a focus on reducing wastewater
with national and regional regulatory requirements including the Law of the People's Republic of China on the Prevention discharge and promoting resource recycling. This project was designed to address the issue of low recovery rates for high-
and Control of Water Pollution . It has established internal regulations such as the Detailed Rules for Wastewater salinity wastewater (secondary concentrate) generated by the reverse osmosis process in pure water production systems.Treatment Plant Management the Detailed Rules for the Management of Online Environmental Monitoring Equipment By comprehensively monitoring key water quality parameters such as TDS COD and turbidity the project optimized
and the Detailed Rules for the Inspection and Management of Stormwater and Sewerage Facilities thereby enhancing the recovery process and redirected the secondary concentrate to the pretreatment system for reuse thereby reducing
its wastewater management system. The Company has established a dedicated team to oversee daily operations and wastewater discharge at the source. Following the implementation of the project the secondary concentrate recovery rate
inspections standardize the management of environmental records and engage in technical exchanges on wastewater increased from less than 30% to over 60% reducing annual wastewater discharge by approximately 8000 cubic meters
treatment with neighboring businesses and relevant organizations thereby continuously improving operational and lowering fresh water consumption by more than 15%. This has simultaneously reduced environmental treatment
management capabilities. In terms of end-of-pipe treatment the Company has constructed dedicated wastewater costs achieved wastewater reduction and resource recovery and supported the green stable and sustainable operation
treatment facilities that reduce pollutant concentrations through processes such as sedimentation filtration microbial of the pure water system.degradation and adsorption. These facilities are equipped with online monitoring devices to track key indicators in real
time ensuring that treated wastewater consistently meets regulatory standards and is discharged in accordance with
applicable regulations.Wastewater Reduction Target of Yunnan Baiyao Wenshan Qihua Implemented Purified Water Wastewater Recovery System Upgrade
By 2030 the wastewater discharge intensity per RMB 10000 of output value will be reduced by at least
In 2025 Wenshan Qihua invested in the construction of a
7% wastewater recovery pipeline network to address the issue of compared to the 2025 baseline approximately 90m3 of wastewater generated daily by three
purified water systems. The Company collected wastewater
Wastewater Prevention and Control of Yunnan Baiyao from purified water systems in the raw material herbal
slice and finished dosage form production areas into a
Building a storage tank at the wastewater treatment plant where it was * To implement multi-stage treatment processes and degrade various types of pollutants
comprehensive reused for toilet flushing sludge thickening and chemical
water pollution through continuous multiple treatment stages. preparation. Following the renovation approximately 35640
governance * To install automated online monitoring systems for water pollution sources and connect cubic meters of wastewater can be recycled annually directly
system them to national provincial and municipal regulatory platforms to transmit monitoring replacing reclaimed water and tap water. This significantly
data in real-time and engage third-party units for regular maintenance and management reduces wastewater discharge and the load on wastewater
to ensure the stable operation of the online systems. treatment facilities thereby achieving the resource recovery
* To conduct regular maintenance upgrades and transformation of wastewater treatment of wastewater.facilities to ensure their long-term efficient and stable operation.Purified Water Station
Reducing * To strengthen source control optimize production processes and reduce the generation
wastewater of pollutants at the source. In 2025 the Company monitored and reported key water quality indicators in accordance with the requirements of higher-
pollutant * To intensify end-of-pipe treatment select appropriate treatment technologies based on level environmental protection authorities to ensure compliant discharges and prevent any adverse effects on water
concentration the characteristics of the wastewater and treatment objectives and ensure stable and bodies and soil.reliable treatment outcomes.Wastewater Discharge of Yunnan Baiyao in 2025
Indicator Unit 2025
Improving * To promote water recycling technologies and enhance measures for the reuse of treated
water usage wastewater (such as reclaimed water) to reduce the volume of wastewater generated. Total wastewater discharge Ton(s) 1493268.51
processes
COD Ton(s) 99.02
Ammonia nitrogen Ton(s) 2.51
Total phosphorus Ton(s) 2.65
Wastewater discharge density Ton(s) / Operating revenue of RMB 10000 0.36
83 842025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
Waste Management Project for the Energy-Based Recycling of TCM Residues in the Qidian Industrial Zone
Yunnan Baiyao's solid waste includes hazardous waste and non-hazardous waste. Hazardous waste mainly includes
waste drugs medicines and experimental waste liquids etc.; nonhazardous waste mainly consists of medicine residue In 2025 the Qidian Industrial Zone addressed the issues of generating no less than 21000 metric tons of herbal medicine
and sludge generated in the production process. The Company strictly complies with laws and regulations such as the waste annually high disposal costs and a lengthy composting cycle by innovatively establishing a "herbal waste–
Law of the People's Republic of China on the Prevention and Control of Environment Pollution Caused by Solid Wastes energy–production" green recycling system. The project converts pharmaceutical waste into biomass fuel which is used
the National Catalogue of Hazardous Wastes (2016) and the relevant industry disposal standards. It has established in biomass boilers to generate steam. This steam is then directed back to the Qidian Industrial Zone creating a closed-
internal regulations like the Management Details for Solid Waste Environmental Protection to establish clear classification loop cycle of "solid waste-recycling-reuse." Once the project is implemented the Qidian Industrial Zone will achieve zero
standards and management procedures and implement categorized management record-keeping and standardized waste emissions with an estimated annual reduction of over 10000 metric tons of carbon dioxide equivalent and annual
transportation and disposal of solid waste ensuring that hazardous and non-hazardous waste are strictly separated savings of approximately RMB 2.7 million in pharmaceutical waste disposal costs thereby delivering both ecological and
and remain under control throughout the entire process. Adhering to the management principles of reduction resource economic benefits.utilization and harmlessness the Company continuously strengthens the standardized management and resourceful use
of solid waste. In 2025 the Company achieved a 100% compliance rate in the disposal of hazardous waste.Measures for Solid Waste Treatment and Resource Utilization
* General solid waste including household waste is collected and transported to the sanitation station for
Non- incineration.hazardous * Non-hazardous waste with recyclable value such as discarded TCM materials fragments of medicinal
waste materials dust and packaging cardboard boxes is collected and regularly sold to recycling companies for recycling. For example sludge after fermentation is used for soil improvement in landscaping and
medicinal residues after fermentation are used to produce organic fertilizers.Project for the Energy-Based Recycling of TCM Residues in the Qidian Industrial Zone
* A hazardous waste management plan shall be established and filed with the environmental protection
authorities; Waste Discharge of Yunnan Baiyao in 2025
* A hazardous waste management ledger shall be established which includes the following: management
accountability system operating procedures management plan emergency response plan training plan Indicator Unit 2025
training records drill plans drill summaries transfer records and inventory records;
Hazardous * Hazardous waste generated in production workshops is managed by designated personnel. Clear labels Hazardous waste discharge
waste and signs are used. It is stored in designated areas and collected by categories before being handed over
to a third party for disposal. Waste drugs drugs HW03 Ton(s) 132.00
* For laboratory hazardous waste we have formulated the Laboratory Hazardous Waste Prevention Experimental liquid waste HW49 Ton(s) 36.53
and Control Responsibility System and the Laboratory Environmental Control Procedures to clarify
and strictly implement the laboratory waste treatment standards. Following the principle of "Unified Other hazardous waste Ton(s) 32.58
Collection Classified Disposal and Elimination of Hidden Dangers" disposal is carried out by third-party
professional disposal companies. Total amount of hazardous waste Ton(s) 201.11
Discharge intensity of hazardous waste Kilogram(s) / Operating revenue of RMB 10000 0.049
Non-hazardous waste discharge
Sludge Resource Recovery Project in the Yuhua Industrial Zone
Drug residue sludge Ton(s) 22491.13
In 2025 the Yuhua Industrial Zone launched a project to utilize Household waste Ton(s) 1148.80
dewatered sludge for soil improvement and resource recovery
integrating the principles of "reduction harmless disposal and resource Total amount of general solid waste Ton(s) 582.13
recovery" into its daily operations. Through the standardized collection
sun-drying scientific blending and fermentation of dewatered sludge Total amount of non-hazardous waste Ton(s) 24222.05
from the Qidian and Yuhua industrial zones the project converted it
into landscaping soil that meets the DB5301/T 41-2019 standard. This Discharge intensity of non-hazardous waste Ton(s) / Operating revenue of RMB 10000 0.0059
soil was specifically used for forest land improvement and landscaping
reducing sludge disposal costs by RMB 90.44 per ton and yielding annual
cost savings of approximately RMB 180000. The converted planting Total
soil is rich in nutrients which can improve soil fertility reduce the use
of chemical fertilizers and enhance the area's ecological functions and Total amount of solid waste Ton(s) 24423.17
carbon sequestration capacity. Project site Discharge intensity of solid waste Ton(s) / Operating revenue of RMB 10000 0.0059
85 862025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
Resource Recycling and Efficient Utilization Health Products
Yunnan Baiyao incorporates the principle of resource conservation throughout its entire production and operations * To implement an energy management system to achieve precise management that ensures energy usage is "transparent
process. It is committed to the efficient use of resources and strives to achieve green development. The Company and accurately accounted for;"
optimizes resource allocation through technological R&D and process improvements thereby enhancing the efficiency * The production workshop shall integrate TPM (Total Productive Maintenance) and lean improvement practices into
of energy water and raw material use and reducing resource consumption. In addition we actively promote a circular its daily operations and systematically reduce lighting energy consumption during non-production hours through
economy advocate for green office practices and strive to reduce packaging waste and make it more environmentally measures such as implementing time- and zone-based lighting shutdowns and optimizing lighting layouts;
friendly thereby enhancing the systematic and sustainable use of resources. * To monitor and dynamically adjust air compressor stations and refrigerant stations in real time by incorporating AI-
powered control systems thereby effectively reducing energy consumption.Energy Management The Company has consistently regarded energy-saving technological upgrades as a key driver for promoting green
development and achieving the "dual carbon" goals. Through systematic optimization of production processes upgrading
Yunnan Baiyao places a high priority on the efficient use of energy continuously of energy-consuming equipment and the advancement of digital energy management the Company aims to tap into the
improves its energy management system and deepens its efforts to conserve potential for energy conservation and consumption reduction comprehensively improve energy utilization efficiency and
energy and reduce consumption. The Company strictly complies with laws and steadily reduce overall energy consumption intensity.regulations such as the Energy Conservation Law of the People's Republic of
China and the Measures for Energy Conservation Management of Key Energy-
consuming Units . It has formulated and implemented the Energy Management Variable Frequency Drive Retrofit Projects in Multiple Industrial Zones
Measures while each unit has established secondary management systems
such as the Detailed Rules on Energy Conservation Incentives and Penalties the From February to March 2025 the Qidian Industrial At the same time to address issues with the existing
Detailed Rules on Energy Audits and Performance Evaluation and the Detailed Zone carried out a variable-frequency drive retrofit on circulating water pump system such as oversized pumps
Rules on Energy Usage Planning Management. These measures clarify the division the cooling tower fans of the circulating water system low operational efficiency and high energy consumption
of responsibilities workflows and supervision and evaluation mechanisms in Workshop 3. The project was designed to address the the Yuhua Industrial Zone upgraded four circulating water
for energy management. The Company requires each manufacturing unit to issues of long-term high-speed operation and high energy pumps by repurposing a 55 kW variable-frequency drive
establish an organizational structure for energy management to further ensure Energy Management System consumption associated with the existing fan system (VFD) that had been sitting idle in a warehouse. Two of the
the orderly implementation of energy management. In 2025 the Company Certification of Wenshan Qihua running at line frequency. We retrofitted the four fans with pumps were converted to VFD-controlled operation while
systematically optimized its energy management system in accordance with the independent variable-frequency drives while retaining the other two retained their soft-start mode and were
Requirements and Guidelines for Energy Management Systems (GB/T 23331- Energy-Saving Goals the existing cooling tower structure and intelligently designated as backup units. Electricity meters were also
2020) designating the Manufacturing Safety and Environmental Operations of Yunnan Baiyao linked the fan speed to the circulating water temperature installed simultaneously to monitor and compare energy
Center as the lead department for energy management to coordinate and advance By 2030 energy enabling on-demand adjustment of operating power. consumption. After the retrofit was completed the pump's
consumption per RMB The control system features an integrated design operating frequency dropped to 40% saving 20 kWh of energy management efforts across the entire company. The head of each unit combining a PLC and a display screen enabling real- electricity per hour and resulting in annual electricity cost
was designated as the primary person responsible for energy management within 10000 of output value time monitoring of temperature and the operating savings of approximately RMB 95000. While saving energy
that unit and must ensure that responsibilities are implemented at every level. In will be reduced by at status of each fan. Following the renovation electricity and reducing consumption the stability and reliability
addition energy management officers were appointed and dedicated positions least consumption is expected to be reduced by approximately of equipment operation have been improved thereby
were established to encourage major energy-consuming units to set up dedicated 20% annually resulting in annual electricity cost savings lowering system maintenance costs.management departments staffed with full-time or part-time personnel thereby of approximately RMB 47000.ensuring the effective operation of the system. During the reporting period 7%
Wenshan Qihua underwent an audit by a qualified third-party assessment body compared to the 2025
and successfully obtained ISO 50001 Energy Management System certification. baseline
Energy Management Initiatives of Business Groups of Yunnan Baiyao
Pharmaceuticals
* To establish an energy conservation inspection task force to conduct monthly on-site inspections and provide guidance
to each energy-consuming unit identify key areas with energy-saving potential and organize and implement energy-
saving retrofit projects; carry out corrective actions and training to promptly address non-compliant energy usage Electrical control cabinet before (left) and after (right) the Pump system retrofit
practices promote the development of a sustainable energy conservation management mechanism improve energy optimization and retrofit
efficiency and reduce energy waste and production costs;
* To incorporate energy-saving targets into the performance evaluation systems for departments and employees
strengthen accountability and incentive mechanisms enhance the proactive engagement of all staff in resource
conservation and environmental management and promote the development of resource-efficient enterprises;
* To optimize upgrade and modernize key energy-consuming equipment such as compressed air systems and chilled
water systems to improve operational efficiency and refine energy consumption management strengthen control over
energy costs and support the achievement of energy conservation and emissions reduction targets.
87 882025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
In addition the Company steadily increased the proportion of renewable energy used enhanced energy recycling in
production processes and systematically reduced its reliance on traditional fossil fuels and overall energy consumption.Key Initiatives for Renewable Energy Development of Yunnan Baiyao in 2025
Type of energy Development initiatives
The Qidian Industrial Zone and Wenshan Qihua have constructed and authorized the use
Biomass energy of biomass boilers to ensure a stable share of biomass energy in the energy supply and to
leverage the carbon reduction benefits of renewable energy.The photovoltaic project commissioned by Wenshan Qihua operates under a "self-generation
for self-consumption with surplus power fed into the grid" model. It generated a total of
Solar energy 3.417 million kilowatt-hours over the course of the year reducing carbon dioxide emissions
The Company posted "Everyone Can
by approximately 3639 tons. At the same time Wenshan Qihua launched a feasibility study Save Energy" posters throughout the
for the second phase of its photovoltaic project with plans to further expand its solar power premises
generation capacity and increase the share of clean energy in its overall energy consumption. Energy Consumption of Yunnan Baiyao in 20258
The Yuhua Industrial Zone and Wenshan Qihua implemented measures to recover and reuse Indicator Unit 2025
Waste heat recovery waste heat from the circulating cooling water system tapping into potential low-temperature Diesel Ton(s) 778.30heat sources and optimizing the existing raw material extraction condensate system to
maximize the recovery of water and thermal energy. Gasoline Ton(s) 20.90
Natural gas 10000m3 468.00
In addition the Company conducted diverse and tiered energy-saving training programs for its employees covering Purchased electricity MWh 93424.94
topics such as the interpretation of energy-saving policies technical applications and practical guidance. These have Purchased steam Ton(s) 128473.90
comprehensively enhanced employees' energy-saving awareness and skills thereby providing the human resources
needed to build an energy-efficient enterprise. clean Hydropower kWh 71359094.00
energy Solar photovoltaic kWh 3112320.00
Specialized Training on Energy Management Measures Comprehensive energy consumption Ton(s) of standard coal 30632.00
Comprehensive energy density Ton(s) of standard coal/Operating revenue of RMB 10000 0.0074
From June to July 2025 the Company organized two specialized training sessions on the Energy Management Measures
of Yunnan Baiyao Group. The training program was tailored to the Company's specific context providing an in-depth
analysis of energy conservation regulations and internal policies and sharing best practices in energy management within Water Resource Management
the pharmaceutical manufacturing process. It helped employees integrate energy conservation requirements into their
daily work thereby continuously enhancing energy conservation awareness and on-the-job compliance across the entire
workforce. Guided by the principle of "water conservation first recycling and system Water Saving Goals
optimization" Yunnan Baiyao remains committed to the conservation and of Yunnan Baiyao
protection of water resource. The Company strictly adheres to the requirements of
laws and regulations such as the Water Law of the People's Republic of China and By 2030 the water
has formulated and implemented internal regulations such as the Management consumption intensity
Procedures for Non-Pharmaceutical Water Systems and the Standard Operating per RMB 10000 of
Procedures for Secondary Water Supply System Safety guiding all production and output value will be
business departments to strengthen water conservation awareness and water reduced by at least
management. Through measures such as energy-saving technological upgrades
management optimization and recycled water reuse the Company has enhanced 7%
water use efficiency and reduced water resource wastage.compared to the 2025
Energy-saving training session baseline
8The statistical data follows the reporting standards of the National Bureau of Statistics.
89 902025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
Water Resource Management Initiatives of Business Groups of Yunnan Baiyao
Reverse Osmosis Brine Reuse Project at the Health Industry Park
Pharmaceuticals
* To improve the water resource management system by establishing regulations such as the Water Conservation In 2025 in response to the issue of water waste caused by the
Management System the Metering Management System and the Regular Inspection and Maintenance Management direct discharge of reverse osmosis concentrate from the raw water
System for Water-Using Equipment ; conduct unscheduled inspections and maintenance at all water usage points treatment system the Health Industry Park implemented a project
monitor water quality indicators promptly identify and address any abnormalities and strictly control the risks of water to retrofit the system for the recycling and reuse of concentrate.loss due to leaks spills drips and seepage; Through technological upgrades the reverse osmosis concentrate
* To establish and standardize water usage management records; conduct regular water balance tests; compile monthly is redirected for reuse as makeup water in the plant's wastewater
statistics perform calculations and analyze water usage at each water point; organize water usage performance pretreatment system and as recirculating water in the vacuum pump
evaluations; coordinate water allocation across business units and develop annual water usage plans; system thereby enabling the on-site recycling and cascading use of
* To incorporate water management performance into performance evaluations implement a system of rewards for water resource. The project can save 33600 tons of tap water annually
conservation and penalties for overuse strengthen accountability and promote continuous improvement in water and reduce wastewater discharge by the same amount effectively
management standards. improving the overall operational efficiency of the water system. Reverse Osmosis Brine Reuse System
Health Products Water Consumption of Yunnan Baiyao in 2025
* To assign water conservation targets to each water-using department through refined management raising water
conservation awareness among all staff and driving improvements in water management; Indicator Unit 2025
* to identify opportunities for water conservation through data analysis drive the implementation of improvement Reclaimed water reuse Ton(s) 92442.00
projects effectively increase the volume of recycled water and significantly reduce water consumption and wastewater
discharge. Water consumption Ton(s) 1869115.00
Water consumption density Ton(s) / Operating revenue of RMB 10000 0.45
Yunnan Pharma
* To improve the "Four Preventive Measures" safety inspection mechanism across all departments; establish the "Safety Packaging Material Management
Hazard Self-Inspection System"; require all departments to conduct daily inspections to ensure water and power supplies
are turned off and scan a QR code to log the results; Yunnan Baiyao is committed to minimizing the negative environmental impact of its manufacturing processes. The
* To strengthen property inspections and patrols and conduct unscheduled inspections and repairs of utility networks in Company continuously optimizes the management of packaging materials and related production resources encouraging
all buildings within the park; each business division to explore pathways toward greener lighter and more sustainable packaging solutions tailored
* To establish a water usage management ledger conduct monthly statistical calculations and analyses and coordinate to their specific operations. By optimizing packaging design and material usage reducing excessive packaging and
the park's annual water usage plan. implementing recycling and reuse programs for production scraps and packaging materials we strive to minimize raw
material consumption to the greatest extent possible. In 2025 the Company worked with suppliers to promote practices
such as reducing packaging materials and recycling continuously improving the effectiveness of packaging management
and reducing packaging waste.Yuhua Industrial Zone Implemented Full-Process Condensate Recovery Packaging Material Conservation Measures of Yunnan Baiyao
In 2025 the Yuhua Industrial Zone launched a project for the full- Products Packaging Material Optimization Measures Image
process recovery of condensate and the utilization of waste heat to
address the issues of condensate waste and low energy efficiency. The For toothpaste packaging materials we replaced the original
project employs a proprietary condensate iron removal unit a flash anti-counterfeit colored fiber paper with white cardstock
steam recovery system and a digital monitoring platform to establish reduced the use of chemical dyes during production
a closed-loop "recovery–purification–reuse" system. Heat exchange improved the paper's recyclability and lowered carbon emissions per unit of packaging by approximately 10%.is achieved using plate heat exchangers; the recovered waste heat is Additionally the raw material supply chain now better aligns
utilized in the production process; the purified condensate is used with Forest Stewardship Council (FSC) standards enhancing White cardstock
to replenish the circulating water system; and the low-temperature Toothpaste the environmental sustainability of the packaging process.condensate is further utilized for waste heat recovery. The project
can recover 21500 tons of condensate annually reduce energy
consumption in the steam system by 8-10% conserve water resource For certain toothpaste packaging materials we implemented
lower the wastewater treatment load and reduce carbon emissions lightweight optimization by reducing the sheet thickness from the original 275 μm to 220 μm effectively reducing plastic
thereby achieving synergistic improvements in energy efficiency water consumption and putting our commitment to green low- Composition of Toothpaste
conservation and environmental performance. Condensate waste heat recovery system carbon production and operations into practice. Packaging Materials
91 922025 Sustainability Report Green Transformation: Environmental Management and Ecological Protection
Establishing an "Innovative Packaging Display Area" to Create a Platform for Exchanging Packaging Material Consumption of Yunnan Baiyao in 2025
Cutting-Edge Ideas
In 2025 the Company established an "Innovative Packaging Display Indicator Unit 2025
Area" focusing on three key dimensions (sustainability intelligence Paper Ton(s) 18234.00
and innovation) to showcase packaging solutions that combine
environmental benefits with technological advancement. The Plastic Ton(s) 3617.62
Company regularly invited suppliers to update their exhibits and
participate in on-site exchanges and technical seminars to promote the Glass Ton(s) 4449.87
sharing of packaging expertise and collaborative R&D. Through regular
exhibitions and exchange mechanisms the Company has fostered Aluminum Ton(s) 2309.00
consensus and collaboration among all stakeholders regarding
material selection structural design and recycling gradually building Composite soft package Ton(s) 2291.00
a sustainable packaging ecosystem characterized by synergy among
enterprises suppliers and the industry and jointly driving the green Packaging material consumption Ton(s) 30901.49
and intelligent transformation of the industrial chain. Innovative Packaging Display Area
Density of packaging material consumption Ton(s) / Operating revenue of RMB 10000 0.0075
Hosting a Thematic Exchange Event on "Green and Sustainable Supply Chains"
Green Office
In October 2025 the Supply Chain Operations Center held
in-depth on-site discussions with partners on the theme
of "Green and Sustainable Supply Chains." Focusing on Yunnan Baiyao has integrated the concept of green development into its office operations management and continues
key areas such as design for reduced packaging materials to promote the creation of green and low-carbon office environments. The Company combines policy guidance with
the use of renewable materials and improving packaging educational outreach to strengthen employees' awareness of energy conservation and promote responsible behavior. We
recyclability they explored feasible implementation place signage in office areas to encourage employees to conserve electricity and water set air conditioning temperatures
pathways and technical solutions and engaged in in-depth appropriately and use air conditioning during designated hours. Additionally the Company advocates for paper recycling
discussions on how to convey green concepts through and paperless operations to help make green work practices a routine part of daily operations. At the same time the
product design and respond to consumers' environmental Company has stepped up routine inspections and oversight to ensure the effective implementation of all green office
preferences working together to promote the greening and requirements.sustainable upgrading of the packaging sector.Scene from the exchange event
93 942025 Sustainability Report People-Oriented: Employee Development and Workplace Development
95 962025 Sustainability Report People-Oriented: Employee Development and Workplace Development
Employment Details of Yunnan Baiyao in 2025
Protecting Employees' Rights and Interests
The Company is committed to safeguarding the legitimate rights and interests of its employees. We promote an
employment philosophy based on equality and inclusivity prohibit discrimination in any form continuously improve our
employment practices and foster a work environment that is open transparent and characterized by mutual respect and Total number of employees9 9286 Persons Formal employees
a strong sense of belonging.
11685Persons Type of
Compliant and Fair Employment employees in 1158 Persons Labor dispatch employeestotal employee
count
Yunnan Baiyao strictly adheres to laws and regulations such as the Labor Law of the People's Republic of China the 1241 Persons Subcontracting staff
Labor Contract Law of the People's Republic of China the Law on the Protection of Workers' Rights and Interests of the
People's Republic of China and the Regulations on the Prohibition of Child Labor. The Company resolutely prohibits
all forms of child labor and forced labor and effectively safeguards the fundamental rights of workers. The Company
has constantly refined its internal management systems by revising and implementing policy documents such as the Middle Technical staff Production
Recruitment Management System the Labor Contract Management System and the Dual Career Path Management management (including R&D staff
Measures and standardized recruitment processes labor contract management and the development of career pathways staff)
from the outset ensuring that all aspects of human resources management are conducted in a lawful compliant fair and 1064 Persons 1640 Persons
transparent manner. In 2025 the Company focused on refining key management documents such as the Guidance on 1351 Persons Financial
the Conversion of Probationary Employees to Permanent Status of Yunnan Baiyao Group Co. Ltd and established a more Number of Number of staff
scientific and rigorous talent selection system. The Company has not been involved in any violations such as the use of employees employees byby rank11 type of work 271 Persons
child labor or forced labor.Senior Junior Administrative
The Company actively integrates global intellectual resources to foster an open inclusive and innovative talent management10 employees Sales staff staff
ecosystem. In response to the need for strategic transformation and business upgrading we have proactively embraced 206 Persons 8016 Persons 5467 Persons 557 Persons
change focusing on key areas such as drug R&D and digital transformation and have established a precise and efficient
talent pipeline to attract top-tier professionals. In 2025 the Company was recognized for its outstanding performance in
organizational innovation talent strategy implementation and sustainable development. It was named to the "Top 30 Female 51 (inclusive) 30 and
Employers with the Most Innovative Spirit" list jointly selected by Zhaopin the Social Survey Research Center at Peking employees and above below
University and the National School of Development at Peking University. The Company also received numerous other 4188 Persons 343 Persons 2660 Persons
honors including Liepin's "2025 Yunnan Extraordinary Employer of the Year" and Emerson's "2025 Employer of the Year
Award." Number of Number of
employees by employees
gender by age
Male
employees 41 to 50 31 to 40
5098 Persons 1799 Persons 4484 Persons
Overseas Hong Kong Macao
employees Taiwan and overseas Yunnan
1 Persons 5 Persons 4684 Persons
Number of Number of
employees by employees by
nationality Mainland region
China
Ethnic (excluding
minorities Han Yunnan)
1346 Persons 7939 Persons 4597 Persons
9The total employee count includes employees under labor contracts labor dispatch and subcontracting staff.
10The employees by rank only include regular employees.
11They include senior managements of the Company and its subordinate business groups
97 982025 Sustainability Report People-Oriented: Employee Development and Workplace Development
Promotion of Diversity Talent Cultivation
Yunnan Baiyao has always upheld the values of fairness transparency and diversity and inclusion and firmly opposes Yunnan Baiyao continues to refine its talent development system which places equal emphasis on "ideological
any form of discrimination based on factors such as educational background gender ethnicity religion region of origin development and capability building" and adheres to a talent supply chain mechanism driven by both "internal
physical appearance age marital status health or family planning status. The Company strictly prohibits harassment development and external recruitment" to ensure that talent growth aligns with the Company's strategic direction. By
in any form including verbal written visual and physical contact and is committed to fostering a safe respectful and building an empowerment network that spans "strategy operations organization and talent" the Company is committed
friendly work environment. To effectively safeguard employee rights the Company has established open and efficient to deeply integrating training into business practices. This approach not only enhances individual capabilities but also
channels for complaints and reports as well as a standardized investigation and resolution process to ensure that stimulates organizational intelligence effectively driving the implementation of key strategic tasks.employees can promptly report any misconduct. The Company will respond swiftly and handle such matters appropriately In 2025 the Company used the "Baiyao Academy" as its training base and designed training programs closely aligned with
while protecting privacy. In 2025 the Company did not experience any incidents of discrimination or harassment and its strategic transformation and business challenges. In response to key challenges such as smart manufacturing industrial
continued to foster a healthy and positive corporate culture. ecosystems and new retail we actively promoted a shift in training models from traditional classroom settings to real-
The Company actively promotes cross-cultural communication and integration. We organized a visit to Yunnan Baiyao world scenarios adopting an approach that combines "targeted empowerment" with "action learning." During specialized
for international students from "Future Leaders" program of Guanghua School of Management Peking University where training in the manufacturing sector by guiding participants to analyze real-world problems we directly gathered 49
they engaged in discussions under the theme "Yunnan's Model for Innovation and Globalization in Biomedicine and concrete and actionable cost-saving suggestions. These provided valuable input for advancing lean management and
Comprehensive Healthcare" thereby continuing to foster an open respectful and trusting corporate culture. The annual enabled the rapid translation of learning outcomes into tangible benefits.employee turnover rate of the company stands at 8.55%. Development of Yunnan Baiyao's Three Teams
In 2025 Management team Professional team Skilled team
women accounted for
We organize programs such as We implement targeted small-group Leveraging national-level training
45.10% of the Company's the Peking University Advanced training tailored to the specific needs b a s e s w e h a v e e s t a b l i s h e d a Training Program the Transition of different professional fields such systematic framework for cultivating workforce skil led talent. Through the "New
and Empowerment Training for New as R&D manufacturing and supply Apprenticeship System" program we
while employees from ethnic minority groups Cadres and specialized training chain. Throughout the year we held trained 120 highly skilled workers; we
made up for reserve cadres to continuously 12 specialized training sessions organized an innovation and technical
enhance cadres' strategic vision and reaching more than 600 participants. s k i l l s co m p e t i t i o n t o st i m u l a t e
14.49% leadership skills. More than 10% of We also strengthened our team innovation among frontline staff; and we continued to implement inclusive participants in the reserve cadre of internal trainers certifying 70 skills certification programs such as
Cross-Cultural Communication and fully demonstrating the organization's success in program have been promoted and internal trainers and developing 80 the "Spread Your Wings" enabling
promoting diversity appointed to positions internal training courses. more than 1300 frontline employees Integration Event to advance their vocational skill levels
throughout the year.Indicator type Indicator name Unit Data for 2025
Two-Level Training System and Three-Level Management Mechanism for Talent Development of Yunnan Baiyao
The percentage of women in all management positions % 39.69 for 2025
Percentage of women in entry-level management positions % 41.38 Led by the Company and implemented by the Baiyao Academy with the focus on
Data about First-Level Training top-level design and unified plans and standards developed within this system to
employee Percentage of women in top management positions % 10.00 Two-Level System cover corporate culture employee quality and leadership training in line with the
diversification The percentage of women in management positions in revenue- Training Company's talent development strategy.generating departments % 3.13 System Second-Level Led by the Company's business or platform units this system focuses on business
Percentage of women in STEM-related positions % 40.34 Training System and job requirements aiming to enhance employees' professional skills.HR and Cadre Responsible for the overall planning of the Group's training strategy the
Management construction of the training system and mechanisms the management of training
Department resources and operations and leading the development and implementation of the first-level training system.Talent Cultivation and Development Three-Level
Management Undertaking projects related to the first-level training system and being responsible HR Functional Line for organizing and managing the second-level training system within the respective
Yunnan Baiyao has always placed great emphasis on building a talent development system continuously refining its talent Mechanism business or platform units.development strategy and is committed to establishing a talent system that integrates specialization professionalism
and market orientation. By optimizing our talent structure strengthening capacity building and fostering an inclusive Departments of Responsible for the planning and implementation of training related to employees' each business/ job knowledge and skills and organization of a series of training activities targeting
and supportive growth environment we systematically enhance the overall quality of our team thereby providing a solid platform unit business operations based on business needs.talent foundation for the Company's long-term high-quality development.
99 1002025 Sustainability Report People-Oriented: Employee Development and Workplace Development
Yunnan Baiyao has always placed great emphasis on the simultaneous development of employees' personal growth and Highlights of 2025 Training Programs of Yunnan Baiyao
professional capabilities. The Company is committed to building a systematic tiered and categorized training system
continuously refining its talent development mechanisms centered on career advancement pathways. The Company is 2025 Specialized Development Training Program for Mid-Level Managers of Yunnan Baiyao Group
committed to building management technical and highly skilled teams adhering to a training philosophy centered on
"trainee-centered practice-based" principles and aiming to create a conducive environment for employee learning and
growth. In 2025 Yunnan Baiyao conducted specialized category-
specif ic training for mid-level managers in R&D
We strictly adhere to a training approach that emphasizes "training aligned with combat and the integration of training manufacturing supply chain marketing and finance
and combat" and actively implement a job rotation policy to help employees gain cross-functional experience through focusing on the Company's key functional areas. By
real-world operations. By simulating real-world work scenarios and challenges in our training programs we are committed adopting a model combining "small-class instruction
to enhancing our employees' diverse skill sets and overall capabilities thereby fostering a win-win situation that supports targeted capacity-building and action learning" we
both personal growth and the Company's strategic development. delivered tailored training for the program. To date
we have held 12 sessions and trained more than 600
Talent Cultivation System of Yunnan Baiyao for 2025 participants thereby enhancing the strategic execution
and management capabilities of mid-level managers.Employee
Hierarchy Training Plan Training Objectives Progress in 2025
To enhance senior management to The Company organized and conducted the
deeply understand the Company's overall second session of the Senior Management Middle Management Successor Training and Evaluation Program of Yunnan Baiyao Group.Senior strategy and business deployment be Training Program - the 2025 Peking
Management more clear about the Company's long- University Senior Workshop of Yunnan
Training term development plan and enhance the Baiyao Group. To continuously infuse fresh energy into management
Senior Program understanding of the Company's vision the Company has launched a training program for mid-
management and mission so as to more effectively lead level management candidates. Focusing on areas such as
the Company towards achieving its preset industry insights capital operations strategic planning
goals. and innovation management the program aims to
To promote the middle management's The Company organized the first session broaden participants' organizational perspectives and
strategic thinking and leadership skills of the 2025 Training Program for Newly enhance their overall management competencies. To
Middle deepen their understanding of the Promoted Mid-Level Managers of Yunnan date four sessions have been held. We are committed to
Management Company's business and develop their Baiyao Group as well as the 2025 building a team of young well-rounded professionals who
Training decision-making and team management Specialized Development Training Program possess vision potential and a sense of responsibility
Middle Program skills such that they can become an for Mid-Level Managers of Yunnan Baiyao thereby cultivating a core workforce to support the
management effective backup force for the Company's Group which was divided into classes for Group's long-term development.senior management. R&D manufacturing marketing supply
chain and finance totaling 12 sessions.Focusing on the Company's strategy The Company organized and conducted
business development and organizational 4 sessions of the Middle Management
capability requirements the program Successor Training and Evaluation Program Data of Employee Training in 2025Middle
Management aims to accelerate the structural and of Yunnan Baiyao Group.Successor qualitative upgrade of the cadre echelon Total Training Duration Total Number of Participants Training Duration Per Person
Training stimulate the internal driving force of theBack-up
Program cadre team and cultivate versatile middle management management successors to meet future 337162.92Hours 59557 36.31 Hours
management challenges and leadership
tasks.
12
To help new comers quickly integrate into The Company organized and conducted Annual total training expenses Per capita training cost
the Company culture enhance their two sessions of the new employee training
identification with the Company culture program titled "Ambitious Aspirations
and deepen their understanding of the Shining Future." 742.22 RMB 10000 710.67 RMBNew Employee
Training Company's core business so as to ensure
Program that they can achieve comprehensive New quality expansion in the early stage of
employees their career in the Company laying a solid
foundation for their long-term
development.
12Data for annual total raining expenses and per capita training cost includes both formal employees and dispatched personnel.
101 1022025 Sustainability Report People-Oriented: Employee Development and Workplace Development
Promotion Mechanism Employee Welfare and Incentives
Yunnan Baiyao continues to build a clear and systematic talent development Yunnan Baiyao has established a compensation and performance management system centered on value contribution
framework by combining internal cultivation with external recruitment. This ensuring that its incentive mechanisms are both fair and competitive. The Company offers a comprehensive benefits
system includes position management career levels competency standards package covering health care lifestyle conveniences and family support. It regularly organizes a variety of cultural and
performance evaluations and dual-track career development paths. It recreational activities tailored to the specific needs of different employee groups. Additionally the Company collects and
effectively supports employees' continuous growth and career advancement responds to employee feedback through formal channels establishing an effective two-way communication mechanism
helps them clarify their personal roles and development directions and that enhances employees' sense of value and belonging.broadens their long-term career prospects thereby enhancing the Company's
ability to attract and retain talent.On this basis we provide personalized career development support to our
employees. Employees can choose a career path that suits their professional Compensation and Benefits Employee Care
expertise skills and personal characteristics and define their growth
trajectory within the Company. By participating in career-level evaluations
within their respective fields employees can clearly understand where they Yunnan Baiyao has always adhered to laws and regulations The Company strictly adheres to internal policies such as the
stand in their careers. With guidance from their supervisors employees such as the Social Insurance Law of the People's Republic of Welfare Management Measures and the Leave Management China the Company Law the Securities Law the Measures Measures . By focusing on employees' daily well-being
can identify key areas for skill development and create actionable personal for the Administration of Equity Incentive Plans for Listed convenience and family support we have established a
development plans. We encourage our employees to continuously enhance Companies the Shenzhen Stock Exchange Listing Rules and multidimensional care system that spans "from work to life
their professional capabilities and work contributions through ongoing the Guidelines on Pilot Employee Stock Ownership Plans and from the individual to the family" helping employees
learning and practical experience thereby gaining opportunities for promotion for Listed Companies . In addition the Company strictly achieve a harmonious balance between work and life.and advancing their professional qualifications which fosters a virtuous cycle implements its internal management systems including the Compensation Management System of Yunnan Baiyao Yunnan Baiyao continues to enhance its employees'
of talent development and company growth. Group Co. Ltd and the Performance Management System of occupational safety long-term benefits and health
Yunnan Baiyao Group Co. Ltd to ensure that management management. In 2025 the Company comprehensively
practices such as compensation distribution performance increased the coverage limits for its employees' accidental
evaluations and promotion mechanisms are lawful and injury insurance extended coverage to all employees under
Performance Management compliant. Building on its existing institutional framework labor contracts temporary agency workers and outsourced
the Company continues to ensure that performance outcomes personnel strengthened protection against accidental risks
Yunnan Baiyao has established an integrated "performance-compensation- are effectively linked to salary adjustments promotion and alleviated the potential financial burden on employees and opportunities and eligibility for long-term incentives thereby their families. In terms of long-term benefits the Company has
promotion" system centered on its Performance Management System . safeguarding the standardization fairness and motivational optimized its corporate pension plan by changing the eligibility
Performance evaluation plans are designed based on departmental functions nature of human resources management. requirement from "two years of service" to "completion of
and job responsibilities clearly defining weightings criteria and evaluation the probationary period" thereby extending coverage to all
cycles to establish a solid foundation for fair evaluations. In particular the The Company has established a compensation system that permanent employees. This allows employees to voluntarily
compensation system adopts a "position + skills + performance" distribution benchmarks against the market and reflects both the value begin saving for retirement at an earlier stage supports their of each position and individual contributions and ensures long-term financial planning and enables them to share in the
model focusing on value-based rewards to channel compensation resources through performance-based incentives that employees' Company's success. In addition the Company has enhanced
toward high-performing employees and reinforce the incentive principle earnings grow in tandem with the Company's development. its health management services by adding three new screening
that "superior performance leads to superior rewards." The results of the We strictly implement relevant national and local regulations tests to the annual free health checkup package for employees.performance evaluations are fully incorporated into key processes such as to ensure that employees are entitled to statutory holidays It has also expanded its service network by opening new
bonus distribution salary adjustments and promotion selections ensuring paid annual leave leave for weddings and bereavement high-end health screening centers offering employees more maternity leave and breastfeeding breaks as stipulated comprehensive convenient and professional health screening
the fairness and effectiveness of the performance evaluation process through by national and local laws. We provide comprehensive options to help them better monitor and maintain their health.a closed-loop management system. coverage for pension medical unemployment work-
related injury maternity and housing benefits thereby
To ensure the effective implementation of our corporate strategy we have effectively safeguarding our employees' fundamental rights
broken down our overall objectives into specific actions for each department and interests. In addition the Company has continued to
and employee and established an organization-wide system for goal refine its benefits program conveying the organization's warmth through festive gestures and gift packages to foster
management and performance evaluation. In collaboration with the Finance a supportive work environment that promotes a sense of
and Strategy departments we have broken down the Company's strategy into belonging thereby enhancing employees' overall well-being
a clear roadmap for development and key performance indicators; established and sense of fulfillment.a three-tier goal alignment mechanism spanning "senior management-middle
management-employees" to ensure alignment across all levels and organized
all employees to sign performance agreements. Throughout the year we During the reporting period
conducted process monitoring regular evaluations and post-project reviews
as planned and conducted a comprehensive annual performance review The overall salary of grassroots employees
at the end of the year ensuring that the Company's strategy is ultimately at Yunnan Baiyao has achieved double-
implemented by every employee thereby ensuring accountability and orderly digit growth year-on-year.execution.
103 1042025 Sustainability Report People-Oriented: Employee Development and Workplace Development
The Company continues to refine its support mechanisms for employees facing financial difficulties strictly implements the trade
union's care package program and conducts regular visits and special care programs. Eligible employees facing health issues
life challenges or significant family burdens may apply for early retirement. During the early retirement period the Company will Care for Female
continue to provide benefits maintains continuous seniority and pay social insurance contributions helping employees focus on
their health and balance family responsibilities thereby demonstrating our genuine care. In addition the Company will extend
its warmth to employees during important milestones such as birthdays childbirth and hospital stays and distribute gifts during
traditional holidays thereby effectively strengthening employees' sense of belonging and identification with the organization. The Company has always placed a high priority on gender equality and the protection of female
employees' workplace rights. We strictly adhere to national policies and regulations regarding the
To promote work-life balance among employees the Company is actively working to create a healthy convenient and enjoyable protection of female workers and rigorously enforce our internal regulations outlined in the Special
work environment. In 2025 the Company implemented a parental leave policy and opened its recreational facilities including
basketball courts tennis courts and fitness centers to all employees to enhance employees' physical and mental well-being Collective Agreement on the Protection of Female Employees' Special Rights thereby strengthening
and strengthen team cohesion through a variety of extracurricular activities. In addition the Company has partnered with China the safeguarding of female employees' legitimate rights and interests. The contract clearly stipulates
National Petroleum Corporation to offer discounts on fuel cards the signed Vehicle Annual Inspection Service Cooperation various protective measures for female employees including comprehensive procedures for prevention
Agreements with multiple vehicle inspection agencies to provide door-to-door vehicle pickup and drop-off services and offers reporting investigation and resolution of incidents of sexual harassment reported by female employees.employees benefits such as discounted swimming passes and home appliance discounts. Thus we can effectively alleviate the These measures ensure a timely response and fair resolution in the event of such incidents while fully
financial burden on employees foster a reassuring and supportive work environment and comprehensively enhance employee
satisfaction and well-being. protecting the privacy of those involved. In addition the Company is actively engaged in women's health
support programs. In collaboration with professional medical examination institutions we organized
Caring for Women's Health seminars offering free medical report reviews by physicians and mental health
counseling services thereby demonstrating a genuine commitment to the physical and mental well-being
of the female employees.Hosting the Second "Baoxiang Cup" Male Employee Basketball Tournament In 2025 the Company further implemented a more inclusive and supportive leave policy. To address the
specific needs of certain employees in caring for their families the Company proactively implemented
policies such as leave for employees with only children. For the employees facing family responsibilities
such as caring for their parents the Company provided ample paid leave support thereby safeguarding
employees' legal rights and interests while demonstrating the Company's commitment to and concern for
the well-being of employees' families.Employee Communication
Yunnan Baiyao has consistently upheld open and transparent internal communication and continuously promoted the
development of grassroots democratic governance and the Company's healthy growth. We are committed to establishing
a systematic and diversified framework for employee feedback and democratic participation to fully safeguard employees'
rights to information participation and expression.The Company has established a multi-channel communication system that integrates online and offline platforms as well
as anonymous and real name-based feedback channels including the OA system collaborative documents and forms
suggestion boxes and dedicated email addresses. This ensures that employees can conveniently and promptly provide
feedback and suggestions regarding process optimization training experiences system improvements and day-to-day
management. In 2025 the Company incorporated the performance appeal process into its performance management
guidelines along with the corresponding performance appeal forms and performance review forms.The scene of the employee basketball tournament
105 1062025 Sustainability Report People-Oriented: Employee Development and Workplace Development
Occupational Health and Safety Construction of Safety Culture
Yunnan Baiyao puts employee health and safety production as its top priority and keeps strengthening safety The Company has consistently adhered to the principle of "full participation and comprehensive coverage." By
management across the entire supply chain by establishing a comprehensive system of policies and organizational systematically conducting emergency drills thoroughly identifying potential risks and hazards and continuously
safeguards. The Company actively promotes the development of a safety culture systematically conducts training and promoting diverse safety training programs that span both online and offline platforms the Company has established a
drills and effectively enhances the safety awareness and emergency response capabilities of all employees. We are closed-loop safety management mechanism for routine operations deeply integrating health and safety awareness into
committed to creating a safe and healthy work environment for our employees thereby laying a solid foundation for the every aspect of its production and business activities.Company's sustainable development. In 2025 based on actual operational needs the Company developed and launched a series of courses covering topics such
as basic safety fire safety emergency response and laboratory safety. We adopted a blended training and assessment
Health and Safety Management System model combining online and in-person sessions to ensure the effectiveness of the training.Throughout the year the
Yunnan Baiyao strictly adheres to laws and regulations such as the Work Safety Law of the People's Republic of China Company organized a total of and with over
and the Law of the People's Republic of China on the Prevention and Control of Occupational Diseases and continuously
improves its work safety management system. The Company has continuously refined its Basic Work Safety Management
System and Emergency Management System and has established a series of regulations including the Work Safety 50 safety and emergency drills 115 safety training sessions 22800 participants
Education and Training Measures the Implementation Measures for Rewards for Internal Work Safety Reporting and the
Emergency Response Plan for Sudden Environmental Incidents. These measures systematically delineate responsibilities These efforts effectively enhanced the safety knowledge and emergency response capabilities of all
at all levels and clarify operational standards. Additionally to address specific production scenarios such as warehouses employees providing a solid foundation for workplace safety.tank farms and hazardous chemicals the Company has formulated various special rules such as the Safety Management
System for Warehouses and Tank Farms the Fire Prevention Explosion Prevention and the No-Fire Management System
the Hazardous Chemicals and Major Hazard Sources Management System and the Precursor Chemicals Management Specialized Training on Safety Risk Prevention and Control
System to strengthen control over critical processes.The Company has established a Work Safety Management Committee and continues to promote the development of In August 2025 the Company organized a specialized training session on safety risk prevention and control aimed at
safety management structures tailored to the operational realities of its subsidiaries. It has appointed safety management enhancing employees' awareness of safety responsibilities and their ability to respond to emergencies. This training
personnel and is actively encouraging all subsidiaries to simultaneously improve their own safety management session centered on regulations such as the Fire Control Law of the People's Republic of China and the Work Safety
frameworks to ensure that safety responsibilities are effectively implemented at every level. To enhance basic safety Law focusing on key areas including work at heights electrical and gas safety fire safety and emergency response.standards we have actively implemented safety measures such as interlocking devices alarm systems and detection Through a combination of policy interpretation analysis of typical cases and hands-on drills the training systematically
equipment thereby effectively reducing the risk of accidents at our production sites. strengthened participants' safety knowledge and risk prevention skills. The trainees fully understood the responsibilities
of each position regarding workplace safety and expressed their commitment to incorporating the principle of "Safety for
In 2025 All Preparedness for All" into their daily work thereby working together to strengthen the Company's safety defenses.Yunnan Baiyao invested a total of RMB conducted
9.1258 million in safety 342 safety inspections
identified and achieved a
2762 potential hazards 100% rectification rate
Occupational Safety Performance
Number Number
of work- of work- Lost working Lost workingdays Number of employees
related related hours due to work- due to work- Injury rate per undergoing occupational
injuries deaths related injuries13 related injuries million work hours health examinations
13 0 6288 42 Days 62.23 % 1775
Persons Persons Hours Persons
Specialized Training on Safety Risk Prevention and Control
132025 witnessed an increase in the identified number of workers suffered work-related injuries extension of the identification scope and
improved awareness of the employees to safeguard rights which together led to the increase in the lost working hours.
107 1082025 Sustainability Report Social Contribution: Creating Shared Value and Promoting Harmonious Development
109 1102025 Sustainability Report Social Contribution: Creating Shared Value and Promoting Harmonious Development
Serving the Rural Revitalization Strategy Community Collaboration
Yunnan Baiyao actively supports the national rural revitalization strategy and leveraging its industrial resources and Yunnan Baiyao always places great emphasis on fulfilling its corporate social responsibilities. By forging close long-
professional expertise systematically plans and implements rural revitalization projects. The Company has established a term collaborations with the community the Company has actively carried out a variety of care activities successfully
comprehensive operational framework covering organizational development Party-building collaboration technological responding to residents' practical needs and driving harmonious development and continuous improvement within the
empowerment leadership development talent cultivation and consumer support. By focusing on mutual empowerment community.of both the industry and talent the Company is committed to promoting the sustainable development of the rural
economy and improving the quality of life for residents. In 2025 the Company actively participated in the "Golden Autumn
Campaign for Consumption-Based Poverty Alleviation" and the "Spring Festival Campaign for Consumption-Based Poverty Organizing a Photography Event to Convey Social and Humanitarian Concern
Alleviation." Through the "832 Platform" we purchased a total of 8862 units of agricultural and sideline products from
Weixi County amounting to RMB 886200 thereby actively helping farmers increase their income and contributing to rural
revitalization. In 2025 Yunnan Baiyao organized a public welfare
campaign for "Filial Piety and Respect for the Elderly" in
2025 rural communities to celebrate the Double Ninth Festival.
Under the theme "Fulfilling Dreams in the Capital" the
Through the "832 Platform" we purchased
amounting to RMB campaign provided free photography services to 151 a total of elderly villagers capturing their heartwarming moments
8862 886200 and presenting them with the photos. The campaign units of agricultural and sideline aimed to enrich the spiritual and cultural lives of the
products from Weixi County elderly and tangibly enhance their sense of well-being.Vigorously Promoting Educational Assistance and Continuing the
"Golden Autumn Scholarship" Program
Yunnan Baiyao has always upheld the belief that "rural revitalization depends on talent and to foster talent education Free Photography Event for the Double Ninth
must come first." In 2025 the Company continued its "Golden Autumn Scholarship" program in Pantiange Township Festival to Honor Parents and Respect the Elderly
Weixi County allocating RMB 164000 in scholarships to support 92 students from across the township who were admitted
to undergraduate and vocational programs.Since 2015 the Company invested a total of RMB 1.915 million to help nearly
600 students successfully study in the universities and colleges offering talent support for the long-term development of
Promoting Community Health and Providing Care for People of All Ages
Pantiange Township.In 2025 Yunnan Baiyao launched the "Healthy Rejuvenation Good Times" series of activities taking the cerebration of
Double Ninth Festival as an opportunity. Through cultural reimagining the Company has expanded the connotation of
festivals into all-age health care. By collaborating with the community to organize activities such as health walks and free
Promoting the "Grain-Medicinal Materials" Intercropping Model Improving Farmers' medical clinics we have effectively integrated health concepts into public spaces demonstrating that the Company is not
Cultivation Skills only a product provider but also a champion and practitioner of healthy lifestyles within the community.In 2025 Yunnan Baiyao leveraged Weixi's natural resources to actively
promote the "grain-medicinal materials" intercropping model. The
Company revised and improved the Specialized Technical Solution for
the Cultivation of Dolomiaea costus of Yunnan Baiyao and conducted
10 training sessions that reached 180 participants thereby enhancing
farmers' cultivation skills. The Company invested RMB 101500 in incentive
subsidies for farmers in the two villages who practice intercropping corn
with Dolomiaea costus encouraging 140 farming households (including
96 households that have been lifted out of poverty and those under
monitoring) to develop the Dolomiaea costus cultivation industry.Intercropping of Dolomiaea costus was promoted across more than 500
mu in Chazhiluo Village and Xinle Village increasing output value by
RMB 1.05 million and boosting average household income by RMB 5000.Several media outlets including xuexi.cn and Diqing Learning Platform
have published in-depth reports on the case study titled Chazhiluo Village
Overcame Challenges and Boosted Income Through the "Three Ones." Intercropping of grain and medicinal "Healthy Rejuvenation Good Times" series
materials boosted yields and income
111 1122025 Sustainability Report Social Contribution: Creating Shared Value and Promoting Harmonious Development
Public Welfare and Charity
Yunnan Baiyao actively fulfills its corporate social responsibility deeply integrating
charitable donations and volunteer services into its sustainability strategy. The
Company strictly adheres to the internal regulations set forth in the Management Hosting a High-Level Industry Forum to Bring Together Expert Insights
Measures for Charitable Donations of Yunnan Baiyao Group Co. Ltd. We have
established a comprehensive management system for charitable activities to
ensure that donations and public welfare activities are conducted in a standardized In 2025 As a strategic partner Yunnan Baiyao was deeply involved in and hosted the core events of the 2025 Tengchong Scientists
transparent and efficient manner thereby continuously enhancing the cohesion The Company made Forum series. The Company co-hosted the "Entrepreneur Innovation Forum" with Tsinghua University. Centered on the
of our corporate culture and our social influence. During the reporting period the external donations totaling theme of "AI-Driven Industrial Innovation" the forum showed the Company's explorations and practices in areas such as
Company actively participated in numerous public welfare activities and widely approximately RMB the standardization of TCM materials intelligent supply chain management and AI-assisted drug R&D. The Company's
encouraged employees to join volunteer programs. The Company made external collaborative research project with Peking University titled "High-Throughput Analysis of Small Molecules from Natural
donations totaling approximately RMB 3.56 million including approximately RMB 3.56 Products of Medicinal Plants and the R&D and Application of Key Technologies for AI-Assisted Rapid Drug Screening" was 2.6 million in charitable donations and approximately RMB 960000 in donations million honored as one of the forum's "Top Ten Technology Transfer Cases" laying a solid foundation for the establishment of a
related to rural revitalization and harmonious neighborhood-building activities. regional technology transfer hub.Through these concrete actions the Company gave back to society and contributed
to community development and improvements in people's livelihoods.Active Participation in the "HER HEALTH" Public Welfare Activities to Effectively Raise Health
Awareness Among Young People
In 2025 Yunnan Baiyao actively participated in the "HER
HEALTH Women's Public Welfare Activities" organized by
Meituan Medicine & Health. The Company provided key
support for the "Girls Go for It!" donation campaign at
the Liude Township Central School in Yongsheng County
Lijiang and hosted the "Care for Her Goodness" health fair
and campus outreach events at Yunnan Minzu University
to help raise health awareness and improve the well-being
of women and young students. Entrepreneur Innovation Forum
In addition the Company successfully hosted the Pharmaceutical Innovation and Technology Frontier Forum 2025 inviting
"HER HEALTH Women's Public Welfare Activities" seven academicians from the Chinese Academy of Sciences and the Chinese Academy of Engineering to provide guidance
and promote cutting-edge industry dialogue.Industry Leadership and Industrial Synergy
Guided by its mission of "to guard life and health" Yunnan Baiyao actively fulfills its role as an industry leader while
pursuing high-quality development. Through technological innovation and knowledge sharing the Company actively
fosters an open industry ecosystem and collaborative partnerships while deeply integrating itself into local development.It is committed to advancing the modernization and sustainable development of the pharmaceutical industry thereby
achieving a harmonious balance between industrial and social value.Building Platforms Together Sharing Knowledge
Yunnan Baiyao is committed to accelerating the modernization of the TCM industry. By establishing high-level dialogue
platforms sharing cutting-edge practices and promoting technology transfer the Company is leading the industry toward Pharmaceutical Innovation and Technology Frontier Forum 2025
a future characterized by digitalization and intelligent development.
113 1142025 Sustainability Report Appendix
Building a Collaborative Expert Service Platform to Support Industry Innovation Appendix
During the reporting period Yunnan Baiyao formally
signed an agreement with the Yunnan Provincial Expert Performance Table
and Talent Industr y Ser vice Group. The Company
conducted a total of 23 expert consultations and
assessments led the development of one industry Dimension Indicators Unit 2025
standard collaborated to resolve two key technical
challenges published one high-level scientific paper Business Ethics
and established one innovation platform one expert Compliance training sessions Time 20Governance
workstation and one engineering research center. These Compliance
efforts comprehensively advanced the upgrade of the training
Compliance training coverage of
employees % 100
scientific research capabilities and innovation system
of the Central Research Institute while continuing to Exchange Meeting of the Yunnan Provincial Addressing Climate Change
strengthen the foundation for high-level R&D support. Expert and Talent Industry Service Group Direct greenhouse gas emissions
(Scope I) Ton(s) of CO2 equivalent 34718.58
Indirect greenhouse gas emissions
(Scope II) Ton(s) of CO2 equivalent 56028.10 GHG
Empowering Industries Promoting Collaborative emissions Total greenhouse gas emissions Ton(s) of CO2 equivalent 90746.68
Development Density of greenhouse gas Ton(s) of CO2 equivalent/
emissions Operating revenue of RMB 0.022
Yunnan Baiyao is actively building and integrating into an open mutually beneficial and diverse industrial ecosystem. By 10000
participating in the formulation of industry standards sharing management systems expanding cooperation models and Environmental Management
promoting scientific principles the Company is continuously enhancing the innovation and sustainability of the industrial
chain. Total exhaust gas emissions 10000m
337707.64
Fume (dust) Ton(s) 0.80
NOx Ton(s) 5.41
Integrating Industry Academia and Research to Lead the Development of Industry Standards Exhaust ga Sox Ton(s) 0.29
* In 2025 Yunnan Baiyao established collaborative research and innovation platforms partnering with the Yunnan VOCs Ton(s) 4.21
Provincial Institute for Food and Drug Control to apply for the designation of the "Yunnan Provincial Key Laboratory for Environmental 10000m
3/Operating
the Quality and Standards of TCM materials" and collaborating with Yunnan University of TCM to apply for the "Yunnan Exhaust gas intensity revenue of RMB 10000 0.0092
Provincial Key Laboratory for the Processing and Preparation of TCM materials." Through the integration of industry Total wastewater discharge Ton(s) 1493268.51
academia and research the Company aims to overcome bottlenecks in quality standards and processing technologies
thereby injecting new momentum into industrial R&D. COD Ton(s) 99.02
Ammonia nitrogen Ton(s) 2.51
* We took the lead in developing the group standard Seeds of Yunnan Paris polyphylla participated in the formulation
of the national standard of Technical Specifications for the Production of Poria cocos Strains and spearheaded the Total phosphorus Ton(s) 2.65
release of four group standards including the Technical Specifications for Determining the Shelf Life of TCM Decoction Ton(s)/Operating revenue
Pieces and the Technical Specifications for the Production of Yunnan Paris polyphylla: On-Site Processing (Fresh-Cut Wastewater discharge intensity of RMB 10000 0.36
Processing) covering key stages such as seeds processing and quality control. These standards have filled technical Wastewater
gaps in the industry and provide unified guidelines for enterprise production. Waste drugs drugs HW03 Ton(s) 132.00 management
Experimental liquid waste HW49 Ton(s) 36.53
Other hazardous wastes Ton(s) 32.58
Total discharge of hazardous wastes Ton(s) 201.11
Participating in the Development of Industry Standards to Enhance Industry Best Practices
Intensity of hazardous waste Kg/Operating revenue of 0.049
In 2025 Yunnan Baiyao participated in the development of the industry standard Functional Toothpaste helping to RMB 10000
standardize the evaluation of the efficacy of oral care products. At the same time the Company's experts were appointed Drug residue sludge Ton(s) 22491.13
as members of the National Expert Committee of the ISO Technical Committee on Dental Science and Technology. They Domestic garbage Ton(s) 1148.80
participated in its annual meetings actively discussed international standards for oral care products and helped enhance
the influence of Chinese companies in the development of international standards.
115 1162025 Sustainability Report Appendix
Dimension Indicators Unit 2025 Dimension Indicators Unit 2025
Other general solid waste Ton(s) 582.13 Reclaimed water reuse Ton(s) 92442.00
Total discharge of non-hazardous Water
waste Ton(s) 24222.05 resource
Water consumption Ton(s) 1869115.00
management Ton(s)/Operating revenue
Intensity of non-hazardous waste Ton(s)/Operating revenue
Water consumption intensity of RMB 10000 0.45
of RMB 10000 0.0059 Paper Ton(s) 18234.00
Total discharge of solid waste Ton(s) 24423.17
Plastic Ton(s) 3617.62
Discharge intensity of solid waste Ton(s)/Operating revenue Environmentalof RMB 10000 0.0059 Glass Ton(s) 4449.87Packaging
Total waste recycled/reused Ton(s) 18924.736 material Aluminum Ton(s) 2309.00
Total waste recycled/reused per Ton(s)/Operating revenue usage Composite soft package Ton(s) 2291.00
million RMB revenue of RMB 1 million 0.46 Packaging material usage Ton(s) 30901.49
Percentage of waste recycled/reused % 77.49 Intensity of packaging material Ton(s)/Operating revenue
Total waste disposed Ton(s) 24423.17 consumption of RMB 10000
0.0075
-Landfill Ton(s) 849.80 Supply Chain Management
Wastewater -Incineration with energy recovery Ton(s) 678.34 Total number of suppliers / 310
management -Incineration without energy Key suppliers / 154
recovery Ton(s) 0.00 Yunnan Province / 45
-Other disposal methods Ton(s) 22895.03 Chinese Chinese suppliers (in other
-Unknown disposal method Ton(s) 0.00 suppliers provinces and regions in Mainland / 263
-Total hazardous waste recycled/ China except Yunnan Province)
reused Ton(s) 0.00 Overseas suppliers (including Hong Kong Macao / 2
-Total hazardous waste disposed Ton(s) 201.11 and Taiwan)
Environmental Compliant Recruitment
-Hazardous waste to landfill Ton(s) 0.00
-Hazardous waste incinerated with Total number of employees
14 Persons 11685
energy recovery Ton(s) 169.67 Type of Formal employees Persons 9286
Social
-Hazardous waste incinerated employees
without energy recovery Ton(s) 0.00 in total
Labor dispatch employees Persons 1158
employee
-Hazardous waste disposed through Subcontracting staff Persons 1241count
other methods Ton(s) 31.44 15
-Hazardous waste with unknown Number of Senior management Persons 206
disposal method Ton(s) 0.00 employees Middle management Persons 1064
by rank
Resources Utilization Junior employees Persons 8016
Diesel Ton(s) 778.30 Sales staff Persons 5467
Gasoline Ton(s) 20.90 Number of Technical staff (including R&D staff) Persons 1351
Natural gas 10000m3 468.00 employees by Production staff Persons 1640
Purchased electricity MWh 93424.94 type of work Financial staff Persons 271
Purchased steam GJ 128473.90 Administrative staff Persons 557
Energy
management Water and electricity kWh 71359094.00
Solar PV kWh 3112320.00
Comprehensive energy
consumption Ton(s) of standard coal 30632.00
Density of comprehensive energy Ton(s) of standard coal / 14The total employee count includes employees under labor contracts labor dispatch and subcontracting staff.consumption Operating revenue of RMB 0.007410000 15They include senior managements of the Company and its subordinate business groups.
117 1182025 Sustainability Report Appendix
Dimension Indicators Unit 2025 Dimension Indicators Unit 2025
Number of Male employees Persons 5098 Quality and Safety of products
employees by
gender Female employees Persons 4188 Quality and Number of quality and safety
safety training training sessions / 1973
30 and below Persons 2660
R&D Innovation
Number of 31 to 40 Persons 4484
employees R&D investment RMB 100 million 4.23
by age 41 to 50 Persons 1799 The amount of expenses incurred due to the filing
51 and above Persons 343 of intellectual property rights registration RMB 10000 107.56
Number of Han Persons 7939
Number Invention patent / 42
of patent
employees by Ethnic minorities Persons 1346 applications
nationality Overseas employees Persons 1 filed during Utility model patent / 12
Yunnan Persons 4684 Social the year
Number of Number of
employees by Mainland China (excluding Yunnan) Persons 4597
Invention patent / 30
patent grants
region Hong Kong Macao Taiwan and during the Utility model patent / 12
overseas Persons 5 year
Employee Training Invention patent / 132
Number of
Total Training Duration Hours 337162.92 valid patents Utility model patent / 232
Total Number of Participants / 59557 during the Patent for appearance design / 69
Employee Training Duration Per Person16
year
Training Hours 36.31 Total / 433
Social Annual total training expenses RMB 10000 742.22 Public Welfare
Per capita training cost RMB 710.67 External donations RMB 10000 356
Number of work-related injuries Persons 13
Number of work-related deaths Person 0
Lost working hours due to work-
Occupation related injuries
17 Hours 6288
Safety Lost working days due to work-
Performance related injuries
Days 42
Injury rate per million work hours % 62.23
Number of employees participating
in occupational disease Persons 1775
examination
Safety
Management Safety investment RMB 10000 912.58
Safety Safety inspection sessions Sessions 342
Inspection
Number of safety hazard inspections / 2762
Safety emergency drill sessions Sessions 50
Safety
Training Safety education training sessions Sessions 115
Safety training attendances / 22801
16Data for annual total training expenses and per capita training cost includes both formal employees and dispatched personnel.
172025 witnessed an increase in the identified number of workers suffered work-related injuries extension of the identification scope and
improved awareness of the employees to safeguard rights which together led to the increase in the lost working hours.
119 1202025 Sustainability Report Appendix
Shenzhen Stock Exchange Guidelines
Series Corresponding Series Corresponding
Dimension Topic Corresponding Section Dimension Topic Corresponding Section
No. Article No. Article
Green Transformation:Environmental Innovation Empowerment: Product
1 Addressing climate Articles 21 to 28 Management and Ecological Protection 12 Technology ethics Article 43 Excellence and Industry Collaborationchange
Addressing Climate Change R&D Innovation
Green Transformation:Environmental Innovation Empowerment: Product
2 Pollutant discharge Article 30 Management and Ecological Protection 13 Supply chain safety Article 45 Excellence and Industry Collaboration
Addressing Climate Change R&D Innovation
Green Transformation:Environmental Equal treatment for Innovation Empowerment: Product
3 Waste disposal Article 31 Management and Ecological Protection 14 small and medium- Article 46 Excellence and Industry Collaboration
Addressing Climate Change sized enterprises Supply Chain Management
Ecosystem and Green Transformation:Environmental Innovation Empowerment: Product
4 biodiversity Article 32 Management and Ecological Protection 15 Safety and quality of Social Excellence and Industry Collaboration
protection products and services
Article 47
Addressing Climate Change Full Lifecycle Quality Management
Environmental
Environmental Green Transformation:Environmental Data security and Governance as Foundation: Strategic
5 compliance Article 33 Management and Ecological Protection 16 customer privacy Article 48 Leadership and Sound Operations
management Addressing Climate Change protection Risk and Compliance Management
Green Transformation:Environmental People-Oriented: Employee Development
6 Energy utilization Article 35 Management and Ecological Protection and Workplace Development
Addressing Climate Change Protecting Employees' Rights and Interests
17 Employees Article 50
Green Transformation:Environmental Talent Cultivation and Development
7 Water resource Article 36 Management and Ecological Protection Employee Welfare and Incentivesutilization
Addressing Climate Change Occupational Health and Safety
Green Transformation:Environmental 18 Due diligence Article 52 Governance as Foundation: Strategic
8 Circular economy Article 37 Management and Ecological Protection Leadership and Sound Operations
Addressing Climate Change Anti-commercial Governance as Foundation: Strategic
Social Contribution: Creating Shared Value 19 bribery and anti- Article 55Sustainability corruption Leadership and Sound Operations
9 Rural revitalization Article 39 and Promoting Harmonious Development related
Serving the Rural Revitalization Strategy governance 20 Business Ethics and Article 55 Governance as Foundation: Strategic Integrity Building Leadership and Sound Operations
Social Contribution: Creating Shared Value
Social 10 Social contribution Article 40 and Promoting Harmonious Development 21 Anti-unfair Article 56 Governance as Foundation: Strategic
Serving the Rural Revitalization Strategy competition Leadership and Sound Operations
Innovation Empowerment: Product
11 Innovation driven Article 42 Excellence and Industry Collaboration
R&D Innovation
121 1222025 Sustainability Report Feedback Form
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