Stock Code: 002422.SZ

2023

Environmental

Social and

Governance (ESG)

ReportCONTENTS

PERSIST IN GREEN

DEVELOPMENT ADVOCATE

PREFACE 04 THE HARMONIOUS COEXISTENCE

3 ABOUT THE REPORT 48 Environmental Management System

5 MESSAGE FROM OUR CHAIRMAN 50 Addressing Climate Change

6 ABOUT US 52 Carbon Management

12 Feature One: Grand Quality Concept 53 Resource Management

13 Feature Two: Circular Economy 56 Pollution Prevention

14 Feature Three: R&D Path 58 Biodiversity Protection

ATTRACT AND EMPLOY TALENTS

01ESG GOVERNANCE 05 ADHERE TO SHARED GROWTH

17 Board Statement 60 Employment

17 ESG Governance Structure 64 Compensation and Benefits

18 ESG Vision 70 Training and Development

18 ESG Management Approach and Strategy 82 Occupational Health and Safety

19 Communication with Stakeholders

20 Analysis of ESG Material Topic

MAINTAIN A STABLE JOIN OUR HANDS TOGETHER

02 COURSE AIM TO REACH AFAR 06 ORIENT TOWARDS THE FUTURE

22 Corporate Governance 89 Accessible Healthcare

25 Business Ethics 98 Social Responsibility

28 Lead Party Building

UPHOLD THE CRAFTSMANSHIP

SPIRITSTAKE

03 RESPONSIBILITIES FOR LIVES APPENDIX

30 R&D Innovation 101 ESG Performance KPIs

35 Product Quality Management 105 Content Index of the ESG Reporting Guidelines

40 Sustainable Supply Chain 111 Feedback

44 Responsible Marketing

46 Data Security and Privacy Protection

02 KELUN PHARMA 2023 ESG REPORTABOUT THE REPORT

Description of this Report Data and Information

This report is the 12th environmental social and gover- The data and cases in this report are mainly derived

nance (Hereinafter referred to as "ESG") report pub- from our statistical reports official report and related

lished by Sichuan Kelun Pharmaceutical Co. Ltd. public materials. the Company undertakes that this

("KELUN PHARMA" "the Company" or "We"). report does not contain any false records or mislead-

ing statements and is responsible for the authenticity

The purpose of this report is to provide stakeholders accuracy and completeness of its contents

such as shareholders employees governments clients

and consumers partners and the public with a true pic-

ture of the practice and results of KELUN PHARMA in Confirmation and Approval

fulfilling our social and environmental responsibilities. This report was approved by the Board of Directors

on April 23 2024 after confirmation by the ESG

Committee.Report Scope and Boundaries

This report is an annual report covering the financial

year from January 1 2023 to December 31 2023 (the Publication and Acquisition

"Reporting Period") with some associated information of this Report

that may be retroactive outside of the Reporting Period.The policies and data provided in this report cover the This report is available in simplified Chinese and

Company and its subsidiaries and the report’s scope is English. For online browsing or downloading please

consistent with the Annual Report. Apart from the spe- visit the Company’s website (www.kelun.com) or

cial description the financial unit of this report is in RMB http://www.cninfo.com.cn. If there is any ambiguity

(or "CNY") whichever is inconsistent with the financial between Chinese and English the Chinese version

report shall prevail. shall prevail. If you want to learn more about us

please read the Company’s annual report or visit

the Company’s website to supplement it.Reporting Basis

This report follows the Shenzhen Stock Exchange Self-regu-

latory Guidelines for Listed Companies No. 1 - Standardized Contact Information

Operation of Main Board Listed Companies and is refer- Address: 36 Baihua West Road Qingyang District

ence to the GRI Sustainability Reporting Standards issued Chengdu

by the Global Reporting Initiative (GRI Standards 2021) Postcode: 610071

United Nations Sustainable Development Goals (UN SDGs) Tel: 028-82860678

and Morgan Stanley International ESG ratings (MSCI ESG

rating). We also take into account the relevant recommen- Email: kelun@kelun.com

dations of the Task Force on Climate-related Financial Dis-

closures (TCFD) for climate-related matters.

03 KELUN PHARMA 2023 ESG REPORT 03关于本报告

ABBREVIATION

Full Name Abbreviation

Sichuan Kelun Pharmaceutical Co.Ltd. KELUN PHARMA

Yili Chuanning Biotechnology Co. Ltd. CHUANNING BIOTECH

Sichuan Kelun-Biotech Biopharmaceutical Company Limited Kelun-Biotech

Sichuan Kelun Pharmaceutical Research Institute Company Limited Kelun Pharmaceutical Research Institute

Hunan Kelun Pharmaceutical Co. Ltd. Hunan Kelun

Heilongjiang Kelun Pharmaceutical Co. Ltd. Heilongjiang Kelun

KLUS PHARMA INC. US Kelun

Kelun Kazakh Agriculture Co. Ltd. Kelun-kaz Agro

Yili Jiangning Biotechnology Co. Ltd. JIANGNING BIOTECH

Shanghai Ruikang Biotechnology R&D Co. Ltd Shanghai Ruikang Biotech

Sichuan Kelun Pharmaceutical Co.Ltd. Anyue Branch Anyue Branch

Kelun-Kazpharm Co. Ltd. Kelun-Kazpharm

CELOGEN LANKA (Private) Limited CELOGEN LANKA

Kunming Nanjiang Pharmaceutical Co.Ltd. Kunming Nanjiang

Chengdu Qingshan Likang Pharmaceutical Co.Ltd. Qingshan Likang

Kelun Life Science Co. Ltd. Kelun Life Science

Guangxi Kelun Pharmaceutical Co. Ltd. Guangxi Kelun

Jiangxi Kelun Pharmaceutical Co. Ltd. Jiangxi Kelun

Sichuan Kelun Pharmaceutical Co.Ltd. Xindu Base Sichuan Kelun

Sichuan Xinkaiyuan Pharmaceutical Co. Ltd. Xinkaiyuan

Guizhou Kelun Pharmaceutical Co. Ltd. Guizhou Kelun

Hunan Kelun Pharmaceutical Co. Ltd. Yueyang Branch Hunan Kelun Yueyang Branch

Sichuan Xindi Biopharmaceutical Co. Ltd Xindi Biopharma

Sichuan Kelun Pharmaceutical Co.Ltd. Guangan Branch Guangan Branch

Hubei Kelun Pharmaceutical Co. Ltd. Hubei Kelun

Sichuan Kelun Pharmaceutical Co.Ltd. Qiong Lai Branch Qiong Lai Branch

Henan Kelun Pharmaceutical Co. Ltd. Henan Kelun

Shandong Kelun Pharmaceutical Co. Ltd. Shandong Kelun

04 KELUN PHARMA 2023 ESG REPORT 03MESSAGE FROM OUR CHAIRMAN

Along with the coming dawn of the new century we have enough

reasons to believe that the perfect combination of scientific tech-

nology and ethics is human beings' lofty ideal in their survival and

development. Just as implied by its big name Kelun's credo

“Pursue Truth in Science and Kindness in Ethics” shows the pro-

found cultural connotation of KELUN PHARMA.KELUN PHARMA set up by my outstanding colleagues and

myself is a modern pharmaceutical enterprise with a beautiful

environment and excellent facilities. Our technical talents per-

sistently work hard to develop new medicines with excellent

quality and practice the far-reaching ambition of serving the

country by developing the industry.Among the numerous tribulations of human beings diseases are

the most dangerous disasters. Being honoured to be the guards of

human lives we are determined to take part in the fight to conquer

diseases with colleagues in the field of medicine side by side and

strive to return health and happiness to millions of patients and

their families. We firmly believe our effort will promote the progress

of medical technology and thus benefit all human beings.Gexin Liu

Chairman of KELUN PHARMA

05 KELUN PHARMA 2023 ESG REPORT

02ABOUT US

Company Name: Sichuan Kelun Pharmaceutical Co. Ltd.(Stock Code: 002422.SZ)

KELUN PHARMA was founded in 1996 and is one of the largest pharmaceutical enterprise groups with the most complete domestic

industrial ecosystem headquartered in Chengdu Sichuan Province the People’s Republic of China (the“ PRC”or“ China”). We

have become a modern pharmaceutical group with dozens of enterprises at home and abroad after decades of growth in strength

and technological innovation.Since our successful listed on the Shenzhen Stock Exchange in June 2010 we adhere to the development strategy of "Three Driving

Engines and Innovative Growth". We boast both high-end manufacturing and novel material advantages in the field of IV solution

and possess the strategic heights of technical innovations and quality benchmarks. Moreover based upon our mature fermentation

technology and robust industrialization platform we keep solidifying the fundamental base for our antibiotics main business con-

stantly optimize and upgrade our industrial structure and fully enter into synthetic biology.In terms of our research and development (R&D) innovation we focus on developing drugs with high technological content includ-

ing branded generics innovative small molecules novel drug delivery systems and biotechnology drugs. We have successfully

established an internationally renowned Antibody-Coupled Drugs (ADC) R&D platform marking a new era in our innovative R&D

efforts and global layout. The successful spin-offs and listings of our subsidiaries Chuanning Biotechnology and KELUN-BIOTECH

have enabled us to establish a three-pillar operational structure supported by“ pin”-shaped capital platforms further

consolidating our industry-leading position.We firmly adhere to the philosophy of "Pursue Truth in Science and Kindness in Ethics". Throughout our development journey we

have continuously invested tens of billions of RMB in R&D innovations and donated over RMB three hundred million to social public

welfare causes which demonstrates our wealth quality perspective and sense of social justice exhibiting a good image of a promi-

nent private enterprise developing healthily under the conditions of market economy.Corporate Philosophy

Pursuing Truth in Science and

Kindness in Ethics.Corporate Vision

Corporate Valu Corporate

ntegrity and Trustworthy Excel- To become an innovative-driven Culture

lence-pursuing Customer-oriented internationally competitive

Team-cooperation. pharmaceutical enterprise with

global influence and a modern

pharmaceutical group with

standardized management social

satisfaction and civilized and

prosperous employees."Three Driving Engines and Innovative Growth" Strategy

123

Engine No.1 Engine No.2 Engine No.3

KELUN PHARMA maintains its KELUN PHARMA creates a competi- KELUN PHARMA strives for

leading position in the area of IV tive advantage in antibiotics from longevity through the elaboration

Solutions through continuous intermediate APIs to FPPs by of R&D systems and diversified

industrial upgrading and innovative exploitation of quality technology innovation.restructuring product portfolio. natural resources.

06 KELUN PHARMA 2023 ESG REPORTOUR BUSINESS

We are mainly engaged in the research and development production and sales of various types of pharmaceutical products

including large-capacity injection (infusion) small-capacity injection (water injection) sterile powder for injection (including

powder injection and lyophilized powder injection) tablets capsules granules oral liquid peritoneal dialysis fluid antibiotic

intermediates APIs and pharmaceutical packaging materials.Our products cover anti-tumor cardiovascular anesthesia and analgesia psychiatric anti-microbial nutritional infusion respira-

tory anti-osteoporosis male specialty diabetes water and electrolyte balance diagnostic imaging hepatitis B and other disease

areas. We actively expand the breadth and depth of drug coverage to meet diversified medical needs.OUR PRODUCTS

OTC Non-infusionProducts

Infusion Products Innovative Raw Materials and

Injection Packaging Intermediates

07 KELUN PHARMA 2023 ESG REPORTMILESTONE

1996

Kelun was established

and made a wonder

by completing 1998 1 2001 2

planning investment

construction

production and

making profits in the 2003

same year. We became the first large-vol- We established Hunan Kelun We were transformed as

ume-injection manufacturing Pharmaceutical Co. Ltd. and Sichuan Kelun Pharma-

enterprise in Sichuan Province started to expand to industries ceutical C2o.0 L0td.3

to meet with GMP standards. outside Sichuan Province. Heilongjiang Kelun

Pharmaceutical Co. Ltd.was established and our

nationwide layout in

infusion industry was

completed initially.

20154201432010

2018

Kelun-kaz Agro was

established. We acquired Collapsible Uniflex@PP KLUS PHARMA INC. (the U.S. On June 3 2010 KELUN

the GMP Compliance Bottle was awarded the State branch) was established. PHARMA (SZ002422) successful-

Inspection Result Notifica- Science and Technology ly listed on the Shenzhen Stock

tion of Japan PMDA and Advancement Award. Exchange.became the first

Chinese-funded IV solution

manufacturer that passed

the Japan PMDA GMP

inspection.

202052022620237

We set up Yili Jiangning

Biotechnology Co. Ltd. and In 2022 KELUN-BIOTECH successfully signed three KELUN-BIOTECH successfully listed on the

Shanghai Ruikang Biotechnology major authorized cooperation agreements with multi- Hong Kong Stock Exchange and enabled us

R&D Co. Ltd. and fully entered national giant Merck & Co. Inc. with a total contract to establish a three-pillar operational

into synthetic biology. value of nearly US$11.8 billion which not only ranked structure supported by“ pin”-shaped capital

first in the history of international authorization trans- platforms.actions in the Chinese pharmaceutical industry but

also ranked first gloriously as one of the TOP 10

Biopharma Partnerships of 2022 by total deal value in

the global pharmaceutical industry.Chuanning Biotech successfully went listed on the

Shenzhen Stock Exchange GEM (Growth Enterprise

Market).

08 KELUN PHARMA 2023 ESG REPORT2023 ESG KEY PERFORMANCE

Economical

Business income Net profit attributable Countries & regions

21.45 to the parent company of product salesbillion CNY

a year-on-year 2.46billion CNY 50+

increase 12.69% a year-on-year

increase 44.03%

Social Responsibilities

Total employees Investment in R&D

worldwide

19798 1.95billion CNY

persons Total patents applied

increase 7.47% 2904

Total training hours Percentage of

of employees suppliers signing the

1282096.54 Customer Supplier Honesty and

hours satisfaction Integrity Agreement

rate

100%100%

Environment

GHG emissions intensity

1.24

tCO2e / 10000 CNY

Total GHG emission（s Scope 1 and Scope 2）

2659459.92

tCO2e

09 KELUN PHARMA 2023 ESG REPORTOUR ESG Rating

WIND"AA“ in the WIND ESG Rating the highest rating for pharmaceuticalcompanies Top 100 Listed Companies for BEST ESG Practice in 2023

Ranked 9th out of total 291 pharmaceutical companies selected by

the WIND

MSCI

Received“ BB” rating as of February 1 2024

Refinitiv

“B”in the Refinitiv ESG rating as of 2024

SynTao Green Finance

“A-”in the SynTao Green Finance ESG rating in December 2023

CCXI

“A+” in the CCXI ESG rating as of 2024 Q1

QuantData

“AA”ESG rating as of 2024 Q1

10 KELUN PHARMA 2023 ESG REPORTOUR 2023 HONORS

2023 Partial External Recognition

Time Certified Name Awarding Organization Awardee

January 2024 Best Value Team for Transferring IR in 2023 Comein.cn KELUN PHARMA

December 2023 “Most Valuable Listed Company” in 2023 China Security Market CHUANNING BIOTECH

December 2023 2023 Most Innovative Enterprise ? Comprehensive CBIITA KELUN PHARMA

Strength in R&D

December 2023 2023 "Golden Phoenix Tree" Award for Best Investor Chinese Industrial Co-operatives (CIC) KELUN PHARMA

Relations Management of Listed Companies Jian Financial Information TMTPOST

December 2023 BEST IPO - ASIA and Hong Kong SAR Finance Asia KELUN-BIOTECH

November 2023 2023 Best Industrial Enterprise for Pharmaceutical China National Pharmaceutical Industry KELUN PHARMA

R&D Product Line in China Information Center

November 2023 No. 18 in China’s Top 100 Pharmaceutical Industry China Pharmaceutical Statistics KELUN PHARMA

Enterprises of the Year Annual Report

November 2023 Most Promising Growth Biomedical Listed Company National Business Daily KELUN PHARMA

November 2023 Most Socially Responsible Listed Company Stock Star - Capital Power CHUANNING BIOTECHNovember 2023 Top 100 Chinese Pharmaceutical Innovation E Medicine Manager (E 药经理人） KELUN PHARMA

Enterprises ? Tier 1

October 2023 Certificated as AAA for Integration Information and Authorized agency of the Ministry of Industry KELUN PHARMA

Industrialization Management System and Information Technology (MIIT)

All-China Federation of Industry and

September 2023 China Top 500 Private Enterprises in 2023 KELUN PHARMA

Commerce (ACFIC)

July 2023 Top 100 Pharmaceutical Manufacturing CMP KELUN PHARMA

Companies in 2022-2023

July 2023 Pioneer Enterprise in Independent Innovation in the

Pharmaceutical Industry Association of the All

KELUN PHARMA

Pharmaceutical Industry China Federation of Industry and Commerce

June 2023 Annual Top 10 Big Pharma Enterprise Menet.com.cn KELUN PHARMA

Innovation in China

2023 List of Brand Value for Chinese Listed National Business Daily，Research Center for

May 2023 China Business School of Economics and CHUANNING BIOTECH

Companies - No. 45 in the List of Rising Stars Management Tsinghua University

April 2023 2023 Global Unicorn Company Hurun Research Institute KELUN-BIOTECH

Ministry of Industry and Information

February 2023 2022 National Green Factory Technology of the ANYUE KELUN PHARMA

People’s Republic of China

11 KELUN PHARMA 2023 ESG REPORTFeature I: The Grand Quality Concept-Lean Management Foundation of QualityThe "Grand Quality Concep“t management model is our valuable summary of the practice of the "Grand Quality Concep“t byall KELUN people for over 20 years which encompasses the entire value chains incorporates all elements spans all channels

covers the whole processes and integrates full data management.Every employee of KELUN PHARMA must establish a grand quality concept - drug quality and safety has multi elements and

dimensions. In this sustainable and circular ecosystem a closed responsibility system must be formed from research and

development manufacturing and logistics transport to end use which is unbreakable and unobstructed."KELUN Grand QualityConcept" model

The loyal guardian

of human life

Aninnovative-driveninternationally

competitive andmodern pharmaceutical qroupwith global influence In 2023 being the first pharmaceutical enterprise Kelun

Pharma received the honor of the Second Tianfu Quality

Scientific Collaborative

Project Initiation Supply Chain Award for the "Grand Quality Concept" management

nt

Producti

Ethical Clinical Professional pme on Real-time

elo a

Smart

n

Practice RA ev d Release Manufacturing model. The Tianfu Quality Award is the top quality award

Platform-based Full-capacity

Development Production established by the Sichuan Provincial Government and

Science

Ethics given to those organizations with excellent quality

High-efficiency Integrated Production

Access and Sales management independent innovation ability outstand-

Customer r Controlled

Safe Drug Use Us na s a Storage Smart LogisticsAccessibility ge tic and ing economic and social contributes and significant Logis Transportation

Agile Service End-to-end Tracing industry quality benchmarking.High-quality

Excellent Risk Control HeadquarterAdvanced BaseAdvanced Quality Platform Performance Quality System Digital Enablement

Quality Objective Quality Approaches and Goals

Quality Approaches and Goals： Quality Objective：

We uphold and adhere to the grand quality concept and In 2023 our quality work has always adhered to the core

install a reliable quality control and quality testing objective of "controlling risk strengthening system and

system to ensure that the drugs produced by all member shaping brand" focused on quality empowermentexcel-

enterprises are safe and effective. In addition we strive to lence in risk management and control advanced quality

continuously improve product quality competitiveness platforms and high-quality performance taken quality

and reputation to provide quality assurance for KELUN audits regional supervision and management review as

PHARMA to become an excellent modern pharmaceutical tools and continued to build a high-quality and mature

enterprise. quality system for our product quality and safety.Our Honors in Product Quality

In 2015 KELUN PHARMA was certified as the "Quality Benchmark" for industrial enterprises by the

Ministry of Industry and Information Technology.In 2020 Guang'an Branch was awarded the Mayor's Quality Award of Guang'an City and Hunan

Kelun received the Mayor's Quality Award of Yueyang City.In 2021 KELUN PHARMA was nominated for the 1st Sichuan Province Tianfu Quality Award and

all of our subsidiaries also actively participated at all levels. Kazakhstan KELUN PHARMA won

the medal "Quality Star" of Kazakhstan.In 2022 Hunan Kelun received the honor of the 7th Hunan Provincial Governor's Quality Award.In 2023 KELUN PHARMA won the 2nd Sichuan Province Tianfu Quality Award. Yueyang Branch

received the Mayor's Quality Award of Ziyang City.

12 KELUN PHARMA 2023 ESG REPORT

Research & D

d Transfer

ring

nuf

actu

Ma

seu

End

-Feature II：Circular Economy - Resource Regeneration Green Transformation

Our subsidiary CHUANNING BIOTECH actively responds to the national call and attaches great importance to environmental

protection. It constantly adheres to the strategy of "Environmental Protection First and Sustainable Development". In particular

CHUANNING BIOTECH incorporates the concepts of environmental protection green and low-carbon and sustainable develop-

ment in all aspects of its business operations continues to optimize its production processes and methods and gradually shifts

its focus from traditional end-of-pipe pollution treatment towards source reduction promotes deep integration of economic

social and environmental benefits step up its paces in building an environment-friendly enterprise and aims to set the industri-

al benchmark for“ Three Waste” management.Wastewater Treatment Measures

CHUANNING BIOTECH firmly persists in the principle of "subtraction" in its wastewater treatment process aiming for near-zero discharge. Following pretreat-

ment procedures that involve source-based cascade recycling and utilization of wastewater of different qualities from fermentation and extraction workshops

the Company employs an integrated processing technology that combines biochemical treatment mechanical vapor recompression (MVR) and advanced treat-

ment using special membranes (DT) along with high-quality recycling and reuse of recycled water. This primary objective of this approach is to minimize the

discharge of production wastewater into the environment conserve water resources and significantly reduce the overall emissions of pollutants such as chemi-

cal oxygen demand (COD) ammonia nitrogen and salt. The wastewater treatment system implemented by CHUANNING Biotech is a leader in the antibiotic API

(intermediates) industry. Over 80% of the deeply-treated water is recycled and reused with high quality for various applications including production prepara-

tion power plant boilers and replenishment for the circulating cooling water system. The small amount of wastewater discharged meets stringent standards

falling well below the special discharge limit as per the Discharge Standards for Water Pollutants for Pharmaceutical Industry ? Fermentation Productions

Category (GB21903-2008) and COD level is less than 20mg/l and the ammonia nitrogen lever remains below 2mg/l.Exhaust Gas Treatment Measures

Strictly adhering to the principles of“ source reduction enclosed collection classified treatment and comprehensive reinforcement” CHUANNING BIOTECH has

established an centralize system for collecting waste gases emitted from workshops and operation units and has taken the lead to innovatively introduce a series

of high-end integrated treatment technologies tailored for the pharmaceutical industry encompassing negative pressure enclosed collection pretreatment

molecular sieve or activated carbon adsorption and concentration as well as high-temperature oxidative combustion. Through these measures CHUANNING

BIOTECH has significantly improved its removal efficiency of major pollutants at the exhaust gas outlet reaching 95% at least. At the same time the volatile

organic compounds (VOCs) in the purified exhaust gas are maintained below 5ppm and the intensity of exhaust gas emission is much lower than the relevant

national environmental protection standards. Moreover CHUANNING BIOTECH has systematically resolved the problem of odor nuisance and achieved the deep

waste gas purification during antibiotic production and "near-zero emission" for major pollutants from waste gas.Waste Treatment Measures

CHUANNING BIOTECH invested 15 million CNY in the demonstration project for the regeneration of saturated granular activated carbon with a daily regeneration

capacity of 15 tons. The project innovatively utilizes biogases produced from anaerobic reactors in biochemical treatment of wastewater as clean fuels for

activated carbon regeneration process. The adsorption performance of the regenerated activated carbon can be restored to approximately 95% of that of new

activated carbon. Consequently the project annually reduces the need to purchase nearly 4000 tons of new activated carbon translating into savings of over 50

million CNY in waste gas treatment costs and contributes to a reduction in Carbon Dioxide (CO2) emissions by more than 500 tons. By enhancing the frequency of

activated carbon replacement in the waste gas treatment process CHUANNING BIOTECH is not only able to efficiently ensure the effectiveness of exhaust gas

treatment during antibiotic production but also facilitates the recycling and utilization of solid waste resources. Furthermore CHUANNING BIOTECH can mitigate

the substantial waste gas emissions arising from the incineration of used activated carbon achieving noteworthy synergistic effects of pollution reduction and

carbon reduction.In addition CHUANNING BIOTECH has taken "maximizing resource utilization and minimizing environmental pollution" as its

mission "pilot demonstration of harmless treatment and resource utilization of antibiotic residue" as its orientation and "setting

up an environmental protection model for the global antibiotic industry" as its development concept. It actively responds to the

national programs promoting the use of organic fertilizers and reducing the use of chemical fertilizers takes the initiative to

create a green circular economy development model within the pharmaceutical industry and strives to become a leading model

enterprise in green economy.Research on Harmless Treatment of Antibiotic Residue and Circular Economy

Relying on the R&D and innovation platform of the National Environment Protection Engineering and Technology Center for Harmless Treatment and Resource

Utilization of Antibiotic Residue CHUANNING BIOTECH has set up a special project team to address the challenges of harmless and resourceful utilization of

antibiotic residue. Taking penicillin cephalosporin and erythromycin antibiotic residues organic fertilizer base materials as the research objects the team focuses

on the process for the harmless and resourceful utilization of antibiotic residue the quality requirements for residue and harmless resourceful organic fertilizer

products the identification of harmless physicochemical and toxicological characteristics and the analysis and detection methods for antibiotic residues in

products biological safety indicators of products antibiotic residues in soil and crops and other characteristic pollutant indicators such as resistance genes. This

provides a fair systematic and scientific testing and analysis platform for the resource utilization of residue by pharmaceutical companies and the implementation

of risk management by regulatory authorities.At the same time CHUANNING BIOTECH possesses the key integrated and automated technologies and equipment for harmless treatment including high-tem-

perature and high-pressure hydrolysis spray drying disc drying and electron beam irradiation. These technologies are used to transform the residue generated

during the antibiotic fermentation process into organic fertilizer through harmless treatment which is then used for the cultivation of industrial corn soybeans

and other crops. The harvested corn soybeans and other crops are then fully reused as raw materials in the antibiotic fermentation production process forming

a closed-loop model for the harmless and resourceful treatment of antibiotic residue that is fully supervised by environmental regulatory authorities and the

public with controlled risks. This establishes a cross-industry green and low-carbon circular economy industrial chain system between modern biopharmaceuti-

cals and modern agriculture.

13 KELUN PHARMA 2023 ESG REPORTFeature III：The Path of R&D - Innovation-Driven Intelligence Ushering in the Future

Since Sichuan Kelun Pharmaceutical Research Institute Co. international standards under which research is mainly led

Ltd. was founded In 1998 we made the most of medical by domestic institutes with the help of foreign technology.talents and other competitive resources at home and abroad

and established an R&D system with multiple technical cate- In the field of R&D and innovation twelve of our member

gories and a fully functional platform which includes the companies have been certified as national high-tech

Chengdu and Suzhou Research Institutes as the main body enterprises. We have six national-level innovation plat-

committing to high-end generics Kelun-Biotech and KLUS forms. Additionally we have established a national

(the U.S. branch) as the main body focusing on innovation post-doctoral research station making our innovation

research. This is a new kind of R&D mode fully in line with capability a core competitive advantage.National Engineering

and Technology Research National Local Joint

Centre for Large Engineering

Volume Injectables Laboratory of Large

Volume Injectables

National Local

Joint Engineering

National-lever Enterprise Laboratory of Packaging

Technology Centre Six national-level Materials for Injections

innovation

National Engineering platforms National Environmental

Research Protection Engineering

Center for Targeted Biologics Centre for Harmless Treatment and

Resource Utilisation

of Antibiotic Residues

Honours & Awards

Time Name of Award Awarding Organization Awardee

December 2023 China National Intellectual National Intellectual Property Advantage Enterprise Hunan KelunProperty Administration

December 2023 National Intellectual Property Advantage Enterprise China National Intellectual

Property Administration Kunming Kelun

December 2023 National Intellectual Property Advantage Enterprise China National Intellectual QING SHAN LI KANG

Property Administration

December 2023 Most Innovative Enterprise ? Comprehensive Strength in R&D CBIITA KELUN PHARMA

November 2023 Top 100 Chinese Pharmaceutical Innovation Enterprises ? Tier 1 E Medicine Manager (E药经理人) KELUN PHARMA

November 2023 2023 Best Industrial Enterprise for Pharmaceutical China National Pharmaceutical R&D Product Line in China Industry Information Center KELUN PHARMA

2023 Best Industrial Enterprise Top 100 Chinese Pharma- Most Innovative Enterprise ?

for Pharmaceutical R&D ceutical Innovation Comprehensive Strength in R&D

Product Line in China Enterprises ? Tier 1 awarded on 15 December 2023

14 KELUN PHARMA 2023 ESG REPORTInnovative Drug R&D Achievements

In 2023 Kelun-Biotech actively pushed forward the R&D process of more than 30 innovative drugs with a primary focus on tumor

diseases. Meanwhile Kelun-Biotech broadened its scope to include the therapeutic areas such as autoimmune diseases inflamma-

tion and metabolism and made significant progress in over 10 innovative clinical projects based on molecular entities. As of now

Kelun-Biotech has submitted 4 projects for New Drug Applications (NDA) and all have been accepted. Three projects are concurrent-

ly undergoing clinical research in both China and the United States with one of them having received orphan drug designation from

the FDA.Tumor Antibody-Drug Conjugate (ADC) Projects

Sacituzumab Tirumotecan (SKB264/sac-TMT) for injection is a new generation of ADC drug developed by Kelun-Biotech with

independent intellectual property rights. It is composed of a humanized monoclonal antibody targeting TROP2 an enzymati-

cally cleavable linker and a novel topoisomerase I inhibitor. This innovative drug combines the specificity of monoclonal anti-

bodies to tumor cell surface target antigens with the high efficacy of cytotoxic drugs. Based on initial clinical data Sacituzum-

ab Tirumotecan (SKB264/sac-TMT) for injection has received four Breakthrough Therapy Designations (BTDs) for the treatment

of advanced or metastatic Triple-Negative Breast Cancer (TNBC) locally advanced or metastatic EGFR-mutated Non-Small Cell

Lung Cancer (NSCLC) that has failed EGFR-TKI therapy locally advanced or metastatic Hormone Receptor-positive (HR+) and

Human Epidermal growth factor Receptor 2-negative (HER2-) breast cancer patients who have received at least second-line

systemic chemotherapy and for first-line treatment of patients with unresectable locally advanced recurrent or metastatic

PD-L1-negative TNBC. In December 2023 the New Drug Application (NDA) for Sacituzumab Tirumotecan (SKB264/sac-TMT) for

the treatment of adult patients with unresectable locally advanced or metastatic triple-negative breast cancer who have previ-

ously received at least two systemic therapies (including at least one for advanced or metastatic disease) was accepted by the

National Medical Products Administration (NMPA) of China and included in the priority review and approval procedure.Currently Sacituzumab Tirumotecan (SKB264/sac-TMT) for injection is undergoing Phase II and III clinical trials as a monother-

apy or in combination for the treatment of various tumor types.A166 (Trastuzumab Deruxtecan for Injection) adopts the new generation of ADC technology stably couples antibodies and

toxins through linker reduces the toxin detachment rate and improves tolerability and safety thus enhancing the drug effect.In May 2023 the NDA application for the study of A166 (Trastuzumab Deruxtecan for Injection) in the treatment of patients with

3L+ advanced HER2+ breast cancer was accepted by the National Medical Products Administration. Currently a confirmatory

Phase III trial is being conducted in China for patients with 2L+ advanced HER2+ breast cancer.Other Tumor Projects

A400 (EP0031) is a new generation of selective RET small-molecule kinase inhibitor (SRI) that exhibits extensive activity against

common RET gene fusions and mutations. It also has the potential to overcome resistance to first-generation SRIs potentially address-

ing the issue of resistance to selective RET inhibitors. In November 2023 A400 (EP0031) received orphan drug designation from the FDA

for the treatment of RET fusion-positive solid tumors. In March 2024 A400 (EP0031) obtained fast track designation from the FDA for

the treatment of RET fusion-positive NSCLC. Currently Kelun-Biotech is conducting pivotal clinical studies in China for A400 (EP0031)

targeting RET-positive NSCLC.Generic Drug Sector

From 2017 to the end of the reporting we have obtained production approval for 164 generic drugs further consolidating our

leading position in domestic infusion market. We have established a core portfolio of advantageous products across therapeutic

areas of parenteral nutrition bacterial infection fluid balance and central nervous system diseases. Additionally we have

achieved notable breakthroughs and enhancements in multiple disease areas such as anaesthesia and analgesia reproductive

health diabetes and radiography fully demonstrating our growing influence in the global pharmaceutical industry chain.In 2023 we obtained production approval of 45 drugs (including drugs with consistency evaluation) and submitted production

applications for 62 drugs. We have been continuously enhancing our pipeline layout in products of anti-infective drugs parenteral

nutrition and reproductive health-related products and leveraging our specialized technology platforms such as powder-liquid

dual-chamber bags multi-chamber bags and liposomes ensuring serialized outputs and long-term sustainable growth of our

core products.Based on our established core portfolios we continue to expand our focus on complex raw materials complex preparations

NDDS and enhanced innovation projects. Simultaneously we remain committed to opening up to the outside world and exploring

blue-ocean areas and continuously refining our management and control systems to ensure that projects are delivered as

planned and maximizing the value of project outputs.

15 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

We fully understand the importance of corporate

responsibilities and sustainable development and

always deepen the organic integration of ESG principles

with our business operations. In order to effectively

fulfill our commitment to ecological environment and

01 social welfare we built up a robust ESG governance system continuously strengthen our ESG management and regularly review and constantly optimize our ESG management approach and strategy. Meanwhile we actively advocate and practice an open and transparent communication mechanism maintain-

ing close ties with various stakeholders listening to

voices from all parties to ensure that ESG principles are

ESG comprehensively incorporated into our strategic deci-sion-making and daily operations. We not only focus on

GOVERNANCE our own sustainable development but also strive to pro-mote collaborative progress across the entire industry.

0 1 BOARD STATEMENT

0 2 ESG GOVERNANCE STRUCTURE

0 3 ESG VISION

0 4 ESG MANAGEMENT APPROACH AND STRATEGY

0 5 COMMUNICATION WITH STAKEHOLDERS

0 6 ANALYSIS OF ESG MATERIAL ISSUES

16 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

01 BOARD STATEMENT

Our Board of Directors is the highest responsible deci- the reporting period our ESG work plan has been effectively

sion-making and supervisory body for ESG matters and implemented and all ESG annual targets have been

takes the ultimate responsibilities. On October 31 2022 the achieved.Board of Directors approved the establishment of an Envi-

ronmental Social and Governance (ESG) Committee ("ESG We continue to be proactive in response to expectations

Committee") and the formulation of working rules to com- from all stakeholders stick to achieving the goal of excellent

prehensively plan and control the ESG-related opportuni- and high-quality sustainable development earnestly fulfill

ties and risks involved in our operations. corporate social responsibilities and make long-term value

for society.The ESG Committee reviews our ESG annual targets and

plan and audits their achievement status. At of the end of

02 ESG GOVERNANCE STRUCTURE

As of the end of the reporting date we have formed a dure. The ESG Committee reports and is accountable to the

top-down and well-defined ESG governance system from Board subject to the Board’s supervision.our Board of Directors ESG Committee to ESG Working

Group to provide a strong support for our sustainable devel- Under the ESG Committee there is an ESG Working Group

opment. with Mr. Feng Hao and Ms. Liao Yihong as the leader and

deputy leader respectively. Our ESG Working Group is com-

Our Board as the highest responsible decision-making and posed of heads of various functional and business depart-

supervisory body for ESG matters takes the ultimate ments as well as heads of subsidiary or branch companies.responsibilities. We have established the ESG Committee Heads of various functional and business departments and

under the Board with Mr. Liu Sichuan acting as the chair- heads of subsidiary or branch companies need to dedicate

man of the ESG Committee and Mr. He Guosheng and Mr. contact persons to assist with detailed ESG activities.Ren Shichi as members over 50% of whom are independent

directors. We also have established The Working Rules of the In addition as per our ESG Assessment and Performance

Environmental Social and Governance (ESG) Committee to Reward Adjustment Policy we incorporate ESG perfor-

clarify the responsibilities authorities and rules of proce- mance indicators into the compensation system of our

senior management teams. Guided by our internal policies

their contributions to our ESG commitments and progress

are assessed annually and recognized with incentives.OUR ESG Governance Structure

Review and approve our ESG strategy and

objectives and significant matters related to

social responsibility.Formulate ESG management poli-

cies objectives strategies and

Board of structures;

Formulate policies and implementa- Directors

tion plans in line with our strategy identify ESG trends and assess

and ESG objectives; ESG risks and opportunities facing

ESG the Company;

manage ESG-related r isks and

issues in our daily operations; Committee supervise and guide the work of

coordinate and promote the imple- ESG working groups.mentation of ESG-related problems; ESG Working

Group

prepare annual ESG reports etc.

17 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

03 ESG VISION

Our ESG vision is to practice high-quality ESG management actively respond to the United Nations Sustainable Development Goals

(SDGs) support the Healthy China initiative and the national goals of peaking carbon emissions and subsequent carbon neutrality turnour corporate philosophy of“ Pursuing Truth in Science and Kindness in Ethics“ into concrete actions seek health and well-being formore patients and make more diseases to be treated. Moreover we engage in climate change embrace challenges integrate resources

incorporate ESG principles into our development strategy of "Three Driving Engines and Innovative Growth" effectively fulfill our com-

mitments to all sectors of society collaborate with our employees and all partners lead industrial sustainable and healthy development

promote harmonious development between enterprises employees communities and environment boost advances in medical tech-

nologies and make contributions to all.

04 ESG MANAGEMENT APPROACH

AND STRATEGY

We are committed to integrate the concept of sustainable development into our daily operation and management prac-

tice maintain our ESG management strategy consistent with the United Nations Sustainable Development Goals (SDGs)

and take efforts to achieving excellent performance and continuous progress in key areas to promote high quality and

sustainable development of our Group’s business.Strengthening quality management and Leading the industry development andfirmly establishing the“ Grand Quality driving the future through innovation.Concept”. Setting up a reliable quality Continuously cultivating deeply into the field

of new drug research and development

control and monitoring system to ensure the constantly promoting the implementation of

safety and effectiveness of manufactured innovative achievements and introducing

Product drugs while continuously improving our R&D better treatment solutions for human being

Responsibility quality standards and brand reputation. Innovation to overcome diseases. Exploring new innova-

tive models such as digitization and artificial

intelligence and promoting the upgrading of

pharmaceutical innovation models.Environmental Social Employee

Protection Responsibility Development

Actively responding to climate change and Fulfilling social responsibilities and caring Advocating simple and friendly interper-

achieving synergistic effects in pollution for patients' health. Actively participating sonal relationships and supporting

reduction and carbon emission reduction. in drug procurement with quantity com- employee development. Adhering to the

Always adhering to our business philoso- mitment voluntarily engaging in national people-oriented principle striving to

phy of "giving priority to environmental health insurance negotiations and drug create a corporate culture that is diverse

protection and sustainable development" commercial insurance catalog application equal open inclusive collaborative and

pursuing green and sustainable develop- work and improving production process- mutually supportive. Enabling employees

ment. Through continuous investment in es. Under the premise of ensuring product to live happily and work joyfully. Continu-

environmental protection and substitu- quality reducing drug costs thereby ously improving employee welfare bene-

tion of clean energy advocating energy further reducing drug prices relieving fits enhancing their sense of belonging

conservation and emission reduction patients' burden and increasing drug happiness and honor.forming a circular economy model and accessibility. Always firmly serving as

promoting green production and green pioneers in national inclusive healthcare

ecology. and guardians of patients' lives and health.

18 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

05 COMMUNICATION WITH STAKEHOLDERS

We are fully aware of the vital role of various stakeholders in driving our sustainable development. Based upon a thorough review we

have identified 8 core stakeholder groups including governments regulatory bodies social organizations or associations shareholders

or investors suppliers customers employees communities potential users and other partners. We actively advocate and practice a

multi-dimensional communication strategy striving to comprehensively and sincerely listen to the authentic voices from all parties. This

approach enables us to achieve sustainable development goals together with all stakeholders share the fruits of our enterprise's

growth and jointly create social value.We highly value opinions and feedbacks from all stakeholders maintain good communication with them via multiple channels such as

public email addresses and complaint hotlines and get ready to receive and respond to their feedbacks and concerns at any time. All

stakeholders can provide feedback on any negative impacts caused by our company through the designated email address. Our dedicat-

ed personnel will promptly contact the feedback providers actively address or improve the resulting negative effects and accept super-

vision and auditing of the improvement measures until the relevant negative impacts are properly resolved and recognized.STAKEHOLDERS TOPICS OF INTEREST COMMUNICATION AND RESPONSE

?Tax Compliance ?Supervision and Inspection by Administrative Authorities

Government and ?Carbon Emission Management ?Work Reports and Official Correspondence emails or phones

Regulatory Bodies ?Water Resource Management ?Regular Communication?Climate Change

?Compliant Operation ?Policy Consultation and Implementation

?Compliant Operation ?Periodic Reports to Shareholders' Meeting

Shareholders ?Business Ethics and Anti-corruption ?Official Website Information Disclosure

and Investors ?Stable Returns ?Investor Hotline

?ESG Management Approach and Strategy ?Exclusive Appointment and Inquiry Email for Investors

?Sustainable Supply Chain ?Supplier Exchange and Inspection

Suppliers ?Business Ethics and Anti-corruption ?Supplier Trainings

?Energy Usage ?Supplier Evaluation

? Industrial Development and Cooperation ?Procurement Bidding Process

?Product Safety and Quality ?Customer Satisfaction Survey

?Responsible Marketing ?Communication with Customers via Email and Phone

Customers ?Compliant Operations for Service and Complaint Handling

?Carbon Emissions Management ?Customer Visits

? Universal Health and Access to Healthcare

?Employee Compensation & Benefits ?Internal Emails and Announcements

?Occupational Health and Safety ?Corporate Culture Platform

Employees ?Compliant Operation ?Employee Suggestion Platform

?Equality and Diversity ?Internal Publication

?Training and Education ?Company Labor Union

?Public Welfare and Charity ?Health Knowledge Popularization Activities

? Universal Health and Access to Healthcare ?Public Enquiries and Complaints

Communities ?Carbon Emissions Management ?Visits and Interviews

?Waste Management ?External Announcements and Disclosure

?Compliant Operation ?Information Disclosure

Potential Users ?Carbon Emissions Management ?Official Websites

?Waste Management ?Social Media

?Employee Compensation & Benefitss ?Business Communication and Agreement Signing

?Compliant Operation

Other Partners ?Industry Activities e.g. Exhibitions Seminars?Carbon Emissions Management ?Satisfaction Surveys

?Climate Change

19 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

06 ANALYSIS OF ESG MATERIAL TOPICS

During the year we interacted and communicated with stakeholders through our daily production and operation activities. This enabled

us to gather their opinions and feedbacks on our sustainable development management and ensure accuracy and comprehensiveness

of information disclosure. Moreover we conducted a comprehensive assessment taking into account shifts in our industrial peers and

ESG development trends to determine our annual sustainable development topics.We have established a material analysis process of ESG topics to gain a deep understanding of stakeholders' concerns expectations and

needs on our sustainable development and review our ESG performance. Through the material analysis process we identified and

screened our key ESG topics understood our stakeholders' interests in these topics evaluated their impacts to our operations and

defined our ultimate key ESG topics. The defined key ESG topics serve as our goals and foundation for ESG management either.Identifying our stakeholders Establishing our pool of key ESG topicsWe identified stakeholders from two dimensions of“ materiality We established a pool of key ESG topics based upon regulatoryto stakeholders" and“ materiality to corporate development” requirements sustainable development standards industrial

combined with in-depth research and analysis in international characteristics and our practice. In 2023 we have identified 32

standards macro policies industry hotspots and peer practice key ESG topics.taking into consideration our own development strategy and

characteristics. Analyzing and confirming survey results

After the survey we analyzed the feedbacks of all participants

Conducting online survey and evaluated the materiality of each topic from two dimen-

We invited all stakeholders to participate in our online survey sions o“f materiality to corporate development” and“ materiali-to understand their concerns on key ESG topics. This year we ty to stakeholders” to obtain a materiality matrix of ESG topics

successfully gathered a total of 490 survey responses. in 2023.Disclosure and Improvement

Our management reviewed and confirmed the results of evalu-

ating key topics and made the key ESG topics as the focus of

disclosure in this report.

269

32310

194

1124

151325527

221812

720166

2128

29

328

14

313017

Low Materiality to Corporate Development High

Environment Topic Social Topic Governance Topic

1 Carbon Emission management 9 Occupational Health and Safety 23 Compliance

2 Waste Management 10 Product Safety and Quality 24 ESG Management Approach and Strategy

3 Energy Usage 11 Employee Compensation & Benefits 25 Risk Management

4 Water Resource Management 12 Training and Education 26 Business Ethics and Anti-corruption

5 Supplier Environmental Assessment 13 R&D and Technological Innovation 27 Tax Compliance

6 Green Building 14 Equity and Diversity 28 Stable Returns

7 Biodiversity Protection 15 Supply Chain Management 29 Negative Event Management

8 Addressing Climate Change 16 Universal Health and Healthcare Accessibility 30 Board Diversity and Inclusion

17 Intellectual Property Protection 31 Data Security Management and Privacy Protection

18 Consumer Protection 32 Corporate Culture and Values

19 Responsible Marketing

20 Public Welfare and Charity

21 Industry Development and Co-operation

22 Communication with Stakeholders

20 KELUN PHARMA 2023 ESG REPORT

High Materiality to StakeholdersESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

We act with integrity and ethics and firmly believe

02 that a sound governance structure is the cornerstone of our sustainable corporate development. We are dedicated to promoting accountability of the Board and our senior management and increasing corpo-rate transparency to ensure strict adherence to national laws and regulations and business ethics.

We commit to optimizing internal management

system and reinforcing party construction to stan-

MAINTAIN A dardize our operations. We endeavour to deeply inte-grate our business practice with corporate values

STABLE COURSE compliance requirements international standards and customer expectations to create long-term value

AIM TO REACH for all stakeholders.AFAR

0 1 CORPORATE GOVERNANCE

0 2 BUSINESS ETHICS

0 3 LEAD PARTY BUILDING

21 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

01 CORPORATE GOVERNANCE

1.1 ORGANIZATIONAL STRUCTURE

In strict compliance with the laws and regulations such as cedures for the Supervisory Committee and so on to ensure

the Company Law of the People's Republic of China The that all parties strictly hold individual accountable for their

Securities Law of the People's Republic of China The Code actions in a standardized and orderly manner as prescribed

of Governance for Listed Companies the Shenzhen Stock by laws and regulations the Articles of Association and the

Exchange Self-regulatory Guidelines for Listed Companies corresponding rules and procedures. Through a clear and

No. 1 - Standardized Operation of Main Board Listed Compa- robust governance structure we respond proactively to

nies (Revised in 2023) and other regulatory requirements external regulatory requirements and internal development

we continuously refine our corporate governance structure needs contributing to the achievement of our sustainable

strive to enhance our internal management systems and development strategic goals.streamline the efficiency of information disclosure aiming

to further elevate our corporate governance capabilities. For further information please download the relevant poli-

cies and procedures from our official website.We have established a comprehensive governance system

based upon the Articles of Association and including the

Rules of Procedures for the General Meetings the Rules of

Procedures for the Board of Directors and the Rules of Pro-

OUR ORGANIZATIONAL CHART

Shareholders’General Meeting

Board of

Supervisors

Board of Directors

Office of the Board of Directors

(Securities Department)

General Manager

Deputy General Manager

22 KELUN PHARMA 2023 ESG REPORT

Internal Audit Department

Pharmaceutical

Research institute

Audit Committee Subsidiary companies

ESG Committee Human Resources

Department

Nomination Committee Office

Information

Remuneration and Department

Evaluation Committee

Ministry of Business

Development

Strategy Committee

Financial

Department

Raw Materials

Sales Department

Supply

Department

Logistics Supervision

Department

EHS Supervision

Department

Ministry of Engineering and

Equipment

Production Technology

Department

Quality Supervision Centre

Marketing Centre

Internal Control and

Compliance Department

Department of Legal AffairsESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

1.2 BOARD DIVERSITY

Board of Directors

At of the end of the reporting period our Board of Directors comprised 7 members including 3 independent directors. The inde-

pendent directors play a key role in ensuring the fairness and scientific nature of our Board’s decision-making which helps pro-

tect the rights and interests of all shareholders Our current composition of the Board and director selection procedure are in

compliance with the relevant requirements of the laws and regulations and our Articles of Association. All current Directors are

well-experienced professionals of which 4 of our Directors hold doctoral degrees and 3 hold master degrees. In 2023 we con-

vened 11 meetings of the Board with a 100% attendance rate.Board of Directors Structure

Name Position Gender Education Expertise

Industry Experience Accounting Economics Law

Gexin Liu Chairman Male Master

Sichuan Liu Director Male Master

Guosheng He Director Male PhD

Guangji Wang Director Male PhD

Shichi Ren Independent Director Male PhD

Minggang Ou Independent Director Male PhD

Jinbo Gao Independent Director Male Master

Committees of the Board

Our Board has established the Strategy Committee the Remuneration and Evaluation Committee the Nomination Committee

the Audit Committee and the ESG Committee. Independent directors make up the majority of the members of all the mentioned

committees.The committees established under the Board of Directors assist the Board in providing consultation and advice on decision-mak-

ing matters in accordance with the provisions of the Articles of Association Working Rules for the Audit Committee of the Board

of Directors Working Rules for the Remuneration and Evaluation Committee of the Board of Directors and other relevant policies

and procedures. Each specialized committee is accountable to the Board reporting on work progress and achievements to the

Board. The proposals of the committees are submitted to the Board for review and decision-making.Roles & Responsibilities of Our Committees of the Board

Committees of the Board Roles and Responsibilities

Strategy Committee The main duties of the Strategy Committee are to conduct research and make recommendations to the Board on

matters related to our long-term development strategy and material investment decisions.Remuneration and Evaluation The main duties of the Remuneration and Evaluation Committee include studying performance criteria for the Direc-

tors and senior management and evaluating their performances and formulating and reviewing the remuneration

Committee policy and structure and remuneration packages of the Directors and senior management.Nomination Committee The main duties of the Nomination Committee include establishing and reviewing the nomination policy and procedures and advising the Board on the appointment and nomination of the Directors and senior management.The main duties of the ESG Committee include reviewing our ESG performance; formulating management policies

ESG Committee objectives strategies and frameworks for ESG matters; identifying and assessing ESG-related risks and opportuni-

ties that have significant impacts on our business.Audit Committee The Audit Committee is mainly responsible for the communication supervision and verification of internal and external audits within our Company.

23 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

1.3 INFORMATION DISCLOSURE MANAGEMENT

In accordance with the Company Law of the People's Repub- sure newspaper and website to timely report our business

lic of China the Securities Law of the People's Republic of operations to all stakeholders.China the Code of Corporate Governance for Listed Compa-

In addition we actively innovate the form and content of

nies the Administrative Measures on Information Disclosure

information disclosure and adopt various ways to release

by Listed Companies and other laws and regulations nor-

information that does not meet the information disclosure

mative documents as well as our Articles of Association we

standards of listed companies so that investors can under-

have established the "Information Disclosure Management

stand our situation more comprehensively and deeply and

System" "Annual Report Information Disclosure Material

actively safeguards the right to information of the generalErrors Accountability System“ "Material Matters Reportinginvestors.System“ "Information Disclosure Suspension and Exemp-tion Management System" and other systems. We fully fulfill During the reporting period we disclosed periodic reports

our information disclosure obligations and designate Securi- interim announcements and other important information

ties Times Shanghai Securities News Securities Daily China as prescribed fulfilling our information disclosure obliga-Securities Journal and“ CNINF " as our information disclo- tions in an authentic accurate and complete manner andreceiving the highest rating of "A" for information disclosure

by Shenzhen Stock Exchange.

1.4 PROTECTION OF SHAREHOLDERS AND

INVESTORS’INTERESTS AND RIGHTS

We support investors in fully understanding our operational investors and replying to investors' emails.and development trends and establish a multi-channel During the reporting period we received more than 1000

communication platform for domestic and foreign investors. interviews and investigations from significant media and

We actively share our latest developments and achieve- intermediaries and produced more than 100 press releases

ments with investors respond to their concerns regarding of various types; our response rate of SZSE Interactive and

our strategic planning development impetus and core com- emails reached 100%; more than 100 telephone inquiries

petitiveness and deepen investors' understanding of our were received from the hotline strengthening the commu-

company by issuing announcements holding performance nication with investors through multiple channels and

presentations participating in institutional research further consolidating the Company's investor relations

responding to questions on the interactive platform of the work.Shenzhen Stock Exchange (SZSE) answering calls from

The 2022 Annual General Meeting held on May 4 2023

24 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

02 BUSINESS ETHICS

2.1 COMPLIANCE AND RISK MANAGEMENT SYSTEM

We focus on strengthening risk prevention and internal management by developing risk management strategies continuously

promoting the construction of internal control systems enhancing internal audit supervision and constantly identifying and

effectively responding to various risks. We actively carry out risk investigations and formulate countermeasures to ensure com-

pliant operations stable development and improve our risk resistance capabilities.Internal Control

By the requirements of the Company Law The Securities Law The Rules for the Listing of Stocks on the Shenzhen Stock

Exchange The Basic Standards for Enterprise Internal Control and other relevant laws and regulations combined with our own

operations and management needs we have prepared our internal control documents including but not limited to The Internal

Control Manual The Implementation Plan for Internal Control Management The Compliance System Documents and revise and

update them periodically to ensure the effectiveness and adaptability of the design and implementation of internal controls.During the reporting period we further optimized our internal control evaluation mechanism strictly supervised and evaluated

the implementation of internal control systems and was able to quickly identify potential internal control defects. In response to

the issues discovered we promptly proposed practical and feasible rectification plans and continuously followed up until they

were fully implemented and resolved effectively ensuring the effective implementation and execution of the internal control

system.Compliance Management

“Compliance” is a cornerstone of our corporate culture. We require each employee to strictly adhere to the bottom line of compli-

ance and maintain a mindset of risk awareness. By continuously enhancing our compliance management system construction

we aim to safeguard the stable operation of our business activities. Since 2020 we have designated the second quarter of each

year as the“ Kelun Compliance Season”. During this period we organize a series of compliance-themed activities aiming to help

all employees gain a deeper understanding and recognition of our compliance requirements and let these requirements reach

the hearts of our employees and guide their work.In addition we actively organized a wide range of diversified professional training courses on anti-monopoly compliance quality

system compliance legal norms and other related topics to reinforce our compliance culture. In 2023 6903 trainees attended

compliance training and 144209 hours were accumulated demonstrating our firm determination in promoting a comprehensive

compliance culture.Internal Auditing

To further enhance our level of corporate governance and To strengthen the internal audit function enhance the effec-

operational transparency we have established an audit tiveness of internal audit work and ensure the effective pro-

committee. This committee consists of three directors with tection of investors' legitimate rights and interests we have

independent directors holding the majority of seats. At least formulated the "Internal Audit System" in accordance with

one of the independent directors is a professional accoun- relevant laws and regulations such as the "Audit Law" and

tant. The audit committee is responsible for overseeing and the "Regulations of the Audit Office on Internal Audit Work".guiding the work of the internal audit department as well as The aim of this system is to reinforce internal supervision

coordinating between internal and external audits. and management improve audit quality and enhance the

level of corporate governance.Our Compliance Management System

QUALITY MARKETING EHS TAX PARTNER

COMPLIANC COMPLIANCE COMPLIANCE COMPLIANCE COMPLIANCE

We always put quality compli- Through enhanced reporting In constructing safety environ- Establish company-wide unified Sign sunshine agreements with

ance as the priority in produc- auditing and training mecha- mental protection and health financial accounting and tax partners and express anti-com-

tion. We have established a nisms we provide specific compliance systems we have treatment norms and promote mercial bribery clauses in the

closed responsibility system for gatekeeping on compliance established a supporting the financial compliance capabil- signed contracts. Provide

pharmaceutical without break- details in the marketing business manage ment mechanism that ity of each member company compliance training to partners

age and obstacles from research and super vise and guide includes the four aspects of through review of significant tax through compliance material

and development manufactur- business units to operate in "acquisition study self-assess- matters of subsidiary companies promotion and other means.ing logistics and transfer to end compliance. ment and review" of regulations. and evaluation of financial

users. management.

25 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

2.2 ANTI-CORRUPTION AND ANTI-FRAUD

We joined the China Enterprise Anti-Fraud Alliance in 2015 and have actively participated in its efforts to combat corruption and

fraud and build a clean business environment. In order to establish a robust system of business ethics strengthen our ability to

govern the enterprise in accordance with laws and regulations and enhancing our capacity to manage business ethics we have

formulated a series of documents such as the Code of Business Conduct Employee Handbook Anti-Fraud System of Sichuan

Kelun Pharmaceutical Co. Ltd. Trade Secret Protection and Non-competition System of Sichuan Kelun Pharmaceutical Co. Ltd.the System for Reporting and Avoiding Conflicts Arising from Relative Relationships and Declaring Conflicts of Interest. Collec-

tively these documents constitute a comprehensive control system from multiple dimensions including employee behavior

norms fraud prevention trade secret protection and conflict of interest avoidance.We require all employees adhere to the highest standards of business ethics and encourage upstream and downstream partners

as well as other stakeholders to support accept and implement the Code of Ethical Business Conduct. This ensures that our

business operations are conducted in a manner that is ethical and compliant with commercial ethics.Anti-corruption Anti-fraud

We take“ integrity and honesty” as our corporate lifeline and As the decision-making body of the highest responsibility

are committed to actively safeguarding against any forms of our Board is responsible for supervising and promoting our

bribery and corruption that could potential harm our opera- management to build a company-wide anti-fraud culture

tions reputation and business relationships. We uphold a environment and establish and improve a robust internal

zero-tolerance stance towards corruption and fraud and control system including fraud prevention. The Audit Com-

require that all employees and third parties engaging with mittee is the leading and primary responsible body for

our company adhere strictly to our anti-bribery and anti-cor- anti-fraud work responsible for guiding anti-fraud efforts

ruption policies. and conducting continuous supervision of anti-fraud work.We explicitly require employees to sign the Compliance / We actively prevent and combat all types of fraudulent

Integrity Commitment Letter upon employment and our behavior to effectively safeguard our fair competition envi-

Internal Control and Compliance Department performs spot ronment and good business order. At the same time

checks annually on the signing of this letter by all employees through business ethics education and training we enable

and business partners. Meanwhile we organize annual inter- all employees to have a deep understanding of and strictly

nal control self-inspections for all subsidiaries branches and adhere to relevant requirements building a fair transpar-

directly affiliated departments to promptly identify any ent and honest corporate atmosphere.signs of violation of business ethics standards. Additionally

as per our audit plan we regularly conduct audits on busi-

ness ethics and related policies across all business seg-

ments subsidiaries branches and directly-affiliated depart-

ments within our Company.

2023 Training Performance

Anti-fraud training for all Integrity training for man- Compliance training

employees agement cadres Number of trainees partici-

Number of trainees partici- Number of trainees partici- pating in training

pating in training pating in training 6903persons

20434 persons 1105persons Total training hours

Total training hours Total training hours 144209 hours

20434 hours 552.5hours

February 2 2023 May 192023

Integrity training for management cadres "KELUN Compliance Season" Anti-fraud training for all employees

26 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

2.3 WHISTLEBLOWER PROTECTION SYSTEM

We firmly adhere to the business philosophy of "customer When handling whistleblowing matters we strictly adhere

first" and "honesty as the foundation". In order to foster a to national laws and regulations as well as internal compa-

healthy and win-win business environment we actively ny policies. Strict confidentiality measures are implemented

encourage suppliers partners and all employees to partici- for whistleblowers and the information they provide. From

pate in the supervision of our integrity management system. receiving recording safekeeping to investigation and han-

We have established a Whistleblower Protection and Reward dling we have established a rigorous information protec-

System to incentivize all parties to courageously disclose tion mechanism to resolutely prevent any leakage or loss of

instances of corruption job-related criminal activities and whistleblowing information. Personnel who violate confi-

other illegal behaviors. dentiality regulations will be severely punished. Employees

who intentionally disclose whistleblower information for

We have achieved a diversified layout in our whistleblowing non-job-related reasons will be terminated and those

mechanism. Specialized whistleblowing hotlines have been whose actions constitute a crime will be prosecuted for

established in multiple core departments including the criminal liability in accordance with the law. We are commit-

Internal Audit Department Legal Affairs Department and ted to ensuring that every whistleblower who courageously

Human Resources Department. In addition convenient expose illegal behavior receives the respect and protection

channels such as WeChat and e-mail are also available they deserve.ensuring that any employee or related party can safely and

effectively submit reports on fraud and other violations.Our Whistleblowing Channel

Whistleblowing Phone： Internal Audit Department 028-82860620

Legal Affairs Department 028-82860470

Human Resources Department 028-82860386ntegrity KELUN PHARMA 13710096516 (same WeChat account number）

Whistleblowing E-mail：jubao@kelun.com

Mailbox：Internal Audit Department / Legal Affairs Department / Human Resources Department Sichuan Kelun Pharma-

ceutical Co. Ltd. No.36 West Baihua Road Qingyang District Chengdu Sichuan P. R. China

2.4 TAXATION MANAGEMENT

We strictly adhere to domestic and international tax laws providing the required information. We maintain close and

and policies all the time upholding the principle of honest good interactive relationships with tax authorities to ensure

taxpaying and fulfilling our tax payment obligations in timely communication and proper handling of opinions

accordance with laws and regulations. To ensure the stan- jointly creating a fair and transparent tax environment.dardization and compliance of tax operations we have

established a comprehensive tax management system For overseas business our overseas subsidiaries and

including guiding documents such as the Tax Management branches have timely submitted country-by-country reports

Regulations Tax Daily Operation Guidelines and Tax Relief to relevant countries and regions since 2019 satisfying the

and Fee Reduction Guidelines. All subsidiaries and branches requirements of international tax supervision and demon-

strictly adhere to these policy requirements in handling tax strating our determination and action in adhering to legiti-

matters. mate and compliant operations globally.In the face of various inspections conducted by tax authori-

ties and collaborative investigations by regulatory agencies

we maintain a consistently cooperative attitude proactively

27 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

03 LEAD PARTY BUILDING

3.1 PARTY BUILDING MANAGEMENT AND BUSINESS

DEVELOPMENT

Since the establishment of our party organization in 1998 we have always regarded party building work as one of the core driving

forces for promoting our development. In our more than 20 years of progressing we have adhered to guiding our spiritual outlook

and strategic direction through party building deeply integrating it into all aspects of production and operation This has shaped a

firm ideal and belief for Communist Party members within our company. At the same time we have nurtured the cultural founda-

tion of our company with advanced party ideas allowing high-level party building work to lead our company to achieve high-quali-

ty growth.

3.2 PARTY ORGANIZATION ACTIVITY“Uniting Efforts and Focusing on Development Pressing Forward with Perseverance Towards theFuture”—The Party Committee of KELUN PHARMA organized Thematic Education and Special Party

Lesson Activity

To celebrate the 102nd anniversary of the founding of the Communist Party of

China the Party Committee of KELUN PHARMA organized a thematic education

and special party lesson titled "Uniting Efforts and Focusing on Development

Pressing Forward with Perseverance Towards the Future" on the afternoon of

June 30 2023. The KELUN people with red hearts towards the Party actively

participated in this event. Fully utilizing video conference equipment the party

lesson innovatively adopted a synchronous live broadcast format combining

"on-site learning" with "online learning". The main venue was set up in our Com-

pany while more than 20 "online" branch venues were established in the Shang-

hai Marketing Center various production bases Kelun-Biotech Kelun Pharmaceu-

tical Research Institute CHUANNING BIOTECH and sales regions. Such arrange-

ment allowed more party members to learn high-quality party lessons in their

own units effectively expanding the coverage of party member education and

training.The Party Committee of KELUN PHARMA and The Party Committee of New Hope Group Jointly

Hosted a Party Building Collaboration Event

On May 17 2023 the Party Committee of the New Hope Group led the heads of

various industrial sectors subsidiaries and party organizations as well as party

affairs cadres to participate in learning and exchanges. This exchange adhered to

the principles of openness sharing and cooperation for mutual benefit. Through

mutual learning in party building work it further laid a solid foundation for

empowering enterprise development. Both parties reached a consensus that in

the future they would continue to strengthen communication and connections

among party organizations actively resonate with business development fully

leverage the platform advantages of party building cooperation and establish a

new pattern of party building work featuring "resource sharing complementary

advantages integration and progress and joint improvement." This will enable

party building work to become a strong backbone and important safeguard for the

sustainable and stable development of enterprises strengthen confidence and

momentum for the development of the private economy and jointly chart a new

chapter in development.

3.3 PARTY MEMBER DEVELOPMENT

We adheres to the principle of "wherever the business the core team of Party members and actively implement the

extends the Party organization takes root" in the develop- mechanism of "training key personnel into Party members

ment of Party members and organization building. Closely and training Party members into key personnel." Through

integrating with the actual needs of enterprise operations it this mechanism many Party members who possess both

creatively integrates the Party organization system with our Party spirit excellent work style profound professional

Company's production management structure extending knowledge and rich management experience have stood

vertically to all levels. This ensures that the Party organiza- out. They have gradually taken up key positions fully play-

tions and the ranks of Party members can keep up with the ing the role of Party member pioneers and models effec-

pace of enterprise development. tively promoting capacity enhancement and independent

innovation strengthening our core competitiveness and

Moreover we attach great importance to the construction of accelerating the red engine of our sustainable development.

28 KELUN PHARMA 2023 ESG REPORTthe core team of Party members and actively implement the

mechanism of "training key personnel into Party members

and training Party members into key personnel." Through

this mechanism many Party members who possess both

Party spirit excellent work style profound professional

knowledge and rich management experience have stood

out. They have gradually taken up key positions fully play-

ing the role of Party member pioneers and models effec-

tively promoting capacity enhancement and independent

innovation strengthening our core competitiveness and

accelerating the red engine of our sustainable development.ESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

03 We adhere to the original intention and mission of prod-uct R&D and keep driving our development with innova-tion. Also we strictly control product quality and treat every medicine as a solemn commitment to life striving to show respect for life in every detail with care.We build a sustainable supply chain management

system and choose our partners responsibly to ensure

that raw materials are green and traceable from the

source. We uphold responsible marketing principles

Uphold the resist false propaganda and commit to provide custom-

Craftmanship ers with true and accurate product knowledge and instructions.Spirits Take We understand the importance of data security in

Responsibilities patient privacy and corporate responsibility. Therefore

we adopt advanced technology and strict management

for Lives measures to protect user information at all levels.

0 1 R&D Innovation

0 2 Product Quality Management

0 3 Sustainable Supply Chain

0 4 Responsible Marketing

0 5 Data Security and Privacy Protection

29 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

01 R&D INNOVATION

2023 R&D performance

R&D Expense R&D Investment R&D Team Patents

1.95 billion CNY R&D investment in Since 2012 to the end of the The number of R&D employees Total 2904 patents applied

FY2023 totally increased 7.59% reporting period 12 billion CNY 2612 persons increased 2.27% as of the end of 2023

covering 9.10%of revenue cumulative R&D investment totally covering 13.19% of all employee

1.1 OUR R&D SYSTEM

We have established a multi-technical and full-function platform for the R&D system. The core are Chengdu and Suzhou research

institutes that are dedicated to high-end imitation and improvement of generic medicines. The main operating parties are

Kelun-Biotech and KLUS Pharma which focus on discovering and developing innovative biologics. In R&D we own 12 companies

rated as national high-tech enterprises and six national innovation platforms and postdoctoral research workstations.Doctoral

R&D Team Below Undergrad

123

R&D team is our core drive of technology innovation. We have launched a comprehensive Innova-

tion transformation since late 2012 attracting thousands of talents with doctoral and master 492

degrees. We have set up a scientific research team with profound academic background strong

R&D Academic 1215

will and up to international standards. At of the end of 2023 we have 2612 R&D staff and commit- Composition

ted to breaking through key technical bottlenecks and improving the technological and market

competitiveness of our products. 782

1.2 R&D Strategy Masters Undergradduate

In 2023 we reinforced our strategic positioning further strengthened our R&D strategic layout in the global pharmaceutical

market and launched more than 400 drug research projects. We innovatively covered over 30 innovative drugs and 431 generic

and improved medicines with cluster advantages high technical level distinctive features and cost competitiveness.Innovative Drugs

We continue to deepen the pace of reform focus on our advantages improve speed and efficiency benchmark with the best

practice in the industry. We continuously strengthen our internal management optimization and external cooperation expansion

aiming to ensure our leading advantages in key technology fields such as first-mover projects and ADC.We establish the concept of product marketization respond to unmet clinical needs and launch targeted projects to develop

innovative drugs with significant differentiation advantages and global market potential. To secure a favorable position in the

fierce market competition we also introduce big data and artificial intelligence technology to reinforce our application capabili-

ties of basic biology and translational medicine and to improve our efficiency and success rate of innovative drug R&D.We also continue to pay attention to new targets and technologies in the ADC field strengthen the ADC pipeline increase the

strength of the ADC platform and promote the authorization of overseas rights for projects under development to enhance

market value and international competitiveness of the projects. We will integrate ourself into the global drug innovation network

actively promote international cooperation cultivate competitive advantages and value of innovative drugs at a higher level and

in a wider scope.Generic Drugs

Our Kelun Research Institute follows the market changes and clinical needs highlights the development of branded generic

drugs high-end infusion preparations and improved innovative drugs that are needed for clinical use. It relies on a rich cluster of

favorable product pipeline to establish characteristic technology platforms and develop advantageous areas. We obtain the com-

petitive and brand advantage of "multi-point development" in the centralized procurement markets non-centralized procure-

ment markets and global markets.

30 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

1.3 MEDICINE R&D ETHICS

Our Commitment

In our drug development process we always adhere to regulatory requirement and the ethical principles such as the Helsinki Dec-

laration Guidelines for Ethical Review of Clinical Trails International Council for Harmonization (ICH) Guidelines for Good Clinical

Practice (GCP) and China’s Clinical Practice for Drug Clinical Trials and Adverse Drug Reaction Reporting and Monitoring Manage-

ment. With the continuous improvement of the pharmaceutical regulatory system we promise that all Our R&D activities shall be

conducted under legal compliance and ethical legitimacy .Clinical Research

Drug Clinical Research Procedures

010203

Preliminary Subject Clinical

Research Screening Trials

New drugs need to be tested before Before the clinical trial phase Develop a subject privacy protection

clinical trials. Research data can prove researchers need filter the potential system to fully protect the rights and

that the drug is safe and controllable subjects according to strict inclusion interests of subjects

and exclusion criteria.

060504

Review & Collecting Emergency

Communication AdverseEvents Mechanism

Regularly follow up and review Collect adverse event after product Establish a Plan B for the emergency or

processes such as trial plans informed launch through clinical trials from accident response mechanism to

consent forms and protocol healthcare professionals patients and ensure quick reaction to adverse

deviations and maintain good business partners through hotline and events.communications other channels

Clinical Trial Risk Management

We customize a risk management plan for each project for important risk controlling point such as subject protection data

authenticity integrity reliability and GCP compliance. We currently adopt three levels of control for clinical trial risks and also

conduct corresponding audits on external suppliers to ensure that the service quality of suppliers meet the clinical trial require-

ments.Clinical Trial Risk Control

Level 1 Level 2 Level 3

Carry out clinical monitoring activities

in strict accordance with GCP require- Ensure that key point data of Ensure project process

ments and company SOP to ensure the project can be guaranteed compliance and compliance

that the operations of clinical research and important links are with GCP requirements

centers and researchers meet the controlled and paid attention to

requirements and that the data is

authentic and reliable

31 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Subject Protection

We always prioritize the protection of the rights and interests of clinical trial subjects. Through rigorous scientific research pro-

cesses and management systems we manage to protect the informed consent privacy and health rights of each participant in

clinical trials.In addition we continuously optimize the adverse drug reaction monitoring system to discover and handle any problems that

may affect the health of subjects so as to protect the rights and interests of subjects from damage to the greatest extent. We are

committed to providing a scientific and safe research environment for subjects and strives to achieve a harmonious unity of

social benefits and ethical responsibilities of drug research and development.Animal Welfare

Experimental animals are an important supporting condition for pharmaceutical R&D and life science research. We highly value

the ethical principles of animal welfare and respect the life contributions of experimental animals to research. Kelun-Biotech has

established an Institutional Animal Care and Use Committee (IACUC) to review major issues related to animal welfare.We strictly comply with all regulatory requirements such as the Regulations on the Administration of Laboratory Animals and the

3R principles and implement the Company's Human Endpoint Regulations for Experimental Animals Management of Control

Substances and Test Substances Accuracy Control of Animal Administration General Principles of Animal Administration and

Regulations for Dosage Administration Route and Blood Collection of Experimental Animals ensuring that the medication for

animals meets the scientific and ethical requirements of the project research.The 3R Principles of Animal Experimentation

Replace live animal experiments with vitro ones

Replacement Predict drug effects with models and mathematical simulation techniques

Carefully design experiment plans to reduce the sample size while

Reduction obtaining reliable data

Avoid repetitive experiments by improving plan validity

Reduce duplicate experiments by sharing databases and existing results

Use advanced anesthesia and drugs to reduce the discomfort and pain of

animals during experiments

Refinement Redesign procedures to reduce stress responses to animals with humane handling methods

Strengthen training improve the professional capabilities of researchers

and conduct animal experiments in a more humane way

32 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

1.4 R&D EXTERNAL COOPERATION

We actively respond to the national strategy of Belt and Road and the 14th Five-Year Plan for the Development of the Pharmaceuti-

cal Industry and seek in-depth cooperation with the world's top pharmaceutical R&D institutions and enterprises. The overseas

layout of the production and R&D includes Kelun US Kelun Kazakhstan and Kelun Lanka building a diversified international

research network. By signing a series of major agreements we have not only introduced advanced technology and concepts of

innovative drugs but also continuously expanded our global collaboration layout in new drug discovery clinical trials and regis-

tration applications.Global Collaboration

Collaboration with MSD team

On October 20 2023 the 2023 European Society for Medical Oncology (ESMO) Congress opened grandly in Madrid Spain. During

the ESMO conference the teams of Colombote Biotech and Merck had a cordial meeting in Madrid. The management and proj-

ect teams of both parties discussed the research and development progress of the cooperation project and deeply discussed the

work plan for the global clinical research of the cooperation project in close collaboration. The teams of both parties will jointly

strengthen the development of clinical-stage drugs and multiple ADC drugs that are about to enter the clinical stage including

rapid expansion of indications from single drugs to combinations and from back-line to front-line treatment. In addition both

parties may explore cooperation opportunities for other new target ADC projects.Project with UK Ellipses Pharma UK

In November 2023 the British Ellipses Pharma a project partner of Colombote Biotech’s A400 (EP0031) (RET small molecule kinase

inhibitor referred to as A400) received Orphan Drug Qualification (Orphan Drug Designation) from the U.S. Food and Drug Administra-

tion (FDA). Drug Designation (ODD) for the treatment of RET fusion-positive solid tumors. After A400 (EP0031) obtains orphan drug

qualification from the US FDA it is expected to accelerate the progress of clinical trials and marketing registration in the United States. At

the same time we can enjoy certain policy support including but not limited to tax credits for clinical trial costs exemption from new

drug application fees. In March 2024 A400 (EP0031) was granted Fast Track designation by the FDA for the treatment of RET fusion-posi-

tive NSCLC.Industry-University-Research-Hospital Collaboration

We have formed a strategic alliance with first-class scientific research and clinical research institutions and organizations by lever-

aging national innovation platforms such as the National Engineering Research Center for Biopharmaceuticals and the National

Engineering Technology Research Center for Large Volume Injection Formulations. The institutions include China Pharmaceutical

University Shanghai Institute of Materia Medica - Chinese Academy of Sciences Sichuan University Southwest Medical University

Shenyang Pharmaceutical University Chongqing Medical University Sichuan Food and Drug Inspection Institute as well as

renowned hospitals such as Tongji Hospital of Huazhong University of Science and Technology The First Affiliated Hospital of

China Medical University Qilu Hospital of Shandong University The First Affiliated Hospital of Zhejiang University School of Medi-

cine The Second Xiangya Hospital of Central South University Jiangsu Province Hospital The First Affiliated Hospital of Zheng-

zhou University. In addition we collaborate with national high-energy platforms such as the National Precision Medicine Industry

Innovation Center and the National Engineering Research Center for Isotopes and Drugs. Together we aim to form strategic

alliances together and through complementing each other's advantages develop core technologies for key fields for industrial

development establish a long-lasting cooperation mechanism for the innovation and technology development cooperation and

finally make contributions to the development of China's pharmaceutical industry.

33 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

1.5 PATENT REGISTRATION STATUS

2023 Key Updates

As of December 31 2023 the Company and subsidiaries had 2904 valid patent applications including 1338 invention

patent 1338 utility model patent and 228 design patent. Among them 2153 applications have been authorized

including 707 invention patents 1237 utility model patents and 209 design patents.Our group applied for a total of 409 patents in 2023 including 258 invention patent 130 utility model patent and 21

design patent. Among them 184 were authorized including 99 invention patents 80 utility model patents and 5

design patents.Overseas Registration

In 2023 we started the registration work for 16 projects in 8 countries and regions products involving APIs preparations. For

instance we have completed the DMF registration for our generic drug Nintedanib in the US. Also we have finished the applica-

tion of ADC drug (SKB264) targeting TROP-2 in 6 countries including Canada Australia and Belgium.

1.6 Intellectual Property Protection

We are deeply aware of the importance of IP protection for our core competitiveness. We have ensured that our innovative

achievements in R&D production and operation activities are strictly protected by law by stressing IP rights work. Therefore the

efforts of IP protection could provide a solid guarantee for our strategic upgrade and development in the long run.To fully implement the strategy of IP protection we continue to improve our internal IP management system and strive to pro-

mote the systematic construction of IP work. We actively follow the latest international and domestic IP laws and regulations

integrate IP management into the entire life cycle from R&D project establishment to product launch and eventually reinforce our

competitive advantage of IP reserves.IP Manage- IP Infringement Alarm IP HR Resources IP Support for Global

ment System and Risk Monitoring and Training Cooperation

IP Protection System

Intellectual Property Training

We focus on the implementation of IP education and training courses to promote the

Awareness of the importance of IP protection among our employees. At the same

time we have released intellectual property basics through our internal learning plat-

form via which employees are encouraged to learn and enhance our company's over-

all understanding of intellectual property rights.

34 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

02 PRODUCT QUALITY MANAGEMENT

2.1 PRODUCT QUALITY MANAGEMENT SYSTEM

Since establishment we have always prioritized product quality as the lifeline of survival and development. We have firmly estab-

lished a concept of Big Quality and have adhered to various national pharmaceutical quality regulations including but not limited

to the "Drug Administration Law of the People's Republic of China" and "Pharmaceutical Production". "Good Manufacturing Prac-

tices" "Good Manufacturing Practices for Pharmaceutical Products" and "Good Pharmacovigilance Practices".Quality Management Organisation

We maintain a rigorous quality management system where the core quality officer is appointed by our legal person after

signing a binding agreement to ensure an independent of quality management function. To guarantee effective and stan-

dard operation of the Company's drug QC the quality officer can delegate his/her workload to qualified personnel who

have filed with the drug regulatory department so as to achieve the balance between effectiveness and efficiency.Quality Management Framework Diagram

Group General Manager

?? VP Production VP QC District QC

QC Audit

Subsidiary GM?A Subsidiary GM?B Subsidiary QC Center QC Management

GM-? ?

Drug Security

Department Equipment Logistics Production Quality Supplier Quality

& Power

QC QA Verification

QC Balanced Scorecard

Quality Management Measures

Our company’s quality manual is a program- Grand Quality Concept

matic document to guide the Company’s total

quality management practice planning and High Quality * Expectation of stakeholder

implementation control and supervision guar-

antee improvement and continuous improve- Extraordinary Headquarters * Base * Advanced Quality High Quality risk control Advanced Quality quality system information Performance

ment. We actively organize quality manage- Platform empowerment

ment education and training activities for all Layered Control Full value chain quality negative listoperation system Laboratory information quality positive list

management system

employees based on the guideline. quality measurementChange control Kelun Good Standard(KGS) quality management system

Data reliability practices Good Practice Guide (GPG) VMS for PP &PO Knowledge management system

Technology transfer risk Major special program management CAPA System *Document (archive) management system *Quality satisfaction

In production and operations we actively Quality incident management Continuous improve of the platform

Change Management System

*Training management system *First time correct rate

Subject matter expert platform Management review *Quality reporting system *Process Capability

implement the ISO9001 quality management Intensive management Review and release *Data analysis system etc. *Audit ready (Supplier Management & Vigilance) Vigilance system

system and apply the quality balanced score- Quality technical support

card model to ensure product quality in multi Quality Risk Management System

dimensions. All our production centers have Knowledge Management System

passed the PRC’s Good Manufacturing Practice

(GMP) (revised in 2010) certification demon- Powertrain (Headquarters): NanJi Empowerment & Propeller (Base): Business Platform Development

strating the our commitment to continuous Regional Supervision & Management Review & Major Project Development etc.optimization of quality management pursuit of Learning & Growth: Subject Matter Experts & Continuous Training

quality excellence.

35 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

2.2 QUALITY RISK MANAGEMENT

We compile the Quality Risk Management Procedures based on the ICHQ9 Quality Risk Management - Scientific Guidelines (for-

mulated by the International Conference on Harmonization) to build a rigorous and efficient quality control system. The estab-

lished procedures ensure all risk points that may affect product quality can be comprehensively identified evaluated and con-

trolled to guarantee the rationality of quality risk management.Quality Risk Management Process

Initiation of Quality Risk Management

Risk Assessment

Hazard Identification

Risk Analysis

Risk Evaluation Not

Acceptable

Risk Control

Risk Mitigation

Risk Acceptance

Output

Risk Review

Reviewing Incidents

2.3 QUALITY CULTURE CONSTRUCTION

Quality culture is a pillar of soft power in corporate management. We believe in customer-centered quality culture and continue to

promote the development by including all employees in training sessions. The debates and trivia contests enable the employees

to respect QC at all times implant the QC concept into the corporate cultural gene and contribute to the sustainable develop-

ment of our company.Case 1: QC Team Building

We address QC team building and actively improve the level of QC activities. Our 20th Excellent QC Results and Project

Results Presentation Conference was held in Xindu from Oct 20th to 21st 2023. Over 270 people attended the confer-

ence on site and 35 online sub-venues were set up to include 1800 participants in total. The conference published the

results of "small practical lively and new" QC topics and project activities with long cycles and large investment. 27

outstanding QC results from 24 subsidiaries and associated enterprises were announced at the meeting. One gold

medal two silver medals four bronze medals and two QC Tool Application Awards were finally announced.

36 KELUN PHARMA 2023 ESG REPORT

Risk Management Tools

Risk CommunicationESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together AppendixCase 2:“ Quality Theme Month" ActivitiesWe place a high priority on the construction of a company-wide quality culture from top-down. Every year the Quality

Supervision Center joins forces with the EHS Supervision Department and the Production Technology Department to

organize a Quality Theme Month Activity on a regular basis. In 2023 the focus is on the theme of "Implementing Safety

Production Responsibilities Deepening Quality Risk Management and Enhancing Clean Production Capabilities".Theme activities are carried out in three areas: production quality and safety management. 18 subsidiaries (branches)

and 4 affiliated enterprises have actively participated in various theme activities with diverse forms and rich content

such as slogan collection document error-checking promotion of data integrity customer satisfaction surveys and

special training on regulations and guidelines. These activities aim to enhance our company's awareness of regulations

and improve the level of quality management.

2.4 PRODUCT SAFETY MANAGEMENT

Product Testing

Each level of our production companies has completed the product quality management system with standard system to ensure

that all products meet the requirements of registration regulations and pharmacopoeia standards. For instance CNAS certifica-

tion is the opportunity for us to improve the laboratory system capabilities. Currently eight laboratories affiliated to our core

member companies have passed the authoritative review of the China National Accreditation Service for Conformity Assessment

and obtained CNAS certification. Our labs can provide accurate and efficient product testing services covering testing projects

such as drug stability research impurity quantitative analysis and microbial limit determination ensuring that high-quality safe

and effective products are provided to the market.Quality Review

Each subsidiary of our group has drafted the Product Quality Review Management Procedure to confirm the applicability of pro-

cess stability raw materials and finished product current quality standards through effective analysis of product quality aiming to

promote the continuous improvement of product quality. Also an annual product quality review plan will be presented and

reviewed based on retrospective product quality review by categories.Quality Audit

We establish a functional and comprehensive quality audit system and formulate the Internal Quality Audit Management Mea-

sures for product quality complies with various laws regulations and standards. Moreover we accept audits from drug regulatory

agencies and customers every year. In 2023 a total of 16 bases (including joint ventures) passed over 100 external inspections

including registration on-site check entrusted production on-site inspections GMP compliance etc. The varieties inspected

covers 30 categories including sodium chloride injection.By continuously optimizing the quality management system we are committed to creating the world's leading quality benchmark

for the pharmaceutical industry and providing our customers with safe effective and high-quality pharmaceutical products.

37 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Product Labeling Management

We always adhere to laws and regulations such as the Drug Administration Law Drug Instructions and Labeling Management Reg-

ulations. Keeping in mind the philosophy of standardization and transparency we review labels for each product in details and

ensure that all labels instructions and identification information on internal and external packaging are accurate.In practice we adopt an advanced management system to accurately record and control key information such as drug name

specifications batch number expiry date manufacturer information indications usage and dosage precautions contraindica-

tions and adverse reactions. At the same time any adjustments to product labeling content must be approved by scientific argu-

ment to ensure that the change process is legit and valid and customer are entitled to consume safe drugs.Product Traceability

We run a product tracing system where the production and packaging processes are closely monitored and recorded in accor-

dance with regulations and operating procedures. The tracing system integrates the laboratory management LIMS quality assur-

ance QMS knowledge management DMS personnel training ELN and warehouse management WMS yielding a united quality

information management platform. The tools and methods applied ensure the traceability of products throughout the production

and at the stage of clinical use.We are open to any questions opinions or suggestions brought up by our Patients and companies that transport or consume our

products. Topics varies from product quality packaging storage standards use safety to prices.Product Recall

We have formulated and issued guidance documents of actions and submit to the drug regulatory authorities for

“Drug Recall Management”and“ Guideline for Handling filing. During the recall process the special working groupSudden Drug Safety Incidents”. Our subsidiaries (branches) will conduct statistics and acceptance checks on the pro-

have also established product recall management system posed recalled products returning them in accordance with

and corresponding policies and procedures in accordance the return policy and promptly report the progress of the

with relevant regulations and group requirements. This recall to the drug regulatory authorities actively cooperat-

ensures that any batch of products with potential safety haz- ing with the drug regulatory authorities to carry out relevant

ards can be recalled quickly and effectively from the market investigations.when necessary.Once all products to be recalled are properly disposed of

For products that are proposed to be recalled each subsidi- the special working group will summarize the recall situa-

ary (branch) will organize a special working group and cate- tion and form a relevant report. Based upon the submitted

gorize the product recall incident into three levels according report by the special working group the recall work will be

to the severity of the potential safety hazard. After reporting closed when it is determined that the actions have fully met

the recall incident to the headquarters the subsidiary the expected objectives. In addition we continuously assess

(branch) will issue a“ Recall Notice”. Subsequently the spe- the effectiveness of our recall management system through

cial working group will develop a recall plan and detailed activities such as simulated recalls.

38 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

2.5 PHARMACOVIGILANCE SYSTEM

We have set up a comprehensive pharmacovigilance system nel as pharmacovigilance responsible persons to ensure the

in accordance with the "Good Pharmacovigilance Practice" safety and health of the public in drug use.(GVP) and relevant guiding principles and formulated thepolicies and procedures such as“ Post-marketing Drug We have established an extensive channel of adverse eventSafety Management Procedures”“ Adverse Drug Reaction collection to monitor drug safety. We have configured aReporting and Monitoring Procedures” and“ Drug Safety pharmacovigilance system purchased a MedDRA dictionaryRisk Management Procedures”. to standardize and unify terminology and connects with the

National Medical Products Administration’s Center for Drug

The holders of marketing authorization for all our company Evaluation (CDE) and Center for Adverse Drug Reaction Mon-

drugs have established a complete pharmacovigilance orga- itoring (CDR) through gateway systems to achieve the moni-

nizational structure and system documents in aligned with toring of adverse drug reactions through coding analysis

regulatory requirements and continuously improved them and evaluation and timely reporting. In addition we use

in accordance with the latest regulatory requirements computer systems to carry out literature searches risk

during implementation. At the same time all holders of warnings etc. to manage risks in real time

marketing authorization for our company drugs have estab-

lished drug safety committees set up dedicated pharma- What’s more we continue to attract senior pharmacovigi-

covigilance departments and appointed qualified person- lance talents from home and abroad to improve our overall

risk management .Pharmacovigilance Activities

Pre-launch Pharmacovigilance Post-launch Pharmacovigilance

Activities Activities

Sichuan Kelun Pharmaceutical Research Institute We maintain a group-based post-launch vigilance

Co. Ltd. is responsible for the establishment and management system. Under the guidance of the

operation of the pre-market pharmacovigilance Drug Safety Risk Department of the headquarters

system for our company. Through the formulation of each subsidiary manages adverse reaction informa-

policies and procedures such as the "Standard Oper- tion collection monitoring reporting signal detec-

ating Procedures for Pharmacovigilance Risk Control tion risk assessment and post-launch research

Planning" and the "Procedures for Collection Pro- aiming to ensure consumer drug safety. In addition

cessing and Submission of Reports on Serious the Company regularly organizes independent

Adverse Incidents" we have effectively ensured the audits of the vigilance system to ensure its effective

efficient and orderly conduct of pharmacovigilance operation.work during the stage.Adverse Reaction Collection Channel

01 Channel Ⅰ 02 Channel Ⅱ 03 Channel Ⅲ 04 Channel Ⅳ 05 Channel Ⅴ

Official Website Official website Customer Hotline Email Address WeChat Official Account

Contact us Contact us 4006860333 pv.china@kelun.com "KELUN E Medicine"

Suggestion and Drug Vigilance Product Services

Consultation Feedback

Adverse Reaction Report

We have cultivated a multi-layered and systematic channel to collect adverse reaction from and give professional answers to

patients doctors and pharmacists. Adverse drug reactions obtained will be reported to the Drug Safety Risk Management Depart-

ment of the headquarters. The HQ office will follow up on missing information in accordance with the "Adverse Drug Reaction

Reporting and Monitoring Management Regulations". When identified the drug reactions could be recorded on the Adverse Drug

Reaction Feedback Form and processed in the pharmacovigilance system. The process includes data entry medical review and

submission. For serious events we will report the investigation results of production logistics and other link to the drug regulato-

ry authorities in a timely manner.

39 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

03 SUSTAINABLE SUPPLY CHAIN

3.1 SUPPLIER ACCESS

We have a strict and standardized supplier admission process in place. The Material Supplier Management Measures was

announced to screen qualified suppliers for material quality process suitability product quality and strictly control supplier

admission. basic threshold requirements. Apart from the necessary qualification requirements we screen our suppliers based on

their performance in environmental management such as hazardous substance emission to ensure that our supply chain meets

the requirements of environmental regulations industry standards and sustainable strategies.Under the same conditions we give priority to suppliers that have passed ISO series management system certification and will

continue to increase the proportion of such high-quality suppliers in the overall procurement share. For different types of suppli-

ers we clearly stipulate corresponding qualification access requirements and details of certification documents that must be sub-

mitted.Supplier Categories

Suppliers of packing Suppliers of drug packing Suppliers of API starting

API Suppliers material that have and printing materials and reaction aids

direct contact of medicine

100% of our API suppliers passed pharmaceutical GMP test. Meanwhile we encourage our suppliers to obtain ISO-related system

certification. In 2023 over 95% of API manufacturers pharmaceutical excipient manufacturers and over 85% of pharmaceutical

packaging material manufacturers have the certification of ISO9001 quality management system.

3.2 SUPPLIER CLASSIFICATION MANAGEMENT

We classify the materials into Grade I to IV levels based on a comprehensive analysis of quality risks of the products nature of

materials the use and dosage of materials the degree of impact of materials on product quality adopting different management

methods for different levels of materials.Supplier Classification Approved Supplier Classification

Potential suppliers H

Bottleneck Strategic

suppliers suppliers

M

Approved suppliers

Supliers L General Leveraged

suppliers suppliers

Unqualified suppliers

N

L H

Purchase Amount

For material suppliers we classify suppliers into the For approved suppliers we develop a matrix of materi-

three categories as above based on the qualification al supply risk and material purchase amount and

verification (approval) status. apply specific strategy to each dimensions to differenti-

ate the management levels.

40 KELUN PHARMA 2023 ESG REPORT

Supply RiskESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

3.3 SUPPLIER AUDITS

We formulate the Material Supplier Quality Audit Management to conduct audits from the six GMP dimensions to ensure product

quality and safety from the source. We stipulate the audit frequency audit methods and standard procedures based on material

levels and strictly implement audits in accordance with relevant requirements. To build a green and sustainable supply chain we

established the Supplier EHS Risk Assessment System as a guideline to include EHS in supplier audits. The EHS audit results will

be disclosed in the audit evaluation of suppliers thereby determining the overall EHS performance of suppliers.EHS Audit Content

The EHS audit mainly includes implementation of administrative licensing and environmental management systems

compliance with emission standards of pollutants compliance with the collection and disposal of solid waste safety

progress emergency management and drills education and training and hidden danger inspection.In 2023，our group requested quality audit for 383 material vendor s achieving a 35% increase in supplier coverage (xx more than

preliminary planning). Among them are 306 on-site audits 2 remote audit 75 document audit. After the quality audit we issue

audit opinions by conducting a comprehensive assessment based on supplier qualification materials audit records and defect

rectification reports returned by suppliers.

3.4 SUPPLY CHAIN RISK MANAGEMENT

We effectively managed supply chain risks by adopting a proactive methodology.Industrial Trends Maintain communication with material suppliers and pay regular visits to

keep up with industry trends and collect information for risk evaluation.Avoid Single Sources Include new suppliers for existing products; sort supplier information

Material before approval for developing prototypes.Supply Risk Diversify Suppliers Diversify suppliers on the group level

Management

Reasonable Standards Avoid premium sourcing price due to unrealistic standards

Establish Strategic

Partnership Keep strategic relationship with key material vendor to ensure stable supply

Supplier Performance Review

We conduct supplier performance review for authorized suppliers according to material levels. The performance review includes

quality (qualification rate per batch anomalies quality audit notification of change quality/EHS compliance) delivery (timeli-

ness delivery cycle accuracy) services (communication response support and cooperation) and others. After applying the

review matrix we categorize our suppliers into A B C and D-level and manage them with differentiated methods including

reducing/increasing the frequency of audits increasing/decreasing supply ratio and suspension/cancellation of supply qualifica-

tions.Change of Suppliers and Materials

Our change management requires supplier management for new or changed material. If any changes to the supplier and the

materials supplied the supplier should promptly notify us in accordance with the change management requirements stipulated in

the quality agreement. We will monitor product safety effectiveness and quality controllability of relevant changes in materials.We will determine the degree of risk and change the management category accordingly. Full research evaluation and necessary

verification will be carries out under relevant technical guidelines and quality management specifications if necessary. If the prod-

uct involved is a medicine preparation or API we would implement or reported after approval and filing to ensure that changes of

raw and auxiliary packages and those of the starting materials of APIs do not compromise the safety effectiveness and quality of

the drug.

41 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

3.5 SUPPLY CHAIN QUALITY MANAGEMENT

Supplier Training

To improve the supply chain quality we offer 2023

training workshops of quality management

training to our suppliers either online or

onsite and customize training content on Number of workshop: 300

issues discovered during supplier audits or

supplier evaluation to achieve efficiency of Total training hours: approximately 400 hours

the training sessions. Covering over 300 suppliers

More than 2000 participants

Improving Pharmaceutical Supply Chains in Developing Countries

To improve pharmaceutical supply chains in developing countries we implement localized production base across the country to

reduce transportation costs improve supply timeliness and reduce the drug costs.Kazakhstan is sparsely populated making it difficult for local hospitals to deliver. Kelun KAZ has cooperative distribution agents in

15 local states to could handle logistics and distribution of the bided products for local hospitals efficiently.

Kelun Sri Lanka distributes drugs directly to institutions through local organizations reducing intermediate links and improving

the timeliness of local supply.

3.6 SUPPLY CHAIN INTEGRITY CONSTRUCTION

External Restrictions and Supervision

Our anti-corruption policy governs all external economic transactions. We require all stakeholders (including suppliers service

providers contractors and customers) to follow our Supplier Code of Conduct and Anti-Fraud System and sign the Sunshine

Agreement. At the end of the reporting period the signing rate of "Sunshine Agreement has reached 100% and we have included

anti-corruption from the supplier admission stage requiring all suppliers to study the training videos on our official procurement

website.Our Supplier Code of Conduct sets out strict and clear requirements for suppliers’ ESG performance for applicable parties includ-

ing suppliers service providers contractors etc. The code of conduct covers six topics: business ethics quality management

labor rights occupational health and safety environmental protection and information confidentiality.In 2023 we conduct anti-corruption and

anti-bribery investigations on suppliers to 82.91% suppliers have internal independent compliance department

confirm whether suppliers have established

a sound internal compliance policy and 91.46% suppliers have anti-corruption and bribery policy in place

implemented implementation of their 80.90% suppliers hold anti-corruption training to main positions

anti-corruption management systems. 83.42% suppliers have employees sign anti-bribery agreement

42 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Internal Standardized Management

Internally we strictly standardize management and processes and implement the Code of Conduct for purchasing personnel. We

track manage and trace the procurement through the information-based procurement management platform - Kelun Pharma

Electronic Procurement System. These internal measures effectively reduce fraud risks in the cooperation with our suppliers

ensure fair procurement and promote the clean supply chain.

3.7 SUPPLIER COMMUNICATION

We adhere to the idea of openness fairness and win-win when choosing our suppliers. We are committed to establishing

long-term strategic partnerships with high-quality suppliers. To ensure the efficient operation and sustainable development of the

supply chain we regularly hold various supplier network events aiming to enhance communication and understanding between

the two parties share cutting-edge industry information and discuss industry development trends.

43 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

04 RESPONSIBLE MARKETING

4.1 CUSTOMER SERVICE SYSTEM

Relying on our comprehensive advantages of stable product quality top-notch packaging image considerate service and appro-

priate prices we strongly broaden our development space. Currently our sales network covers all provinces autonomous regions

and municipalities in China excluding Taiwan Hong Kong and Macao. Meanwhile we actively promote our internationalization

strategy and our leading products have achieved bulk exports with a high reputation in over 50 countries and regions.

6000dealers Exported to 50+ countries in Europe

4300tertiary hospitals Asia Africa South America

We always practice responsible marketing and closely align our business goals with the corporate social responsibilities. In the

marketing process we adhere to laws regulations and industry norms and insist on promoting our medicine in an ethical scien-

tific and objective manner. In the reporting period we issued the responsible marketing policy that covers information disclosure

employee training audit supervision environmental protection and social responsibility to ensure that employees perform under

business ethics and our social responsibility values. Last but not least we issued the Market Service Provider System to manage

the full-process of our third-party service providers.

4.2 IMPROVE CUSTOMER SATISFACTION

We continue to improve the customer satisfaction by emphasizing the customer-centered service and by regularly conducting cus-

tomer surveys. In the reporting period we resolved 100% of customer feedback and received a satisfaction rate of over 98%. the

Company always adheres to the principle of "customer first" maintains a good communication channel with customers continu-

ously improves its products and services and wins public trust.Responsible Marketing Training

We regularly organize training sessions of responsible marketing to all employees. In 2023 the Internal Control and Compliance Depart-

ment collaborated with the Internal Audit Department Legal Affairs Department Quality Supervision Center to hold the annual compli-

ance training for the entire group. The training content included Compliance System Documents the policy of anti-commercial bribery

anti-fraud and pharmacovigilance. Our marketing center organized a series of special trainings covering laws and regulations company

policy industry violation case sharing. The training rate reaches 100% in the marketing department.For external marketing partners not limited to our suppliers dealers and agents we host training sessions of responsible market-

ing from time to time to publicize our company policy so that stakeholders could implement the policy in their business with us.

44 KELUN PHARMA 2023 ESG REPORT

Overseas

DomesticESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

4.3 CUSTOMER PRIVACY PROTECTION

In accordance with the Personal Information Protection Law we have established a strict customer information protection mecha-

nism to safeguard the storage and transmission of personal health data and other sensitive information and to prevent unautho-

rized access use or leakage. We only collect use and disclose necessary information permitted by law and explicitly authorized by

customers and strengthen employees' awareness of customer privacy protection through internal trainings.In addition we fully respect customers' rights to make informed choices and keep personal privacy while we are committed to

improving customer service experience. We manage to maintain transparency in any operations involving customer privacy and

promptly respond to customers’ requests for inquiries corrections or deletions of personal information. Through a series of rigor-

ous and comprehensive privacy protection measures we strive to create a trustworthy environment so that every customer can

use our products and services without worries.

4.4 CUSTOMER FEEDBACK HANDLING

We highly value places customer feedbacks and suggestions. We have published guide documents such as Product After-sales

Information Management. Each subsidiary company has established a management system for collecting c classification investi-

gation and processing of customer feedback. The process ensures that all feedback can be handled properly in a timely manner

protects the interests of consumers promotes the audience’s medication safety and continuously improves our product quality.

4.5 MARKETING AUDIT

We deploy three lines of defense for responsible marketing supervision and audit which enable all departments to work closely to

carry out their own duties separately and jointly to promote the marketing compliance work by improving rules strengthening

training and implementing accountability for problems discovered in a timely manner.

3 Lines of Defense - Responsive Marketing

The Operations Management (Compliance) Department as a compliance management

function set up at the forefront of business operations performs regular management

First line and supervision of the marketing team under the guidance and support of our compli-

of defense. ance management system documents. Compliance specialists stationed in each busi-

ness frontlines carry out full-coverage compliance initial review and regular compli-

ance culture promotion.As an important department of the second line of defense for risk management the

Internal Control and Compliance Department organizes various subsidiaries (branches)

Second line to conduct internal control self-assessments of sales-related processes annually in

of defense. accordance with our company's Implementation Plan for Internal Control Manage-

ment. Subsequently the Internal Control and Compliance Department reviews the

self-assessment results.As the third line of defense for our risk management the Internal Audit Department in

accordance with the Internal Audit System of Kelun Pharmaceutical Co. Ltd. carries

out internal audits on marketing activities within our group based upon our company's

Third line

of defense business development status and audit priorities. For units with identified issues the

Internal Audit Department regularly tracks the improvement results until the unit com-

pletes the rectification.We review the responsible marketing from time to time throughout the process for all marketers and service providers. We con-

duct thorough background checks before cooperating with any third party including but not limited to if there are any violations

of regulations or disciplines in marketing activities to ensure that our operations comply with national regulations.

45 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

05 DATA SECURITY MANAGEMENT

5.1 DATA SECURITY MANAGEMENT SYSTEM

We value the protection of customers' business secrets data security and personal privacy and strictly

adhere to the regulations and industry standards regarding customer privacy protection such as Personal

Information Protection and the Cybersecurity Law. At the same time the Company has formulated Informa-

tion Organization Construction and Computer System Project Management Specifications and Several Sup-

plementary Regulations on Information System Implementation and Management Computer Room Man-

agement Documents Information System Account and Password Management System to ensure data securi-

ty management effectiveness and compliance.We regularly hire a third-party organization to conduct risk assessments on our information system every

year to promptly and accurately identify potential risks and take corrective measures. We divide the identi-

fied risks into four categories: system level core and ordinary business level and general level and take During the reporting period we passed

targeted control according to each risk level. There were no complaints about leakage or incidents of the AAA-level assessment of the

infringement of customer privacy rights or loss of customer information during the reporting period. integrated management system of informatization.Security System

Management Operations Physical

Organisation and Security Cyber

Maintenance Security

Management

Information System Information System

Security Security

Management Technology

Safety Construction Host Construction

Management System SecuritySystem Construction Data

Management Security

Personnel

Security Application

management Security

5.2 INFORMATION SECURITY EMERGENCY MEASURES

We have built a complete data security emergency response mechanism the division of responsibilities adjust the overall data security plan

and formulated documents such as the Computer Room Emergency and report it to the public security department for further action as

Response Plan and "Information System Backup Strategy to ensure that appropriate. trace

emergency response can be initiated when potential threats or emergen-

cies are discovered.Preventive

To cope with data security emergencies such as virus outbreaks illegal In-process Post-event Treatment

web page tampering or intrusions we would respond rapidly and work Handling handling

closely in groups. Through process management we quickly assess the

risk level and take appropriate isolation measures to avoid leakage and Monitoring Alarm Event reporting

further losses. At the same time we continue to organize regular emer- (Automated Confirmation Event archiving

gency drills to improve the ability of all employees to respond to informa-

tion security incidents. Monitoring System

Handling Adjustment of

+ Manual Recovery procedures and

Moreover we have a complete post-processing system. After a data securi- Monitoring) contingency plans

ty incident is dealt with we will report and archive the incident confirm

5.3 DATA SECURITY TRAINING

To build a solid information security defense line and raise the informa-

tion security awareness of all employees we regularly hold information

security training activities to make everyone fully aware of the potential

information security risks in the workplace and master effective preven-

tion and response measures.In 2023 our IT Department carried out cybersecurity training for new

employees during their induction and regularly conducted cybersecurity

education and promotion activities for internal employees. By combining

graded protection ISO 27001 cybersecurity management system and

company regulations we have clarified our management requirements for

cybersecurity personnel security terminal security physical security

document security institutional regulations and other aspects. This has

enhanced our employees' awareness and skills in security reduced the

occurrence of security incidents and provided a guarantee for our stable

and rapid development.

46 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

We adhere to the concept of sustainable development

and have established a rigorous environmental man-

agement system. Faced with increasingly severe risks

such as extreme climate change we have strengthened

our climate change response strategy. Through scientif-

04 ic carbon emission measurement and management we actively reduce negative environmental impact of our production activities striving to achieve low-carbon operations. In terms of resource management we have improved energy efficiency utilization and implement-ed conservation measures for key resources such as water and electricity.

In pollution prevention and control we strictly comply

with national environmental laws and regulations

PERSIST IN GREEN adopt advanced pollution control technologies effec-

tively reduce waste generation and improve disposal

DEVELOPMENT efficiency to ensure compliance with emission stan-

ADVOCATE THE dards for various pollutants. We advocate integrating the concept of green ecology into the entire production

HARMONIOUS process actively fulfilling corporate social responsibility through practical actions promoting harmonious coex-

COEXISTENCE istence between industry and nature and jointly creat-ing a new chapter of green development.

01 Environmental Management System

02 Addressing Climate Change

03 Carbon Management

04 Resource Management

05 Pollution Prevention

06 Biodiversity Protection

47 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

01 ENVIRONMENTAL MANAGEMENT SYSTEM

1.1 ENVIRONMENTAL MANAGEMENT SYSTEM

Our environmental management system is built on the core Additionally we have further refined environmental man-principle of "environmental protection first and sustainable agement policies including rules for“ Wastewater Treat-development" and we continuously advance the construction ment Systems”“Air Pollution Control Systems”“Solid Wasteof our environmental management system to standardize and Management”and“ Guidelines for Developing Volatilesystematize it. We strictly adhere to various environmental Organic Compound (VOCs) Management Ledgers”. Further-laws and regulations in various operating locations such as the more we have established an“Environmental Information“Environmental Protection Law”“ Energy Conservation Law” Disclosure Management System”to ensure transparency

“Water Pollution Prevention and Control Law”“ Atmospheric and effective supervision of environmental work.Pollution Prevention and Control Law”“ Solid Waste Pollution We have established an EHS (Environment Health andPrevention and Control Law”“ Cleaner Production Promotion Safety) supervision department staffed with environmentalLaw” and“ Regulations on Environmental Protection Manage- professionals responsible for guiding inspecting andment of Construction Projects”. We base our operations on the supervising the environmental management work of each

internationally recognized ISO 14001 environmental manage- subsidiary company. Each subsidiary company has also set

ment system framework to continuously enhance our environ- up a dedicated EHS department directly under its General

mental management capabilities. In our daily production and Manager responsible for managing and implementing spe-

business processes we strictly follow the environmental cific environmental work. This hierarchical managementresponsibilities outlined in the“ Environmental Management approach ensures the professionalism and effectiveness ofAccountability Reward and Punishment System” at all levels environmental work contributing to the achievement of ourto avoid crossing environmental "red lines”. sustainable development goals.Environmental Audit

Environmental Audit: We conduct regular internal audits and external audits to verify the operational status and management

level of EHS (Environment Health and Safety) management systems in various production-oriented enterprises.We primarily focus on internal EHS audits for matters such as construction project environmental "three simultaneities" including

pollution discharge permit management compliance with pollutant emission standards full-process management of hazardous

and non-hazardous waste construction and operation of environmental protection facilities emergency response plans and

drills and environmental records management.Internal Audit External Audit

Our EHS Supervision Department implements hierarchi- All subsidiaries and production bases which have been

cal control over our subsidiaries and production bases. At certified under the ISO management system and within

least once every two years the Department conducts the validity period hire independent third-party certifica-

comprehensive on-site EHS audits. Based on the issues tion bodies to conduct system supervision audits annual-

identified during the audit the severity is assessed ly and undergo recertification audits every three years.corresponding corrective measures and deadlines are

proposed and the improvement progress of each enter- Subsidiaries and production bases involved in interna-

prise is continuously monitored. tional business regularly undergo international external

Our production-oriented enterprises hold company-level audits from partners such as Merck. Furthermore we con-

EHS meetings at least once a month where they learn tinuously compare against international high standards

about new EHS laws and regulations. They conduct train- conduct inspections and make improvements to ensure

ing specifically targeting key areas and ensure the imple- that all business operations fully comply with internation-

mentation of relevant requirements. al norms and requirements.The EHS Supervision Department has established a com-

prehensive EHS assessment system setting assessment

indicators for our production-oriented subsidiary enter-

prises and incorporating them into their performance

48 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

1.2 AWARDS & HONORS

We have implemented a green manufacturing strategy by using an advanced GMP (Good Manufacturing Practice) quality manage-

ment system as our cornerstone and integrating an environmental management system on this basis. This not only combines the

requirements of environmental energy occupational health and safety and risk standards but also gradually establishes a mutu-

ally complementary and compatible integrated management system. This move has strongly promoted the transformation and

upgrading of our company making us more environmentally friendly and sustainable. We continue to carry out the acquisition of

ISO 14001 environmental management system certification and actively promote our subsidiaries to environmental management

system certifications simultaneously. We have passed audits by the China Quality Certification Center for consecutive years and

obtained environmental management system certification. As of now 50% of our production-oriented enterprises have obtained

ISO 14001 environmental management system certification. Additionally we attach importance to green development encourage

our subsidiaries to boldly innovate and breakthrough in environmental protection technologies. Our outcomes have been recog-

nized by the industry and we have won multiple honors and awards.ISO 14001 Environment Management Environment Award and Certification

System Certification

1.3 EMERGENCY RESPONSE PLAN FOR ENVIRONMENTAL INCIDENTSWe strictly adhere to relevant laws and regulations such as the“Emergency Management of Environmental Emergencies“ the“Measures for Record Management of Emergency Plans forEnvironmental Emergencies in Enterprises and Institutions (for TrialImplementation)” the“Safety Production Law” and the“Regulations on the Safety Management of Hazardous Chemicals”. We

have formulated a series of environmental safety management systems including the "Emergency Plan for Environmental Inci-

dents" "Environmental Accident Management System" "Dangerous Goods Management System" and "Hazard Source Identifica-

tion Risk Assessment and Risk Control Management System". To effectively prevent and handle environmental incidents we

regularly conduct environmental risk assessments identify and rectify potential environmental risks and hazards. Additionally

we continuously improve our measures for preventing and controlling environmental incidents and dynamically adjust our plans

based on actual situations. During the reporting period we have successfully organized various types of environmental emergen-

cy drills to enhance our emergency response capabilities.Environmental Emergency Drill Cases

We place great importance on environ-

ment protection continuously increas-

ing our efforts in developing environ-

mental projects. Apart from investing

in environmental projects purchasing

environmental equipment and opti-

mizing environmental processes and

procedures we also focus on talent

development. We conduct targeted

environmental training for employees

at different levels allowing them to

understand environmental regulations

from multiple perspectives raise their

environmental protection awareness

and learn the latest environmental

technologies to improve their opera-

tional skills.Flood prevention emergency drill

49 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

02 ADDRESS CLIMATE CHANGE

We actively respond to the carbon peaking and carbon neutrality goals analyzing the risks and opportunities brought by climate

change to our own developments and formulating effective response measures. We actively conduct climate change manage-

ment to reduce greenhouse gas emissions and enhance climate change response capabilities.During the reporting period our Company and subsidiaries referenced TCFD recommendations to comprehensively assess the

climate risks and opportunities we face and formulated and deployed specific plans to address climate change and reduce green-

house gas emissions.

2.1 CLIMATE RISK STRATEGY

We establish a management system led by According to the categorization of

our Board of Directors coordinated by the climate risks and opportunities by TCFD

Governance ESG committee executed by the ESG work- Strategy we identify applicable climate risk items

ing group and various functional and busi- and opportunities based on our busi-

ness departments to comprehensively pro- ness sectors.mote climate change-related affairs.Risk Management: we identify screen and

evaluate climate risks from physical and tran- We actively explore the economic Risk

Management sitional dimensions formulate countermea-

Metrics & opportunities and challenges that

sures have the content reviewed by our Targets climate change may bring to our Com-

Board of Directors and develop additional pany in response to China's 2060

measures as needed. carbon neutrality commitment.

2.2 CLIMATE CHANGE RISKS AND OPPORTUNITIES

In order to accurately identify the multidimensional impacts of climate change on our Company and formulate comprehensive

risk response and business opportunity strategies we adopt the disclosure methods and recommendations of TCFD to conduct

in-depth analysis of the climate change-related risks and opportunities faced by our Company.Climate Change and Risk

Climate Change and Risk Identification

Types Descriptions Potential Impacts

Policy and Legal Risks Energy pressure Reduced production due to local government's power restrictions may lead to income loss.Transition Technology Risk Increased environmental standards Tighter government policies may require the Company to improve production processes to comply with the law.Risks Mandatory information Mandatory disclosure of climate-related financial information by Reputation Risk regulators lack of historical data and precise accounting methods disclosure by regulations affecting the quality of disclosure.Stricter emission reduction policies by the government may require the

Market Risk Energy transition policy Company to use green energy to replace existing high-emission energy

sources increasing energy-saving costs.Earthquake Increased earthquake frequency may cause casualties property or equipment damage and direct losses.Increased frequency of flooding may result in business closures due to

Acute Risk Floods damage to property or equipment and employees may be unable to

report to work resulting in direct loss of income.An increase in the frequency of typhoons may lead to production

Physical Typhoons shutdowns due to damage to property or equipment and employees may be unable to go to work directly leading to loss of income.Risks Sea level rise Rising sea levels can directly pose hydrological risks causing production shutdowns and reduced income.Chronic Risk

Employees may be unable to work due to extreme heat leading to

Temperature Rise heatstroke heat exhaustion or other health issues resulting in increased

operating costs; production machinery may face overheating issues

shortening their lifespan. All these situations may lead to income loss.

50 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Climate Risk Response Measures

Policy and Legal Risks Properly arrange production plans such as staggering production schedules; optimize process flows to reduce electricity consumption

Technology Risks Establish a relevant policy tracking team to monitor and follow up on the latest environmental policies of local governments avoiding fines or increased operating costs due to delayed adjustments to company policies

Reputation Risks Assign dedicated personnel or commission third parties to monitor the latest disclosure guidelines of regu-

latory authorities to ensure the accuracy and effectiveness of information disclosure

Market Risks Increase the proportion of externally purchased green energy and expand the construction of renewable

energy systems

Acute Risks Develop and implement emergency plans for extreme weather events and conduct regular drills for such

events

Chronic Risks Avoid locating facilities in low-lying areas as much as possible during expansion; reduce the use of high-en-ergy-consuming equipment

Based on a thorough understanding of climate change risks and opportunities we have developed a comprehensive climate

change risk response strategy and are firmly advancing related measures to minimize the impact of climate change on our Com-

pany operations to the greatest extent possible. At the same time we are keenly capturing the potential opportunities brought by

climate change ensuring that while actively addressing challenges we can also accurately grasp the pulse of development to

create greater value for the Company.Climate Change and Opportunities

Identification Of Climate Change and Opportunities

Opportunities Response measures

Research and develop-

ment of new processes Optimizing chemical processes to improve resource efficiency reduce operational costs Resource efficiency Use of new technolo- and enhance our reputation.gies

Energy sources Use of new technologies Reducing energy expenditure to support the carbon peaking and carbon neutrality goal.Products and Based on customer strategies and needs formulate environmental management strate-Adaptation to

services gies to enhance competitive advantage; providing green products and services. That customer preferences makes it easier to gain customer recognition for low-carbon operations.

51 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

03 CARBON MANAGEMENT

Greenhouse Gas Emission Management

We have long been focusing on the inventory and review of greenhouse gas emissions. In order to further enhance the manage-

ment level of greenhouse gas emissions we plan to use the total greenhouse gas emissions of 243.3 million tons in 2021 as a base-

line and set greenhouse gas emission management goals. While we are experiencing rapid growth we aims to gradually reduce

the growth rate of greenhouse gas emissions and ultimately achieve a peak in carbon emissions between 2025 and 2030. During

this reporting period the greenhouse gas emission intensity was 1.71 tons of CO2 equivalent per 10000 CNY of revenue.Our direct carbon emissions (Scope 1) mainly come from fixed emission sources (such as natural gas coal etc.) mobile emission

sources (such as company-owned vehicles etc.) and emissions from other production auxiliary facilities. Indirect carbon emis-

sions (Scope 2) mainly come from purchased electricity steam etc.Through calculations direct carbon emissions account for 82.37% of the total emissions (Scope 1 and Scope 2) with carbon emis-

sions from coal consumption accounting for 95.01% of direct emissions. Therefore our carbon reduction measures will mainly

target the coal consumption in Scope 1.Environmental Management in 2023

Emission scope GHG Emissions in 2023

GHG emissions (Scope 1) 2190590.17 tonnes of CO2 equivalent

GHG emissions (Scope 2) 468869.75 tonnes of CO2 equivalent

Total Emission 2659459.92 tonnes of CO2 equivalent

GHG emissions intensity (Scope 1) 1.02 tonnes of CO2 equivalent / 10000 CNY revenue

GHG emissions intensity (Scope 2) 0.22 tonnes of CO2 equivalent / 10000 CNY revenue

Total GHG emissions intensity 1.24 tonnes of CO2 equivalent / 10000 CNY revenue

Special Events

We are actively responding to the national

policy of "carbon peaking and carbon neutrality

goals" and prioritizing carbon emission manage-

ment. To understand our own carbon emission

situation and formulate a carbon emission

policy that is more suitable for sustainable

development we held a kickoff meeting of the

Greenhouse Gas Carbon Footprint Verification

and Working Group Establishment on December

42023.

Kick-off Meeting of The Greenhouse Gas

Carbon Footprint Verification Working Group

52 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

04 RESOURCE MANAGEMENT

4.1 ENERGY MANAGEMENT SYSTEM

We have always adhered to the concept of green development and are committed to promoting the sustainable development of

the energy industry. We strictly abide by the "Energy Conservation Law" "Renewable Energy Law" and other relevant laws and

regulations and formulate internal regulations such as "Energy Management Measures" "Energy Conservation and Emission

Reduction Management Trial Measures" and constantly optimize and improve the energy management system to achieve upgrad-

ed corporate energy usage.In 2023 our total energy consumption was 9383172.31 MWh with an energy consumption intensity of 4.37 MWh/10000 CNY of

revenue.Electricity Saving

GUANGXI KELUN HUNAN KELUN JIANGXI KELUN

photovoltaic power generation photovoltaic power generation photovoltaic power generation

Installed capacity 3.84 MW， Installed capacity 2.65 mega- Phase I installed capacity is 1.00 MWelectricity generation 2679.10 watts，electricity generation electricity generation 906.02 MWh inMWh in 2023 1868.30 MWh in 2023. 2023. Phase II 1.8 MWhas been

installed and will be connected ot

the grid.Xindu Base New Kaiyuan air

high-efficiency refrigeration unit conditioning cold energy recovery

Double-tier energy efficient Fresh air tratment section with ener-

magnetic levitation refrigeration gy-saving heat pipes. Annual saving 2.14

unit and centrifugal chiller annual thousand KWh

power saving 1124 thousand KWh

Natural gas saving

GUIZHOU KELUN Kunming Nanjiang thermal

new type boiler compression distillation water machine

low-nitrogen gas boiler reducing the Added 15T thermal compression

frequency of large fire adjustment distillation water machine expected

frequency，saving natural gas energy by annual natural gas energy savings of

297000 cubic meters per year 393621 cubic meters

We post slogans on saving water saving electricity and rational use of air conditioners and lighting equipment in the office to

guide employees to enhance their awareness of danger responsibility and environmental protection and create a good atmo-

sphere for energy conservation and environmental protection.

53 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

4.2 WATER RESOURCE MANAGEMENT

KELUN PHARMA is aware of the significance of water resources protection and takes concrete actions to promote the scientific

utilization of water resources. We strictly abide by the "Water Law of the People’s Republic of China" and other relevant laws and

regulations and comprehensively implement measures such as water conservation and wastewater reuse across our research

and development production and supply chain operations to progressively reduce water consumption and maximize the

efficient utilization of water resources.In 2023 the total amount of fresh water used by KELUN PHARMA was 16052556.46 tons and the total amount of reclaimed

water reused was 11969173.00 tons and the water resource reuse rate reached 74.56%.Water resource reuse management

Develop wastewater Strengthen reclaimed Strengthen company

reuse technologies water management water management

Reverse osmosis concentration MVR A circulating water supply system to cool Complete the water quota system and

technology and ceramic membrane water for production equipment and strengthen water assessment; strengthen the

technology to realize wastewater high-temperature resin is used to soften maintenance of water supply water pipelines

recovery and reuse and recover steam condensed water and facilities to prevent leaks and leaks.QINGSHAN LIKANG: YUEYANG BRANCH:

Steam Condensate Recovery and Use Project Steam Condensate Recovery and Use Project

CHUANNING BIOTECH:

Water Reuse BOT Project

54 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

4.3 RAW MATERIALS AND PACKAGING MANAGEMENT

We have implemented environment-friendly policies to reduce resource consumption and pollutant emissions from the source.We give priority to materials that are easily recyclable and reusable to improve the sustainable utilization efficiency of resources

and to reduce negative impacts on the environment.We also strive for excellence in pharmaceutical packaging materials and independently developed the fourth-generation infusionpackaging container - Collapsible PP Bottle (Uniflex). Moreover we uphold our credo“ Pursue Truth in Science and Kindness inEthics” and made the self-developed outcome public with an open and inclusive mindset aiming to benefit human being. Now-

adays the collapsible PP bottle becomes a commonly used infusion packaging material and container. Its material is made of

medical polypropylene pellets modified through a special process. It is non-toxic odorless has good chemical stability corrosion

resistance and drug resistance. It has the advantages of liquid immersion and other advantages. It is pharmacologically safer than

other plastic materials and is suitable for transportation and storage. The decomposed products after incineration of waste bags

are non-toxic completely avoiding the pollution and harm of medical waste to the environment and it is an environmentally

friendly product. This product has won the National Science and Technology Advancement Award and multiple national patents

and is the latest technological achievement in the infusion industry.Illustrations of Collapsible PP Bottle (Uniflex)

and Award Certification

55 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

05 POLLUTION PREVENTION AND CONTROL

We continue to commit integrating the concepts of environ- mental risk factors existing in the entire production process

mental protection green low-carbon and sustainable devel- conduct risk assessments formulate control measures and

opment into the entire production and operation process of ultimately achieve the purpose of reducing EHS risks.our company and have always strictly abided by the Envi-

ronmental Protection Law the Law on the Prevention and In 2023 we had no general or above environmental pollution

Control of Environmental Pollution by Solid Waste and the incidents and each subsidiary unit had no violations or major

Prevention and Control of Air Pollution Law Water Pollution defects during inspections by environment-protection-related

Prevention and Control Law Pollution Discharge Permit government departments. The environmental pollutants

Management Regulations and other relevant laws and regu- during our pharmaceutical production process mainly include

lations. At the same time based on the current situation we sewage boiler exhaust gas VOCs dust noise hazardous

issued the "Environmental Hazard Factor Identification and waste etc. all of which meet the emission standards or han-

Control System" to help enterprises identify major environ- dling requirements after effective treatment.

5.1 EXHAUST GAS MANAGEMENT

We actively responded to the national "Action Plan for In-depth Fight to Eliminate Heavy Pollution Weather Prevent and Control

Ozone Pollution and Control Pollution from Diesel Trucks" and formulated the "Exhaust Gas Treatment System Management Reg-

ulations" based on the Company's actual situation.The regulations guided our company along the production process and

reduced the unorganized waste gas emissions.In response to VOCs particulate matter and other pollutants generated in the production process we have formulated the "Vola-

tile Organic Compounds (VOCs) Management Account Development Guide" which is achieved through the comprehensive use of

cryogenic recovery activated carbon adsorption molecular sieve adsorption concentration high-temperature oxidation combus-

tion and other technologies. Process waste gas emissions meet the standards further improving the level of comprehensive VOCs

management. At the same time we continue to improve VOCs monitoring and control facilities perform regular self-examination

and self-correction and achieve independent waste gas emission reduction.By scientifically and rationally classifying and

collecting exhaust gases from the source and using

safe and effective pre-cooling cryogenic and other

combined processes Xindi Biopharma has effective-

ly promoted the emission reduction of VOCs and

improved the technical level of sustained low-car-

bon emissions. Among them VOCs emission concen-

tration is reduced by about 30% and VOCs emission

volume is reduced by about 25%.XINDI BIOPHARAMA Exhaust Gas Control

and Upgrading Project

Chuan Ning Biotech effectively controls VOCs and

odorous gases through the technology of "negative

pressure closed collection + pretreatment + molecu-

lar sieve adsorption and concentration + hydropho-

bic activated carbon adsorption + high temperature

oxidation combustion" with a removal rate of great-

er than 95%.CHUANNING BIOTECH Production Process Exhaust

Gas Treatment Equipment

56 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

5.2 WASTEWATER MANAGEMENT

We have formulated documents such as the "Wastewater Treatment System Management Regulations" and "Wastewater Treat-

ment Management Manual" as the general guideline for wastewater management which require each of our affiliated production

companies to compile a standardized management system based on their own actual conditions to ensure the stable operation of

wastewater treatment facilities. Wastewater discharge meets standards and we continue to improve the quality of wastewater

effluent actively increase the proportion of wastewater reuse and increase the reuse rate of water resources.Chuanning Biotech first employs membrane treatment technolo-

gy to pretreat the wastewater of different qualities in workshops

and then sends it to the biochemical treatment system for anaer-

obic treatment converting the organic matter into methane.This methane is used as a clean fuel to enter the boiler for com-

bustion generating electricity and steam realizing the green

recycling of waste. The wastewater treatment utilizes the "sub-

traction emission" theory and adopts an internationally leading

integrated treatment system namely biochemical + MVR (me-

chanical vapor recompression) / DT (special membrane) +

advanced treatment technology to minimize the discharge of

production wastewater into the environment conserving water

resources and reducing the total emissions of pollutants such as

chemical oxygen demand (COD) ammonia nitrogen and salt.CHUANNING BIOTECH MVR Evaporation System The integrated system is at the leading level in the domestic anti-biotic raw material industry. The treated water can be used as

industrial water mainly for replenishing water in the production

circulating cooling system and water intake for power plant

boilers and production water preparation. For the small amount

of wastewater discharged the COD level is less than 20 mg/l

only 40% of the special discharge limit standard as per the

Discharge Standards for Water Pollutants for Pharmaceutical

Industry ? Fermentation Productions Category (GB21903-2008) .The main construction content of this project is to add a hydroly-

sis acidification and contact oxidation tank which will be used in

parallel with the primary treatment tank; to build a pretreatment

facility for penicillin and cephalosporin wastewater; to cancel

the pretreatment process of comprehensive preparation waste-

water; and finally form a "pretreatment + hydrolysis and acidifi-

cation" + contact oxidation" treatment process.YUEYANG BRANCH Sewage Expansion Project

57 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

5.3 WASTE MANAGEMENT

We strictly abide by the "Law of the People's Republic of China on the Prevention and Control of Environmental Pollution by SolidWaste" and other relevant regulations and have established "Solid Waste Management Regulations“ and other systems throughthe entire process from the early site selection mid-term construction and later use of solid waste prevention and control facili-

ties to solid waste identification and collection transfer and storage resource utilization reduction and treatment we standard-

ize the management of each subsidiary (branch) company. We continue to promote waste reduction resource utilization and

harmlessness through many effective measures such as improving production processes optimizing product structure and carry-

ing out cleaner production thereby ensuring the efficient implementation of waste emission reduction work.

5.4 NOISE MANAGEMENT

We have formulated the "Environmental Noise Management Measures" in accordance with the requirements of the "Noise Pollu-

tion Prevention and Control Law" and other regulations to guide the base in equipment selection and installation and noise con-

trol during the production process.When purchasing equipment we choose low-noise equipment as much as possible while ensuring that the equipment functions

meet normal production needs; when installing the equipment we adopt noise reduction measures such as vibration reduction

noise reduction and sound insulation; and installs silencers for all strong noise sources. ; Properly arrange comprehensive mea-

sures such as noise facilities at factory boundaries to reduce the impact of noise generated in the production process on the out-

side world.All our production enterprises of conduct factory boundary noise testing in accordance with national regulations to ensure that

daytime/nighttime noise meets the requirements of the "Environmental Noise Emission Standard for Industrial Enterprises at Fac-

tory Boundaries".Case: Noise Control in U-line Packaging Area of Xindu Base

Pre-treatment Post-treatment

06 BIODIVERSITY PROTECTION

We attach great importance to biodiversity protection and animal welfare strictly abide by relevant laws regulations and interna-

tional conventions such as the Forest Law Wildlife Protection Law and the United Nations Convention on Biological Diversity and

adhere to relevant measures to promote biodiversity protection. We are well aware that animal experiments are an essential part

of medical research. Our company and subsidiaries (branch companies) strictly abide by relevant animal experiment regulations

and requirements when conducting animal experiments and have formulated the "Procedures for the Development of Humane

Endpoints for Laboratory Animals" and "Contrast Reference Materials". and Management of Test Substances" "Accuracy Control of

Animal Administration" "General Principles of Administration of Experimental Animals" "Regulations on Administration Dosage

Administration Routes and Blood Collection Amounts for Experimental Animals" and other internal policies to minimize the risk

of experimentation. Animal suffering during experiments. We always adhere to the rational development and utilization of biolog-

ical resources on the basis of effective protection of biological diversity to ensure the healthy and orderly development of the

pharmaceutical industry.

58 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

05 We have established a fair and transparent employ-ment system emphasizing an equal and diversified talent structure. We provide employees with abun-dant training opportunities and continue to develop

high-level and versatile talents through systematic

courses and projects internally.ATTRACT AND At the same time we strictly adhere to occupational

health and safety standards and create safe and

EMPLOY TALENTS comfortable working environment for our employees.We are committed to ensuring the physical and

ADHERE TO SHARED mental health of every employee achieving common

GROWTH development of our company and individuals and sharing the achievements of enterprise development.

0 1 EMPLOYMENT

0 2 COMPENSATION AND BENEFITS

0 3 TRAINING AND DEVELOPMENT

0 4 OCCUPATIONAL HEALTH AND SAFETY

59 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

01 EMPLOYMENT

1.1 COMPLIANT RECRUITMENT & EMPLOYMENT

We insist on respecting and caring for our employees strict- mechanism to ensure that all applicants have equal

ly adhering to a series of laws and regulations including but employment opportunities.not limited to the Labor Law of the People's Republic of

China the Labor Contract Law of the People's Republic of We have also launched the "Employee Diversification and

China the Special Provisions on the Labor Protection of Labor Employment System" which applies to all employees

Female Workers the Trade Union Law of the People's of our company's headquarters and subsidiaries (including

Republic of China the Law on the Protection of Minors of the overseas bases) covering full-time employees part-time

People's Republic of China the Prohibition of the Use of employees interns and any other form of employees. This

Child Labor and practicing compliant recruitment and equal system clearly prohibits the employment of child labor

employment. In addition we comply with the United firmly opposes forced labor protects employee diversity

Nations Global Impact ILO core conventions and other and guarantees the full realization of their legitimate rights

human rights protection requirements demonstrating our and interests in compensation fairness work safety career

commitment to global social responsibility and human development and democratic engagement. These two

rights protection. systems as important components of our Company's ESG

practice not only demonstrate our firm commitment toWe have established the“ Recruitment and Onboarding social responsibility but also reflect our concrete commit-Management System” which is applicable to the recruit- ment to building a people-oriented and harmonious corpo-

ment of full-time part-time and intern employees. The rate culture.system aims to build a transparent and fair recruitment

As of the end of December 2023 the total number of our employees was 19798 (including full-time

employees and interns).

0.80%5.96%

45.84%1591179

9075

Employee Employee

Gender 2 7 . 4 7 %Educational 5 4 3 9

Structure

6 5 . 7 7 % structure

13021

54.16%

10723

Male Female PhD Master Bachelor Others

8%5.80%1.76%

15841148349

10.70%

22.10%29.71%2118

4 3 7 6 Employee 5 8 8 2 Employee

Age Position

Structure 5 6 . 3 9 % Structure 2 5 . 3 5 %5 0 1 8

11165

40.19%

7956

Under 30 30-39 Administrative staff Financial staff Sales staff

40-49 50 Technical staff Production staff

Note: Technical staff includes R&D Quality EHS IT.

60 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Summary of Employee Diversification and Labour Employment System

During our recruitment interview process the age of candidates is strictly reviewed. Recruitment of minors under

the age of sixteen is prohibited. Our headquarter periodically or non-periodically check the employee roster of

subsidiaries (branches) to ensure effective implementation of relevant regulations.We adhere to reasonable and legal employment distribution according to work and equal pay for equal work.When making decisions related to human resources such as promotion performance renumeration benefits and

training our management treats employees from different backgrounds equally eliminates any form of discrimi-

nation prejudice harassment or illegal discrimination and strives to create a simple and friendly working atmo-

sphere for employees.We are committed to creating a diverse equal and inclusive workplace environment for employees respecting

their diversity and differentiation. We protect employees from the influence of diverse identities reject all biased

and illegal discriminatory behaviors and provide diverse employee services as much as possible.We respect the rights and dignity of all individuals and strictly controls potential risks related to human rights

violations.We encourage employees to provide feedback on violations of this system through relevant channels. If employ-

ees discover violations of this system they can provide feedback to the Human Resources Department or Internal

Audit Department of the headquarters. We will carefully investigate and synchronize the investigation progress

with the feedback person. We promise to keep the feedback person's information confidential.We firmly oppose forced labor and take appropriate safety measures to ensure the safety of the working environ-

ment for all employees. All employees have the responsibility to report potential unsafe factors in their workplace.We hold a zero-tolerance attitude towards any form of harassment intimidation and bullying in the workplace

and any external work-related environment and take serious actions against those who engage in harassment

behavior. We adhere to the principle of gender equality severely fights sexual harassment and other malicious

behaviors protect the rights and interests of employees and ensure gender equality.

1.2 Diversification and Equal Opportunities

Diversified Employment Diversified Training

The "Employee Diversity and Labor Employment System" We actively build an inclusive corporate culture. With the

clearly stipulates that the recruitment process should ensure support of relevant departments we organize specialized

fairness and impartiality build a diversified standardized and training on "Diversity and Labor Employment" that covers all

transparent recruitment process adopt multi-channel recruit- employees at least once a year.ment such as social recruitment campus recruitment internal

recommendation and headhunting recommendation receive In April 2024 we conducted a special training on "Diversity

resumes from online and offline submissions attract diverse and Labor Employment" for all employees including diversi-

talents of different nationalities races genders and social fied identity recognition talent recruitment the establish-

experiences. and lay a solid foundation for the long-term ment of a culture of diversity inclusiveness and equality in

development of our talent team. In addition we firmly imple- talent development and training as well as channels for feed-

ment a zero-tolerance policy and adopt an uncompromising back. This training helps to protect the diverse identities of

attitude towards any form of harassment intimidation or employees standardize labor employment and enable every

bullying. Once such misconduct is discovered we will imme- employee to gain a sense of belonging respect and impor-

diately initiate a rigorous and impartial investigation proce- tance.dure and severely punish individuals confirmed to have

engaged in harassment in accordance with the law and regula-

tions. We actively practice the concept of gender equality with

a particular emphasis on eliminating all forms of sexual

harassment within the organization. In order to effectively

protect the rights and dignity of every employee we have

established a strong mechanism aimed at efficiently prevent-

ing quickly responding and severely dealing with violations

of employee rights such as sexual harassment. Therefore we

can build a safe respectful and inclusive work environment

and fully realize the commitment to gender equality.

61 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Feedback Channels

We adhere to the principle of "transparent communication and continuous improvement" and have opened diversified

employee feedback channels. We encourage all employees to actively provide feedback on any behavior that may

violate the "Employee Diversity and Labor Employment System" through various formal channels including telephone

hotlines dedicated email addresses and written letters. The Human Resources Department or Internal Audit Depart-

ment of the Company headquarters promises to respond quickly within 24 hours of receiving feedback and ensure

timely sharing of investigation progress and handling plans to employees who provide feedback fully respecting their

right to know.At the same time in order to protect the legitimate rights and interests of all feedback recipients we strictly follow the

confidentiality agreement and promises to implement strict confidentiality measures for the personal information and

feedback content provided by feedback recipients in order to create a safe fair and trustworthy working environment.During the reporting period all recruitment information released by our Company (including overseas regions) did not contain

any discriminatory content related to ethnicity race gender religious beliefs etc. and no employment discrimination occurred.There have also been no incidents of child labor forced labor human rights violations or related legal disputes.Number of Female Employees Employee Ethnicities

Full-time female employees Female grassroots managers

Female intermediate managers Female senior managers

Newly hired female employees (Join for less than or equal to one year) Han Minorities Other

number人数

1000020000

90751800017586900016574

8375

800016000

700014000

600012000

500010000

40008000

30006000

20004000147314511606

1000753200015421883

15621613306329

00

202220232022年2023

注：2023年调整了分类标准：将中层管理人员又细分为中层管理人员、基层管理人员，故此处将 Note.:"Other" represents non-Chinese employees of overseas branches of

22年的909人拆分成了中层管理156人，基层管理753人。 KELUN PHARMA (204 male employees and 149 female employees).

62 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

1.3 Employer Honours

From 2021 to 2023 KELUN PHARMA and its subsidiaries have demonstrated unremitting efforts and outstanding results in build-

ing harmonious labor relations and have won over 20 enterprise labor relations honors and awards from national provincial mu-

nicipal and district governments and authoritative institutions. These honors fully confirm the continuous involvements and

significant achievements of KELUN PHARMA in employee rights protection labor relations management and corporate culture

construction.Partial honors of KELUN PHARMA and its subsidiaries (branches) 2021-2023

Company/Base Name Labour Award Received Level

HUBEI KELUN 2021 China Federation of Trade Unions "National Worker Pioneer" National

KELUN YUEYANG BRANCH 2023 Hunan Provincial Labor Dispute Gold Medal Mediation Organization Province

HENAN KELUN 2023 Henan Province Worker Pioneer Province

GUANGXI KELUN April 2021 Guangxi May Day Labor Medal Province

GUIZHOU KELUN 2022 Guizhou Province "Advanced Employee Home" Province

JIANGXI KELUN 2021-2023 exemplary organization of Public and Democratic Manage-ment of Factory Affairs in Jiangxi Province Province

SICHUAN KELUN 2022 Chengdu Model Labor Relations Harmonious Enterprise City

SICHUAN KELUN 2023 Chengdu Five-star Enterprise and Public Institution Trade Union City

SICHUAN KELUN 2023 Chengdu City Four Star Trade Union City

GUANGAN BRANCH 2023 Guang'an Gold Medal Labor Dispute Mediation Organization City

HUBEI KELUN 2023 Xiantao City Harmonious Labor Relations Demonstration Enterprise City

QINGSHAN LIKANG 2021-2023 Chengdu Five Star Labor Union City

QINGSHAN LIKANG 2022 Chengdu Model Labor Relations Harmonious Enterprise (5A) City

QIONGLAI BRANCH 2020-2022 Chengdu 5A Model Labor Relations Harmonious Enterprise City

SHANDONG KELUN 2021 Human Resources and Social Security Law Abiding Integrity A-level Unit City

SHANDONG KELUN 2022 Human Resources and Social Security Law Abiding and Honest A-level Unit City

NEW KAIYUAN 2020 Chengdu Factory Affairs Open Democratic Management Standard-ization Above C-level Standard Unit City

NEW KAIYUAN 2020-2022 Chengdu Model Labor Relations Harmonious Enterprise (2A) City

GUANGXI KELUN 2023 Guilin City "Healthy Enterprise" City

HENAN KELUN 2021 Anyang Worker Pioneer City

QINGSHAN LIKANG 2023 Chengdu Gaoxin District Factory Affairs Open Democratic Manage-ment Standardization Construction B-level Standard Unit Region

SICHUAN KELUN 2021 Demonstration Enterprise for Harmonious Labor Relations and Culture Region

63 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

02 RENUMERATION AND BENEFITS

2.1 RENUMBERATION AND PERFORMANCE

Renumeration Management

In order to fully leverage the incentive effect of salary and The floating salary is linked to employee performance eval-

benefits and maximize the motivation of employees we uation results strengthening incentives and forming a

have established a comprehensive compensation system healthy competitive mechanism within the Company.consisting of fixed and floating salaries. The formulated

"Compensation System" and various special salary and We conduct annual salary adjustments for employees based

bonus plans covers all employees. on changes in macroeconomic factors such as national poli-

cies and price levels changes in the Company's development

We have established a standardized and reasonable salary strategy and overall profitability. Our development interests

distribution mechanism based on the principles of "make are combined with the personal interests of employees fully

use of talents distribution according to work fairness in reflecting the motivating effect on employees.treatments and consideration of benefits". This combined

with the characteristics of production operation and man- We will regularly monitor employee compensation to

agement and taking into account the supply and demand ensure effective implementation of relevant policies. At the

situation of the labor market differences among employees same time a sound compensation appeal mechanism has

and our paying ability. We ensure that the salary level of been established and internal communication and appeal

employees is competitive compared with local peers and channels related to compensation have been opened to all

major domestic competitors in order to effectively attract employees. The scope of appeal includes compensation

retain and motivate talents and improve the competitive- benefits attendance performance evaluation and rewards

ness. We also ensure that male and female employees with and punishments. Specific appeal procedure is detailed in

the same job functions contributions and performance "Compensation Appeal".receive equal compensation in our Company. To fully reflect

the performance orientation based on job functions the

principle of remuneration based on contributions and per-

formance is adopted.Performance Management

In order to establish a performance-oriented culture and Employees extract and develop key performance evaluation

achieve continuous improvement of organizational and indi- indicators from the annual key work plan departmental

vidual performance through standardized and effective per- performance indicator decomposition core job responsibili-

formance management mechanisms and ensure the ties and other aspects to form a personal annual performance

achievement of the Company‘s strategic and operational plan table; The performance is reviewed and adjusted in agoals we have formulated the“ Employee Performance Man- quarterly or semi-annual manner with department headsagement Measures” and various specialized performance providing performance coaching during the process; At the

bonus assessment plans covering all employees. We also end of the year the assessment will be conducted through a

regularly organize employees to conduct performance eval- combination of performance self-evaluation and department

uations according to the agreed performance evaluation head review. For direct sales department of the headquarters

cycle (monthly/quarterly/semi-annual/annual). To fully mo- performance evaluations are conducted on a per unit basis for

bilize the work enthusiasm of employees in different sectors each business department and sets performance related and

diverse performance evaluation methods are set up. behavior related evaluation indicators.For non-sales departments at the headquarters we mainly

drive business development through the setting of KPIs.

64 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

2.2 EMPLOYEE CARE AND WELFARE

Employee Welfare

We provide employees with a competitive compensation We send "Caring and Blessing SMS" to employees on their

system including salaries bonuses subsidies benefits social anniversaries reflecting our care for the employees’ onboard-

insurance premiums housing provident fund commercial ing and expressing gratitude for their contributions to our

insurance etc. In 2023 we paid social security and housing company enhancing the employees’ sense of belonging and

fund to 19250 employees accounting for 97.23% of all honor.employees; For 548 employees who cannot be covered by

social security such as contract workers and interns employer For the employee group of overseas bases we adhere to the

liability insurance will be purchased uniformly. This group of concept of global operation fully respects and complies with

workers accounting for 2.77% of all employees. The purchase the local regulatory requirements of various countries and

of social insurance and employer liability insurance ensures hereby formulates and implements the "Regulations on the

100% insurance coverage for all employees achieving the Overseas Base Visits (Anti Visits) Management". In December

protection of their rights and interests. 2023 an exclusive welfare plan was formulated for employees

of overseas bases including purchasing commercial insur-

In order to practice the core values of corporate humanistic ance purchasing commercial insurance for their families con-

care and enhance employee sense of belonging and team ducting free medical examinations holiday condolences etc.cohesion we have formulated the "Guidelines for Welfare of KELUN PHARMA ensures that all employees regardless of their

Production Base Employees (Trial)" in accordance with the geographical location can enjoy the corresponding legal bene-

national legal and regulatory framework. The guideline fits and benefits of their workplace thereby realizing the effec-

includes paid annual leave sick leave marriage leave materni- tive protection and implementation of the rights and interests

ty leave funeral leave and personal leave aiming to compre- of every employee worldwide.hensively protect the right to rest of each employee.KELUN PHARMA BENEFITS LIST

Welfare Category Benefit Content Target Group

Five insurances and one fund (basic pension insurance basic medical

insurance unemployment insurance work-related injury insurance maternity

Statutory insurance and housing provident fund) All employees

Benefits Legal holidays and vacations

Paid annual leave

Festival cash gift;

Festival gifts;

Universal Birthday gifts;

Benefits All employeesFactory anniversary gifts;

Health examination

Marriage leave maternity leave Free lunch;

paternity leave breastfeeding leave Home leave;

Funeral leave； Love fund;

High temperature allowance Equity incentive scheme;

Education subsidy; Free dormitories.Transportation subsidy; Wedding Greetings;

Special Communication subsidy; Congratulations on childbirth;

Benefits Employees who Title subsidy; Comfort for illness; meet the conditions

Length of service subsidy; Comfort for work-related Injuries;

Expatriation subsidy; Funeral funds;

Travel subsidy; Retirement condolences;

One-time resettlement fee; Employer's liability insurance;

Paid tourism; Commercial insurance

65 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Employee Care

We firmly believe that employees are the most valuable asset of enterprise. Caring for and respecting every employee is an indis-

pensable cornerstone for building harmonious labor relations and achieving sustainable development of the enterprise.The Love Mutual Aid Foundation established by our company aims to help disadvantaged employees overcome difficulties. As of

the end of the reporting period we have provided over 12 million RMB in financial assistance to more than 1600 employees (fami-

lies). We well received heartfelt gratitude from the assisted employees.We highly value employee happiness and sense of belonging and advocate for a balance between work and life by establishing

employee activity centers gyms and libraries. We have held various series of sports competitions multiple times such as badmin-

ton basketball and table tennis; Organized various team building activities including masquerade dance Winter Solstice food

themed festival activities fun sport day Mid-Autumn Festival themed garden activities Chinese Valentines Day festival fellowship

activities etc; Establishing interest clubs such as table tennis club badminton club dance club board game club photography

club reading club basketball club yoga club billiards club etc. The colorful activities and clubs greatly enrich the lives of

employees creates a warm and harmonious work environment and atmosphere for employees and allows every employee to

truly feel the care from the Kelun family.Shandong Kelun "Reading Sharing Basketball Competition held in Employee yoga class

Conference" July 2023

June 2023“ Yingdayun” Basketball Tournament

66 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

We strictly implement the legal provisions of paid annual leave to provide employees with sufficient time to rest and relax. We have

formulated the "Regulations on Collective Paid Travel Leave for Employees" which organizes 5-day collective travel every two years

with all expenses borne by the Company. Through paid travel employees can relax both physically and mentally enhance team cohe-

sion and enjoy the beauty of life and work when surrounding by mountains and rivers. In addition subsidiaries located in ethnic

minority areas and overseas areas will consider the holiday customs of local ethnic groups and arrange employee holidays according to

production plans to celebrate ethnic festivals.Employee Team Building

We have formulated the "Employee Retirement Management Measures" for retirees which specify that in the month of retirement the

department or unit where the employee retires will organize a farewell party or formal retirement ceremony issue an "Honorary Retire-

ment Certificate" and provide a certain amount of retirement consolation money based on their rank length of service and contribu-

tions made to the Company during their tenure. Retirees will also be arranged for annual physical examinations and holiday consola-

tion after leaving their job so that they can still feel the warm care of the Company.Every summer we organize employees' children to participate in the "Little Kelun Employee" activity. Through on-site visits depart-

mental experiences scientific experiments medical knowledge learning and overseas returnees sharing they Fully feel the signifi-

cance of predecessors' work laying the foundation for the ideal of developing the industry and serving the country.

2023 "Little Kelun Employee" event

Labour Union Communication

We firmly abide by local laws and regulations and continuously improve the democratic management system within the enterprise. We

establish trade union organizations in accordance with legal norms such as the Constitution of the Chinese Trade Unions and the Trade

Union Law of the People’s Republic of China. the Company regularly convene employee representative conferences with representa-

tives including but not limited to frontline workers technical managers leading cadres party members Youth League members young

employees and female employees. This democratic mechanism has played a substantive role in resolving labor disputes implementing

labor protection supervision fulfilling labor legal supervision functions and protecting the legitimate rights and interests of female

employees effectively safeguarding the democratic rights of all employees in participating in the process of enterprise reform and

development.

67 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

2.3 DEMOCRATIC COMMUNICATION

Appeal Reporting Procedure

To safeguard the legitimate rights and interests of the Company and its employees timely detect and handle hidden problems ensure

effective communication between employees and the management improve employee work enthusiasm establish harmonious labor

relations enhance enterprise cohesion and improve employee satisfaction we have formulated the Employee Appeal System which

clarifies the scope of appeals channels and methods of appeals and procedures for handling them. Our headquarter and subsidiaries

(branches) have set up appeal handling committees respectively to conduct research and feedback on employee appeals.At the same time in order to encourage employees to actively provide suggestions for the development of the Company KELUN

FHARMA widely listen to valuable opinions and suggestions from employees on improving enterprise management improving work-

flow design and work quality strengthening team building and corporate culture construction addressing work conflicts adverse phe-

nomena and complaint handling and effectively help employees solve practical problems. A "General Manager's mailbox" is set up at

the headquarters and subsidiaries (branches) to ensure that employees have the opportunity to directly provide feedback to the Com-

pany's top leadership.the Company has established the“ Whistleblower Protection and Reward System” to encourage suppliers other partners and Kelun

employees to participate in the Company's integrity management supervision system. the Company encourages employees to actively

report violations such as corruption and job-related crimes while strengthening the protection of the whistleblowers.Remuneration Appeals Performance Appeals

We have opened remuneration related internal communication and Performance Communication and Feedback：

appeal channels to all employees including salary benefits atten- After each performance evaluation is completed the evaluator

dance performance evaluation and employee rewards and punish- should promptly provide feedback on the evaluation results to the

ments. evaluated employee which can be done through face-to-face com-

Any employee who has objections to their remuneration can submit munication or phone call so the evaluated employee can under-

an "Employee Appeal Form" to the appeal handler within 10 work- stand the Company's expectations and areas for improvement; At

ing days after the event occurs. The appeal handler shall investigate the same time the evaluated person can indicate the difficulties

and handle the appeal matter within 10 working days. If the appel- encountered in achieving performance goals and request guidance

lant is satisfied with the handling opinion the appeal can be termi- and assistance from their superiors. After sufficient communication

nated. If the appellant is not satisfied with the handling opinion and reaching an agreement both parties shall jointly fill out the

they can continue to appeal to the Director of Human Resources Performance Feedback Interview Record Form and sign for confir-

and the Deputy General Manager in charge level by level until the mation.final appeal handling result is determined. If the appellant of a

subsidiary (branch) company is still dissatisfied after being Performance Appeals:

processed step by step within the subsidiary (branch) company （1） If employees at the headquarters have significant objections

they can apply to the headquarters appeal handling committee for about the assessment results they should file a performance

processing. Complaint handling personnel at all levels strictly follow appeal to the Human Resources Department.the Company's complaint handling procedures and complaint

response requirements and taking the confidentiality concern （2） After receiving an employee's appeal the Human Resources

seriously. Department should provide a response within 3 working days on

whether to handle it; Appeals without objective factual basis and

based solely on subjective speculation will not be handled.

（3） After handling the appeal the first step is to investigate the

content of the appeal and communicate and coordinate with

relevant departments or personnel; For those that cannot be coor-

dinated report to the General Manager's Department for arbitra-

tion. After the decision is made by the General Manager's Depart-

ment the Human Resources Department is responsible for provid-

ing feedback on the appeal handling results to the appellant.In 2023 all remuneration related appeals of our company have been properly handled and the appellants have no objections.

68 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Employee Satisfaction and Dedication

At KELUN PHARMA we firmly believe that employees are the efficiency communication and feedback efficiency work

core driving force and valuable asset for enterprise develop- returns human resource mechanisms logistics support and

ment. In order to continuously optimize human resource other aspects of business management.management improve organizational efficiency and create

a harmonious and efficient work environment we attach We timely handle employee feedback formulate corre-

great importance to and continue to pay attention to the sponding improvement measures and plans continuously

dynamic changes in employee satisfaction and dedication. optimize and improve the Company's various management

In order to gain a deeper understanding of employee needs mechanisms thereby continuously strengthening employ-

improve the work environment enhance team cohesion and ees' sense of belonging and gathering consensus and joint

work efficiency the Company conducts a satisfaction and efforts of all members jointly promoting the stable develop-

dedication survey covering all employees (including subsid- ment and continuous progress of the Company.iaries) at the beginning of each year. Through this survey we

comprehensively grasp the ideological dynamics and psy- We conducted a satisfaction survey covering all employees

chological needs of employees understand their opinions in 2024 and the results showed that the satisfaction rate

and views on the Company's management processes lead- was over 95%.ership abilities work environment atmosphere work

69 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

03 TRAINING AND DEVELOPMENT

3.1 Training System

Following the three principles of“ strategic guidance”“ hierarchical training”

and“ consistent learning and application.”There is an old saying“ To establish a temple first plan for organizing various training courses seminars practicalthe pillars”. Similarly we are well aware that talent is the exercises training through meetings and all other forms of

most important element of the Company's development. In learning activities.order to build a solid foundation of human capital KELUN

PHARMA adheres to the Company's development strategy as In addition we actively advocate consistent benchmarking

the guide closely combines the talent needs carefully of internal and external learning concepts encourage

designs and implements a targeted and effective talent employees to participate in professional seminars and con-

training system. ferences in China and overseas. We invites industry experts

to give lectures and supports employees to go to external

Our company ensures that every employee has sufficient institutions for further education and learning striving to

opportunities for self-improvement and development by maximize the effectiveness of human resources.Our Education and Training Model

New Employee Development

Onboarding Expansion of

Training Base Internship Military Training On-job learning

General Training

Business Laws and

Security Reception Anticorruption Product Financial

Education Etiquette Training Knowledge

Regulations Knowledge ......Training Training Training Training

Professional Training

R&D System Production System Logistics System Marketing System

Training Approach

Internal Training External Dispatch External Hiring Benchmarking

Training Training Learning

KELUN PHARMA Corporate Culture Training

Our unique talent cultivation concept of“ training through meetings learn war in the battle field” has transformed the "cram-

ming" training model into an efficient exploratory training model of "thinking through problems and improving through practice".This transformation not only fully cultivates employees' exploratory thinking but also helps them establish a consistent learning

awareness and effectively improve their practical application abilities in work.We strictly adhere to the principle of“ where there is a training session there is a test” and use various methods such as on-site

questioning paper exams experiences summarizing and meeting sharing to test the effectiveness of training. We also use tutor-

ing and make-up exams to ensure the effectiveness of training.

70 KELUN PHARMA 2023 ESG REPORT

Window of KELUN PHARMA

E-learning Online Learning PlatformESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Implementing The Lifelong Concept of Online-Offline combined Learning

In implementing the educational philosophy of lifelong learning KELUN PHARMA has adopted a diversified training strategy that

combines both online and offline and both internal and external resources. By deeply integrating the application of the E-learning

online learning system a flexible and efficient dual line training model has been constructed. Since the full launch of the platform

in 2017 we have successfully covered online learning and training activities for 23000+ accounts and achieved digital and refined

management.So far the Company has been meticulously planning and executing over 3300 online training programs annually during which it

has accumulated rich educational resources. A total of 7382 online courses have been developed and launched covering new

employee onboarding guidance training medical information communication specialist comprehensive ability improvement

training security protection knowledge popularization online part of the internal trainer team training plan professional knowl-

edge deepening training for various positions compliance education training internal document interpretation training and

interactive live streaming teaching.At the same time in the field of offline training we have also achieved fruitful results organized more than 51000 face-to-face

training activities cumulatively. During this process KELUN PHARMA successfully integrated online and offline resources achiev-

ing a mixed and coordinated management of a series of links including training registration and check-in training process man-

agement training effect evaluation assessment and certification qualification acquisition and knowledge sharing. This effective-

ly improved the comprehensive and multi-level training system for quality management talents and all employees.Training expenditures

amounting to

4680500 Accumulated amount of employee training invested by KELUN CNY PHARMA in 2023

Total training hours In 2023 our company's senior management personnel completed

1282096.54 a total of 1032.16 training hours middle-level management per- Hours sonnel completed a total of 22877.85 training hours grass-roots

management personnel completed a total of 200496.65 training

hours and general personnel completed a total of 1485055.39

The total number of trainees training hours.

944551Persons

The total number of

employees trained

Training covers all employees of KELUN PHARMA

19798Persons

Per employee training time Among them male employees received 88.47 hours of training in

average and female employees received 83.83 hours of training in

64.76Hours average; The average training time for company management per-sonnel was 65.35 hours while the average training time for general

employees was 90 hours

71 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Building a Specialized Training Model for Competence Compounding

According to the three principles of "strategic guidance" workshop leaders through systematic theoretical knowl-

"hierarchical training" and "consistent learning and applica- edge training and on-site practical exercises.tion" as well as the compounding thinking model KELUN

PHARMA has developed special training programs for Provide employees with sufficient learning and empower-

employees including fresh graduates new employees high ment opportunities through different dimensions and

potential personnel and key position personnel. For middle forms promote the Company's talent development plan

and senior management personnel implement a company promote the construction of a high-quality talent team and

management learning activity mainly based on training contribute to the sustainable development of our company.through meetings supplemented by university training pro- To implement the grand quality concept of KELUN PHARMA

grams such as the International Pharmaceutical Engineering the Human Resources Department and the Quality Supervi-

Management (IPEM) education course and the Finance sion Center have jointly established a Kelun quality training

EMBA at the Tsinghua University Wudaokou School of system which includes modules such as a knowledge

Finance under the "Return from Hundred Battles for Further lecture hall for quality management personnel and a drug

Education" program; For general technical management vigilance training center. the Company continuously

personnel conduct job skills technical knowledge and improves the theoretical reserves and practical skills of each

basic management training through benchmarking (internal production base by building the online and offline quality

and external) learning knowledge competitions experimen- knowledge bases.tal platforms and building OPL training platforms; For front-

line employees carry out operating certification and job We have established an online platform called "Knowledge

skills training through practical operations micro courses Lecture Hall" to extract experiential knowledge and has

classroom lectures and other methods. At the same time a launched 22 professional themes such as statistical applica-

squad leader training camp is also established to improve tion data governance and technology transfer. The total

the professional technical knowledge product quality risk number of learners has exceeded 200000.control and grassroots personnel management skills of

Knowledge

Lecture Hall

hromatographic Data Workstation and

Chromatographic Data Management

Requirements CAPA Management Require-

ments Microbial Laboratory Data Manage-

ment etc.Benchmarking Drug Vigilance

Training Centre

l talent

s

benchmarking learning ica Sp

between bases within ch

n m eci M e d D R A c o d e P S U R a a writing quality manage-the group benchmarking

ing the q ment signal detection w it h peer compan ies hanc u

: En

ality o medical evaluation etc.within the industry such ce f

as Shisiyao

KELUN Quality

Training System

External he of

Dispatch Training thic k dth Quality Month ness and brea Activities

Spec nt

s

Knowledge Competition

International Pharmaceuti- ial t era l

q ining fo

r ta Skills Competition Debate

cal Engineering Manage- u C o m p e t i t i o n Q u a l i t y

ment ( IPEM) education ality core Improvement Theme

courses pharmaceutical

technology enhancement

series courses etc. External Hiring

Training

on-site inspection of GMP by the US FDA

t and EU analysis of solutions and defects fo in Chinese flight inspections training on r new knowledge of drug GMP etc m)

72 KELUN PHARMA 2023 ESG REPORT

Special training for te

Essen

talent

Offli

ne Training

g for system

rain

in

ent ta

lents

l t

age

m

n

ple

pe

o

ing

t

s

Incre

a

On al lin e Pe Tr li

n

ain ning O(E-learningESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

3.2 Employee Training

New Employee Onboard Training

In order to ensure that new employees can quickly adapt to the environment and efficiently fulfill their job responsibilities

KELUN PHARMA implements a comprehensive coverage policy in new employee training requiring a 100% participation rate in

new employee training to help them deeply understand the Company's development history core values and management poli-

cies and behavioral requirements that need to be followed in daily operations.New Employee

Training Module

Product

Company Knowledge

History

Corporate Work

Culture Knowledge

Daily

Management

Job Development Training System

We firmly believe that implementing job specific training can not only improve individual employee skills and work efficiency but

also ensure that the Company maintains a competitive advantage in the rapidly changing market environment. We have designed

rich and targeted training courses based on the specific requirements and future development needs of each position. For exam-

ple in the field of marketing we have carefully organized business reception etiquette training courses to enhance the profession-

al image and service ability of employees in external communication and demonstrate the value connotation of the Kelun brand;

In the field of quality control we have held seven themed seminars on the Kelun "New GMP Guidelines · Summit Forum" to

deeply analyze and discuss the core value and application of the new version of GMP (Good Manufacturing Practice) in order to

ensure that product quality management keeps pace with the times and reaches the international advanced level thereby safe-

guarding the safety and health of public medication; In the production and operation sector we have launched an international

high potential talent special training camp project aiming to select and cultivate senior talents with a global perspective and pro-

fessional skills and help Kelun achieve modernization and internationalization in production and manufacturing. We also spare

no effort in promoting corporate culture construction and training. Through systematic educational and training activities we

deeply imprint Kelun's corporate values and social responsibility in every employee’s mind jointly shaping a team that combines

professional skills and noble character and laying a solid talent foundation for Kelun's sustainable development.At the same time through a combination of online and offline teaching modes together with various teaching methods such as

theoretical teaching practical exercises simulation operations and mentor guidance we ensure that employees can fully grasp

and proficiently apply them to practical work continuously broaden their horizons and enhance industry competitiveness. By

regularly evaluating the effectiveness of training and making dynamic adjustments we continuously optimize the job specific

training system ensuring that it always aligns with the Company's strategic goals and industrial development trends thereby

effectively driving the common growth of the enterprise and employees and laying a solid talent foundation for achieving sus-

tainable and excellent performance.Business reception etiquette training

To order to shape a more professional image improve the com-

prehensive quality and reception level of employees our

human resources department has organized the 2023 Business

Reception Etiquette Training. This training focused on "respect

etiquette and morality follow the rules and behave properly"

requiring trainees to demonstrate the "motivated energetic

and vigorous" Kelun style and achieve the goal of "reception

creates productivity".

73 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Internal Job Transfer and Return Training

To ensure that employees smoothly transit and efficiently integrate into their new job positions during the process of job transfer

and return we attach great importance to and implements job transfer and returning to work training programs.In terms of job transfer training we customize training content according to the professional skill requirements of employees who

are about to transfer to their new positions. The training covers various aspects such as professional knowledge operational

skills team collaboration skills and industry regulations. We invite industry experts and senior internal mentors to give lectures

and adopt a blended learning approach combining online courses offline practical training case studies and other teaching

methods to ensure that employees can quickly learn the core skills required for new positions thereby improving their job com-

petency.In terms of returning to work training the Company has formulated the "Regulations on Returning to Work Management". We fully

consider the knowledge update skill recovery and other steps employees may need to go through after long-term leave and pro-

vide them with systematic returning to work training. The training content includes reviewing the operating standards of the origi-

nal position understanding the latest industry standards and regulations as well as providing soft skills training for personal

development and team collaboration. We encourage employees to share their experience of returning to work improve through

interactive discussions and reflection help them readjust to the work pace ensure that they can quickly regain their status after

returning to their positions and contribute to the stable operation and sustainable development of the Company.Thematic Training

We are well aware of the importance of updating employee professional skills and knowledge and pay special attention to and

vigorously promote the implementation of specialized employee training programs. We have planned a series of targeted special-

ized training courses based on industry development trends corporate strategic needs and employee career development paths.In the special training we covered many key areas including but not limited to human rights protection and diversification

anti-corruption and anti-fraud information security EHS quality control intellectual property right and other topics. These

training programs aim to comprehensively improve the professional competence of employees in specific fields and enhance

their profound understanding and practical ability for the sustainable development of our company.The KELUN PHARMA“ New GMP Guidelines - Summit Forum”

With the release of the "Drug GMP Guidelines" (2nd

edition) production enterprises under KELUN PHARMA

will face higher requirements and greater challenges in

the fields of production and quality management. In

order to help production enterprises systematically

study this guide and actively embrace new changes the

Quality Supervision Center and the Human Resources

Department jointly held the KELUN PHARMA "New

Version GMP · Summit Forum" formed a professional

lecturer team and planned and polished 7 topics

including "Sterile Formulations" "Quality Management

System" and "Factory Facilities and Equipment" to

create high-quality training courses. There are a total of

7 topics 18 courses and 200+hot topics. Each profes-

sional course line combines management practice and

needs focuses on new change points key points and

difficulties seeks opportunities for improvement in

business practice and empowers the operations..

74 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Internal Trainer Training

We attach great importance to and continuously optimize the internal trainer training system aiming to cultivate a team of enter-

prise internal trainers with professional knowledge teaching ability and influence.Our internal trainer project serves as a powerful supplement to knowledge sharing methods such as QC conferences and internal

commissioned training cultivating internal professional talents from various dimensions. This is to compensate for the limitations

of external training ensure that the training content is more in line with the actual situation and enhance the practicality of the

training; Also to gather outstanding talents with professional experience within the Company extract their excellent experiences

share knowledge within the Company and subsidiaries (branches) and generate economies of scale in knowledge dissemination

and application as each subsidiary has a high degree of skill similarity. the Company's internal trainer project serves as a powerful

supplement to knowledge sharing methods such as QC conferences and internal commissioned training cultivating internal pro-

fessional talents from various dimensions.The structural design of internal trainers’ courses at KELUN PHARMA can be summarized into two key points. First is to focus on

business needs. The trainers all have business practical experiences and the training topics are practical as well. By extracting rep-

licable professional knowledge and experience the course teaching and development is conducted; Second is dual line tutoring

constantly improving the professional and comprehensive abilities of internal trainers shaping their authority and reflecting their

value in the Company's production and operation.Internal Trainer Exchange and Internal Trainer Competition

Improvement Activity

Leadership Training

We attach great importance to leadership training aiming to cultivate leaders with good strategic vision and with courage to take

on social and environmental responsibilities. We implement a comprehensive leadership training program that covers all levels of

management personnel aiming to enhance their ability of strategic thinking decision-making team collaboration and communi-

cation. The training content not only includes basic knowledge such as management theory business model innovation and

interpretation of industry regulations and policies but also focuses on decision-making social responsibility practices and the

design and implementation of environmentally friendly strategies in complex business environments. In addition we also empha-

size the long-term effectiveness of leadership training ensuring that training outcomes can be translated into leadership enhance-

ment in practical work and effective implementation of company strategies by regularly evaluating training effectiveness tracking

student growth trajectories and providing opportunities for continuous learning and growth.KELUN PHARMA Anesthesia-Line Area Regional Manager Training for

Manager Training Major Surgical Departments

75 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

3.3 EMPLOYEE PROMOTION AND TRANSFER MECHANISM

To conscientiously implement the cadre line policies and outstanding employees for career development. It is coordi-

guidelines of the board we have established a scientific and nated and arranged by the headquarters human resources

standardized "Management Cadre Selection System" which department on an annual basis following strict evaluation

standardizes the conditions authorities and processes for the procedures and promoting employees in an orderly manner.promotion and appointment of cadres at all levels. We have At the same time we also fully consider the demand for new

formed a vibrant and energetic personnel selection and positions or the occurrence of vacancies in existing positions

appointment mechanism that is conducive to outstanding ensuring that employees who meet the conditions and are

talents. The mechanism promotes the youthfulness knowl- capable of corresponding positions have a fair and just oppor-

edge-based and professionalization of the cadre team builds tunity to be promoted to corresponding positions through the

a high-quality management cadre team and ensures the vacancy promotion process at all times during the year there-

smooth realization of the Company's strategic goals. by achieving the optimal allocation of human resources and

promoting the continuous improvement of the overall efficien-

The annual promotion mechanism is a routine channel provid- cy of our company.ed by the Company every year to recognize and motivate

In addition to the traditional promotion channels we have opened up multiple career development paths such as management

sequence professional sequence technical sequence operation sequence and support sequence so that skilled talents can obtain

professional level promotion and matched treatments and thus achieve both spiritual and material harvests.Moreover in order to ensure the rational and orderly allocation of internal human resources within the Company fully utilize the abili-

ties and strengths of employees meet the needs of job responsibilities maximize the utilization of internal human resources and stan-

dardize the personnel relocation procedures between various subsidiaries and departments within our company we have formulated

the "Employee Relocation Management System" which specifies that employees can be transferred within the Company and between

subsidiaries in the form business assignment or private relocation.

76 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

3.4 CONTINUING EDUCATION

Degree Courses and Certificate Support

We support all employees to enhance academic qualifications in spare time in order to enhance the overall quality and profes-

sional technical level of the employee team and always maintain the creativity and combat effectiveness of the talent team to

adapt to the rapid development needs of the Company. Moreover we encourage outstanding grassroots employees with lower

education levels to improve their academic qualifications acquire more professional knowledge enhance their personal qualities

and abilities meet job requirements and achieve personal career development. We provide a certain degree subsidy to ordinary

employees with a bachelor's degree or above who are recruited into the Company with a maximum subsidy of 300 CNY per

month.

2023 we have supported 284 employees in upgrading their academic qualifications including 87 who have been promoted to

associate degrees 175 who have been promoted to bachelor’s degrees and 22 who have been promoted to master's degrees; We

have cumulatively provided education subsidies of 900000 CNY.Support for Professional Titles Supporting Employees to Apply for

and Qualifications Government Talent Awards

We support all employees (including contract employees) to In order to ensure a long-term stable talent supply we

apply for professional and technical titles or professional actively respond to the talent priority development strategy

qualifications related to their positions in their spare time. In promoted by provincial and municipal governments. The

order to create a learning oriented enterprise improve the headquarters and its subsidiaries closely follow policy guid-

professional technical/skill level and structure of the ance fully utilize various talent incentive measures formu-

employee team and enhance the professional quality and lated by governments at all levels and actively carry out

business level of important positions we have formulated various reward applications internally for outstandingthe“ Regulations on Encouraging Employees in Important talents who meet conditions.Professional Positions to Participate in Professional TitleEvaluations and Vocational Qualification Examinations”. We support all employees to actively apply for local provin-

Every year during the professional title evaluation period cial and municipal government talent reward project poli-

organize the professional title/occupational qualification cies and fully assist employees in obtaining higher-level

evaluation information of various provincial and municipal talent rewards or honors. In 2023 we applied for talent

governments notify all employees and actively assist awards of 74 projects including "Chengdu Industrial Circle

employees who are willing and meet the evaluation require- Chain Outstanding Talents" "15th Batch of Provincial Aca-

ments in applying. For employees who have obtained corre- demic and Technical Leaders" "Xiaohe Talent Support Plan

sponding professional titles or qualifications a certain sub- Candidates" "Rongcheng Talent Plan Innovation Leading

sidy will be provided according to the standard with a maxi- Talents" "Rongpiao Plan Innovation Leading Talents"

mum of 1000 CNY per month. "Tianfu Emei Plan Innovation Leading Talents" "Tianfu Qin-

gcheng Plan Innovation Leading Talents" "Wenjiang Crafts-

As of the end of this reporting period the Company has pro- men" and "Excellent Management Talents in Pharmaceuti-

vided a total of 550000 CNY in title subsidies and reimburse- cal Enterprises" for 421 employees. The total amount of

ment support to 748 employees with professional titles. talent award funds reached up to 14.06 million CNY.

77 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

3.5 TALENT DEVELOPMENT

Talent Attraction

We adhere to the employment policy of "strict screening only In addition to introducing external talents we also focus on

selecting true talents; Give rewards and punishments regard- the effective flow of internal talents. the Company regularly

less of relation ". When selecting talents it emphasizes import- initiates internal selection and recruitment processes for

ant qualities such as "integrity pursuit of excellence customer vacant positions and employees can apply through open

orientation and team-centered mindset". We use various chan- channels making talent flow more efficient.nels such as social recruitment campus recruitment internal

and external referrals and headhunting recommendations to We encourage all employees to recommend outstanding

attract talents with different resumes and experiences through talents and efficiently hire the suitable ones. We have estab-a diversified standardized and transparent recruitment lished the Regulations on the“ Management of Internallyprocess laying a talent foundation for the long-term develop- Recommended Talents”. Employees can recommend candi-

ment of the Company and strengthening employer brand dates through online or offline channels such as the Compa-

building. In addition in order to respond to the needs of inter- ny's official website "KELUN PHARMA Recruitment" WeChat

nationalization we recruit talents from the United States Public Account Official WeCom Account and corporate

Europe India and countries linked to the the Belt and Road to email. We set up the "Bole Award" and distribute the bonus

help overseas business development. the Company has creat- to the recommender based on their job level with a maxi-

ed a total of 3393 job opportunities for society in 2023. mum of 40000 RMB.

2023 KELUN PHARMA Group Headhunting Supplier Conference

On May 9 2023 KELUN PHARMA organized the 2023 Headhunting Supplier Conference. This conference revolved around the core of the

connotation of the Kelun brand and corporate culture presenting in a systematic and detailed manner the business in the three key areas of

Kelun research and development innovation industrial operation and marketing as well as the strategic development and key talent intro-

duction needs of some core production enterprises. Through a comprehensive and in-depth introduction the recognition of the overall

strength and future vision of KELUN PHARMA by headhunting suppliers has been significantly enhanced effectively consolidating and deepen-

ing the strategic cooperation symbiosis and win-win partnership between the Company and headhunting suppliers.In view of the outstanding achievements in 2022 this conference specially commended 5 headhunting suppliers and officially awarded them

the title of "Strategic Partner of the Kelun Group". A solemn award ceremony was held on-site to show encouragement. KELUN PHARMA has

been actively exploring and continuously optimizing its cooperation model with headhunting suppliers leveraging the professional strength

of the headhunting industry gathering excellent global talent resources and working together with recruitment experts to create a blueprint

for a better future.Talent Transfer

We focus on strengthening the profound understanding of talent cultivation among management personnel at all levels encouraging

and guiding each subsidiary (branch) to effectively explore cultivate and reserve excellent talent resources. We continue to increase

investment in human capital broaden the career development path of employees and strive to build a systematic and scientific talent

training and delivery system. To this end we have formulated the "Reward Measure for Talent Transfer".Based on the positional importance and hierarchical differences of the employees transferred to other subsidiaries a differentiated

reward mechanism has been established. Specifically in the allocation of reward funds 30% of the reward amount will be given to the

original department and other relevant departments that provided support in recognition of their contribution to the talent transfer

process; The remaining 70% of the reward funds will be directly allocated to the subsidiary (branch) that receives talents as a special

fund for employee education and development. According to this incentive plan the maximum reward amount for a single talent trans-

fer can reach up to 200000 CNY.

78 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Talent Retention

KELUN PHARMA has shown a proactive attitude in talent retention strategy. We have built a comprehensive and sustainable talent man-

agement system and strengthened employee value realization and career stability from multiple key dimensions such as salary and

benefits employee development promotion channels and humanistic care in order to reduce employee turnover rate and improve

organizational efficiency.During the reporting period the turnover rate of employees at KELUN PHARMA was approximately 16.08% (compared to 18.89% in

2022) and there were no incidents of senior management turnover.

Employee Motivation

In order to further optimize the long-term incentive mechanism of our company attract and stabilize outstanding talents fully mobilize

the enthusiasm of our management personnel and core backbone effectively integrate the interests of shareholders our company and

the personal interests of the incentivized objects and enable all parties to focus on the long-term development of our company we

actively launch multiple rounds of equity incentive plans in accordance with relevant laws regulations and normative documents such

as the "Management Measures for Equity Incentives of Listed Companies". As of the end of the reporting period KELUN PHARMA has

carried out three equity incentive plans and two employee stock ownership plans. Kelun-Biotech and Chuanning Biotechnology as

independent listed subsidiaries of KELUN PHARMA have also actively carried out equity incentives according to the Company's situa-

tion.Employee Development

We carry out diversified talent training projects to enhance core competitiveness and enhance employees' sense

of achievement and belonging.

1 FOUR REGULAR INCUBATION PROGRAMSTO CULTIVATE TALENTS IN STAGES

Xinshuo The Xinshsuo Program is a training program aimed at newly recruited supervisors supervisors and below

Program positions in various departments or workshops as well

Talent as training newly recruited reserve cadres with college

Program degree or above. In order to enable team leaders to

take initiative in their work positions and revitalize the

grassroots team the Company has launched the "Pro-

duction Department Team Leader Empowerment

Training Project" to strengthen grass-roots manage-

ment unity and cooperation and contribute to the

vigorous development and effective growth of our

company."Program of Excellence" Training Program (536 Training Principles)

The Talent Program is a special recruitment and train-

Talent ing program developed by KELUN PHARMA for fresh 5 Workshop Intensive Induction line Practice intensive Post Study Debriefingtraining

Program graduates with the aim of building a "Kelun New Workshop

1.On-site teaching Concentration of the

Talent Army" with ideals and courage to strive and reserving accommodation 2.E-Learning Online 1.3-day military training 1.Rotational Learning transfer debriefing centralised leaZrning Learning and Exams 2.2-day outreach 2.Fixed-term Study once the first 4 phases and training. have been completed

talents for Kelun's third decade of development. With

the talent cultivation model of "five stages + three men-

3 Sectoral Mentors Post Mentor Mentor Department

tors" the employees from school recrements to of Human Resources

successfully go through the rapid transformation from 6 6-month incubation period

school to the workplace.Leading This program is for leading talents in key professional and technical fields in enterprises. We select personnel with

Talent relatively high professional and technical skills experience in solving professional and technical problems and outstanding contributions in technical research targeted training match relevant resources and lead our high-quali-

Program ty development through technological innovation.Long We adhere to the principle of "internal training as main focus and external introduction as supplement" reserve

Bench outstanding department heads as successors for our company. We select cultivate and reserve successors for

Succession department heads and above positions implement dynamic management and evaluation provide relevant team

Program managementresources for project management and help successors grow as soon as possible.

79 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

2 THREE SPECIAL TRAINING PROGRAMS FOR TARGETED TALENT ENHANCEMENT Blue Blood Program

Targeting personnel with frontline sales management

International High experience and outstanding performance the Compa-ny reserves senior marketing management talents

Potential Talent Special through a combination of internal and external train-

Training Camp ing (internal executives and external experts) and a combination of training and combat.In response to the development

needs of our overseas base busi-

ness we have selected outstanding

talents who are proficient in indus-

trial technologies and the local

languages in the sector. In 2023 we Three

launched the "International High Special KELUN Pharmaceutical

Potential Talent Special Training Manager

Camp Project". Through one-year Training Select outstanding fresh graduates

language improvement technology Programs and through 18 months of custom-

empowerment and overseas prac- ized training output professional

tice we aim to cultivate internation- and market-oriented business

al high potential talents with both oriented marketing talents and

technical and language advantages management oriented marketing

and strengthen the construction of talents.our talent team.KELUN Blue Blood Program Special Training Camp

International High Potential Talent Special Training Camp

80 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Integration of Industry and Education

We are currently in an important period of industrial upgrad- In order to facilitate the in-depth implementation of indus-

ing innovation driving reforming and opening up. The try education integration work we have constructed a

demand for talent has shifted from low-end and extensive "1+2+3" execution mode. Under the guidance of a commit-

talents in traditional manufacturing to professional skilled tee centered on the Company's general manager's depart-

technological and comprehensive management talents. the ment and with the support of the Company's human

Company was selected as the only "National Industry Educa- resources department and brand office HRBP in the

tion Integration Enterprise" in Sichuan Province in 2021. In research and development industry and marketing sectors

recent years KELUN PHARMA has taken the construction of a serves as the leader of industry education integration and

national industry education integration enterprise as an oppor- forms a working group with the human resources responsi-

tunity to deeply participate in industry education integration ble persons of various enterprises under our umbrella to

and school enterprise cooperation. Through innovating the carry out industry education integration and school enter-

work mode of industry education integration promoting deep prise cooperation in various universities.cooperation between industry academia research and appli-

cation jointly building industry education integration intern- When carrying out the integration of industry and educa-

ship bases establishing a skilled talent training system and tion we focus on clinical needs and common technical chal-

promoting the construction of a "dual teacher" teacher team it lenges in the industry. By using projects as a link closely

has played an important role in the reform of vocational integrating industry academia and research achieving

colleges and higher education and has produced a demonstra- joint development and benefit sharing with universities and

tion effect in improving the quality of technical and skilled research institutions and promoting breakthroughs in key

talent training. core technologies. Based on the enterprise platform KELUN

PHARMA and its subsidiaries (branches) have established

The integration of industry and education is an upgraded strategic cooperation relationships for talent cultivation

version of traditional school enterprise cooperation. the with 68 vocational colleges and 74 h institutions of higher

Company has formulated a management system for the education across the country and established various char-

integration clarifying guiding principles planning goals key acteristic talent cultivation class types.tasks and guarantee measures.KELUN PHARMA and the On December 14 2023 KELUN PHARMA and the School of International Pharmaceutical

International School of Business of China Pharmaceutical University held a talent joint training agreement signing ceremony at the Management Building of the Jiangning Campus of China Pharmaceutical

Pharmaceutical Business University. The economic environment is constantly changing and pharmaceutical profes-

of China Pharmaceutical sionals in the new era must seek for "solutions" and "improvements". The joint training of

talents with the International School of Pharmaceutical Business at China Pharmaceutical

University signed a talent University is an extremely important part of the KELUN PHARMA Cadre Training Plan. The

joint training agreement signing of the talent joint training agreement is an important measure for the Company to

promote the deep integration of industry academia and research. It will help cultivate more

pharmaceutical managers create a new situation of school enterprise cooperation and

jointly contribute new strength to the development of the national pharmaceutical industry

and the health level of the people.

81 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

04 OCCUPATIONAL HEALTH AND SAFETY

4.1 OCCUPATIONAL HEALTH MANAGEMENT SYSTEM

We are deeply rooted in the core belief of "all accidents can be promote continuous optimization and upgrading of environmen-

prevented through measures" in occupational health and safety tal and occupational health and safety management in the enter-

management firmly adhering to the strict requirements of nation- prise we have established a complete and refined audit mecha-

al laws and regulations such as the "Safety production Law" and nism including internal and external assessments. During the

"Occupational Disease Prevention and Control Law". Based on reporting period KELUN PHARMA's total investment on occupa-

this we also actively adopts the occupational health and safety tional health and safety was 23.8 million CNY.management standard - "ISO45001 Occupational Health and

Safety Management System" and constructs a comprehensive The internal audit system focuses on comprehensively examining

EHS (Environmental Health and Safety) integrated management the compliance with EHS regulations delving into the construc-

system including but not limited to core institutional documents tion and improvement of the EHS management system meticu-

such as the "All Staff Safety Production Responsibility System" lously inspecting the execution status of various procedural docu-

"Safety Hazard Investigation and Governance System" "Emergen- ments and conducting a detailed evaluation of the current situa-

cy Plan Management System" "Occupational Health Monitoring tion of EHS management on production sites. We focus on various

Management System" as well as series of process specifications key processes and explore potential hazards from multiple

for risk assessment accident prevention emergency response perspectives to ensure the rigor and effectiveness of internal EHS

education and training and awareness enhancement such as the management."Monthly Safety Production Management Report" and "Accident

Internal Investigation and Handling Report". In 2023 we further The external audit system strictly follows a series of standards and

updated and supplemented several management systems and guidelines formulated by the International Organization for Stan-

related system documents such as the Special Equipment upper dardization (ISO) and through independent and impartial

vision and Management System Occupational Disease Hazard third-party certification audits showcases the high level and high

Accident Emergency Rescue Plan and PSM Process Safety Man- standards of our EHS management system to the outside world.agement System Compilation. This move aims to further stan- This mechanism not only enhances the credibility of the Compa-

dardize and guide the safety management work of subsidiary ny's EHS management but also provides strong guarantees for

(branch) companies in order to comprehensively improve the promoting continuous improvement aligning with international

overall level of occupational health and safety management. advanced management models and achieving outstanding

To comprehensively identify and evaluate EHS risks throughout improvement in environmental and occupational health and

the production process ensure the efficient operation and legal safety management.compliance of the Company's EHS management system and

EHS Management Committee

In order to effectively prevent the occurrence of occupation related diseases and injuries optimize the working environment and

conditions and effectively ensure the physical and mental health safety and well-being of employees we have officially estab-

lished the EHS Management Committee with senior leaders of the Company as the directors and relevant department heads as

members. In accordance with the authoritative standards of national safety production standardization process safety manage-

ment and environmental health and safety management the Company jointly formulates and supervises the implementation of

various policies and measures for occupational health and safety.EHS Management Structure

General Manager Department

EHS Management Committee

EHS Human Production Engineering &

Supervision Resources Technology Equipment each subsidiary

Department Department Department Department (branch) company

EHS Department of

each subsidiary

(branch) company

82 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Democratic Communication

We attach great importance to internal consultation and communication and encourage employees to provide occupational

health and safety opinions and suggestions through safety rationalization suggestion processes employee opinion boxes and

other means and timely provide feedbacks on the results of the handling. We provide employees with corresponding cash or

point rewards striving to establish an effective communication bridge between employees and managers and enhance their

sense of belonging and involvement.At the same time we have established a series of internal communication systems and processes. For example according to the

“Safety Production Meeting Management System” we regularly hold safety meetings with the participation of department heads

and safety management personnel to report on progress of safety work and to discuss existing problems and improvement mea-

sures. In addition we regularly release security work updates and notifications through internal office systems emails and other

means allowing employees to stay informed about the Company's security management situation and the latest policies.During the reporting period there were no

major safety accidents at KELUN PHARMA

and 12 subsidiary (branch) companies have

passed ISO45001 certification.ISO 45001 System Certification (Partially)

As of the end of this reporting period a total of 7 subsidiaries (branches) of KELUN PHARMA have been awarded the

title of Health Enterprise including 1 provincial-level health enterprise and 3 municipal level health enterprises. the

Company emphasizes the people centered approach focuses on the health safety and welfare of employees while

also pays attention to the economic and social responsibility. Through the establishment of a healthy enterprise

KELUN PHARMA optimizes the working environment improves management systems promotes the physical and

mental health of employees and promotes the sustainable development of the enterprise.Guang'an Branch was awarded the Hunan Kelun was rated as "Advanced organization in

title of "Sichuan Health Enterprise" Safety and Environmental Protection"

83 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

4.2 OCCUPATIONAL HEALTH RISK MANAGEMENT

We deeply recognize the importance of occupational health and safety strictly abide by national laws and regulations such as the

Occupational Disease Prevention and Control Law and the Workplace Occupational Health Management Regulations adhere to

the principle of prevention first regularly conduct occupational disease hazard factor tests and occupational health monitoring

sessions systematically improve and update occupational health records and personal health monitoring records of employees

ensuring that the physical and mental health of every employee is effectively guaranteed.In 2023 KELUN PHARMA commissioned a third-party organization with occupational health technology service qualifications to

conduct regular occupational disease hazard factor testing for six subsidiaries (branches). The testing scope includes all places

with occupational disease hazard factors such as production workshops and supportive public projects. A total of 664 positions

were tested with a pass rate of 95.8%.In order to achieve refined management and risk prevention we have developed and implemented the Guidelines for Classifica-

tion of Occupational Disease Hazard Risk Operations Guidelines for Personal Protective Equipment Provision Guidelines for RiskAssessment of Highly Active Drug Operations”. Through the development and implementation of these professional norms we

effectively guide risk identification assessment and control activities at all levels and actively accept supervision and review from

regulatory agencies. At the same time we will continue to optimize and improve production equipment processes protective

facilities and strengthen individual protection to ensure employee health.KELUN-BIOTECH-Bioactive Drug Leakage Detection GuizhouKELUN-Post Noise Detection

In response to the 21st National Health Commis-

sion's "Occupational Disease Prevention and

Control Law" publicity week strengthening the

Company's main responsibility for occupational

disease prevention and control and promoting

occupational disease prevention and control

knowledge in April 2023 each subsidiar y

(branch) company carried out a publicity activity

with the theme of "improving the working envi-

ronment and conditions protecting the physical

and mental health of workers". Through training

courses posting materials playing videos and

other methods the "Occupational Disease Pre-

vention and Control Law" was promoted to

employees enhancing their self-protection

awareness."Occupational Disease Prevention

and Control Law Promotion Week"

of Yueyang Branch from April 25th

to May 1st 2023

84 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

4.3 SAFETY TRAINING

During the reporting period we conducted a total of 18 safety special training sessions for EHS personnel and required all subsidi-

ary (branch) EHS personnel to undergo full staff transfer training for their own units.In 2023 the EHS regulatory department of our Company contin-

ued to deepen the promotion of process safety management in

infusion preparation enterprises. Through regular training and

integration of mature process safety management concepts in

chemical enterprises into their management systems the con-

cept became more practical and operable effectively promoting

the improvement of safety management level in infusion prepara-

tion enterprises.Guang'an Branch Process Safety Training

The EHS department of Xindu Base holds monthly safety meetings at the Company level and provides systematic and in-depth

training on newly issued EHS laws regulations and standards to ensure that attendees can accurately understand and effectively

implement the new regulatory requirements. In addition the meetings also specifically share recent major production safety acci-

dents in China using vivid examples to warn employees and further enhance their awareness of production safety.EHS Training and External Accidents Sharing at Xindu Base

85 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

4.4 WORK-RELATED INJURY MANAGEMENT

To fully protect the legitimate rights and interests of the Company and its employees We have established a system for the prevention

handling and declaration of work-related accidents in accordance with relevant laws and regulations such as the“ Work Safety Law”

“Social Insurance Law”“ Work-related Injury Insurance Regulations” and“ Production Safety Accident Reporting and Investigation andHandling Regulations”. In order to effectively control work-related accidents reduce the risk of work-related injuries from the source and

provide standardized operating procedures and scientific solutions for properly responding to various types of work-related accidents we

have formulated the "Safety Production Accident Investigation and Accountability Management System". To standardize the reporting

investigation and accountability procedures for production safety accidents prevent and reduce production safety accidents we have

established a safety accident investigation and handling mechanism graded and classified safety accidents and evaluated the economic

losses and other impacts that may arise from different types of safety accidents. At the same time we have established a safety reward and

punishment mechanism and the EHS department of each subsidiary (branch) company has established a reward and punishment record-

ing mechanism. Individuals or collectives who conscientiously implement national and group safety production rules and regulations are

rewarded with bonuses such as actively eliminating accident hazards preventing work-related accidents or subsidiaries (branches) that

have outstanding performance in accident handling and rescue and have achieved Z's annual safety responsibility goals well.At the same time the "Guiding Opinions on the Management of Work-related Injury Accidents for Employees" formulated by our Company

aims to standardize our rapid response mechanism in the event of work-related injury accidents strengthen the transparency and accuracy

of accident reports and ensure compliance with specific national regulations on work injury insurance declaration so as to minimize the

impact of work injuries on employees and safeguard their life safety and health rights to the greatest extent. By implementing this systematic

work-related injury management system we continuously optimize the occupational health and safety environment and continuously

improves our comprehensive management level and social responsibility performance.Security Accident Investigation Process

Accident Accident Accident

Reporting Investigation Follow-ups (lessons learnt from accidents)

After a production safety accident occurs the parties We adhere to the principles of "seeking truth from facts After the occurring of accident the safety

involved or on-site personnel should initiate an on-site respecting science and zero-tolerance of the four " management personnel of the EHS department of the

disposal plan on the premise of ensuring personnel timely and accurately investigate the accident process subsidiary (branch) should conduct "retraining" to the

safety and immediately report to the responsible person causes and losses determine the nature of the accident person responsible for the accident and other relevant

of local management and the safety management determine and hold responsible for the accident personnel to ensure the aware of the causes of

personnel of the EHS department of the unit. The safety summarize the lessons learned from the accident accidents similar accident prevention and control

accident must be dealt with within 24 hours.「 Severe propose corrective measures and track their implemen- measures; For internal and external accidents

accidents or emergency situations can be directly tation. The content of the accident investigation report reported by the EHS regulatory department of the

reported to the general manager of the unit; For other includes the accident process casualties economic group each subsidiary (branch) should based on the

non-production safety accidents (such as traffic losses cause analysis responsibility determination actual situation of their own unit promptly organize

accidents occurring on and off duty) relevant personnel suggestions for reward and punishment and preventive training and analogical investigation after receiving

should report to their direct superiors and the safety measures taken. relevant notices and notifications to eliminate hidden

management personnel of the EHS department of the dangers.unit within 1 hour」.After an accident occurs the unit involved must immediately After an accident occurs it is necessary to classify the responsibili-

rescue the injured personnel assign a designated person to ties into the main responsibility and leadership responsibility. The

protect the scene and evidence and strictly prohibit main responsibility is further divided into direct responsibility and The subsidiaries (branches) shall establish safety

unauthorized changes. The scene should be recorded through management responsibility. The subsidiaries (branches) are not accident record which should include: photos of the

methods such as drawing sketches taking photos and filming. allowed to randomly classify safety accidents as non-responsible accident scene investigation records accountabilityIf facilities need to be moved for rescue purposes it is necessary accidents. If a subsidiar（y branch) believes that an accident is a situation and retraining records of the responsibleto simultaneously record the original state. In cases of serious non-responsible accident it must report it to the counterpart person and related personnel; The headquarters

injury or risk of death relevant production activities should be management personnel of the Group's EHS Regulatory summarizes the safety management situation of

suspended to prevent secondary accidents. The cleanup of the Department. The accident can only be qualified as a non-responsi- subsidiary (branch) companies on a monthly basis

scene of a major accident must be carried out after the ble accident after review and confirmation. For near-miss establishes a group safety accident file regularly

completion of investigation and evidence collection and with incidents minor accidents and ordinary accidents the summarizes accidents with extensive warning effects

the permission of the investigation team or government subsidiaries (branches) shall conduct self-accountability according and issues safety accident reports.department. Unauthorized cleanup that conceals the facts is to their own accident management system. In the case of major

strictly prohibited. accidents serious accidents or extraordinary accidents the EHS

Management Committee shall propose handling suggestions for

the relevant responsible persons based on the accident

investigation.Accident Site Accident Investigation Accident

Protection and Responsibility Follow-up Determination (Accident File Management)

86 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

4.5 OCCUPATIONAL HEALTH CARE

We provide free physical examinations for our employees with a coverage rate of 100% effectively preventing and reducing the inci-

dence of major diseases among them.We strictly adhere to the relevant requirements of the“ Occupational Disease Prevention and Control Law” and the“ OccupationalHealth Monitoring Technical Standard” and regularly organizes occupational health examinations for employees who are exposed to

occupational disease hazards. In 2023 a total of 6723 employees completed occupational health examinations and no occupational

disease cases were detected.Information Protection of Employee Medical Examinations

We attach great importance to the protection of personal priva- taking photos etc.) such information must obtain formal approv-

cy of our employees especially the confidentiality of their al from the Company's leadership in advance. In addition for

personal health information. In order to achieve standardiza- situations where it is necessary to access and borrow files and

tion institutionalization and standardization of employee file personal health information our Company will further strengthenmanagement we have formulated the“ Employee File Manage- process management to ensure that every step of operation isment Regulations”. This regulation emphasizes the confidenti- traceable and all access and borrowing activities must be record-

ality of personal health information contained in employee ed and filed in order to comprehensively protect the personal

files and medical examination reports. To ensure the secure privacy rights of employees and reflect our social responsibility

storage and proper utilization of sensitive information the and governance commitment in employee care and information

Company has established dedicated archive storage facilities security.including archive rooms and encrypted archive cabinets all of

which are strictly managed in a closed manner and are super-

vised and managed by dedicated archive administrators. We store the results of occupational disease hazard factor test-

ing and occupational health monitoring in occupational health

records every year and publish them to employees through

Except for authorized archive managers no other personnel written notifications and public announcements on bulletin

shall enter the archive room or open the archive cabinet with- boards ensuring that employees are fully aware of their own

out special permission. health status and potential hazards in the work environment

and are able to take appropriate protective measures.We strictly enforce the rule that unauthorized access to or borrow-

ing of employee files and personal health information from others

is prohibited. Any attempt to access borrow or copy (including

87 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

06 We are dedicated to improving social medical accessi-bility and promoting the development of inclusive healthcare. We actively fulfill our social responsibilities and through continuously innovating and optimizing products structure to ensure that our high-quality med-ical resources can more extensively benefit a wider

range of patients.JOIN OUR HANDS Meanwhile we are enthusiastic about public welfare and charity work supporting projects such as medical

TOGETHER ORIENT assistance and health education. We deeply cooperate

with all sectors of society to expand the coverage of

TOWARDS THE medical services. Together we aim to bring high-quality

FUTURE medical resources to the households developing a better future of public health for all people.

0 1 Medical Accessibility

0 2 Social Responsibility

88 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

01 MEDICAL ACCESSIBILITY

1.1 Inclusive Healthcare in China

The Affordability of Healthcare

We are well aware that the accessibility of medical services and products is an important indicator of a country's or region's public

health level and is key to safeguarding the health-related rights and interests of people.To improve the accessibility of domestic healthcare we actively fulfill our social responsibility by continuously innovating

research and development optimizing production processes expanding production capacity and reducing costs ensuring that

high-quality medicines and medical services can widely benefit the general public. We actively respond to the call of national

policies participate in and support the development of grass-roots medical institutions and help improve the level of grass-roots

medical services through technical support personnel training and public donations.As of December 2023 we have a total of 47 varieties and 69

specifications of drugs been selected for the national drug In 2023 we actively participated in seminars on drug

volume procurement project. The selected products are research and development production quality supply

fielded in treatment of multiple chronic and major diseases. etc. held by National Development and Reform Commis-

The major fields involved are anti-infection tumor diabe- sion Ministry of Industry and Information Technology

tes hypertension rheumatism psychiatry anesthesia anal- Market Supervision Bureau Ministry of Health Medical

gesia osteoporosis and nutrition. Also the average price Insurance Department Drug Administration Bureau and

reduction rate of selected products is higher than the aver- other competent departments as well as academic associa-

age national volume procurement project level. Among tions and chambers of commerce. We actively offered suggestions on improving drug quality stabilizing supply

them drugs like Magnesium Sulfate Injection and Calcium security reducing patient medication burden enhancing

Gluconate which are crucial for emergency rescue have the accessibility of innovative drugs and increasing export

seen price reductions of over 90% effectively resolving the of raw medical materials and was highly praised by the

issues of price increases and supply shortages for some industry. At the same time General Manager Mr Liu Sich-

emergency rescue drugs. uan attended the 2023 "Voice · Responsibility" National

People's Congress and Political Consultative Conference

We have 308 products included in the national medical (CPPCC) symposium in the medical and health industry

insurance reimbursement list of which 293 are chemical promoting high-quality innovative development in the

drugs and 15 are traditional Chinese medicine prepara- industry.tions; by categories there are 125 in category A( 甲 ) and 183

in category B( 乙 ). In the national medical insurance negoti-

ations in 2022 and 2023 a total of 18 innovative varieties

were added to the national medical insurance negotiation

(bidding) catalog. Among them the price reduction of

DPP-4i class oral hypoglycemic drugs such as Teglitazar

Hydrobromide Tablets( 氢 溴 酸 替 格 列 汀 片 ) reached 75%

fully demonstrating the national enterprise's responsibility

and assuming the social responsibility of inclusive clinical

care.Beyond the graded hospital markets we also strive to

improve the coverage and supply stability of drugs in town-

ship health centers village clinics pharmacies and medical

institutions in remote areas accelerating the layout of

online and offline all-channel sales.

89 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Academic Support for Inclusive Healthcare

We not only provide patients with high-quality and affordable We were invited to participate in drafting work for industry

medicines to enhance drug accessibility but also collaborate standards on the safety management of intravenous medica-

with hospital institutions to combine cutting-edge clinical tions for multiple industry associations providing profession-

research information and advanced international scientific al comprehensive scientific and efficient hospital pharmacy

technologies. Based on the actual needs of patients we services technology to the pharmaceutical industry. This has

explore and develop safe rational and efficient management also been highly recognized by experts and medical institu-

of drugs during clinical use enhancing the clinical safety and tions.rationality of drug use. We work in tandem with medical insti-

tutions to improve public health standards moving towards a

patient-centered goal.At the invitation of the China Pharmacists Association we collaborated with domestic senior experts from 2022 to 2023 to

discuss and draft the "Evaluation Standards for Intravenous Medication Dispensing Centers." After drafting and review the

standards were officially issued by the China Pharmacists Association in December 2023.To standardize the centralized intravenous medication dispensing and pharmacist training processes in medical institutions

(including the specific requirements for trainer qualifications pharmacist training and training assessments) KELUN

PHARMA and domestic senior experts participated in drafting discussions on "Standards for Centralized Intravenous Medica-tion Dispensing and Evaluation Pharmacist Training in Medical Institution“s in 2023. After drafting the standards await reviewresults from the China Pharmaceutical Education Association.While actively expanding global business we pay full attention to domestic medical and health management levels actively

engages with local medical personnel according to the actual situations of medical institution diagnostic and treatment

performances. We have invited renowned experts in China's hospital pharmacy management field to conduct pharmacy

management training especially in the field of intravenous medication safety management. We also conduct training on

process and pharmaceutical management for pharmacy practitioners in hospitals nationwide.

90 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Rational Drug Use and Knowledge Popularization

We actively advocate for the rational use of drugs aiming to ensure medication safety of patients enhance efficacy reduce drug misuse

and waste and also care about the environmental impact of pharmaceuticals. We are committed to promoting green pharmaceutical

manufacturing and the development of a circular economy.Through cooperation with medical institutions communities schools and other parties we conduct various forms of rational drug use

and health education activities. We regularly organize professional training for pharmacists and medical personnel to strengthen their

rational drug use guidance capabilities ensuring patients use drugs correctly safely and effectively under doctor's guidance. At the same

time we actively disseminate rational medication knowledge to the public improving the public's understanding of drug instructions

indications contraindications dosage and treatment courses and advocating for scientific medication and rational medical treatment.In addition we leverage digital technology to launch the WeChat public account "Kelun E-pharmacy" providing comprehensive drug

information to our partners consumers and other stakeholders through online consultations science articles and other forms of

communication.Malnutrition is a major factor leading to poor clinical outcomes including prolonged hospital stays increased complication

rates and higher mortality rates. Recent domestic multi-center surveys have shown that malnutrition occurs frequently

among hospitalized patients with malnutrition rates at admission ranging from 14.67% to 31.02%. Standardized nutrition

education influences patients' choices regarding dietary enteral and parenteral nutritional interventions. It can also guide

patients' lifestyle behaviors reduce the occurrence of nutritional therapy complications and promote early recovery.In 2023 the China Anti-Cancer Association's Tumor Nutrition Committee and KELUN PHARMA jointly launched nutrition

treatment education activities for patients conducting over 100 education events nationwide covering more than 3000

hospitalized patients and distributing more than 5000 copies of surgical nutrition education manuals. This initiative has

played an important role in promoting the development and popularization of standardized nutritional treatment.

91 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

1.2 Inclusive Healthcare in the World

Since establishment we have been committed to providing our product line extensively covers the market needs of

high-quality pharmaceutical products and services to improve low-and-middle-income countries. Through careful evaluation

the health of global patients. To date our products have been and selection we ensure that our products match the market

offered in over 50 countries and regions covering developed access plans of low- and middle-income countries. Meanwhile

countries to developing countries. Our key products span a our market access team works closely with partners local

wide range of disease areas including but not limited to paren- regulatory agencies and health departments to ensure our

teral nutrition anti-pathogenic microorganisms and anti-tu- products comply with local regulations and obtain necessary

mor treatments. So far our products and services have reached approvals and licenses.the global market of hundreds of millions of people benefiting

patients from diverse backgrounds and socio-economic levels.During the reporting period we successfully obtained market

In low-and-middle-income countries we always dedicated to access for over 200 products in various disease areas in

providing suitable pharmaceutical products to meet the low-and-middle-income countries. We will continue to focus on

medical needs. We are well aware of the challenges these market demands and changes constantly expanding our

countries face such as limited budgets and insufficient resourc- product coverage to meet the medical needs of low- and

es. Therefore the Company has developed a series of market middle-income countries.access plans tailored to these challenges to ensure product

market assessment. For diseases within this critical issue range.KELUN PHARMA expands the international market through

overseas investment and export trade with overseas

business now covering major global pharmaceutical markets

and emerging markets such as Japan Southeast Asia 01 International Market Expension

Central Asia South Asia Africa and South America. In the

next three years we plans to continue actively exploring the We plan to Undertake

international market: registration work for at

least 50 formulation

projects in at least 10

countries or regions. 02 Product Capacity Reserve

WE plan to select 10 key

varieties from our new

generic drugs for interna-

tional target products

preparing for future export

growth.

92 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Industry Assistance for Emerging Markets

Improving Drug Supply Chains in

Developing Countries

KELUN PHARMA is committed to enhancing the accessibility and such as Hubei Kelun Pharmaceutical Co. Ltd. This "front ware-

efficiency of drug supplies in developing countries by promoting housing" model further optimizes the time efficiency of local drug

localized production bases nationwide effectively reducing logis- supply.tics and transportation costs and significantly improving drug

delivery speed and supply chain responsiveness. This move not In Kazakhstan facing the challenges of vast territory and sparse

only effectively reduces drug costs benefiting a wide range of population distribution in hospital bidding and distribution Kelun

patients but also demonstrates our deep practice in sustainable KAZ Pharmaceutical Ltd. adopted an innovative cooperation

supply chain management. model. Strategic partnerships were established in all 15 states

nationwide leveraging the local distribution agent network to

We strictly follow the national "single-ticket" and "two-ticket" achieve fast and precise delivery of products to local hospitals

policy requirements ensuring drugs are delivered directly from successfully building an efficient and timely drug distribution

the production sites to commercial companies which then system.efficiently distribute them to end sales points. This measure great-

ly enhances the timeliness of drug distribution meeting the drug In Sri Lanka Kelun Life Science and Technology Ltd. worked with

demand of urgent medical scenarios. local partners to directly deliver drugs to the end-use institutions

significantly reducing intermediate links and effectively enhancing

To strengthen regional drug supply security the Company has the local market's drug supply timeliness ensuring drugs can

established distribution centers in several key regions nationwide serve patients timely and effectively.Supporting Productivity Improvement

in Developing Countries

In 2014 KELUN PHARMA undertook the China Ministry of Science and Technology's international science and technology assistance project for

developing countries "Research and Industrialization Demonstration of Key Common Technologies for Infusion" (KY201402019). Through the

implementation of this project KELUN PHARMA helped Kazakhstan mastering advanced manufacturing technology in the infusion industry

develop local infusion-specific quality inspection pharmaceutical research and preparation and industrialization capabilities breaking

through the history of no domestic infusion products and providing Kazakhstan with safe and efficient drugs. Till now KELUN PHARMA has

completed research and registration approval for over 30 injection varieties in Kazakhstan and has also completed registration and approval

for 15 varieties in Kyrgyzstan Armenia Tajikistan and Uzbekistan creating a demonstrative radiation effect in Central Asia.

93 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Localizing Overseas Pharmaceutical Production and

Leading Practices in Environmental Protection

KELUN PHARMA's joint venture in Sri Lanka Kelun Life Science and Technology Ltd. became the country's first ever infusion factory. The regis-

tered varieties now meet the domestic demand for various infusion products in Sri Lanka breaking the long-term dependence on import and

filling a gap in the local infusion product manufacturing sector. This development has significantly promoted the pharmaceutical industry's

growth and medication safety for the Sri Lanka citizens. Moreover the factory incorporated China's most advanced environmental protection

technology in its design making its environmental protection level at the forefront in the country. The design has won honors such as the Sri

Lankan President's Environmental Award and the First Prize for Industrial Development for two consecutive years greatly improving the envi-

ronmental protection performance of the local pharmaceutical industry.Promoting Talent Development

in Overseas Communities

We have built a professional team in Kazakhstan dedicated to Sri Lanka covering production quality control sales logistics

promoting business expansion and deep cultivation in the country and administration. Our investment in Sri Lanka has also stimu-

and neighboring Central Asian regions. This team is based in lated the local job market. We actively recruit and train local

production and office facilities in Almaty. As of the end of this talent offering them valuable opportunities to advance their

reporting period it has attracted around 300 local employees careers with an international company. This not only helps

covering diverse functional areas such as manufacturing quality improve Sri Lanka's employment rate but also stimulates local

management marketing and administrative support. By building economic vitality and sustainable growth.the local team we have created valuable employment opportuni-

ties in Kazakhstan and are committed to discovering and nurtur- By building solid teams and providing extensive employment

ing local professional talents providing them with a broad plat- opportunities in Kazakhstan and Sri Lanka our company firmly

form for career development and growth. This enhances the fulfills its corporate social responsibility actively promoting

team's overall professional skills and operational efficiency sustainable economic development in those countries. In the

contributing to the continuous improvement of corporate produc- future we will continue to focus on and support the discovery

tivity and efficiency. and training of local talent committed to making a continuous

and positive contribution to the prosperity of the communities

In Sri Lanka we have also assembled a team with diverse profes- and economies where we operate.sional backgrounds to support KELUN PHARMA's comprehensive

business operations in the country. The team is based in the capi-

tal Colombo and the historical and cultural city of Kandy. As of

the end of this reporting period we have about 730 employees in

94 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Expanding Educational Cooperation

to Empower Medical Talent Development

In the process of localizing operations in Kazakhstan and Sri This initiative has significantly improved local students' profes-

Lanka KELUN PHARMA not only focuses on driving its own devel- sional knowledge level and strongly promoted the growth of

opment but also prioritizes improving local medical industry and Kazakhstan's medical talent pool. Additionally KELUN PHARMA

health levels as an important social responsibility. Through strate- has made multiple donations of self-developed drugs to the

gic pharmaceutical production plant layouts we build deep com- Almaty Children's Cancer Hospital earning high praise from the

munication platforms with local medical talents injecting "Kelon local government and widespread recognition from all sectors of

Power" into the training and overall upgrade of medical and health society.services in both countries.In Sri Lanka Kelun Life Science and Technology Ltd. and Cloroxin

Lanka Ltd. established a solid cooperation with Peradeniya

Kelun-Kazpharm a subsidiary of KELUN PHARMA has actively University ranked second in the country according to the 2022 QS

supported the development of the national medical education World University Rankings. Together they have created a regular

system in Kazakhstan. Kelun-Kazpharm has hired professors from internship training mechanism. By setting up actual pharmaceuti-

the Kazakhstan National Medical University for academic exchang- cal production and R&D internship bases they offer Sri Lankan

es and cooperation. Over the past five years we have continuously students valuable practical experience enriching their pharma-

provided internship opportunities for students at the university ceutical knowledge and effectively promoting the development of

allowing medical students to deeply practice and understand the local medical professional talent and healthcare service levels.R&D and manufacturing processes of drugs in various therapeutic

areas.Donating drugs to the Almaty Children's

Cancer Hospital in Kazakhstan

Students from Kazakhstan National Medical Providing practical pharmaceutical production and

University interning at Kelon KAZ R&D internship bases for local students in Sri Lanka

95 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Fair Pricing

KELUN PHARMA adheres to the core values of "seeking truth resources through practical actions and contribute to the

through science and seeking goodness through ethics". We development of global health.are committed to ensuring that every patient and customer

can enjoy high-quality and accessible pharmaceutical prod-

ucts and services. In order to respect and adapt to the For developing markets the Company follows a pricing

diverse reality of healthcare systems financial resource allo- strategy for pharmaceuticals in developing countries such

cation and actual patient needs in different countries and as considering the high demand of high-capacity injection

regions around the world and actively promote the benefits products in developing markets and the average selling

of pharmaceutical innovation achievements to a wider audi- price exported to developing markets such as Africa and

ence KELUN PHARMA has formulated the "Fair Pricing Southeast Asia is more than 20% lower than that of devel-

Policy". This policy reflects our profound understanding and oped countries.firm commitment to fairness justice and sustainable devel-

opment. Its connotation covers the Company's entire prod- In 2023 the Company adopted a fair pricing strategy that

uct line aiming to effectively balance the relationship matched local income levels in the sales process of over 150

between commercial operations and social welfare through varieties of products in East Asia Southeast Asia Central

a fair and reasonable pricing mechanism promote the Asia Africa and some other regions.balanced distribution and popularization of medical

The principle of legality and compliance. Fair pricing should comply with relevant laws regulations and other

rules and regulations strictly follow internal and external approval procedures while not harming the public

interests and the legitimate rights and interests of citizens.Fair Pricing The principle of fairness and reasonableness. Fair pricing should be consistent with the Company's philosophy of

Principle "seeking truth through science and seeking goodness through ethics" and reasonable product prices should be

set fairly.the Company adopts a value based fair and reasonable product pricing strategy including:

01. Following the definition of "fair pricing" by the World Health Organization adopting a value based product

pricing strategy ensures that drug pricing reflects its value to patients healthcare systems and the local society.Measures

02. Fair pricing does not equate to low prices. It is necessary to comprehensively consider factors such as drug

research and development investment the affordability level of the healthcare system and the affordability level

of patients before formulating fair reasonable and sustainable pricing.The principle of fairness and reasonable-

ness.the Company sets fair domestic and international product prices based on the concept of product affordability.Due to differences in healthcare needs drug payment methods and financial system affordability among coun-

tries around the world in order to benefit the world the pricing of a company's products in different countries or

regions takes into account factors such as the GDP level of the countries/regions involved the United Nations

Human Development Index and level of public healthcare investment. In the same level of countries/regions and

within the parallel level of market drug pricing remains relatively consistent. At the same time we also develop

more accessible drug pricing strategies based on the needs and payment capabilities of patients in different

countries/regions serving more patients worldwide.The management team of KELUN PHARMA is responsible for organizing and leading the daily implementation of

this policy within the Company ensuring the effectiveness of its implementation. The ESG Committee of KELUN

PHARMA supervises the implementation of the Company's fair pricing policy.Supervision At present we mainly sell non patented drugs and a small number of medical devices in the international market

of fair pricing committed to providing reasonably priced and affordable products to ensure that patients can obtain the neces-sary medical treatment. When formulating our pricing strategy we have considered market demand local

implementation economic conditions medical and health levels etc. striving to ensure that our products are priced reasonably in

low - and middle-income countries and can meet the demand of the local market. Although we currently do not

sell patented drugs and vaccines in the international market we have always been monitoring the global phar-

maceutical industry and recognize that fair pricing is equally important for these areas. We will continue to pay

attention to and comply with relevant regulations and industry standards to ensure that our fair pricing policy is

more applicable and comprehensive when expanding into these areas in the future.

96 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

1.3 MEDICAL DIGITALIZATION

In today's healthcare sector digital transformation has become utilization of medical resources across geographical economic

an important engine driving the sustainable development and temporal barriers.enhancing service efficiency and quality. KELUN PHARMA deeply

understands and actively responds to this trend seeing medical Through building an intelligent medical service system we are

digitalization as a key pathway to fulfilling social responsibilities dedicated to improving the efficiency of medical information

and corporate missions. We embrace the opportunities and sharing improving diagnostic and treatment processes and

challenges brought by medical digitalization with unwavering expanding the coverage of primary healthcare services ensur-

determination pushing forward the efficient allocation and ing every patient can enjoy convenient precise and high-quali-

ty healthcare services.In 2022 the Company was awarded the title of "Sichuan Province Digital Transformation Promotion Center" in

the biopharmaceutical industry and currently being the only company with the award in the province.Medical Digitalization Achievements：

In 2020 to improve the treatment coverage rate of clinical osteoporosis patients and the orderly management of osteo-

porosis slow disease patients in medical institutions KELUN PHARMA developed a management system for clinical

osteoporosis patients providing an effective solution for the discovery and timely treatment.In 2020 to assist medical institutions in strengthening the level of clinical intravenous medication compounding and

safe medication management the Company jointly carried out research on the automation and intelligence of intrave-

nous medication compounding centers with medical institutions receiving special fund support from the government.This project provided reference of safe and efficient management reference for clinical intravenous medication com-

pounding playing a positive role in strengthening infusion safety management in medical institutions.In 2022 to help medical institutions enhance the level of clinical intravenous medication dispensing and safe medica-

tion management the Company conducted application research on intelligent logistics systems for intravenous medi-

cation dispensing centers with medical institutions. This research provided data support for the speed of centralized

allocation and distribution of intravenous drugs in medical institutions and provides a reference for the reasonable

formulation of timeliness and safety of clinical drugs in medical institutions.In December 2023 to assist medical institutions in enhancing the management of intravenous medication compound-

ing centers KELUN PHARMA supported and funded the China Society of Productivity to conduct research topics on the

informatization of mobile management and automatic monitoring of environmental air in intravenous medication

dispensing centers. The main goal of this project was to address the mobile management challenges in PIVAS manag-

ing various processes online through informatization; and by using IoT methods for automatic environmental air moni-

toring it helped PIVAS to grasp the quality of environmental air in real-time online ensuring environmental quality

assurance throughout the drug dispensing process.

97 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

02 SOCIAL RESPONSIBILITY

2.1 INDUSTRY EXCHANGE AND COOPERATION

On the path to sustainable development in the healthcare industry PHARMA is unwaveringly committed to fulfilling social responsibili-

KELUN PHARMA fully recognizes the importance of encouraging ties actively promoting interaction and collaboration with all stake-

broad participation and deep cooperation within the industry. We holders in the industry chain. We aim to build an inclusive open

firmly believe that the development of a company is not only about mutually beneficial industrial ecosystem collectively enhancing

its own growth but also about joining hands with industry peers to medical service accessibility improving global public health stan-

face challenges and share opportunities achieving sustainable dards and contributing our professional strength to creating a

growth for the entire industry. healthy and equitable social environment.As an active advocate and practitioner in the medical field KELUN

Surgical operations can cause stress responses in the body leading to the release of inflammatory factors increased protein breakdown and

negative nitrogen balance. Currently the effectiveness of perioperative nutritional treatment is still not ideal and nutritional treatment man-

agement measures are yet to be standardized. Under the guidance of the principle "Standardization Leads Patients Benefit" KELUN PHARMA

cooperated with the Oncological Nutrition Special Committee of the China Anti-Cancer Association to organize core experts in surgical nutri-

tion. Aiming to establish a comprehensive surgical nutrition management pathway and promote the rational application of surgical nutritional

treatment we initiated the drafting of standards for standardized surgical nutrition diagnostic and treatment wards. In April 2022 the "Stan-

dardized Surgical Nutrition Diagnosis and Treatment Demonstration Ward Standard" were officially released.Under the coordination of associations experts and KELUN PHARMA surgical nutrition diagnostic and

treatment wards have completed standard construction professional training technical guidance

quality supervision and outcome verification forming a standardized surgical nutrition management

system. In 2023 a total of 309 experts passed the surgical nutrition skills training and assessment more

than 1100 experts participated in the tumor nutrition professional training and more than 1000

surgical professional nurses participated in nursing skills training. In December 2023 a total of 99 units

applying for standardized surgical nutrition diagnosis and treatment demonstration wards in China

were awarded the first batch of standardized surgical nutrition diagnosis and treatment demonstration

wards through online defense. It is expected that by the end of 2024 more than 300 demonstration

wards in China will have passed certification achieving the comprehensive implementation of

standardized diagnosis and treatment processes for surgical nutrition through screening evaluation

diagnosis treatment monitoring.The China Pharmaceutical Industry Development Conference was

grandly held in Beijing from November 17th to 19th 2023 jointly

hosted by six ministries and commissions bringing together multiple

forces to build a healthy foundation. Sichuan Kelun Pharmaceutical

Co. ltd. as a leading enterprise in the industry was invited to

participate in this high-level event and won the 18th place on the

"2022 Top 100 Chinese Pharmaceutical Industry" and the title of "Best

Industrial Enterprise in China's Pharmaceutical R&D Product Line in

2023". During this period KELUN PHARMA stood out in the "Manufac-

turing Capacity" section of the "New Era China Pharmaceutical

Industry Achievement Tour Exhibition". Its large-scale production

capacity of erythromycin raw materials intelligent injection manufac-

turing platform and achievements in leading innovation and upgrad-

ing of intravenous drug delivery systems (such as polypropylene

ampoules and upright infusion bag technology) were highlighted.

98 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

2.2 Public Welfare and Charity

In the corporate social responsibility practice of KELUN PHARMA public welfare and charity are important dimensions to fulfill our corporate

citizenship mission. We are well aware that the stable development of enterprises is closely related to social welfare. Therefore we are always

committed to integrating the concept of public welfare and charity into our company's strategy and day-to-day operations responding to

social expectations with practical actions paying attention to and actively engaging in multiple fields such as education support medical

assistance environmental protection and community construction. We firmly believe that through sustained and influential public welfare

and charitable actions not only can the quality of life of beneficiary groups be effectively improved but also social harmony and progress can

be promoted injecting a continuous stream of positive energy into achieving sustainable development goals. In this process KELUN PHARMA

has always adhered to the principles of fairness impartiality and transparency ensuring that love can be accurately transmitted to the places

where it is most needed and jointly drawing a blueprint of warmth and hope for public welfare.KELUN PHARMA has always insisted on providing donations for social welfare and poverty alleviation. As of the end of this reporting period

the cumulative amount of donations exceeded 300 million CNY.PUBLIC WELFARE MANAGEMENT STANDARTD SYSTEM

KELUN PHARMA always pays attention to and understands the needs of vulnerable groups and provides diversified humanitarian assistance.In order to better practice corporate social responsibility the Company has formulated the "External Donation Management System" and

"Social Responsibility Management System" based on the "Public Welfare Donation Law of the People's Republic of China" and other relevant

national laws and regulations. This system is applicable to the Company and its wholly-owned and controlling subsidiaries.Principles of external donations:

Types of External

Voluntary and with clear rights Donations Beneficiaries

not seeking returns and responsibilities

Public welfare donation

Public welfare social organizations

non-profit enterprises and institutions

Relief donations socially disadvantaged groups and individ-

Act within uals in need of donations

our ability be honest and

trustworthy Other donations

99 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Public welfare actions

Rural Revitalization

KELUN PHARMA has always actively responded to and deeply integrated into the national rural revitalization strategy deployment

with consolidating and expanding the achievements of poverty alleviation as the core task and ensuring its tight connection with

the comprehensive promotion of rural revitalization strategy. the Company actively practices social responsibility vigorously pro-

motes the progress of educational and cultural improvement in rural areas and spares no effort in supporting the modernization

and upgrading of infrastructure. This is the cornerstone to empower the comprehensive development of rural society and econo-

my. KELUN PHARMA continues to contribute its own strength in the great journey of common prosperity and is committed to play-

ing an active role. Working together with all sectors of society KELUN PHARMA is ready to create a harmonious and prosperous

During the reporting period KELUN PHARMA has invested

nearly 1 million CNY in supporting rural revitalization and achieving common prosperity.The Sichuan Provincial Medical Insurance Bureau provides targeted assistance

to the rural revitalization and development of Wuzhong Village Renguo Town-

ship Garze County Garze Prefecture. In order to support public welfare under-

takings and demonstrate the social responsibility of private enterprises the

Company through the coordination of the Provincial Medical Insurance

Bureau provides financial and material support to Garze County and Wuzhong

Village every year.Supporting the Education

KELUN PHARMA is well aware that the power of knowledge can change destiny especial-

ly for students in impoverished areas. Education is a key way to break the cycle of poverty

and realize their life value. Therefore KELUN PHARMA has always regarded supporting

students in poverty-stricken areas as an important component of corporate public

welfare actions actively investing resources and efforts committed to improving the

uneven distribution of educational resources and providing equal learning opportunities

and development platforms for students in poverty-stricken areas through various forms

such as scholarship programs and facility constructions. We firmly believe that every care

and support will turn into a ray of hope that illuminates their future path jointly promot-

ing the balanced development of China's education industry and building a more just

KELUN PHARMA provides financial assistance to impoverished college students

and harmonious social environment. in Wenjia Village Longfeng Street Pengzhou City through the Pengzhou Charity Association with a total of 10000 CNY per student per academic year. Now the

second academic year donation has been completed.Responsibility in the Pandemic

As a major infusion supply enterprise in Xing'an League KELUN PHARMA always adheres to supporting the development of medical securi-

ty in Xing'an League with high-quality drugs and warm enterprise services. Especially during the pandemic period the demand for infu-

sion products for inpatients in Xing'an League has surged nearly fourfold. At that time with many freight vehicles suspended nationwide

and a serious shortage of infusion products KELUN PHARMA actively deployed national production lines regardless of cost and made

every effort to prioritize the supply of infusion products in the league effectively alleviated the shortage of infusion products and played a

very important role in ensuring the safety and health of the people.Assisting Community Development

KELUN PHARMA is well aware that the success of the enterprise does not exist in isolation but is deeply rooted in the community we live in.It is closely related to the prosperity of the community. In recent years the Company has been committed to promoting the development

and progress of the community through various means. We actively participate in community volunteer activities providing medical and

living assistance to vulnerable groups in the community ensuring that everyone can enjoy basic medical security and promoting fairness

and harmony in the community. At the same time we support and participate in community infrastructure construction such as donating

medical facilities and funding community environmental improvement projects to improve the quality of life of community residents.Shandong Kelun carried out a Spring Festival Henan Kelun launched a voluntary service Henan Kelun's organized "Protecting Mother

visit the elderly in Gaoxin District delivered activity for civilized transportation River" volunteer service activity

daily necessities to the elderly who are alone

brought them warmth and care.

100 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

APPENDIX

01 ESG KEY PERFORMANCE INDICATORS

Environment KPIs

CATEGORY UNIT 2023

Energy

Total energy consumption MWh 9383172.31

Total energy Intensity MWh/10000CNY 4.37

Greenhouse gas emissions

GHG emissions (Scope 1) Tons of CO2e 2190590.17

GHG emissions (Scope 2) Tons of CO2e 468869.75

Total GHG emissions Tons of CO2e 2659459.92

GHG emissions intensity Tons of CO2e /10000CNY 1.24

Water resources and sewage

Fresh water consumption Tons 16052556.83

Wastewater discharged Tons 11969173.005

Reclaimed water reuse Tons 4776600.24

COD discharged in wastewater Tons 302.08

Five-day biochemical oxygen demand (BOD5) Tons 73.78

Suspended solids in wastewater (SS) Tons 60.51

Ammonia nitrogen discharge from wastewater Tons 14.30

Fresh water use intensity Tons/10000CNY 7.48

Air emissions

Volatile organic compounds (VOCs) Tons 183.33

Sulphur dioxide / SO2 Tons 82.81

Nitrogen oxides / NOx Tons 368.50

Waste materials

Hazardous waste (generated) Tons 217731.47

Hazardous waste (recycled) Tons 213595.73

Hazardous waste (disposed) Tons 4116.63

Non-hazardous waste (generated) Tons 219065.88

Non-hazardous waste (recycled) Tons 10924.10

Non-hazardous waste (disposed) Tons 208141.77

Municipal solid waste (generated) Tons 17240.40

Municipal solid waste (recycled) Tons 2088.17

Municipal solid waste (disposed) Tons 15152.23

101 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Social KPIs

Category Unit 2023

Supplier Management

Total number of suppliers Number of suppliers 5000

Numbers of suppliers signing the Supplier Honesty and Integrity Agreement

in the reporting year Number of suppliers 5000

Numbers of suppliers audited by ESG standards (CSR) in the reporting year Number of suppliers 383

Including: numbers of suppliers audited on-site Number of suppliers 306

The number of suppliers training Number of suppliers 300

Suppliers training duration Hours 400

Number of suppliers participating in training Number of suppliers 300

Employees of suppliers participating in training Number of employees 2000

Employment and diversity

Total number of employees Number of employees 19798

Full-time employees Number of employees 19590

By type of employment

Part-time employees Number of employees 208

Under 30 years old Number of employees 5882

By age 31 - 50 years old Number of employees 12332

Over 50 years old Number of employees 1584

Male Number of employees 10723

By gender

Female Number of employees 9075

Senior management Number of employees 14

Middle management Number of employees 442

By rank

Junior managment Number of employees 2841

General staff Number of employees 16501

Mainland China Hong Kong Macau and Taiwan Number of employees 19445

By region

Overseas Number of employees 353

Proportion of female employees in senior management % 21.43

Proportion of female employees in middle management % 36.43

Proportion of female employees in junior management % 51.07

Proportion of female employees among general staffs % 45.21

Proportion of female employees among all employees % 45.84

102 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Social KPIs (Continued)

Category Unit 2023

Recruitment and retention

Total number of new employees Number of employees 3598

Male Number of employees 1992

By gender

Female Number of employees 1606

Turnover rate % 16.08

Under 30 years old % 24.23

By age 31 - 50 years old % 12.64

Over 50 years old % 7.48

Male % 17.36

By gender

Female % 14.52

Senior management % 0

Middle management % 7.14

By rank

Junior management % 8.50

General staff % 17.48

Staff training and development

Total number of tranining hours Hours 1282096.54

Male Hours 711537.75

By gender

Female Hours 570558.79

Senior managment Hours 774.12

Middle management Hours 17158.39

By rank

Junior management Hours 150372.49

General staffs Hours 1113791.54

Number of training hours

per employee Hours 64.76

Male Hours 66.35

By gender

Female Hours 62.87

Senior managment Hours 55.30

Middle management Hours 38.82

By rank

Junior management Hours 52.93

General staffs Hours 67.50

103 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Social KPIs (Continued)

Category Unit 2023

Staff training and development

Total number of employees trained Number of employees 944551

Total training expenditures Million CNY 468.05

Number of enrolled employees in degree programs Number of employees 284

Performance and promotion

The percentage of employees accepting regular performance

and career development assessment % 100

Anti-corruption

The percentage of subsidiaries that conducted internal risk

assessments on integrity / anti-corruption in the reporting year % 100

and career development assessment

The number of employees signing the integrity commitment

letter / receiving integrity notification letter Number of employees 19590

The number of management members signing the integrity

commitment letter / receiving integrity notification letter Number of employees 3297

The number of general staffs signing the integrity

commitment letter / receiving integrity notification letter Number of employees 7460

The total number of trainees on anti-corruption Number of Trainees 28442

The total hours of training sessions on anti-corruption Hours 165195.5

Employee Occupational Health

Investment in occupational health and safety management 10000CNY 2379.50

Proportion of employees covered by the operational locations with

established occupational health and safety management systems % 100%

The total training hours for EHS Hours 301427.8

The total percentage of employees trained in EHS % 100

Community Involvement and Donations

Amout of social welfare investment 10000CNY 4994.37

Financial Impacts Risks and Opportunities of Climate Change

Aggregate investment in environmental initiatives by the Company 10000CNY 60499.51

Investment in environmental project management 10000CNY 3150.49

Investment in environmental equipment construction and

operation maintenance 10000CNY 57334.82

Investment in environmental training 10000CNY 14.21

104 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

02 CONTENT INDEX OF THE ESG REPORTING GUIDELINES

GRI Indicator

GRI STANDARD ASPECTS PAGES

General Standards

GRI 1：Foundation 2021

GRI 2：General Disclosures 2021

The organization and its reporting practices

2-1 Organizational details P6-8

2-2 Entities included in the organization's sustainability reporting P3

2-3 Reporting period frequency and contact point P3

2-4 Restatements of information —

2-5 External assurance —

Activities and workers

2-6 Activities value chain and other business relationships P4044

2-7 Employees P60-62

2-8 Workers who are not employees —

Governance

2-9 Governance structure and composition P17、22

2-10 Nomination and selection of the highest governance body P23

2-11 Chairman of the highest governance body P23

2-12 Role of the highest governance body in overseeing the management impacts P22-23

2-13 Delegation of responsibility for managing impacts P17

2-14 Role of the highest governance body in sustainable reporting P17

2-15 Conflicts of interest P26

2-16 Communication of critical concerns P20

2-17 Collective knowledge of the highest governance body P18

2-18 Evaluation of the performance of the highest governance body P17、23

2-19 Remuneration policies P17、23、64

105 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

GRI Indicator

GRI STANDARDS ASPECTS PAGES

2-20 Process to determine remuneration P23、64

2-21 Annual total compensation ratio —

Strategy policies and practices

2-22 Statement on sustainable development strategy P17

2-23 Policy commitments P17

2-24 Embedding policy commitments P17

2-25 Processes to remediate negative impacts P25

2-26 Mechanisms for seeking advice and raising concerns P19

2-27 Compliance with laws and regulations P25-27

2-28 Membership associations P9098

Stakeholder engagement

2-29 Approach to stakeholder engagement P19

2-30 Collective bargaining agreements —

GRI 3: Material Topics 2021

3-1 Process to determine material topics P20

3-2 List of material topics P20

3-3 Management of material topics P20

GRI 201: Economic Performance 2016

201-1 Direct economic value generated and distributed P9

201-2 Financial implications and other risks and opportunities due to climate change P50-51

201-3 Defined benefit plan obligations and other retirement plans P65-67

201-4 Financial assistance received from government P77

GRI 202: Market Presence 2016

202-1 Ratios of standard entry level wage by gender compared to local minimum wage —

202-2 Proportion of senior management hired from the local community P60

GRI 203: Indirect Economic Impacts 2016

203-1 Infrastructure investments and services supported P100

203-2 Significant indirect economic impacts —

106 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

GRI Indicator

GRI STANDARDS ASPECTS PAGES

GRI 204: Procurement Practices 2016

204-1 Proportion of spending on local suppliers P40-41

GRI 205: Anti-corruption 2016

205-1 Operations assessed for risks related to corruption P26-27

205-2 Communication and training about anti-corruption policies and procedures P26-27

205-3 Confirmed incidents of corruption and actions taken P26-27

GRI 206: Anti-competitive Behavior 2016

206-1 Legal actions for anti-competitive behavioranti-trustand monopoly practices P26

GRI 207: Tax 2019

207-1 Approach to tax P27

207-2 Tax governancecontroland risk management P27

207-3 Stakeholder engagement and management of concerns related to tax P27

207-4 Country-by-country reporting P27

GRI 301: Materials 2016

301-1 Materials used by weight or volume —

301-2 Recycled input materials used P54-55

301-3 Reclaimed products and their packaging materials P55

GRI 302: Energy 2016

302-1 Energy consumption within the organization P52-53

302-2 Energy consumption outside of the organization P52-53

302-3 Energy intensity P52-53

302-4 Reduction of energy consumption P52-53

302-5 Reductions in energy requirements of products and services P52-53

GRI 303: Water and Effluents 2018

303-1 Interactions with water as a shared resource P54

303-2 Management of water discharge-related impacts P5457

303-3 Water withdrawal P5457

303-4 Water discharge P5457

303-5 Water consumption P5457

107 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

GRI Indicator

GRI STANDARDS ASPECTS PAGES

GRI 304: Biodiversity 2016

Operational sites ownedleasedmanaged inor adjacent to protected areas and

304-1 areas of high biodiversity value outside protected areas P58

304-2 Significant impacts of activitiesproducts and services on biodiversity P58

304-3 Habitats protected or restored —

304-4 IUCN Red List species and national conservation list species with habitats in areas —

affected by operations

GRI 305: Emissions 2016

305-1 Direct (Scope 1) GHG emissions P52-53

305-2 Energy indirect (Scope 2) GHG emissions P52-53

305-3 Other indirect (Scope 3) GHG emissions P52-53

305-4 GHG emissions intensity P52-53

305-5 Reduction of GHG emissions P52-53

305-6 Emissions of ozone-depleting substances (ODS) P101

305-7 Nitrogen oxides (NOX)sulfur oxides (SOx)and other significant air emissions P101

GRI 306: Waste 2020

306-1 Waste generation and significant waste-related impacts P58

306-2 Management of significant waste-related impacts P58

306-3 Waste generated P58

306-4 Waste diverted from disposal P58

306-5 Waste directed to disposal P58

GRI 308：Supplier Environmental Assessment 2016

308-1 New suppliers that were screened using environmental criteria P40-42

308-2 Negative environmental impacts in the supply chain and actions taken P40-42

GRI 401: Employment 2016

401-1 New employee hires and employee turnover P103

401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees P65-67

401-3 Parental leave P65-67

GRI 402：Labor Relation 2016

402-1 Minimum notice period for operational changes —

108 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

GRI Indicator

GRI STANDARDS ASPECTS PAGES

GRI 403: Occupational Health and Safety 2018

403-1 Occupational health and safety management system P82-85

403-2 Hazard identificationrisk assessmentand incident investigation P82-85

403-3 Occupational health services P82-85

403-4 Worker participationconsultationand communication on occupational health and safety P82-85

403-5 Worker training on occupational health and safety P82-85

403-6 Promotion of worker health P82-85

Prevention and mitigation of occupational health and safety impacts

403-7 directly linked by business relationships P82-85

403-8 Workers covered by an occupational health and safety management system P82-85

403-9 Work-related injuries P86

403-10 Work-related ill health P86

GRI 404: Training and Education 2016

404-1 Average hours of training per year per employee P71

404-2 Programs for upgrading employee skills and transition assistance programs P74

404-3 Percentage of employees receiving regular performance andcareer development reviews P64

GRI405: Diversity and Equal Opportunity 2016

405-1 Diversity of governance bodies and employees P2360-62

405-2 Ratio of basic salary and remuneration of women to men P64

GRI 406: Non-discrimination 2016

406-1 Incidents of discrimination and corrective actions taken P6268

GRI 407: Freedom of Association and Collective Bargaining 2016

407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk —

GRI 408: Child Labor 2016

408-1 Operations and suppliers at significant risk for incidents of child labor —

GRI 409: Forced or Compulsory Labor 2016

409-1 Operations and suppliers at significant risk for incidents of forced —or compulsory labor

109 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

GRI Indicator

GRI STANDARDS ASPECTS PAGES

GRI 410: Security Practices 2016

410-1 Security personnel trained in human rights policies or procedures —

GRI 411: Rights of Indigenous Peoples 2016

411-1 Incidents of violations involving rights of indigenous peoples —

GRI 413: Local Communities 2016

413-1 Operations with local community engagementimpact assessmentsand development programs P98-100

413-2 Operations with significant actual and potential negative impacts on local communities —

GRI 414：Suppliers Social Assessment 2016

414-1 New suppliers that were screened using social criteria P40

414-2 Negative social impacts in the supply chain and actions taken P41-42

GRI 415：Public Policy 2016

415-1 Policital contributions —

GRI 416：Customer Health and Safety 2016

416-1 Assessment of the health and safety impacts of product and service categories P36-38

416-2 Incidents of non-compliance concerning the health and safety impacts of products and services P36-38

GRI 417：Marketing and Lableing 2016

417-1 Requirements for product and service information and lebaling P38

417-2 Incidents of non-compliance concerning product and service information and labeling P38

417-3 Incidents of non-compliance concerning marketing communications P38

GRI 418：Customer Privacy 2016

Substantiated complaints concerning breaches of customer privacy and losses of

418-1 customer data P45

110 KELUN PHARMA 2023 ESG REPORTESG Governance Operation Compliance Product Responsibility Green Development People-Oriented Work Together Appendix

Reader’s Feedback

Dear reader

Hello! We sincerely appreciate your time in reading our "2023 Environmental Social and Gover-

nance (ESG) Report." In our continuous effort to improve our ESG practices and enhance our capa-

bilities we cordially invite you to provide valuable feedback and suggestions on this report.We kindly request your assistance in completing the relevant questions in the feedback form and

sharing your suggestions or opinions with our company via email.Email address: kelun@kelun.com

YOUR Infomation

Name

Company name

Tel.Email

Opinions & Suggestions

What do you think of our Environmental Social and Governance (ESG) Report 2023:

□ Excellent □ Good □ Fair

Your evaluation of our economic social and environmental responsibilities：

Economic Responsibility □ Excellent □ Good □ Fair

Social Responsibility □ Excellent □ Good □ Fair

Environmental Responsibility □ Excellent □ Good □ Fair

Do you think this report has presents the economic social and environmental impact of our ESG responsibility practices ？

□ YES □ More or less □ Don’t know

How do you rate the clarity accuracy and completeness of the information data and indicators disclosed in this report

Clearity □ excellent □ good □ fair □ poor □very poor

Accurancy □ excellent □ good □ fair □ poor □very poor

Completeness □ excellent □ good □ fair □ poor □very poor

Do you have any other suggestions for our ESG work and this report:

111 KELUN PHARMA 2023 ESG REPORTSichuan Kelun Pharmaceutical Co. Ltd.

Address：36 Baihua West Road Qingyang District Chengdu

Postcode：610071

Telephone：4006860333（Monday to Friday 08:00-17:30 excluding statutory holidays）

E-mail：kelun@kelun.com