About this Report
2 3Health Access: Innovation-Driven Development and Inclusive Healthcare
About this Report Appellation Note
Sichuan Kelun Pharmaceutical Co. Ltd. and its subordinate subsidiaries and branches are all referred to by their
abbreviations in this report as set out below:
Report Description
Company Name Abbreviation
This report is the 14th publicly released Environmental Social and Governance (ESG) Report of Sichuan Kelun Sichuan Kelun Pharmaceutical Co. Ltd. KELUN PHARMA the Company we
Pharmaceutical Co. Ltd. (hereinafter referred to as "KELUN PHARMA" "the Company" or "we"). It systematically Sichuan Kelun Pharmaceutical Co. Ltd. Renshou Branch Renshou Branch
elaborates on the Company's management objectives practices and performance in the fields of governance Sichuan Kelun Pharmaceutical Co.Ltd. Guang'an Branch Guang'an Branch
environment and society in 2025 aiming to fully respond to the concerns of all stakeholders and present our
commitments and actions in advancing sustainable development. Sichuan Kelun Pharmaceutical Co. Ltd. Qionglai Branch Qionglai Branch
Sichuan Kelun Pharmaceutical Co. Ltd. Anyue Branch Anyue Branch
Report Scope Sichuan Xinkaiyuan Pharmaceutical Co. Ltd. Xinkaiyuan
Kunming Nanjiang Pharmaceutical Co.Ltd. Kunming Nanjiang
The report covers the period from January 1 to December 31 2025 with certain contents retroactively reviewed or Hunan Kelun Pharmaceutical Co. Ltd. Hunan Kelun
extended where appropriate. The report encompasses Sichuan Kelun Pharmaceutical Co. Ltd. and its subordinate
subsidiaries and branches. Hunan Kelun Pharmaceutical Co. Ltd. Yueyang Branch Hunan Kelun Yueyang Branch
Hubei Kelun Pharmaceutical Co. Ltd. Hubei Kelun
Data Source Jiangxi Kelun Pharmaceutical Co. Ltd. Jiangxi Kelun
Guizhou Kelun Pharmaceutical Co. Ltd. Guizhou Kelun
All information and data disclosed in this report are derived from the Company's internal official documents annual Shandong Kelun Pharmaceutical Co. Ltd. Shandong Kelun
reports and other public reports raw operational data public data released by government authorities annual financial Henan Kelun Pharmaceutical Co. Ltd. Henan Kelun
data and third-party evaluation interviews among others. Financial data in this report is denominated in RMB. In case of
any inconsistency with the financial reports the financial reports shall prevail. The Company warrants that there are no Guangxi Kelun Pharmaceutical Co. Ltd. Guangxi Kelun
false records misleading statements or material omissions in the contents of this report. Sichuan Kelun Pharmaceutical Research Institute Company Limited Kelun Pharmaceutical Research Institute
Sichuan Kelun-Biotech Biopharmaceutical Company Limited Kelun-Biotech
Confirmation and Approval Yili Chuanning Biotechnology Co. Ltd. CHUANNING BIOTECH
Ili Jiangning Biotechnology Co. Ltd. JIANGNING BIOTECH
This report has been confirmed by the management and approved by the Board of Directors on April 1 2026. Ili Yongning Biopharmaceutical Co. Ltd. Yongning Biopharmaceutical
Khorgos Jinhe Biotechnology Co. Ltd. JINHE BIOTECH
Compilation Basis
Horgos Jinhe Biotechnology Co. Ltd. Jinhe Biotechnology Horgos Branch
Chengdu Qingshan Likang Pharmaceutical Co. Ltd. Qingshan Likang
Self-Regulatory Guidelines No. 17 for Companies Listed on Shenzhen Stock Exchange—Sustainability Report (For Trial
Implementation) Chongzhou Junjian Plastic Co. Ltd. Junjian Plastic
Self-Regulatory Guidelines No. 3 for Companies Listed on Shenzhen Stock Exchange—Compilation of Sustainability Sichuan Xindi Biopharmaceutical Co. Ltd. XINDI BIOTECH
Report. Kelun-Kazpharm Co. Ltd. Kelun-Kazpharm
GRI Sustainability Reporting Standards (GRI Standards) by Global Reporting Initiative (GRI)
Celogen Lanka Co. Ltd. Celogen Lanka
United Nations Sustainable Development Goals (UN SDGs)
Morgan Stanley Capital International ESG ratings (MSCI ESG rating)
Report Access
The electronic version of this report is available for viewing and downloading on the Company's official website (Sichuan
01 Kelun Pharmaceutical Co. Ltd.) and the CNINFO Website (https://www.cninfo.com.cn/). For any questions or suggestions
regarding the contents of this report please contact us via email at kelun@kelun.com or telephone at +86 28 8286 0609.
01 02Health Access: Innovation-Driven Development and Inclusive Healthcare
Opening "Three Driving Engines and Innovative Growth" Strategy
KELUN PHARMA maintains its leading position in the area
About KELUN PHARMA of IV Solutions through continuous industrial upgrading and Engine No.1 restructuring product portfolio. 01
Founded in 1996 Kelun has now formed a triangular framework operation platform consisting of KELUN PHARMA (002422.SZ) CHUANNING BIOTECH (301301.SZ) and KELUN-BIOTECH (06990.HK). KELUN PHARMA creates a competitive advantage in antibiotics
We actively promote the "Three Driving Engines and Innovative Growth" strategy. In the infusion field we have from intermediate APIs to FPPs by innovative exploitation of
established dual profitability in high-end manufacturing and new materials seizing the strategic high ground of quality natural resources. 02 Engine No.2
technological innovation and quality benchmarking. With mature fermentation technology and a strong industrialization
platform we have consolidated the foundation of our antibiotic main business continuously optimized and upgraded
the industrial structure and fully entered the field of synthetic biology. In terms of R&D and innovation we focus on
the research and development of high-tech connotation drugs such as high-quality generic drugs innovative small- KELUN PHARMA strives for longevity through the elaboration
molecule drugs and biotech drugs and have successfully built a world-renowned ADC (Antibody-Drug Conjugate) R&D of R&D systems and diversified technology innovation.platform ushering in a new journey of innovative R&D and globalization. Meanwhile leveraging our full industrial chain Engine No.3 03
advantages we have entered the anti-aging track with more than 10 types of health product raw materials already in
mass production ready for production or under R&D. In the future we will form a full industrial chain product matrix from
raw materials to end products. Main Business
Adhering to the corporate purpose of "Pursuing Truth in Science and Kindness in Ethics" we while pursuing excellence
actively fulfill our responsibilities to the environment society and stakeholders and are committed to achieving The Company operates in the pharmaceutical manufacturing industry. Adhering to its management philosophy
sustainable and harmonious development between the enterprise and society. of “Pursuing Truth in Science and Kindness in Ethics” and its development strategy of “Three Driving Engines andInnovative Growth” the Company has long been dedicated to building its R&D capabilities and systems for high-barrier
pharmaceutical products (including high-end generics improved innovative drugs and original innovative drugs) spanning
multiple technology categories and full-function platforms. To date it has established several national-level innovation
Corporate Culture platforms such as the National Engineering Research Center for Large Volume Parenterals and the National Engineering
Research Center for Biotargeted Drugs. The Company is primarily engaged in the R&D production and sales of 26
dosage forms including large volume parenterals (infusions) small volume parenterals (injections) sterile powders for
injection (including powder filling and lyophilized powders) tablets capsules granules oral liquids and peritoneal dialysis
solutions as well as antibiotic intermediates active pharmaceutical ingredients (APIs) and pharmaceutical packaging
materials. Its main products cover a wide range of therapeutic areas including oncology anti-infectives parenteral
nutrition fluid therapy central nervous system disorders cardiovascular and cerebrovascular diseases anesthesia and
Corporate Philosophy analgesia respiratory diseases osteoporosis andrology diabetes and rheumatoid arthritis.Pursuing Truth in Science
and Kindness in Ethics
Corporate Vision
Corporate
Culture To become an
innovative-driven
internationally competitive
pharmaceutical enterprise
with global influence and
a modern pharmaceutical
group with standardized
Corporate Value management social
satisfaction and civilized
Righteous and Trustworthy and prosperous employees
Excellence-pursuing Customer-
oriented Team-cooperation
03 04Health Access: Innovation-Driven Development and Inclusive Healthcare
Annual Key Performance
Labor contract signing rate Coverage rate of employee Overall employee engagement
100% social securityEconomic Performance 100% 93%
Total operating revenue Net profit attributable to shareholders
18.51292 of the listed companyRMB billion
RMB 1.70194 billion Overall employee satisfaction Total number of training Total hours of training
91% sessions per year received by employees96300 times 2677400 hours
Social Performance Annual training expenditure Investment in occupational Employee work injury
4.0076 health and safety management insurance coverage rateRMB million
RMB 24.4989 million 100%
R&D investment Year-on-year growth As a percentage of total
operating revenue
RMB 2.205 billion 1.57% 11.91%
Coverage rate of employee Occupational health Number of occupational
production liability insurance check coverage rate disease cases
100% 100% 0 persons
Total R&D Personnel As a percentage of total employees
2799 persons 13.91%
New patent applications New patents granted Environmental Performance
616 items 224 items
Total investment in Total annual environmental Number of violations of
environmental protection training hours environmental laws and regulations
Total employees Female proportion of Ethnic minority employee RMB 635.0152 million 33934 hours 0 cases
middle management
20127 persons persons49.33% 2019
05 06Health Access: Innovation-Driven Development and Inclusive Healthcare
Double Materiality Topic Assessment
Sustainable Development On the basis of previous work according to changes in business operations and internal and external environments with
Governance Mechanism reference to the latest policies regulatory requirements industry standards and other relevant information and listening
to the suggestions of stakeholders we have identified 26 ESG material topics. At the same time we invited senior
management and financial experts to conduct one-on-one interviews and identified 3 material topics with financial
Wi th the goa l of ach iev ing h igh-qua l i ty and impact on the Company providing important reference for the Company's future sustainable development management
sustainable development of the enterprise we deeply work.integrated ESG concepts into our production and
operation activities. By continuously improving the Steps for Materiality Topic Assessment
ESG management system the we have incorporated
sustainability-related impacts risks and opportunities
into our strategic implementation major transaction
decisions and risk management processes while Topic Library Updating
cont inuous ly improv ing our ESG governance Based on the Company's business development and current ESG management status
performance. with reference to the country's latest sustainable development policies domestic and
foreign sustainable development standards and benchmarking against the disclosure
ESG Management Structure Step 1 practices of outstanding peers and the key concerns of mainstream ESG rating
agencies in the capital market we updated the ESG materiality topic library.The Board of Directors is the highest decision-making
body for the Company's ESG management and
assumes ultimate responsibility for ESG management
work. We have established a three-level governance
structure from top to bottom: "Board of Directors Stakeholder Communication
— ESG Committee — ESG Working Group". During
the reporting period we revised the Working Rules To ensure the accuracy and objectivity of the materiality topic assessment we carried
of the Environmental Social and Governance (ESG) out relevant work with experts and conducted in-depth interviews with the Company's Step 2
Committee clarified the terms of reference of each senior management business and financial department heads.level and promoted the achievement of the Company's
sustainable development strategies and goals.KELUN PHARMA's Three-Level ESG
Governance Structure
Topic Materiality Evaluation
We evaluated the materiality of each topic from two dimensions: "materiality to
Board of Directors KELUN PHARMA's finances" and "materiality to economic social and environmental
Step 3 impacts" formed KELUN PHARMA's double materiality topic matrix and clarified the
ision- focus of sustainable development management.Dec
Making
Level
ESG Committee
ent
Mana
gem
Level
ESG Working
Group
velLe
cuti
on
Exe
07 08Health Access: Innovation-Driven Development and Inclusive Healthcare
2025 Double Materiality Topic Matrix of KELUN PHARMA ESG Risk and Opportunity Management
Under the leadership of the ESG Committee of the Board of Directors we systematically identify internal and external ESG
16 9 risks and opportunities scientifically assess their potential impacts on business operations stakeholders and long-term
26 2 value and classify them by dimensions including impact level likelihood of occurrence and impact cycle
2. Based on the
20 25 14 classification results we formulate targeted management strategies allocate resources rationally and take systematic 22 3 management actions to continuously improve our sustainable development performance.
1015
423
1117
13 12 KELUN PHARMA's ESG Risk and Opportunity Management Process
5
6
Identification Assessment Prioritization Management
721181
1924
8 14 Based on its Evaluate the Classify risks and Based on the
own operations potential impact of opportunities prioritized assessment
and industry identified ESG risks based on their results formulate
characteristics and opportunities impact timeframe targeted management
systematically scan on the Company's and likelihood of strategies and
the internal and business operations occurrence defining action plans
external environment development management allocate resources
to comprehensively strategy financial priorities. implement focused
identify ESG-related condition operating managementand
Not material Materiality to KELUN PHARMA's finance Highly material
risks and opportunities results and establish a mechanism
faced by the Company stakeholder interests. for continuous
forming a list. monitoring and
Environmental Social Governance dynamic optimization.No. Material Topic No. Material Topic No. Material Topic No. Material Topic
Environmental Product safety and Intellectual property Corporate governance 1 compliance 9 quality* 17 protection 22 and compliance management* operation
2 Addressing climate 10 Occupational health and 18 Customer relation ESG management change safety management 23 strategy
Data security and
3 Pollutant discharge 11 Employee compensation and benefits 19 customer privacy 24
Comprehensive risk
protection management
4 Waste treatment 12 Employee training and Rural revitalization and Stakeholder development 20 social contribution 25 communication
5 Energy utilization 13 Employee rights and 21 Industry development Business ethics and benefits protection and collaboration 26 anti-corruption
6 Water resources Product R&D and utilization 14 technological innovation*
7 Circular economy 15 Supply chain security
Ecosystem and
8 biodiversity 16 Inclusive healthcare
protection
1 ESG topics marked with "*" are those assessed by KELUN PHARMA as having financial materiality. 2 The impact period is defined as: Short-term: within 1 year (inclusive); Medium-term: 2–3 years; Long-term: over 3 years.
0910
Materiality to economic social and environmental impacts Highly materialHealth Access: Innovation-Driven Development and Inclusive Healthcare
Stakeholder Identification and Communication External Honors and Recognitions
We fully recognize the pivotal role of all stakeholders in advancing the achievement of sustainable development goals
and actively conduct multi-dimensional communication to fully listen to the demands of all parties. In this way we work 2025 ESG-related Honors
with all stakeholders to realize sustainable development goals share the fruits of corporate development and co-create
social value.Stakeholder Categories Concerned Topics Communication Channels
● Corporate governance and compliance ● Inspection by leaders and
operation competent authorities
● Safety and quality of products and ● Daily communication
services ● Daily policy implementation
Government/ ● Addressing climate change MSCI ESG Rating: AA WIND ESG Rating: AA CSI ESG Rating: AA
Regulatory Agencies ● Environmental compliance management
● Corporate governance and compliance ● General Meeting of Shareholders证书
operation ● Periodic reports四川科伦药业股份有限公司入选中国上市公司协会2025年上市公司可持续发展优秀实践案例。
● ESG management strategy ● Information disclosure on the 特发此证，以资鼓励！● Comprehensive risk management official website 中国上市公司协会二零二五年十一月
●
Shareholders/ Innovation-driven development
● Investor hotline
Investors ● Investo email
● Supply chain security ● Supplier audit Sino-Securities ESG Rating: AA 2024 Investor Relations Gold China Association for Public
● Safety and quality of products and ● Supplier training Award - Outstanding ESG Companies - 2025 Outstanding
services ● Supplier engagement Value Communication Award Sustainability Practice Case of
Suppliers/Distributors and
● Business ethics and anti-corruption Public Companies
Other Partners
● Safety and quality of products and ● Customer satisfaction survey
services ● Daily communication via email
● Inclusive healthcare and phone
● Data security and customer privacy ● Customer service and complaints
Customers/Consumers protection ● Customer visits
● Employee compensation and benefits ● Internal emails and
Occupational health and safety announcements Golden Bull Award - 3rd Guoxin SSE Eagle · Gold Quality - Xinhua Daily - Most Socially ●
● Employee training and development ● Corporate culture platform
Cup · ESG Golden Bull Top 100 2025 ESG Award Responsible Award
● Employee rights protection ● Employee suggestion platform
● Company union
Employees
● Rural revitalization and social ● Health knowledge popularization
contribution activities
● Pollutant discharge ● Public inquiries and complaints
● Waste treatment ● Interviews and exchanges
Communities/Public
● Inclusive healthcare ● External announcements and
disclosures
Sichuan Corporate Social
Responsibility Excellence Case -
Public Welfare Responsibility Case
11 12Health Access: Innovation-Driven Development and Inclusive Healthcare
Other Major Honors in 2025
February June November December
Sichuan Province Consumer Goods Industry Vice-Chair of Chengdu Regional Clinical 2025 Sichuan Top 100 Private Enterprises by National Advanced Private Enterprise of
Product Innovation Benchmark Research Alliance R&D Investment Employment and Social Security
Sichuan Provincial Department of Economy Chengdu Regional Clinical Research Alliance Sichuan Federation of Industry and Commerce All-China Federation of Industry and Commerce
and Information Technology Ministry of Human Resources and Social Security
of the People's Republic of China All China
Federation of Trade Union
August
CCXI Corporate Credit Rating: AAA
CCXI
August 2025 2025
2025 China's Top 500 Private Manufacturing 2024 China's Top 20 Most Competitive 2025 China's Top 10 Pharmaceutical Companies by
Enterprises (384th) Listed Pharmaceutical Companies R&D Capabilities
All-China Federation of Industry and Commerce China Pharmaceutical Enterprises PDI Pharmaceutical R&D & Innovation Conference
Association/E-Pharmacy
November November 2025 2025
2025 Sichuan Top 100 Private Enterprises 2025 Sichuan Top 100 Private Manufacturing 2025 China's Top 100 in Pharmaceutical R&D Annual Top 10 Drug Innovation
Sichuan Federation of Industry and Commerce Enterprises PDI Pharmaceutical R&D & Innovation Conference Companies by Securities Times
Sichuan Federation of Industry and Commerce Securities Times
13 14Health Access: Innovation-Driven Development and Inclusive Healthcare
Health Access
Innovation-Driven
Development and
Inclusive Healthcare
Upholding our corporate purpose of "Pursuing Truth in Science
and Kindness in Ethics" we are committed to addressing
unmet global medical needs through systematic R&D
innovation and global market expansion. We have built a
three-dimensional innovation system and inclusive healthcare
network from generic drugs to innovative drugs and from
domestic to international markets. While continuously
improving the accessibility and affordability of medicines we
actively fulfill our corporate social responsibility of serving
people's health and promoting global health equity.Product R&D and Technological Innovation
Improving Healthcare Accessibility
Improving Drug Affordability
Contribution to the United Nations Sustainable
Development Goals (SDGs)
15 16Health Access: Innovation-Driven Development and Inclusive Healthcare
Product R&D and Technological Innovation
KELUN PHARMA regards R&D and innovation as the core engine driving sustainable development. We have established a
systematic and professional governance structure and management processes to ensure the effective implementation of
R&D strategies rational allocation of resources and scientific control of risks and opportunities. Through these measures
we ultimately achieve the sustainable development goal of improving the accessibility and affordability of medicines.Governance
To efficiently promote the R&D process ensure the legality and compliance of pharmaceutical R&D activities and
guarantee the authenticity and reliability of R&D data we have established a top-down R&D management structure with
clear powers and responsibilities. We have also formulated more than 400 management procedure documents covering
11 dimensions including project management quality compliance management document and record management and
instrument and equipment management. The decision-making and management teams related to R&D and innovation
are composed of experts with both R&D expertise and management experience in innovative drugs and generic drugs.They are responsible for grasping cutting-edge technologies identifying core risks and formulating response strategies
ensuring that the R&D direction is consistent with the Company's strategy and social needs from the top level. Meanwhile we have established a three-level intellectual property (IP) management structure with the General Manager
as the top person in charge including the "Intellectual Property Committee — Intellectual Property Management Office
— Intellectual Property Working Group". We integrate IP management into the entire life cycle from R&D project initiation
KELUN PHARMA's R&D and Innovation Governance Structure to product launch building a solid technological barrier. The Intellectual Property Management Office reports to the
Intellectual Property Committee on a quarterly basis covering matters such as patent applications acceptance and
authorization status and patent achievement rewards in the current quarter.KELUN PHARMA's Intellectual Property Governance Structure
● The Board of Directors is the highest responsible body for the Group's product R&D
Decision-
Making Level and technological innovation holding overall responsibility for the Group's project R&D
performance.● Formulate the Company's IP strategy and related major decisions providing
necessary resource support and technical guidance for IP management
Intellectual activities.Property
Committee
● The Project Approval Committee and Pipeline Committee of Kelun Pharmaceutical
Research Institute regularly/ irregularly gather opinions from the institute's scientists
Management clinical experts and market experts. They uniformly formulate strategic plans for project Intellectual Property ● Be fully responsible for the daily management of intellectual Level
R&D matters for the Board's consideration ensuring R&D direction aligns with the Management Office property within the Company.Company's long-term development goals.● Be responsible for the management of the Company's
Intellectual Property patents executing tasks assigned by the IP Committee
● R&D management departments project leaders project managers and members from Working Group organizing patent knowledge learning and training and
various specialized modules form project teams responsible for daily operations progress assisting inventors with patent applications.Execution management and budget management at the project R&D level. At key R&D milestones
Level management makes comprehensive judgments based on the project's scientific merit
druggability competitive landscape and commercial value to maximize R&D success
rates and minimize risks. We have established a performance management and incentive mechanism closely linked to R&D goals to stimulate the
innovation vitality of all employees. For personnel who have made important contributions to R&D and innovation work
we provide incentives in multiple aspects including position promotion annual performance equity incentives and special
rewards.
17 18Health Access: Innovation-Driven Development and Inclusive Healthcare
Strategy KELUN PHARMA's Product R&D and Technological Innovation Risk List
Likelihood
Core Strategies for R&D and Innovation of KELUN PHARMA Risk Type Risk Description of Potential Impact Cycle
Occurrence Financial Impact
Risk of missing Missing strategic opportunities failing to
technology innovation seize key technology platforms targets Medium Medium-term
and market timing or time windows leading to loss of market long-term
New Drug R&D share
Address unmet clinical needs by developing May lead to a
innovative drugs with differentiated Risk of inefficient R&D Insufficient R&D efficiency and failure to decline in corporate Short
advantages and global potential operations and poor meet expected R&D progress leading to
Medium operating income
project management reduced product competitiveness high
medium
and an increase in long-term
R&D expenses
Risk of Failure to achieve the expected commercial
underperforming value of products which may affect Medium Medium-term
product commercial corporate strategic adjustments and market high long-term
value layout
Incomplete application or protection of basic
Risk of inadequate patents for products and technological Short
core IP portfolio and innovation projects leading to core Low medium
High-Quality Generic Drug R&D Clinical Trials and protection products being easily copied by competitors May lead to failure long-term
Regulatory Compliance and weakened market advantages to recover R&D
Maintain leadership in China's investment and Ensure all R&D activities comply increased litigation
generic drug R&D and the leading with international and regional Inability to freely operate activities for and rights protection
supplier position in national Risk of third-party IP products and technological innovation costs Short clinical trial norms and regulatory
centralized procurement through infringement projects due to existing patents blocking
Low medium
requirements and safeguard product commercialization if licensing fails long-term
scientific product planning and patient safety and data reliability
process management
KELUN PHARMA's Product R&D and Technological Innovation Opportunity List
Likelihood
Opportunity Type Opportunity Description of Potential Financial Impact Cycle
Occurrence Impact
Technology Platform Construction Opportunity of
applying cutting- AI-driven drug discovery acceleration Medium-term potentially speeding up R&D timelines High long-term
Further strengthen the construction and iterative upgrading edge technologies
of platforms such as ADC (Antibody-Drug Conjugate) and Opportunity of
new DC and maintain and expand the leading advantages leveraging policy Policy and regulatory adjustments on raising
May lead to increased
and regulatory industry entry barriers possibly reducing High corporate operating
Short medium
in key technology fields such as ADC. Enhance the changes excessive market competition income and reduced
long-term
application of big data and artificial intelligence in the R&D R&D costs
process of innovative drugs to improve R&D efficiency and Opportunity New technology platforms and management
transformation success rate of upgrading Medium-term
technology and practices adoption improving R&D quality Medium long-term
management and efficiency
By comprehensively examining technological development trends market dynamics and changes in policies and
regulations and combining with the Company's R&D strategy and internal R&D capabilities we continuously identify Opportunity of Global patent filing strategy for corporate May increase
potential risks and development opportunities in the process of product R&D and technological innovation form a expanding globally products and innovation projects to secure IP Medium licensing and transfer Short medium and growing long-term
dynamic management list and formulate and implement targeted management strategies to ensure the continuous and markets protection for international expansion income
steady progress of R&D activities.
19 20Health Access: Innovation-Driven Development and Inclusive Healthcare
Actions to Address Risks and Opportunities
Management
Dimension Specific Measures 2025 Progress
● Progress in Generic Drug R&D:
In 2025 we achieved 50 approvals for production 9 approvals for clinical trials
and 60 applications for production for our generic drugs and improved new
drugs.● Progress in Innovative Drug R&D:
Kelun-Biotech had 4 innovative drugs approved for market launch all of which
have been successfully commercialized. Among them three were newly
included in the 2025 edition of the National Reimbursement Drug List. Sac-
Strengthen top-level TMT (Sacituzumab Tirumotecan) (Trade Name: 佳泰莱) included two new
design and strategic lung cancer indications; Tagrisimab (Trade Name: 科泰莱) obtained approval
layout focus on core for its second indication; Cetuximab N01 (Trade Name: 达泰莱) provided
Optimizing R&D disease areas form a pipeline portfolio of a high-quality domestic option for the first-line treatment of patients with Pipeline Portfolio "innovation improved metastatic colorectal cancer; Trastuzumab Botidotin (Trade Name: 舒泰莱) was
innovation and high-end successfully launched.Impact Risk and Opportunity Management generics" and allocate A New Drug Application (NDA) for Kelun-Biotech's A400 project has been resources rationally. accepted by the Center for Drug Evaluation (CDE) of the National Medical
Products Administration (NMPA) of China for the treatment of adult patients
with RET fusion-positive locally advanced or metastatic non-small cell lung
To ensure the efficient and orderly conduct of scientific research activities we have established a regular information cancer (NSCLC).reporting and decision-making mechanism while assessing the potential impacts of relevant risks and opportunities on ● Progress in Biofermentation Products and Synthetic Biology Products R&D:
the enterprise. Through regular and irregular strategic meetings the project teams report project progress key data and Ruikang Biotech completed the upgrading of the high-throughput strain
achievements to the Project Approval Committee and Pipeline Committee of Kelun Pharmaceutical Research Institute. breeding platform the optimization of AI-enabled laboratory-scale fermentation
After being collected and analyzed this information ultimately supports the Group's Board of Directors in making processes the improvement of molecular modification of actinomycetes and
strategic decisions. The Board of Directors comprehensively evaluates factors such as the scientific value and commercial streptomycetes and the strain development of related amino acid products.value of projects and conducts in-depth research and judgment on risks and opportunities to achieve the optimal
balance between R&D input and output. Meanwhile we focus on the continuous optimization of R&D processes. Project Continuously increase investment in and
teams track indicators in real time feed back and adjust R&D strategies timely so as to ensure that R&D efficiency and construction of core
achievements are at the leading level in the industry. elements introduce
leading scientists and
Strengthening the build a research team During the reporting period the scale of the Company's R&D team continued to
Construction of with high scientific expand with a total of 2799 R&D personnel accounting for 13.91% of the total
KELUN PHARMA's R&D and Innovation Risk and Opportunity Management Process R&D Talent Team research level and employees.international standards;
and establish a sound
internal training system
to cultivate core R&D
● Comprehensively identify risks related to innovation and R&D by integrating scientific talents.Establishment data market data regulatory data patent data etc. along with the Company's
of Risk and
Opportunity List management status and industry practices. This process seeks high-potential
Deeply integrate Artificial
Intelligence (AI) and big
opportunities (e.g. new targets indications or technology areas). data technologies to AI Application Progress at CHUANNING BIOTECH: Developed and launched the
Promoting accelerate innovative industry's first "AI Industrial Automatic Control System" gradually increasing
Digital R&D drug target discovery the fermentation output of antibiotic intermediates.An AI control model for
Transformation and compound screening penicillin fermentation has been established with tank tests commencing in Risk and empowering fields December 2025. To date 12 batches of AI-managed fermentation have been
Opportunity ● Decision-making and management levels conduct internal evaluations to comprehensively such as fermentation validated with the AI primarily controlling feeding through intelligent control.Analysis and assess project scientific merit commercial value and return on investment. technology and synthetic
Determination biology.Optimize R&D processes
Risk and ● Assess the likelihood timeframe and impact of identified risks and formulate risk control Implementing and management
Opportunity measures. For identified opportunities plan development or collaboration paths to ensure Full-Cycle Project
and a full life-cycle We made decisions on "accelerating" or "terminating" projects based on clear
Assessment and Management management process key success criteria to improve resource utilization efficiency.Management effective resource allocation and precise risk control. for project R&D has been
established.
21 22Health Access: Innovation-Driven Development and Inclusive Healthcare
Four Newly Launched Products of Kelun-Biotech
CHUANNING BIOTECH Co-Develops AI Industrial Automatic Control System
Sac-TMT (Sacituzumab Tirumotecan) (Trade Name: 佳泰莱 ): CHUANNING BIOTECH together with the research team of Shanghai Jiao Tong University and the technical
A TROP2-targeted ADC drug in March and October 2025 additional indications were approved for EGFR team of Shanghai Jincheng Technology Co. Ltd. jointly developed and launched the industry's first "AI Industrial
mutation-positive non-squamous non-small cell lung cancer both of which are covered by medical insurance. Automatic Control System" (ManuDrive) focusing on industrial time-series control. This system accurately fills
the long-standing technical gap of "process control" in the biopharmaceutical industry and is the first to be
Tagrisimab (Trade Name: ): applied to a 500-ton industrial-scale erythromycin fermentation production line. On the premise of not increasing 科泰莱
production costs it gradually increases the fermentation output of antibiotic intermediates and reduces the
An innovative PD-L1 inhibitor in January 2025 an additional indication was approved for first-line treatment fluctuation of tank output between normal batches by more than 30%.of nasopharyngeal carcinoma in combination with chemotherapy both of which are covered by medical
insurance. In addition the system has successfully developed an "AI Virtual Engineer" which realizes automatic
optimization of process parameters based on real-time data and reduces reliance on the experience of senior
Cetuximab N01 (Trade Name: 达泰莱 ): fermentation engineers. The successful launch of the "AI Industrial Automatic Control System" has verified the
feasibility of AI technology in full-process automatic control and optimization in ultra-large-scale and complex
An EGFR monoclonal antibody biosimilar approved in February 2025 for indications including RAS wild-type biological fermentation production providing an innovative model for green and efficient production in the
metastatic colorectal cancer with relevant indications covered by medical insurance. industry.Trastuzumab Botidotin (Trade Name: 舒泰莱 ):
A HER2-targeted ADC drug approved in October 2025 for unresectable/metastatic HER2-positive adult breast
cancer previously treated with at least one anti-HER2 therapy marking it as the first domestically produced
HER2 ADC drug in China to broadly cover second-line and beyond indications for this condition.The World's First TROP2 ADC Drug for Lung Cancer Indications Approved for Marketing
Sac-TMT (Sacituzumab Tirumotecan) (佳泰莱) is a domestic ADC drug independently developed by Kelun-
Biotech which is the first domestic ADC drug in China to obtain full approval for marketing. In October 2025
its third new indication was approved for marketing making it the world's first ADC that has shown significant
overall survival (OS) benefit compared with platinum-containing doublet chemotherapy and has been approved
for advanced NSCLC that has progressed after only TKI treatment (2L). By the end of the reporting period we
have launched 5 key clinical trials for lung cancer in China and 5 globally for sacituzumab tirumotecan bringing
new hope to a broader group of patients. AI Industrial Automatic Control System Panel
23 24Health Access: Innovation-Driven Development and Inclusive Healthcare
Intellectual Property Management Antimicrobial Resistance Research
We deeply recognize the strategic value of intellectual property protection in enhancing the core competitiveness of To address the risk of antimicrobial resistance spread and promote the resource utilization of antibiotic bacterial residues
the enterprise and ensuring the industry's innovation ecosystem. We have set the strategic goal of "ensuring effective CHUANNING BIOTECH focuses on erythromycin penicillin and cephalosporin antibiotics further systematically improves
protection of R&D achievements' intellectual property to secure long-term competitive advantages for the enterprise" the technical methods for drug-resistant gene detection and carries out ecological risk assessment of bacterial residues
and continuously deepen the full-chain management of intellectual property rights. Through institutional construction for the entire antibiotic production process.risk prevention and control and capacity improvement we realize the effective protection of independent innovation
achievements laying a solid legal guarantee for the enterprise's strategic upgrading and global development. CHUANNING BIOTECH's R&D Progress on Antimicrobial Resistance
Analyzing Resistance Detection Technology Establishing an
Mechanisms Development Evaluation System
Key Measures for KELUN PHARMA's Intellectual Property Management By systematically reviewing literature A qPCR absolute quantification detection Research is conducted on extraction
and standards the res istance method for 8 core resistance genes screening and quantitative analysis
Improving Compliance Management System mechanisms were analyzed to of erythromycin has been developed methods for resistance genes in various
identify key resistance genes that and validated. Simultaneously efforts environmental samples such as soil water
The Company strictly adheres to the Patent Law of the People's Republic of China Trademark Law are easily induced to spread and to optimize detection methods for and plants. By integrating production
of the People's Republic of China and requirements of standards like Enterprise Intellectual Property have high detection rates in the core resistance genes of penicillin and processes with pot and field trials using
Compliance Management System—Requirements. It optimizes the Intellectual Property Management environment for various antibiotics cephalosporins are underway. The bacterial residue organic fertilizer the
Measures promotes deep integration of IP management with core business processes (R&D providing targets for risk assessment. medium-term goal is to establish a Company systematically analyzes and
production sales) and builds an IP management system covering patents trademarks trade secrets multiplex detection technology system evaluates antibiotic residues resistance
and other IP types. covering mainstream antibiotics by 2026 gene abundance and microbial community
and promote the formulation of relevant changes in samples. This scientifically
Strengthening Full-Process Risk Prevention and Control operat ing guidel ines and industry a s s e s s e s t h e e n v i r o n m e n t a l r i s k s
standards to standardize detection throughout the antibiotic fermentation
During the R&D project initiation phase it conducts patent searches and Freedom-to-Operate (FTO) techniques. process providing core data to support
analyses to identify potential infringement risks. During international business expansion it monitors IP subsequent safe resource utilization.laws in target markets and plans global patent and trademark strategies in advance to avoid IP risks
in cross-border operations. Concurrently a rapid response mechanism for infringement disputes is Animal Welfare Protection
established to ensure early detection and handling of IP infringements.Upholding our corporate purpose of "Pursuing Truth in Science and Kindness in Ethics" we regard animal welfare ethics
Deepening Lifecycle Management as a core element of responsible R&D. By continuously improving the governance system strengthening ethical review
and process supervision optimizing experimental operations and animal care and enhancing supplier management and
The Company integrates IP management throughout the entire lifecycle—from R&D initiation and personnel training we systematically protect the welfare of laboratory animals and promote the conduct of scientific
technological breakthroughs to product launch and subsequent iterations. It builds a multi-layered research activities in line with ethical standards.and comprehensive patent protection system around core technologies. Furthermore the Company
strengthens trade secret protection through measures such as technological encryption access control We dynamically update the institutional system every year based on national standards and practical feedback. During
and confidential information personnel management thereby safeguarding the return on innovation the reporting period we added and revised procedure documents such as the Operating Procedures for Laboratory
investments. Animal Inspection and Supervision and the Anesthesia and Analgesia Procedures for Animals to ensure the scientificity
and operability of the system. In addition we conduct strict ethical review of animal experiments through the Institutional
Animal Care and Use Committee (IACUC) and conduct regular supervision of breeding and experimental facilities to form
a management closed loop.Key Performance
The IACUC completed the review of 65 animal use plans covering major animal experiment types
such as pharmacodynamics pharmacokinetics and toxicology;
The IACUC conducted 2 internal animal facility reviews covering the hardware environment and
feeding management of laboratory animal facilities and no major defects were found.
25 26Health Access: Innovation-Driven Development and Inclusive Healthcare
In experimental operations we actively implement the internationally recognized "Reduction Replacement Refinement" Indices and Goals
(3R) principle and take various measures to improve animal welfare.
During the reporting period the indices and goals of the Company in terms of product R&D and technological innovation
is as follows:
Efficient Use of Animal Alternative Blood Collection
Resources (Reduction) Methods (Replacement)
We established a flexible We gradually adopt submandibular Key Performance
management mechanism for trial vein blood collection to replace
plan changes to transfer already- the previous method of retro-
ordered animals to inventory orbital bleeding under anesthesia
or designate them as "surplus significantly reducing pain and
animals" thereby reducing stress experienced by animals
unnecessary additional orders. during the procedure.As of the end of the reporting period including
1922 utility model design patents have been 809 invention 914 199patents authorized patents authorized
authorized patents authorized
Enriched Living Environment (Refinement)
We introduce environmental enrichment items such as toys sterilized sunflower seeds
and jelly into the housing environment. This effectively improves the physiological
state and tolerance of experimental animals thereby extending the observation
window for experiments and contributing to more stable experimental data. During the reporting period 616 224 new patents were authorized
new patent applications were filed
In addition we extend animal welfare and ethical requirements to the supply chain and continuously improve the
awareness and skills of all relevant personnel through training.Goals 2025 Achievement
Kelun-Biotech Conducts Audits on Laboratory Animal-Related Suppliers
Percentage of R&D Expenditure in Sales (%) 11.91%
To safeguard animal welfare and the quality of breeding and R&D from the source Kelun-Biotech conducted a
total of 10 on-site or online audits on laboratory animal service suppliers during the reporting period covering
the suppliers' management systems facility conditions quality assurance animal welfare transportation
specifications and other aspects in an all-round way. All problems and suggestions identified in the audits
have been communicated with the suppliers and followed up ensuring that the supply chain complies with the
Company's quality and ethical standards.Kelun-Biotech Conducts Animal Welfare Training
In 2025 Kelun-Biotech organized a total of 4 special training sessions on animal welfare. Through the training
the experimental staff deepened their understanding of the welfare principle of "avoiding animal suffering".They were able to promptly implement care measures during operations enhance their capacity for monitoring
animal welfare throughout experiments and disseminate key points of animal ethics review. The staff's
awareness of experimental animal ethics review and critical aspects of each experimental procedure was
continuously strengthened.
27 28Health Access: Innovation-Driven Development and Inclusive Healthcare
Improving Healthcare Accessibility During the reporting period we obtained approval for a total of 69 evaluated pharmaceutical preparations covering 31 provinces municipalities and autonomous regions across the country including anti-tumor drugs anti-infection drugs
central nervous system drugs and other varieties.To enhance the accessibility of the Company's healthcare services worldwide KELUN PHARMA always adheres to Anyue Branch Successfully Passes Acceptance of Sichuan Provincial Key Sci-Tech
the patient-centered development philosophy actively responds to the national medical and health system reform Achievement Transformation and Demonstration Project
systematically improves the drug supply guarantee capacity expands diversified market access channels deepens the
development of sinking markets and firmly advances the internationalization strategy. KELUN PHARMA is committed to In October 2025 the provincial key sci-tech achievement transformation and demonstration project Industrial
providing high-quality and affordable medical solutions for global patients. Application of Citalopram Hydrobromide Tablets for Antidepressant undertaken by Sichuan Kelun Pharmaceutical
Co. Ltd. Anyue Branch successfully passed the acceptance inspection by the expert group organized by the
Domestic Market Science & Technology Department of Sichuan Province. With the core objectives of "improving quality and
efficiency and expanding production capacity" the project has not only significantly increased the production
We actively respond to the national medical and health system reform adhere to the patient-centered approach and batch of antidepressant drugs but also upgraded the automation level and quality assurance capacity of the
strive to continuously improve the accessibility of drugs in the Chinese market through systematically enhancing the drug production line. It has laid a solid foundation for ensuring the stable supply of antidepressant drugs to meet
supply guarantee capacity and expanding diversified market access channels and lower-tier market coverage. We aim public medication needs and improving their accessibility and affordability which stands as a major practical
to deliver high-quality medicines to patients in need more efficiently promptly and conveniently putting the "Healthy achievement of the Company's commitment to serving the cause of people's livelihood and health.China" strategy into practice through concrete actions.Overseas Markets
KELUN PHARMA's Strategy for Improving Healthcare Accessibility We continue to advance our internationalization strategy and actively expand into emerging markets and markets in
developing countries and have achieved remarkable progress in enhancing healthcare accessibility.In low and middle-income countries across Asia the Americas Africa and other regions we provide local patients with
The Company adheres to an "API-formulation integration" strategy during the R&D highly accessible and reliable medical solutions covering multiple key therapeutic areas such as parenteral nutrition anti-
phase to enhance the supply capacity of essential drugs from the source. In 2025 the bacterial infection cardiovascular diseases and anticoagulation which reflects our commitment to global health equity.Company obtained approval for 7 new APIs and 42 drug formulations and initiated Our antibiotic intermediate products are mainly exported to India Iran Pakistan Bangladesh and other countries 70% of
Ensuring Stable Drug R&D projects for an additional 12 APIs and 9 drug formulations laying the foundation which are sold to India mainly penicillin and cephalosporin series products. It ensures the stable supply of antibiotics in
Supply for subsequent continued stable supply of drugs. target countries.Beyond the current operational scope we have formulated clear goals and strategies to expand into emerging markets:
The Company actively expands market coverage for drugs post-launch: KELUN PHARMA's Expansion Goals for Emerging Markets
● In-Hospital Market: Ensure newly launched drugs are promptly listed on provincial Preparation Products
procurement platforms for rapid inclusion in medical institution purchasing catalogs.Expanding Market ● Out-of-Hospital Market: For varieties suitable for retail and online channels ● The Company continuously deepens presence in emerging markets. By precisely matching local medication needs leveraging
Access Channels simultaneously establish presence in major pharmacy chains and compliant product technological advantages and optimizing sales channels and models the Company enhances the accessibility of a broader
e-commerce platforms to cater to diverse patient purchasing scenarios. range of medicines. Focusing on Asia Africa and Latin America the Company targets pain points such as shortages of primary
healthcare resources and high prevalence of chronic and infectious diseases accelerating registration and market access. During
the reporting period over 30 of the Company's products were approved in emerging countries.The Company actively participates in national and local centralized volume-based
procurement (VBP) schemes. In 2025 it participated in 14 batches of national and API Products
provincial VBPs with 56 varieties successfully selected. Concurrently the Company
●
Deepening Coverage proactively supports provincial "Three Entries" programs (centralized procurement The Company focuses on emerging and potential markets in Europe America Japan and BRICS countries. The Company has
in Centralized of drugs entering pharmacies clinics and private hospitals) to facilitate the distribution developed clear international filing promotion and marketing plans. It has also established close direct and long-term reciprocal
Procurement of VBP drugs to primary care facilities further enhancing patient accessibility and collaborations with well-known professional agents and large local generic drug manufacturers in various countries and regions. This
affordability. enables comprehensive coverage of the middle-end market from the high-end market.Antibiotic Intermediate Products
The Company continues to participate in National Reimbursement Drug List (NRDL)
negotiations promoting the inclusion of more key varieties in the national medical ● Over the next 3-5 years the Company plans to further expand its overseas market presence partnering with internationally
insurance coverage. This significantly reduces patients' out-of-pocket expenses renowned pharmaceutical companies on penicillin cephalosporin and other products.Integrating into
the National effectively improves drug accessibility and ensures innovative and high-quality generic
Reimbursement System drugs benefit a broader insured population. As of the end of the reporting period we have completed the registration of more than 30 pharmaceutical preparation
products in total continuously expanding our business coverage in emerging markets enhancing our product innovation
and market response capabilities and laying a solid foundation for sustainable development.
29 30Health Access: Innovation-Driven Development and Inclusive Healthcare
Participating in Capacity Enhancing Programs for Developing Capacity
Countries Enhancing Medium and Long-Term
Program Sustainable Development Goal2
2025 Progress
We attach great importance to the advancement of medical and health undertakings in developing countries. Relying In Kazakhstan and Sri Lanka: We have deployed R&D in overseas
on the Group's international development strategy we closely cooperate with local partners and actively participate subsidiaries including Kelun-Kazpharm and Celogen Lanka and launched R&D projects based on investigations into local drug
in various programs for enhancing local medical and health service capabilities. We formulate and continuously track Participating in Launch R&D projects continuously regulatory authorities hospitals and local market medication
medium and long-term sustainable development goals and jointly promote the improvement of medical service levels in Public-Private provide technical guidance to R&D quality and other personnel demands. Overseas subsidiaries recruited local personnel who
developing countries. Partnerships to at overseas bases in the process were arranged to receive guidance from Kelun Pharmaceutical Enhance Local R&D
Capabilities in Low and continuously improve local
Research Institute to enhance the local R&D capabilities in low
personnel's R&D capabilities and the and middle-income countries. As of the end of the reporting and Middle-income
Countries local level of pharmaceutical R&D
period we have launched and carried out more than 300 R&D
Capacity through projects projects overseas. Among them in Sri Lanka two products
Enhancing Medium and Long-Term 2025 Progress (Metformin Hydrochloride Tablets and Omeprazole Capsules) and Sustainable Development Goal2 two small-volume liquid production lines have obtained EU GMP Program certification.In Kazakhstan: Kelun-Kazpharm has adopted an innovative Assisting Local
cooperation model established strategic cooperative relations Pharmaceutical In Sri Lanka: Celogen Lanka invested by KELUN PHARMA in
Invest in building overseas factories in all local states and realized the fast and accurate delivery of Enterprises in Low Cooperate with local regulatory
to reduce medication costs and lead successful bid products to local hospitals by virtue of the local and Middle-income authorities such as drug
Sri Lanka has become the first pharmaceutical enterprise in
administrations to provide consulting Sri Lanka to obtain EU GMP certification which has greatly times in low and middle-income distribution agent network; In Sri Lanka: Kelun Lifesciences Pvt. Countries in Meeting promoted the local pharmaceutical manufacturing level to meet
countries and shorten overseas Ltd. (Sri Lanka) directly distributed drugs to end-user institutions International and guidance for enterprises international pharmaceutical production standards. In 2025 two
supply chains through local organizations greatly cutting down intermediate Pharmaceutical enabling more products to obtain EU newly added small-volume liquid production lines obtained EU
links and ensuring that drugs can serve patients in a timely and Production Quality GMP certification GMP certification.effective manner. Standards
Optimizing
Pharmaceutical Two newly added small-volume liquid production lines in the
Supply Chains in Assist overseas production lines in two factories invested and constructed by us in Sri Lanka have
Low and Middle- obtaining EU GMP certification to successfully obtained EU GMP certification further enriching the Providing Training Conduct continuous annual training
income Countries for Local Health for local medical and nursing staff in In Vietnam and Kazakhstan: We conducted irregular annual raise the level of medication in low product matrix with EU certification and effectively improving
to Improve Drug training and promotion of new products for local medical and middle-income countries local drug accessibility and pharmaceutical manufacturing Workers in Low low and middle-income countries;
Accessibility for and Middle-income and nursing staff to ensure proper usage and timely market capacity. Provide training on the use of 100%
Patients Countries availability upon launch.of new products
Assist overseas customers in
optimizing their own warehouse Building the
storage capacity; plan to cover 60% We have assisted overseas customers in optimizing their own Capacity of
Public Health Establish a long-term communication of customers' warehouses in the warehouse storage capacity.Infrastructure mechanism with local governments We have established long-term cooperative mechanisms through next 3-5 years and improve the "last
Information Systems and official institutions and provide cooperation with local schools and reserved professional talents mile" drug supply
or Health Projects assistance within our capacity with solid pharmaceutical knowledge for the local area.in Low and Middle- according to real-time needs
income Countries
We conducted irregular pharmacovigilance-related training
for end users or distributors via emails or online meetings and
Supporting Low Provide pharmacovigilance-related timely sent documents such as Drug Safety Reports and Periodic
and Middle- training for all intermediaries Safety Update Reports to distributors to ensure the safety and
income Countries distributors and end customers for controllability of medication;
in Carrying Out 100% of exported products and supply pharmacovigilance training We exported products to regions such as Southeast Asia Pharmacovigilance materials (e.g. videos operation South America Africa and Europe and conducted post-Work manuals etc.) marketing surveillance in developing countries based on the
Pharmacovigilance Monitoring and Reporting Management
Procedure.Kelun-Kazpharm Organizes Training for Local
Medical and Nursing Staff
2 Definition of Period: Medium-to-long term refers to the next 3 to 5 years. Kelun-Kazpharm Provides Training for Local
Medical Students
31 32Health Access: Innovation-Driven Development and Inclusive Healthcare
Improving Drug Affordability Product Name Pricing Details
● Meropenem for injection/sodium chloride injection: It is indicated for infections
caused by single or multiple meropenem-sensitive bacteria in adults and children.Based on the core concept of product affordability we revised the Fair Pricing Policy during the reporting period to adapt The medical insurance payment price was reduced from RMB 50.50 per vial before
to the diversities in global healthcare service demands as well as the differences in drug payment mechanisms and fiscal negotiation to RMB 28.66 per vial a decrease of 43.24%.system affordability across regions. On the premise of complying with the laws and regulations of target countries and
regions we take a comprehensive account of key factors including local GDP levels economic and social development ● Imipenem and cilastatin sodium for injection/sodium chloride injection: It is indicated
levels reflected by the UN Human Development Index the status of local public medical systems and the prices of peer for the treatment of severe infections mixed infections caused by multiple Powder-Liquid
products when formulating tiered pricing strategies. We maintain relatively consistent drug pricing among countries at pathogens and aerobic/anaerobic bacteria as well as early treatment before Dual-Chamber Bag
the same development level and in markets at the same level within a single country. pathogen identification. The medical insurance payment price was reduced from
RMB 78.80 per vial before negotiation to RMB 53.08 per vial a decrease of 32.64%.Domestic Market
We actively respond to the national medical and health system reform and strictly implement the national drug price ● It participated in the follow-up project of national proprietary Chinese medicine
supervision policies ensuring that the pricing of all drugs abides by the requirements of relevant laws and regulations and centralized procurement with a price reduction of 42.2% compared with the original
safeguarding the fairness and transparency of drug prices. Meanwhile we take an active part in the national volume- winning price.based drug procurement and national medical insurance negotiations reducing product prices to the maximum extent Kangfuxin Liquid
and effectively lowering the medication threshold and economic burden for patients.Business Segment Equitable Pricing Strategy Overseas Markets
● For the first generic drugs launched on the market pricing shall not exceed that of When promoting products in overseas countries or regions we adhere to the principle of "demand orientation and
the original research reference drug enterprises in line with relevant national policies; value matching" and formulate reasonable pricing strategies based on local economic development levels and market
● For drugs with the same generic name already approved for marketing by other conditions. Meanwhile we actively participate in local government drug procurement and bidding activities committed to
Generic Drugs enterprises pricing shall refer to the median price of such varieties of the listed alleviating the economic burden of medication for local patients.enterprises.● Tiered pricing strategies for products shall be implemented with comprehensive Product Type Equitable Pricing Strategy
consideration of factors including the economic development levels of different
countries and regions the UN Human Development Index public medical investment
and the public's economic affordability;
● In addition to aligning with local income levels we also compare our products with
● Drug prices shall be ensured to be relatively consistent across countries and regions other similar local products. Our products in Asia Africa the Americas and other
Innovative Drugs at the same development level and in markets at the same level within a country so regions are significantly lower than or equal to similar products in price covering
as to benefit more patients worldwide. anti-tumor anti-bacterial infection parenteral nutrition anesthetic analgesia and
other therapeutic areas;
Preparation Products
● The selling prices of large-volume injection products exported to developing country
During the reporting period we actively participated in the 11th round of the national centralized drug procurement markets such as Africa and Southeast Asia are more than 20% lower than those in
program and won the bids for 14 specifications under 12 varieties in total. The products cover the treatment fields of developed countries.multiple chronic and major diseases including anti-infection oncology diabetes hypertension rheumatoid disorders
psychiatry anesthetic analgesia osteoporosis and nutrition. The average price reduction of the winning products reached
83% higher than the national average level of centralized procurement which significantly reduced the economic burden
on patients.● A equitable pricing strategy aligned with local income levels shall be adopted in
In addition as of the end of the reporting period a total of 353 varieties of our products have been included in the overseas sales;
National Reimbursement Drug List (2025 Edition) including 338 chemical drugs and 15 proprietary Chinese medicines.● For our strategic cooperation customers in-depth cooperative relations shall be
Classified by Category A and Category B: 127 varieties are Category A and 226 are Category B. In the past four years we Active Pharmaceutical established with customers by signing framework agreements and other means and
have applied for the inclusion of 20 new varieties in the national medical insurance negotiation (bidding) catalog through Ingredients (APIs) & certain preferential terms shall be given on the basis of market prices.national medical insurance negotiations; at present a total of 9 varieties in the National Reimbursement Drug List (2025 Antibiotic Intermediates
Edition) have the status of negotiated drugs.
33 34Quality as the Foundation: Quality Culture and Product Responsibility
Quality as the
Foundation
Quality Culture and
Product Responsibility
Driven by Kelun's core values we continue to practice the
"Holistic Quality" philosophy and systematically construct
and continuously improve a quality-centric operation and
management system. By strictly implementing product
safety and quality assurance mechanisms we ensure
the entire process from R&D to delivery is controllable
and reliable; by providing high-quality customer services
we continuously enhance user experience and trust.Meanwhile we actively advance the construction of a
sustainable supply chain and collaborate with partners to
jointly fulfill our responsibility commitments.Product Safety and Quality
Customer Service
Building a Sustainable Supply Chain
Contribution to the United Nations Sustainable
Development Goals (SDGs):
35 36Quality as the Foundation: Quality Culture and Product Responsibility
In terms of quality management system certification we actively integrate international standards. As of the end of the
reporting period all our production bases have obtained GMP certification among which 16 have been awarded ISO 9001
certification accounting for 48.48% of all production-oriented enterprises.Certification Entities of the Quality Management System
Xindu Kunming Anyue Renshou Qionglai
Base Nanjiang Branch Branch Branch
Qingshan Junjian CHUANNING Guang'an Guangxi Yueyang
Product Safety and Quality Likang Plastic BIOTECH Branch Kelun Branch
Jinhe
KELUN PHARMA has always adhered to a quality-centric corporate development philosophy and the principle of "quality Hubei Hunan JIANGNING JINHE Biotechnology
first safety foremost" and strictly complied with the national drug regulatory requirements to ensure the sustained Kelun Kelun BIOTECH BIOTECH Horgos Branch
stability and reliability of product quality.Governance
In the product production link we have established a three-level quality management organizational structure covering
decision-making supervision and management and implementation. Among them the Production Technology Committee
as the decision-making body is directly led by the Company's senior management. During the reporting period we
revised the Quality Manual and continuously improved the quality management system and standard system to ensure
that products consistently comply with registration regulations and pharmacopoeia requirements.Organizational Structure of Product Quality Management (Production Link)
Decision-making Body Production Technology Committee
Supervisory Authority Production Management Department Quality Supervision Center
ISO 9001 Quality Management System Certification Certificate (Example)
In response to post-marketing product safety issues we have established a joint management mechanism comprising
a two-level Drug Safety Committee at both the group and factory levels. The group-level committee led by the group
Executive Body Production/Quality Department general manager is responsible for decision-making on major safety incidents and cross-system coordination. The factory-
level committees led by the general manager of each factory are responsible for the daily safety management of their
respective factories. The two-level committees operate in coordination to achieve closed-loop disposal of safety risks.
37 38Quality as the Foundation: Quality Culture and Product Responsibility
Key Honors Strategy
During the reporting period our "Intelligent Factory for Large- We have built a risk management system covering the entire product life cycle which systematically identifies product
Volume Injections with Integrated Production Supply and safety and quality risks in key dimensions such as raw and auxiliary materials packaging materials production processes
Sales Collaboration" was certified as an Excellent Intelligent
Factory by the Ministry of Industry and Information Technology production equipment and storage warehouses assesses their potential impacts and forms a dynamic management list
(MIIT). Since the launch of this certification in 2024 both to provide a basis for developing response measures.Xindu Base and Hunan Kelun have been successively selected
demonstrating our strong strength and leading position in the
field of intelligent manufacturing. KELUN PHARMA's Product Safety and Quality Risk List
Our "Application of Fully Automatic Light Inspection System
for Infusion Products Based on Machine Vision Detection and
Intelligent AI" was recognized as a 2024 Typical Case for Likelihood Potential Financial
Quality Improvement and Brand Building by MIIT; in accordance Risk Type Risk Description of Impact Impact Cycle
with the Evaluation Model for Intelligent Manufacturing Certificate of Compliance with Intelligent Occurrence
Capability Maturity we have achieved Level 3 maturity. Manufacturing Capability Maturity Standards
Quality Risks of Inadequate supplier quality systems fail to May lead to consistently supply materials meeting quality an increase in
In addition we have constructed a group-based intensive pharmacovigilance management system. A Drug Safety Raw Auxiliary and Packaging Materials requirements resulting in non-compliant
Low the Company's Short-term
Risk Management Department has been established at the headquarters to centrally guide the pharmacovigilance preparation quality production costs
management departments of all subsidiaries and branches in conducting adverse reaction collection monitoring reporting
risk assessment post-marketing research and other related work. A 7-member expert team is stationed at the group level Irrational parameter design imprecise
responsible for the centralized coordination and promotion of pharmacovigilance and post-sales safety management Production Process processes and inaccurate parameter
Risks control in production processes lead to non- Low Short-termacross the entire group; each subsidiary and branch has set up a full-time pharmacovigilance department with a qualified
compliant or unstable preparation quality
pharmacovigilance officer in charge.We strictly comply with the Good Pharmacovigilance Practices and relevant guiding principles and have established a Inadequate cleaning procedures for shared
sound institutional system including core documents such as the Management Regulation on Post-Marketing Drug Safety Cross- equipment in the production process fail
May result in
Research Management Regulation on Adverse Drug Reaction Reporting and Monitoring and Management Regulation Contamination Risks to reduce residual products from previous Low
product recall
expenses reduced Short-term
on Drug Safety Risk Management. Furthermore to ensure the effective operation of the pharmacovigilance system we batches to an acceptable level causing non-compliant preparation quality sales revenue and
conduct regular systematic and independent audits on the system so as to fully safeguard the public's medication safety. potential regulatory fines and legal
litigation costs
Inadequate packaging and sealing processes
Internal and External Audit Responsibilities for Pharmacovigilance at the lack of temperature and humidity monitoring
Headquarters and Subsidiaries/Branches
Storage and in storage warehouses failure to ensure
Transportation Risks long-term compliance with drug storage Low Short-termrequirements and packaging damage during
Drug Safety Risk Management Department of Headquarters drug storage and transportation cause drug
contamination or deterioration
● Coordinate pharmacovigilance internal audits and external inspections for all subsidiaries (and
branches) within the group. Coordinate preparations for extended inspections by regulatory
authorities and facilitate related corrective actions.● Regularly conduct internal audits of the pharmacovigilance system within the department.Pharmacovigilance Management Departments of Subsidiaries (Branches)
● Organize and conduct internal pharmacovigilance audits within the company.● Organize preparations for external inspections promptly implement corrective actions based on
inspection findings and provide rectification reports when necessary.Product Safety and Quality Management Assessment Mechanism
We have established a product safety and quality management assessment mechanism strictly implemented the
Quality Objectives and Assessment Plan for Subsidiaries and Branches and the Measures for the Control of Major Quality
Incidents and set the weight of year-end quality performance assessment at 20% to 30% forming a positive cycle of
"promoting performance through quality and ensuring quality through performance".
39 40Quality as the Foundation: Quality Culture and Product Responsibility
Impact Risk and Opportunity Management Material Procurement Link
We strictly abide by the processes and requirements of quality risk management in our work to ensure the scientificity We comprehensively improve supply chain resilience and ensure the continuous and stable supply of key materials
and rationality of quality risk management. Based on risk management methods and tools we make more effective risk- through forward-looking risk research and judgment reasonable material standards dynamic inventory adjustment
based decisions to eliminate reduce or control potential risks and protect the interests of patients. diversified supply layout and in-depth supplier collaboration.Product Quality and Safety Risk Management Process Measures for Ensuring Production Continuity in the Material Procurement Link
Process Initiation Industry Information Analysis:
Define risk management objectives and scope covering all stages from R&D and production to sales and Communicate regularly with material suppliers to track industry dynamics and assess supply risks.market withdrawal.Setting Reasonable Standards
When establishing or changing product material standards simultaneously assess material
Risk Identification availability and cost implications to avoid situations where overly stringent standards lead to market
supply shortages or necessitate high-cost procurement.Systematically identify potential risks that may affect product quality and safety across dimensions
such as APIs and excipients packaging materials production processes production equipment and Implementing Multi-Sourcing
warehousing inventory.Mitigate single-source supply risks by sourcing from suppliers across multiple regions and countries.Assessing Supplier Resilience
Risk Assessment
In supplier evaluations comprehensively consider their scale inherent risk resilience and emphasis
Analyze and grade identified risks using scientific tools to determine their severity and likelihood of on preparedness mitigation and recovery plans.occurrence.Establishing Safety Stock
Establish a safety stock adjustment mechanism to proactively adjust inventory and procurement
Risk Control plans based on demand forecasts.Develop and implement corresponding control measures based on assessment results to eliminate
reduce or manage identified risks. Developing Strategic Partnerships
Establish strategic partnerships and sign long-term agreements with key material suppliers to ensure
long-term supply chain stability.Quality Emergency Management
Production and Manufacturing Link
We adhere to proactive prevention and risk prediction and respond systematically to potential risks such as production
disruption product supply interruption and product safety hazards. In light of this we have formulated the Quality Risk
Response Plan covering material procurement production and manufacturing product transportation post-marketing To ensure the continuity of product supply we adopt a strategy combining multi-base collaborative production and
supervision and other links which applies to all products under research and already on the market. Through the equipment maintenance. By improving the multi-base layout we promote the realization of certified production and
implementation of this plan we identify and control various operational risks and implement mitigation measures to nearby distribution of commonly used varieties across multiple bases. While improving operational efficiency we have
ensure the quality and safety of products throughout their life cycle and business continuity as well as the continuous built a backup production capacity system that can be quickly switched ensuring no supply interruption in the event of
delivery of safe and reliable products to customers. sudden incidents such as natural disasters and epidemics.During the reporting period we revised institutional documents including the Regulations on Disaster Recovery and At the same time we fully implement the preventive maintenance management of equipment requiring all production
Emergency Management of Group-Deployed Quality Information Systems and the Regulations on Business Continuity enterprises to strictly implement the Preventive Maintenance Management Regulations to ensure the continuous and
Management of Group-Deployed Quality Information Systems further enhancing the Company's ability to ensure stable operation of production equipment reduce the risk of unplanned downtime and thus provide reliable support for
business continuity in an information-based management environment. continuous production and stable product quality.
41 42Quality as the Foundation: Quality Culture and Product Responsibility
Product Transportation Link Quality Inspection
During the reporting period we organized and carried out The Company has built a high-level testing platform featuring
systematic special training for all carriers focusing closely comprehensive coverage and advanced technology. To date the
on the specific quality requirements in product logistics and Company has set up more than 22 quality control laboratories
transportation (e.g. temperature and humidity control shock equipped with over 500 high-precision testing instruments capable
and pressure prevention cleanliness assurance etc.) as well of covering more than 1100 testing items. This effectively ensures
as standardized handling and loading/unloading operating the accuracy of testing results and provides a solid foundation
procedures. Through a combination of theoretical explanation for product safety and efficacy. Laboratories of 7 core subsidiary
and practical operation cases we deepened carriers' companies have passed the authoritative assessment of the
understanding of quality risks that may be caused by improper China National Accreditation Service for Conformity Assessment
operations effectively raised their awareness of product (CNAS) and obtained CNAS accreditation demonstrating the
quality protection and extended the company's strict quality The Company Conducts Training on Quality professionalism and credibility of the Company's testing system.management standards to the "last mile" of product delivery Requirements for Product Carriers
significantly reducing logistics-related quality risks. During the reporting period the Company actively introduced
advanced testing technologies from across the industry and
continuously optimized its processes. While improving testing
Post-Marketing Supervision efficiency and data reliability the Company further strengthened
quality control throughout the entire process and advanced the
We have established a robust post-marketing drug quality and safety supervision mechanism. Based on standardized shift of quality risk management toward proactive prevention.traceability and information systems we achieve full traceability of drugs from production to end use. Meanwhile relying
on an institutionalized product recall system and regular drills we continuously enhance our capacity to respond to and
handle safety risks. Introduction of Advanced Testing Technologies
Drug Quality and Safety Traceability System
PAT for Automated Intermediate Monitoring
Standardized Traceability Implementation Applied in the Company's intensive high-speed production lines to enable dynamic
monitoring of critical process parameters significantly improving the precision and
Strictly implement standardized operations during production and packaging with complete timeliness of process control.records and assign a unique electronic monitoring code to each sales packaging unit.Automated Testing Technology
Information System Traceability Integration
Applied in the Company's laboratories integrating automated equipment with data
Integrate information systems such as LIMS QMS and WMS to build a unified digital quality systems to reduce human error significantly improve testing efficiency and ensure
management platform. This enables data linkage and full-process traceability from raw consistency and reliability of results.material entry through production and distribution to clinical use.Product Recall Mechanism Quality Culture Development
The Company attaches great importance to the development of a quality-oriented culture and actively promotes the
Develop guiding documents such as the Drug Recall Management and Guidelines for Handling
System "Kelun's Grand Quality Concept". A systematic quality training framework has been established under which diverse Sudden Drug Safety Incidentsto promote the establishment of product recall systems
Safeguards product safety and quality-related training programs are conducted annually for all employees.and procedures across all subsidiaries (and branches) in compliance with relevant laws
regulations and company requirements. This ensures the ability to promptly and effectively The Company's training system spans the entire employee career lifecycle covering all stages from onboarding training
recall batches of products with potential safety risks. pre-job training to post-job continuing education ensuring that every employee receives training relevant to their
position including GMP knowledge applicable laws and regulations and standard operating procedures.In addition the Company has established specialized training programs for different functions and levels such as
Drill
Continuously evaluate the responsiveness and effectiveness of the recall process and the "Knowledge Lecture Hall" and the "Drug Vigilance Training Center" for quality management personnel. Training is Improvement
optimize the recall system through regular activities like mock product recalls. delivered through a combination of on-site lectures online learning and practical assessments. Training effectiveness
is tracked through multi-dimensional evaluation forming a complete training loop and providing strong support for
pharmaceutical quality and production safety.
43 44Quality as the Foundation: Quality Culture and Product Responsibility
2025 Product Safety and Quality Training Matrix
Category Training Category Training Content Frequency Organization Form Training Method Effectiveness Tracking
Basic training for new 5S Management Fundamentals of Lean Standardized New employee onboarding Organized uniformly by the On-site lectures + learning All new employees must pass the
employees Operations etc. training Quality Department via E-learning platform online assessment as one of the conditions for onboarding.GMP training for new Clean Area Personnel Behavior Standards Microbiology All new employees must pass the
employees Fundamentals Personal Hygiene Requirements Pharmaceutical
New employee onboarding Organized uniformly by the On-site lectures + learning
Fundamentals etc. training Quality Department via E-learning platform
online assessment as one of the
conditions for onboarding.New employee induction
Drug production and quality Drug Administration Law of the People's Republic of China All new employees must pass the
laws and regulations Measures for the Supervision and Management of Drug
New employee onboarding Organized uniformly by the On-site lectures + learning online assessment as one of the
Production Good Manufacturing Practice and appendices etc. training Quality Department via E-learning platform conditions for onboarding.SOP Organized by training
GMP knowledge drug Pre-job training; retraining administrators of the Production
Production staff production regulations the SOP for Light Inspection Position SOP for Filling Position SOP when relevant regulations are Department supervised by
On-site lectures + learning
via E-learning platform + Theoretical assessment on-site
Company's drug production for Packaging Position etc. revised department heads; tracked practical assessment Q&A practical assessment
management systems and and managed by the Quality
position SOPs Department
GMP knowledge drug quality Organized by departmental
regulations the Company's Deviation Management Procedure Change Management Pre-job training; retraining training administrators On-site lectures + learning Quality staff drug quality management Procedure Electronic Balance SOP Product Release when relevant regulations are supervised by department heads; via E-learning platform +
Theoretical assessment on-site
Management Procedure etc. revised tracked and managed by the practical assessment Q&A practical assessmentsystems and position SOPs Quality Department
Pre-job Organized by departmental
training Equipment Professional knowledge Equipment Maintenance Procedure Equipment Lifecycle Pre-job training; retraining training administrators On-site lectures + learning
management staff training Management Procedure Preventive Equipment Maintenance when relevant regulations are supervised by department heads; via E-learning platform +
Theoretical assessment on-site
Procedure etc. revised tracked and managed by the practical assessment Q&A practical assessment
Quality Department
Raw Material Receipt/Dispatch/Storage Management Organized by departmental
Professional knowledge Procedure Finished Product Receipt/Dispatch/Storage Pre-job training; retraining training administrators On-site lectures + learning Warehouse staff training Management Procedure Finished Product Shipping when relevant regulations are supervised by department heads; via E-learning platform +
Theoretical assessment on-site
Management Procedure etc. revised tracked and managed by the practical assessment
Q&A
Quality Department
Drug production and quality Retraining when relevant
All Staff laws and regulations revision Such as Measures for the Administration of Drug Registration regulations are revised;
Combination of company-level Internal trainer PPTs Theoretical assessment on-site
of drug production and quality Measures for the Administration of Vaccine Production etc. training when new regulations department-level and position- online learning through
documents are issued level training recorded videos
Q&A
Continuing Core management Training on international laws EU GMP Annex 1: Manufacture of Sterile Medicinal Products Internal trainer PPTs
education personnel regulations and guidelines ICH Q10 Federal Food Drug and Cosmetic Act EU GMP Guide
Organized based on business Company-level and department- online learning through Theoretical assessment on-site
Part 1 GMP for Medicinal Products etc. needs level training recorded videos Q&A
45 46Quality as the Foundation: Quality Culture and Product Responsibility
In terms of continuous improvement the Company encourages all employees to identify issues and implement Pharmacovigilance in Developing Countries
improvements within their respective roles by promoting rationalization proposals and Quality Control (QC) group
activities. These initiatives cover multiple areas including production processes and management fostering a culture In accordance with the Pharmacovigilance Monitoring and Reporting Management Procedure the Company
in which everyone pays attention to quality and participates in improvement. Through these efforts the Company systematically conducts post-marketing safety monitoring for pharmaceuticals in developing countries. The Company has
has effectively addressed numerous operational bottlenecks and potential risks in daily operations while further established an overseas adverse reaction monitoring and reporting mechanism and has signed agreements with overseas
strengthening company-wide quality awareness and reinforcing the foundation of its quality management system. agents to clarify their responsibilities for the collection and transmission of post-marketing adverse reaction information
as well as follow-up and investigation related to exported products. Relevant departments of the Company strictly handle
and report adverse reactions in compliance with regulatory requirements and continuously carry out risk identification
Incentivizing Employee Quality Proposals to Drive Company-wide Continuous Improvement and control activities thereby systematically safeguarding medication safety for global consumers.In 2025 the Company continued to advance product quality improvement efforts by establishing a specialized Collaboration Between the Company and Agents on Pharmacovigilance
incentive mechanism to encourage frontline employees to submit rationalization proposals for product quality
enhancement. During the year a total of 12555 proposals were received from 18 subsidiaries/branches Agents shall notify the Company of all Agents shall proactively conduct follow-up
covering areas such as cost control process optimization equipment upgrades and safety management. A Adverse Events (AEs) occurring with the and information collection for AEs.total of approximately RMB 390000 in special rewards was granted for adopted proposals. This initiative not use of the Company's products within
only delivered tangible improvements in quality and efficiency but also facilitated the culture of company- their territory.wide participation and continuous improvement bringing together grassroots insights and innovative vitality to
support the Company's high-quality development.Agents are responsible for sub-
Agents shall provide all relevant mitting documents such as Risk
information related to product AEs Management Plans (RMPs) and
Pharmacovigilance Mechanism to the Company within the required Periodic Benefit-Risk Evaluation
timeframe depending on the nature Reports (PBRERs) to territorial
of the AE. authorities in accordance with
The Company has established a systematic pharmacovigilance mechanism with global coverage. Through the regional legal requirements.implementation of standardized processes and intelligent tools the Company continuously enhances the monitoring and
response quality and efficiency comprehensively strengthening safety risk management throughout the entire lifecycle
of pharmaceuticals and laying a solid foundation for safeguarding patient safety worldwide. When agents request in writing that the Company investigate a drug adverse event the Company
shall provide the agents with an estimated timeframe for feedback on the investigation results
within the corresponding working days and provide feedback within that estimated timeframe.Corrective Measures for Deficiencies Identified in Pharmacovigilance Audits
Immediate Rectification Indices and Goals
For deficiencies that can be corrected immediately rectification is completed on the spot During the reporting period the Company's indices and goals for product safety and quality were as follows:
or as soon as possible after the audit concludes.Annual Coal Achievement Status
Inclusion in CAPA Management
No incidents of being ordered by drug regulatory authorities to suspend production for
For complex deficiencies that cannot be resolved within 20 working days they are included in CAPA rectification or having drug approval documents or the drug manufacturing license Achieved
management. revoked
Reporting and Approval No failures in inspections conducted by drug regulatory authorities due to the Company's
own reasons (including licensing inspections GMP compliance inspections on-site Achieved
After all deficiencies are rectified a Pharmacovigilance Deficiency Rectification Report must be
registration verification supervisory inspections and for-cause inspections)
systematically completed and submitted to the Head of the Drug Safety Risk Management
Department for review and approval.Production repeat deviation rate <5% Achieved
Record Archiving Training completion rate >90% Achieved
Within 7 working days after the audit concludes organize and archive all records related to the
audit. Timely closure rate of production deviation >90% Achieved
47 48Quality as the Foundation: Quality Culture and Product Responsibility
Customer Service
Product Quality Complaint (PQC) Handling Process
KELUN PHARMA has always adhered to a customer-centered service philosophy established an after-sales service
management system with clear hierarchy and well-defined responsibilities formulated and implemented a series of Information For different categories of Product Quality Complaints (PQC) the Company strictly
policies such as the Product After-sales Information Management clarified service standards throughout the entire Transmission adheres to established reporting scopes and timelines for information transmission.process and promoted all subsidiaries/branches to comprehensively establish and implement customer feedback
management mechanisms allowing for standardized closed-loop management covering information acceptance Any after-sales feedback that could potentially trigger a major crisis or cause severe
classification investigation and handling. The Company ensures that every piece of customer feedback receives a timely adverse impact must be immediately reported to the Quality Manager Qualified
and professional response while continuously safeguarding consumer rights and medication safety and continuously Person Enterprise Legal Representative and Headquarters Quality Management
driving the optimization and upgrading of products and services. Center. Concurrently the relevant senior management must be notified and personnel
must be dispatched to the site for immediate handling.After-Sales Service Management
Information For every PQC key information involved must be systematically and completely
The Company attaches great importance to customer after-sales feedback information regards it as an important basis Recording recorded to ensure sufficient basis for subsequent analysis and traceability.for improving quality and services and clearly requires all relevant departments to properly handle such information. The
Company strictly follows the principle of "local handling" with the sales region or subsidiary/branch where the feedback
information is received serving as the first responsible party ensuring that no after-sales information is omitted or shifted. Investigation Conduct internal and external investigations commensurate with the severity of each
If a product may have obvious quality defects or pose risks to patients the recall procedure shall be initiated immediately. PQC category and document the investigation process in detail.After-Sales Information Classification and Handling Process Developing Corrective The Quality Department in coordination with relevant departments formulates and Preventive Actions Corrective Actions and Preventive Actions (CAPA) as per Company requirements to
prevent recurrence of similar complaints. These actions are communicated to the
Receipt of after-sales Qualified Person and relevant directly responsible personnel.information
Response Respond to the user regarding the investigation results in writing by phone or by
dispatching personnel to the location.Preliminary
Review and Analysis Conduct monthly summaries and annual retrospective analyses of after-sales assessment information. Use statistical tools to identify recurring and high-risk issues reporting
by specialists
from Quality the findings to the Qualified Person and Quality Manager and to the Enterprise Legal
Department Representative when necessary.Record Management Assign a unique code to each PQC and archive it. Ensure complete records are
maintained for each key stage from receipt to resolution for long-term preservation.No product quality issues Product quality issues Patient safety risk
Non-product quality inquiries Product quality complaints Adverse events
(NON-PQC) (PQC) (AE)
Customer satisfaction survey
Quality specialists provide
The classification and handling Pharmacovigilance personnel The Company continuously optimizes and improves customer satisfaction by regularly conducting customer satisfaction on-site responses and
process is initiated based on handle the matter according surveys continuously gaining insights into customer needs and driving service improvements. During the reporting period conduct periodic reviews and
severity and scope of impact to procedures the Company achieved timely responses and closed-loop handling for all customer feedback received with a resolution analyses rate of 100%.
49 50Quality as the Foundation: Quality Culture and Product Responsibility
Customer Privacy Protection Responsible Marketing System
KELUN PHARMA strictly complies with laws and regulations such as the Personal Information Protection Law of the The Company strengthens the development of its marketing compliance management system by conducting high-
People's Republic of China and has established a customer privacy protection system covering the entire process frequency and irregular responsible marketing audits each year and integrates compliance requirements into the daily
of information collection storage transmission and use. The Company processes necessary information only under operations of frontline marketing personnel and relevant business units thereby enhancing employees' compliance
circumstances permitted by law and with explicit customer authorization and safeguards the security of sensitive execution capability and their recognition of the compliance culture.information such as personal information transaction records and health data through reliable technical and
management measures preventing illegal access leakage or misuse. The Company also conducts in-depth analysis of significant and common issues identified during inspections providing
important references for subsequent revisions of policies process optimization and improvement of the training
In customer services the Company fully respects and protects customers' rights to know and choose as well as their system thereby achieving routine supervision and closed-loop management and promoting the continuous iteration and
rights to privacy. Any operation involving customer privacy is handled transparently and an efficient response mechanism upgrading of the overall marketing compliance management system.has been established to promptly address various customer requests regarding information. Through continuous internal
training and improvement of institutional mechanisms the Company continuously enhances employees' awareness and
execution capability in privacy protection while providing high-quality pharmaceutical services and creating a secure and
trustworthy environment for customer information. Quarterly Compliance Spot-check Mechanism
The Company carries out regular quarterly spot-checks to identify potential risks in marketing
operations through systematic and standardized procedures. For significant issues and risk
Responsible Marketing points identified during spot-checks the Company promptly conducts special meetings and
written communications with the management of the marketing segment to jointly advance issue
KELUN PHARMA adheres to the principle of responsible marketing deeply integrates social responsibility into its rectification and process optimization.marketing practices and strives to conduct pharmaceutical and medical promotion in an ethical scientific and objective
manner while resolutely eliminating any misleading information. By strictly implementing internal management systems
such as the Responsible Marketing Policy and Compliance System the Company has established and continuously Unannounced Inspection Mechanism
improved its marketing compliance management system ensuring that all marketing activities strictly comply with laws During the reporting period the Company conducted over 250 unannounced inspections
and regulations and safeguarding market order and company reputation. across business units within the marketing segment focusing on verifying the compliance and
effectiveness of marketing activities and establishing a normalized supervision model.Responsible Marketing System
Responsible Marketing Training
Responsible Marketing Policy: A guiding document publicly available on the
official website. The Company continuously improves its responsible marketing training system and constantly enhances the professional
competence and compliance awareness of its marketing teams to ensure that marketing activities comply with legal and
● Scope of Application: All employees of the Company and its subsidiaries including full-time part-time regulatory requirements and business ethics standards.outsourced and temporary employees.● Policy Content: The Company's Responsible Marketing Policy defines basic marketing principles and covers
consumer privacy protection training for employees and partners responsible marketing audits and Conducting Specialized Training to Enhance Employees' Awareness of Responsible Marketing
mechanisms for handling violation reporting and supervision.In 2025 the Company systematically conducted specialized compliance training on responsible marketing for
Compliance System Series: Specific operational standards for responsible all employees in the marketing segment. The training focused on the key contents of the compliance system
marketing conduct. documents offering a series of video courses covering topics such as promotional material management
third-party due diligence and service provider management and employees were organized to participate
● Promotional and Non-Promotional Materials Management System: It establishes a review mechanism in the training through an E-learning platform. The training adopted a combined learning and assessment
before internal and external information release to ensure content is objective and compliant. model linking employees' learning progress with departmental performance to ensure training effectiveness.Market Service Provider Management System: It strengthens full-process management of third-party The training comprehensively improved marketing personnel's compliance knowledge and risk prevention ●
service providers. capabilities providing strong support for implementing the concept of responsible marketing.
51 52Quality as the Foundation: Quality Culture and Product Responsibility
Building a Sustainable Supply Chain
KELUN PHARMA has established an institutional system covering the entire lifecycle of suppliers to systematically
promote the sustainable development of its supply chain. During the reporting period the Company further improved
core standards such as the Material Supplier Management Measures and the Supplier Code of Conduct ensuring that
supply chain management fully complies with national laws and regulations pharmaceutical GMP requirements and the
Company's development needs thereby guaranteeing the compliance stability and sustainability of the supply chain
from the institutional level.Example of KELUN PHARMA's Supplier Management System
Material Supplier Material Supplier Quality Procurement Personnel
Conducting Training Based on Marketing Audit Results to Facilitate Issue Rectification and Management Measures Management Procedure Code of Conduct
Risk Prevention
In 2025 in response to common and high-frequency issues identified in quarterly spot-checks and unannounced
inspections the Company conducted specialized compliance training for the marketing team. The training
focused on topics including system operation standards the institutional basis for unannounced inspections
analysis of typical cases and risk early warning mechanisms. Throughout the year a total of seven training Supplier Code of Online Procurement Material Supplier Audit
sessions were conducted through both online and offline formats supplemented by in-class tests and interactive Conduct Management Measures Management Procedure
Q&A to reinforce learning outcomes. The training effectively reduced the recurrence of issues and significantly
strengthened the marketing team's ability to identify and prevent risks.As a group-based pharmaceutical company KELUN PHARMA implements a centralized management model for material
Key Performance suppliers of its controlled enterprises to achieve resource integration and risk control.Centralized Management of Material Sourcing
Centralized Procurement Unified Personnel
During the reporting period the Company covering Execution Qualification Management
42 3191 The Group's supply department Implement unified qualification conducted responsible marketing audits employees is uniformly responsible confirmation and recognition
for material procurement for supplier management
leveraging economies of scale leaders and quality auditors to
to ensure supply stability and ensure personnel capabilities
cost optimization. meet Group management
requirements.Standardization of Resource Coordination
A total of with total training hours reaching an average of Institutional Systems and Synergy
13063 employee 127100 39.84 Develop and promote unified Comprehensively utilize Group hours hours per person management systems resources coordinate various
participations were recorded in and documents to ensure management tasks improve
responsible marketing training all controlled subsidiaries efficiency conserve resources
adhere to consistent supplier and systematically control
management standards. supply chain risks.
53 54Quality as the Foundation: Quality Culture and Product Responsibility
Supplier Admission Evaluation Supplier audit
In the supplier admission evaluation stage the Company follows a strict and standardized multi-dimensional evaluation In accordance with the Material Supplier Audit Management Procedure KELUN PHARMA formulates and implements
process conducts comprehensive reviews of supplier qualifications and strictly enforces admission thresholds in terms of supplier quality audit plans. The audit scope comprehensively covers the six major GMP systems enabling the
quality compliance and capability. Company to control product quality and safety from the source. Audit results serve as a key basis for suppliers' annual
comprehensive performance evaluations and directly affect their subsequent procurement share thereby continuously
promoting the improvement and optimization of supply chain quality. In 2025 the Company's quality audits covered all
Dimensions of Supplier Admission Evaluation suppliers assessed as high-risk in terms of material availability and quality maturity.Material Quality Assessment Key Performance
● Including assessing the applicability of material quality standards.Process Suitability Evaluation During the reporting period the including
written
● Evaluating the compatibility of materials with production processes through trials and validation. Company completed audits of 342 99 441 audits suppliers on-site audits
Product Quality Assessment
● Encompassing verification of finished product quality stability.The number of suppliers that underwent the number of suppliers that underwent
social impact assessments was environmental impact assessments was
Supplier Comprehensive Qualifications and System Certification 463 463
● In supplier selection the Company focuses on its quality management EHS management
system social responsibility and environmental performance. Priority is given to suppliers with
certifications such as ISO and the procurement ratio from high-quality suppliers is continuously
increased.● Over 95% of the Company's API manufacturers over 90% of pharmaceutical excipient
manufacturers and over 90% of pharmaceutical packaging material manufacturers have
obtained ISO 9001 certification. The number of suppliers identified as having the number of suppliers identified as having actual
● 100% of the Company's API suppliers have passed GMP compliance inspections. actual or potential significant negative social or potential significant negative environmental
impacts was 0 impacts was 0
55 56Quality as the Foundation: Quality Culture and Product Responsibility
Supplier Capability Development Supplier Quality Training
Through systematic supplier capability development initiatives the Company continuously drives quality improvement To continuously enhance the quality management level of the supply chain the Company organizes diversified quality
across the supply chain. The Company adopts various measures such as seminars training sessions on-site diagnostics training for suppliers each year through multiple approaches such as online video learning offline thematic meetings on-
and benchmarking learning to assist material suppliers in optimizing production quality management and product quality site specialized guidance and information sharing. The training content covers key areas including quality management
control thereby ensuring their ability to provide compliant materials on a long-term and stable basis and establishing system development application of lean production tools contamination control strategies strengthening process and
sustainable and mutually beneficial partnerships. quality control and interpretation of newly issued regulations aiming to assist suppliers in consolidating their quality
foundations and strengthening compliance capabilities. At present online video learning has covered all material
Supplier Rectification Mechanism suppliers of the Group.For high-risk suppliers the Company customizes training programs based on specific issues identified during assessments
Mechanism Activation Conditions and audits to further enhance the relevance and effectiveness of training. At the same time by organizing supplier
exchange conferences and industry benchmarking activities the Company further conveys its quality philosophy and
The Company initiates the supplier rectification mechanism when material supply or quality management requirements promoting coordinated development and continuous improvement across the supply chain.anomalies occur.In the future the Company plans to further increase the proportion of training related to EHS and social responsibility
in 2026 more clearly conveying the concept of sustainable development to its partners and jointly building a more
responsible and resilient supply chain system.Multi-Dimensional Technical Guidance
Provide targeted technical guidance to suppliers focusing on process improvement on-site
management quality inspection and pollution control strategies.On-Site Diagnosis and Action Plan Formulation
Organize multiple on-site audits and diagnoses analyze root causes jointly with suppliers
and formulate specific improvement and corrective action plans.Implementation of Rectification and Capability Enhancement
The Company Conducts Supplier Quality Training
Track and promote the implementation of measures to ensure issue closure and
systematically assist suppliers in enhancing their quality management and production
assurance capabilities. Key Performance
Supplier Quality Training During the Reporting Perioda
Holding Specialized Seminars to Enhance Supplier Quality Management Capabilities
Training Method Training Coverage Training Frequency
In 2025 the Company organized specialized seminars for
pharmaceutical packaging material and pharmaceutical
excipient suppliers with a focus on training and discussion
regarding GMP-related appendices. The seminars involved Video learning content is updated annually Online video learning All suppliers (suppliers shall complete video learning on the official
in-depth exchanges on product quality and safety product website before placing orders)
improvement plans and problem rectification measures
promoting consensus between both parties on key quality
requirements and strengthening quality safety and On-site/online customized training Core/key/high-risk suppliers Annually
compliance control of raw materials and packaging materials
Supplier exchange conference Core/key/high-risk suppliers Annually
from the source. This initiative significantly enhanced suppliers'
understanding and implementation of regulations and quality
standards providing clear guidance for systematic rectification The Company Holds a Specialized Audits and quality training are conducted All suppliers subject to annual on-
and continuous improvement thereby further solidifying the Seminar for Suppliers at supplier locations according to the audit site audits Annually
collaborative quality foundation of the supply chain. plan
57 58Quality as the Foundation: Quality Culture and Product Responsibility
Supplier Code of Conduct Training
During the reporting period the Company uniformly launched training videos explaining the
Supplier Code of Conduct and the Sunshine Agreement (Anti-Corruption Commitment Letter)on
its official website procurement platform and on the supplier registration and login interface
of the electronic procurement system. These videos are mandatory and cannot be skipped.Suppliers must watch them in full to complete registration or continue using the system.Key Performance
During the reporting period
100% of core suppliers conducting business
with the Company signed the Sunshine Agreement.Supplier Integrity Development
The Company attaches great importance to integrity development within the supply chain and has formulated and
implemented a series of institutional documents such as the Supplier Code of Conduct and the Third-party Due Diligence
and Handling Management System to create a fair and honest business cooperation environment together with suppliers. Green Supply Chain Development
The Company integrates supplier integrity management throughout the entire process of cooperation between the
Company and its suppliers. The Internal Audit Department conducts irregular spot checks at various stages through The Company actively promotes the development of a green supply chain and advocates and encourages suppliers
methods such as questionnaire surveys and compliance interviews and continuously supervises the implementation. to prioritize the use of environmentally friendly materials and sustainable products through multiple approaches. To
At the same time the Company systematically incorporates business ethics and anti-corruption requirements into its systematically evaluate the environmental performance of the supply chain the Company conducted a specialized
supplier training system and regularly organizes specialized training sessions for all suppliers to ensure that integrity questionnaire survey among packaging material suppliers focusing on understanding whether they had passed FSC
principles are effectively communicated and fully implemented. (Forest Stewardship Council) certification. The survey covered a total of 59 packaging material suppliers and the results
showed that 17 of them had passed FSC certification.Through the combination of institutional constraints process supervision and training advocacy the Company has
established an integrity management system covering both existing and potential suppliers effectively strengthening In the future the Company will continue to improve its green procurement mechanism and guide and support more
compliance awareness and risk prevention capabilities across the supply chain and laying a solid foundation for partners in participating in green and low-carbon transformation and jointly building an environmentally responsible
sustainable cooperation. supply chain ecosystem.Supplier Integrity Supervision
Key Performance
Admission Phase Establishing Cooperation During Cooperation During the reporting period
Conduct spec ia l i zed ant i - Sign a Sunshin e Agreement with Regularly conduct special anti- suppliers cooperating with the Company had
commercial bribery and anti- suppliers clearly defining integrity commercial br ibery audits 17
corruption due diligence on requirements and breach of on suppliers to continuously passed FSC certification.supp l i e r s to ensu re the i r contract liabilities. monitor the compliance of their
compliance background meets business practices.cooperation requirements.
59 60Health Access: Innovation-Driven Development and Inclusive Healthcare
Living in Harmony
with Nature
Low-carbon Transition
and Environmental
Friendliness
KELUN PHARMA adheres to the business phi losophy of
"environmental protection first sustainable development" and
is committed to deeply integrating green ecological principles
into the entire production process while continuously improving
its environmental management system. The Company strictly
complies with environmental protection regulations reduces waste
generation and improves disposal efficiency through the application
of advanced pollution control technologies to ensure that all
emissions meet regulatory standards; improves energy utilization
efficiency and implements water-saving and electricity-saving
measures to achieve efficient resource management; enhances
climate risk resilience scientifically measures and manages carbon
emissions and actively promotes low-carbon operations thereby
facilitating the harmonious coexistence of industrial development
and the natural environment through concrete actions.Addressing Climate Change
Environmental Compliance Management
Pollution Prevention and Ecosystem Protection
Resource Utilization and Circular Economy
Contribution to the United Nations Sustainable
Development Goals (SDGs):
61 62Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
Addressing Climate Change Climate Risk Identification and Response Status of KELUN PHARMA
Risk Type Risk Description and Impact Response Strategy
KELUN PHARMA fully recognizes the systemic risks and transition opportunities that climate change brings to its own Typhoons heavy rain and floods: Plan for various transportation methods allocate
operations and the entire industry chain integrates green and low-carbon development into its long-term strategic Extreme weather events cause disruptions in logistics and logistics transportation time based on weather transportation impacting product production and timely warnings to ensure material inventory reserves;
planning promotes the clean transition of its operational energy structure and establishes a comprehensive and delivery leading to increased operating costs; Continuously improve emergency response
effective climate response mechanism through identification assessment and scientific management. Damage to production equipment and operational Acute Risks mechanisms for natural disasters stockpile interruptions resulting from the destructive force of emergency supplies and strengthen safety
extreme weather events leads to increased equipment inspections;
repair costs;
Implement emergency plans for extreme weather
Climate Governance Strategy Potential threats are posed to employees' personal safety events and conduct regular drills to prepare for and occupational health with work-related accidents such events;
leading to reduced production efficiency.Physical Risks
The Company and its subsidiaries/branches follow the disclosure recommendations and framework of the Task Force Avoid locating new facilities in low-lying areas;
on Climate-related Financial Disclosures (TCFD) identify and assess the climate risks and opportunities they face and Sea level rise: Develop suppliers in multiple regions within
Operational entities in coastal areas may need to relocate the same category to ensure a continuous and accordingly formulate and implement specific plans to address climate change and reduce greenhouse gas emissions. inland resulting in damage or premature scrapping of sufficient supply of materials without dependence
fixed assets leading to increased production costs; on a single source;
Temperature rise: Install refrigeration facilities to address
Chronic Risks
Employees may experience heat exhaustion heat stroke temperature increases;Governance or other health issues due to extreme heat resulting in Equip facilities with comprehensive fire safety
increased operating costs. Production machinery may systems;
face overheating issues leading to reduced lifespan and Conduct emergency drills and fire safety training
At the climate governance level the Company has established a management framework led by the Board of Directors. increased capital expenditures. to enhance employee awareness and capabilities
The ESG Committee under the Board of Directors serves as the highest representative body responsible for addressing in fire prevention and response.climate change issues and is responsible for assessing and managing climate-related risks opportunities and impacts
as well as formulating climate-related targets with the Board of Directors responsible for supervising the execution Closely monitor carbon emission policies and Tightening carbon emission management policies and
of its work. The ESG Working Group as the executive body of the ESG Committee is responsible for coordinating the regulatory updates in its operational regions to regulations: respond appropriately;
implementation of specific climate change management tasks across departments and subsidiaries/branches. The national deployment of "peak carbon dioxide Properly arrange production plans such as
emissions and carbon neutrality" initiatives including the staggering production schedules;
Policy Risks introduction of energy-saving and emission-reduction To ensure the effective implementation of management measures all subsidiaries/branches have established dedicated policies and standards may increase compliance costs for Optimize process flows to reduce electricity
greenhouse gas inventory teams. Each team is led by a designated person appointed by the EHS department with carbon emissions; consumption;
Potential production reductions caused by local Regularly share domestic and international designated personnel from each business department serving as team members and a management representative is government power restrictions may lead to income losses. policy trends and distribute them to subsidiaries
appointed to promote and supervise all functional departments within the enterprise in jointly implementing climate- (branches) for learning and implementation.related work ensuring smooth communication and efficient actions at the execution level.Select low-energy-consuming production
Transition to low carbon emission technologies: equipment optimize production processes
Strategy Early retirement of high-energy-consuming equipment explore and implement energy-saving and
Technology leads to increased operating costs; emission reduction projects to reduce energy
Risks Research and development and application of clean consumption;
The Company has incorporated climate change and related risks and opportunities into the decision-making process of its energy or innovative low-carbon technologies result in Strengthen carbon emission reduction across the increased R&D expenses. entire process including production operations
sustainable development management. Based on assessments of their impact on the overall direction of the Company's and logistics transportation.business development targeted response strategies have been formulated and specific climate change management Transformation Risks
initiatives have been carried out to effectively reduce greenhouse gas emissions while enhancing the Group's overall Rising raw material costs:
adaptability to climate change. Chemical raw materials auxiliary materials packaging The Company will better monitor and analyze the
materials and other raw materials have been affected market and arrange inventory and procurement
by various factors such as macro economy monetary cycles reasonably to reduce risks;
Market Risks policy environmental protection management and natural The Company will actively organize product
disasters. This may lead to supply constraints or significant technology research to effectively reduce product
price fluctuations which will affect the Company's costs.profitability to some extent.Proactively disclose climate-related risks
opportunities and corresponding response
Company's performance in addressing climate change measures;
based on social concerns: Establish energy-saving and emission reduction
As global awareness and concern for climate change
Reputation goals and regularly monitor the progress of goal and environmental protection increase stakeholders
Risk attainment;expect companies to take on more emission reduction
responsibilities. Failure to initiate early low-carbon Proactively respond to inquiries from stakeholders;
transition plans may result in reputational damage. Enhance overall awareness of energy-saving
management within the Group and provide
climate-related training for employees.
63 64Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
Greenhouse Gas Emission Management Use of Clean Energy
The Company actively responds to the national "dual carbon" goals. Through Greenhouse Gas Emissions
systematic monitoring and analysis it continuously implements carbon reduction Reduction Target
The Company actively increases the proportion of clean energy by participating in green electricity transaction and
developing distributed photovoltaic projects effectively reducing carbon emission intensity in production and promoting
measures and has set a greenhouse gas emission reduction target of "reducing total reducing total greenhouse green transformation across the industrial chain.greenhouse gas emissions per ten thousand yuan of output value by 5% by 2030 gas emissions per ten
using 2023 as the base year." The Company's direct greenhouse gas emissions (Scope thousand yuan of output
1) mainly originate from stationary combustion sources such as coal and other fuels 5% New Green Electricity Transaction Projects in 2025mobile emission sources such as company-owned vehicles and the operation of other value by by 2030
auxiliary production facilities. Indirect greenhouse gas emissions (Scope 2) are primarily using 2023 as the base year.associated with purchased electricity and steam consumed during operations.CHUANNING BIOTECH: A cumulative green electricity transaction volume of 72000 MWh
was completed achieving green electricity consumption certification.Greenhouse Gas Emissions of KELUN PHARMA in 2024-20253
Index Unit 2024 2025 Hunan Kelun: A cumulative green electricity transaction volume of 430.79 MWh was
completed.Total Greenhouse Gas Emissions tCO2e 2845549.25 2.781243.50
Direct (Scope 1) Greenhouse Gas Emission tCO2e 2361763.17 2244508.50 Guangxi Kelun: Since August 2025 green electricity quotas have been adopted green
Direct (Scope 2) Greenhouse Gas Emission4 tCO2e 483786.08 536735.00 vouchers have been obtained annual green electricity transaction volume reached 2478
MWh and green electricity transaction vouchers totaling 1050 MWh have been obtained.Greenhouse Gas Emission Intensity tCO2e/ RMB 10000 revenue 1.30 1.50
Internal Carbon Inventory and Third-Party Carbon Verification
The Company conducts greenhouse gas inventories annually to analyze emission composition and provide a basis
for emission reduction decisions. In accordance with the Group's Greenhouse Gas Inventory Manual all subsidiaries/
branches conduct annual inventories and reporting of emission sources and emission volumes within their organizational
boundaries to identify emission reduction opportunities and improve management efficiency.In addition during the reporting period subsidiaries/branches including the Guang'an Branch Jiangxi Kelun Junjian
Plastic Kunming Nanjiang Henan Kelun and Qingshan Likang engaged third-party institutions to verify emission data
related to fossil fuel combustion methane (CH?) emissions from anaerobic treatment of industrial wastewater and KELUN PHARMA's Green Electricity Transaction Vouchers in 2025 (partial)
purchased electricity and heat in accordance with the Guidelines on Accounting Methods and Reporting of Greenhouse
Gas Emissions of Enterprises in Other Sectors of Industry (Trial).New Photovoltaic Power Generation Projects in 2025
Product Carbon Footprint Certification and Verification
During the reporting period the Guang'an Branch Henan Kelun Jiangxi
Kelun Junjian Plastic Kunming Nanjiang Qingshan Likang and Xinkaiyuan
commissioned third-party institutions to conduct carbon footprint
assessments for products such as sodium citrate anticoagulant solution co- Xindu Base XINDI BIOTECH Junjian Plastic
extruded films large-volume infusion products large-volume injections and
small-volume injections in accordance with the Greenhouse Gases - Carbon A 6.34 MW distributed A distributed photovoltaic A distributed photovoltaic power
Footprint of Products - Requirements and Guidelines for Quantification (ISO photovoltaic system was installed power station with a designed station with a designed installed
14067:2018) Specification for the Assessment of the Life Cycle Greenhouse on the roofs of the material installed capacity of 1.93 MW capacity of 7.07 MW was
Gas Emissions of Goods and Services (BSI PAS 2050:2011) and Greenhouse
KELUN PHARMA's Product Carbon warehouse and production was completed generating completed and connected to Gases - Carbon Footprint of Products - Requirements and Guidelines for
Quantification(GB/T 24067-2024). Footprint Certificate (Example)
buildings. The system is expected 1.2519 million kWh of electricity the grid in May 2025. During the
to generate 4.5 million kWh of during the year saving RMB year it generated 3.3635 million
electricity annually saving RMB 152700 in electricity costs and kWh of electricity saving RMB
3 T he data calculation scope covers the group's major production-oriented and research and development-oriented subsidiaries (branches). 2.7 million in electricity costs reducing carbon emissions by 729900 in electricity costs and
4 The carbon dioxide emission factor for electricity in 2025 was 0.5306 tCO2/MWh which was the 2023 national average grid carbon emission factor per year and reducing carbon 713.98 tCO?e. reducing carbon emissions by
published by the Ministry of Ecology and Environment. The factor for 2024 was 0.5366 tCO2/MWh which was the 2022 national average grid carbon
emission factor. emissions by 2387.70 tCO?e. 1918.19 tCO?e.
65 66Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
Environmental Compliance Management
KELUN PHARMA strictly follows the environmental management policy of "source control effective prevention
comprehensive governance and sustainable development" establishes improves and dynamically updates its
environmental management system and continuously promotes environmental technology innovation implements
clean production models develops a green circular economy and actively participates in environmental protection public
welfare initiatives thereby fulfilling its corporate environmental responsibilities through concrete actions and contributing
to ecological and environmental protection.Governance
To ensure the effective operation of the Group's overall environmental management system and the achievement of
its objectives we have established a top-down environmental management structure decomposed environmental
management tasks step by step and clarified principal responsibilities providing organizational support for the
continuous advancement of environmental protection work. The ESG Committee under the Board of Directors serves as
the highest executive body responsible for core environmental issues such as environmental protection carbon emission
management resource utilization and climate change response. Its work is subject to oversight by the Board of Directors.KELUN PHARMA's Environmental Management Structure
ESG Committee under the Board of Directors Environmental Management System
It is the highest executive body responsible for environmental topic management. It is To establish a unified and standardized environmental management system across the Group the Company's EHS
responsible for formulating environmental strategies reviewing environmental management Supervision Department during the reporting period formulated and revised a series of management procedure
policies and reporting on relevant matters to the Board of Directors. documents focusing on key environmental management areas. These documents cover the entire environmental
management process in order to strengthen the Company's capacity for the treatment of wastewater waste gas and
Management Committee solid waste and to standardize environmental management across the supply chain. In addition the EHS Supervision
Department guides each operating unit to update and formulate localized management documents in accordance with
It is chaired by senior leaders of the Group serving as director and deputy director with the latest regulatory standards ensuring the consistency and timeliness of the Group's environmental management
department heads and general managers of the subsidiaries and branches as members. system.They jointly develop and supervise the implementation of development plans policies and
measures related to environmental occupational health and safety. List of Internal Policies of KELUN PHARMA (example)
EHS Supervision Department Comprehensive Governance Environmental Occupational Health and Safety Management Policy Whole-process
Management Measures for Environmental Protection Indicators such as Wastewater Waste
It is responsible for reporting to the Board of Directors and ESG Committee through Wastewater Gas and Noise (Trial)
weekly reports monthly reports and monthly regulatory updates. The reports include Management
information such as wastewater treatment conditions safety incident notifications Regulations for Wastewater Treatment System Management Wastewater Management
government inspection updates monthly updates on the latest EHS regulations and safety Waste Gas Manual (Template) Wastewater Emission Reduction Plan (Trial)
incident notifications. Quarterly departmental work summaries are submitted to the EHS Emissions Regulations for Air Emission Control Systems
Management Committee. Additionally the EHS Supervision Department is responsible for Solid Waste
preparing the environmental section of the Company's annual report and ESG report. These Management Regulations for Solid Waste Management (2025)
reports are then submitted to the ESG Committee for approval.Noise
Management Environmental Noise Management Measures Noise Emission Control System
The Company has incorporated environmental performance into the management compensation incentive system. By
establishing key performance assessment indicators for the executive management of the Group's EHS Management Soil Protection Soil Hazard Investigation System Interim Measures for Soil and Groundwater Pollution
Committee and supporting reward and penalty mechanisms the Company effectively drives the management team Prevention and Control
to fulfill responsibilities related to environmental compliance and sustainable development ensuring deep coordination Archive Environmental Protection Archive Management System (Trial)
between environmental strategy and daily operational management. Management
67 68Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
The Company regards environmental protection KELUN PHARMA's Environmental Protection Strategy
as the lifeline of the enterprise. Focusing on Investment in 2025
both the application of advanced technologies
and the optimization of core processes the 0.30 Investment Amount (RMB 10000) The Company regularly reviews risks and opportunities that may affect environmental compliance management and
Company continues to increase investment analyzes their potential impacts providing a basis for formulating targeted response strategies.in environmental protection and continuously
promotes innovation and efficiency improvement
in the treatment of wastewater waste gas KELUN PHARMA's Environmental Compliance Management Risk List
and solid waste. The Company firmly fulfills its
environmental responsibilities actively promotes
environmental protection concepts and leads 4956.62 58544.60 Risk Type Risk Description
Likelihood of
Occurrence Potential Financial Impact Impact Cycle
green transformation within the industry while
striving to achieve coordinated and mutually Total Investment in Wastewater waste gas and solid waste The Company may face fines from
beneficial outcomes in environmental economic Environmental Protection ("three wastes") with complex components environmental authorities or be
and social benefits. 63501.52 are generated during the production of ordered to restrict production or antibiotic intermediates and other products. suspend operations for rectification
Short-term
Investment in Environmental Investment in Environmental If not properly treated they may lead to Low affecting normal production and
Equipment Construction and Protection Project Management medium-termexcessive emissions and odor disturbances operations as well as the Company's
Operation Maintenance
Investment in Environmental to surrounding communities resulting reputation. Additional end-of-pipe
Protection Training Operational in environmental penalties community treatment costs and operational
Risk complaints and production interruptions. uncertainties may also increase.Environment Management System Certification Fluctuations in resource prices may
Production and operations require the
affect production costs. Excessive
While steadily advancing the development of its environmental management system the Company consumption of large amounts of water consumption does not align with the Medium-term
actively promotes ISO 14001 environmental management system certification for its subsidiaries/branches energy and raw materials creating pressure Medium high green and low-carbon development long-term
to comprehensively improve the Group's overall environmental management capability and level of to improve resource utilization efficiency and trend and may attract regulatory and
standardization. As of the end of the reporting period a total of 18 manufacturing enterprises of the control costs. investor attention.Company successfully obtained ISO 14001 environmental management system certification. Manufacturing
enterprises that have obtained certification or are in the process of certification account for 54.55% of all National and local environmental
Existing facilities or processes may
manufacturing enterprises of the Company. regulations are continuously upgraded
not meet new standards resulting in
and requirements for pollutant emission Medium-term
Medium high project delays investment losses or
standards environmental impact assessment long-term
significant increases in compliance
Legal and acceptance and information disclosure are costs.Regulatory constantly increasing.Risks
Regulatory authorities are imposing Incomplete or untimely information
increasingly higher requirements on the disclosure or a lack of quantitative
Medium-term
breadth depth and standardization of Medium high data may affect ESG ratings and
long-term
environmental and social responsibility damage the Company's image and
information disclosure by listed companies. credibility in the capital market.KELUN PHARMA's Environmental Compliance Management Opportunity List
Environmental Management System Certificates of
Subsidiaries/Branches of KELUN PHARMA (example)
Likelihood
Opportunity Type Opportunity Description of Potential Financial Impact Impact Cycle
Occurrence
It helps gain the trust of
Reputation Successfully overcoming major governments communities
Enhancement environmental challenges and achieving and international clients Medium-term
and Market high-standard emissions can significantly High
Recognition creating favorable conditions long-termenhance the Company's green brand
Opportunity for obtaining new projects and image and ESG performance expanding markets.
69 70Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
Based on the above assessment the Company has identified that the current major environmental risks are concentrated
in stable and compliant discharge of pollutants and the standardized disposal of waste. For high-priority risks the
Company has formulated dedicated control plans and conducts regular follow-up. Specific management practices
include:
KELUN PHARMA's Environmental Risk Management Practices
System and Compliance Learning
Organize monthly study sessions on environmental laws regulations policy trends and
typical cases. Conduct regular compliance evaluations to prevent violation risks.Specialized Risk Inspections
Conduct regular special inspections on key areas such as pollutant discharge permits
Impact Risk and Opportunity Management "three wastes" (wastewater waste gas solid waste) treatment and pollutant
monitoring to identify potential violations and exceedance risks.The Company has formulated internal management documents such as the Environmental Hazard Factor Identification
and Control System and the Environmental Factor Identification Evaluation Form. Through regular identification
assessment and review identified risks are managed in a graded manner according to their level of impact and a list of Closed-Loop Process Control
significant environmental factors is generated. Risk assessment classifies risks into three levels—high medium and low— Strictly implement the principles of "source reduction process control and end
based on the severity of environmental impact frequency of occurrence and controllability and differentiated control treatment". Implement closed-loop process management for pollutants from generation
measures are formulated accordingly. to disposal.In addition the Company continuously tracks the effectiveness of risk control and opportunity implementation by setting
environmental objectives and indicators conducting internal and external audits (including third-party verification) and
making public disclosures.Capacity Building and Monitoring
Process for Environmental Risk Factor Management of KELUN PHARMA Provide training and assessments for personnel in key environmental positions. Ensure
traceability of data and early warning of anomalies through regular monitoring and
online surveillance of discharge points and treatment facilities.Emergency Response Capability Enhancement
Identification of Assessment of Update and Control of Improve emergency response capabilities for sudden environmental incidents by
Environmental Environmental Reassessment of Environmental refining emergency plans allocating necessary materials and conducting regular drills.Factors Factors Environmental Factors Factors
Water Discharge True-false Judgment Principles of Updating Control Methods
Air Emissions Solid Method Scoring and Reassessment for Important
Waste Soil Pollution Method Environmental
Noise Pollution Factors
Energy and Resource In addition the Company actively identifies and seizes opportunities related to green transformation including promoting Control Methods
Consumption Others the use of environmentally friendly materials optimizing packaging design and improving resource utilization efficiency for General to reduce environmental footprint. The concept of "green and high-quality development" has been incorporated into
Environmental strategic planning to guide investment and innovation in areas such as energy conservation and emission reduction
Factors circular economy and low-carbon technologies thereby creating environmental and operational benefits.
71 72Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
Risk Assessment and Emergency Preparedness for Environmental Emergencies Case 2: Yueyang Branch Conducts Joint Drill to Test Multi-
Departmental Coordination Capability
KELUN PHARMA strictly complies with laws and regulations such as the Environmental Protection Law of the People's
Republic of China the Emergency Management of Environmental Emergencies and the Guidelines for Risk Assessment On July 29 2025 the Yueyang Branch conducted a joint drill
of Enterprise Sudden Environmental Incidents (Trial) and establishes and continuously improves the environmental risk with the fire department environmental protection authority and
prevention and emergency management system following the principle of "prevention first combining prevention with third-party testing institution. The simulated scenario involved a
emergency response". compound environmental emergency in which a crack in the inlet
pipe of an exhaust gas treatment facility caused leakage leading
to personnel fainting while sealing failure of the desorption system
The Company conducts regular risk inspections covering the entire process from source materials steam pipe resulted in the diffusion of dense dichloromethane vapor.reaction processes operation of treatment facilities to waste disposal identifies potential This practical drill comprehensively tested the Company's internal
risks such as leakage fire and pollution diffusion and establishes and dynamically updates an emergency response mechanism under complex risk scenarios as
environmental risk list to enable early identification dynamic assessment and graded warning of well as its efficient coordination with multiple external departments
risks. At the same time through strengthened routine inspections preventive maintenance and effectively enhancing the overall response and risk control capability Joint Drill at Yueyang Branch
implementation of source-level measures such as process optimization and engineering controls for leakage incidents involving specific high-risk pollutants.Environmental the probability of environmental emergencies is effectively reduced.Risk Prevention
and Control
EHS Audit
Based on their respective risk characteristics subsidiaries/branches of KELUN PHARMA formulate
an Emergency Plan for Environmental Incidents establish environmental emergency management To ensure the effective operation and continuous compliance of the environmental management system the Company
mechanisms improve emergency response systems conduct at least one practical emergency drill has established an internal EHS audit system and a relatively comprehensive environmental assessment system and
every year and regularly check and inspect emergency materials. The drills cover key scenarios conducts regular supervision and audits of all production and operation sites under a graded management principle. The
such as wastewater treatment station fault exhaust pipeline leakage hazardous waste leakage Company conducts at least one comprehensive on-site EHS audit each year for major core manufacturing enterprises and
and flood prevention and control following the process of "plan activation on-site handling at least one comprehensive on-site EHS audit every two years for other manufacturing enterprises.coordinated response and post-event evaluation". After each drill timely reviews are conducted
to evaluate response speed effectiveness of measures adequacy of emergency supplies and
Emergency Internal EHS Auditcoordination procedures. Based on the evaluation results on-site response plans supply allocation
Management and command mechanisms are optimized forming a management closed loop of "drill–evaluation–
System Audit content: The audit primarily covers key matters including the implementation of the "three simultaneities" improvement" and effectively enhancing the practicality and operability of emergency plans. environmental protection requirements for construction projects compliance management of pollutant discharge permits
compliant discharge of pollutants full-process management of hazardous and non-hazardous waste construction and
operation of environmental protection facilities emergency plans and drills resource and energy utilization efficiency
and environmental complaint handling and compliant information disclosure.In addition the Company maintains good communication with local governments and surrounding stakeholders
and establishes a coordination mechanism for early warning alarm response rescue and recovery comprehensively Frequency and Methods of Internal EHS Audits at KELUN PHARMA
improving its capability for emergency response and coordinated handling of various environmental incidents and major
accidents. Annual Comprehensive
On-site Audit for Major Core
Production Enterprises
Case 1: The Company Conducts Emergency Drill for Environmental Pollution Core Audit System
Incident to Enhance Response Capability of Emergency Team Biennial Comprehensive
On-site Audit for Other
Production Enterprises
On October 28 2025 the Company organized an environmental
pollution emergency drill at the Xindu production base. The drill
simulated a scenario of "preventing abnormal influent water quality Online Special Audit
KELUN PHARMA Internal
in the wastewater treatment system after the workshop discharges
EHS Audit Supplementary Audit
high-concentration wastewater" aiming to mitigate potential
Monthly Online Review
sudden impacts on the newly built wastewater treatment system
during actual operation. The simulation drill effectively enhanced
the emergency team's response speed and practical capability in Hold at least one company-
equipment operation and accident handling strengthening the base's level EHS meeting and
capacity for preventing and managing environmental emergencies. regulatory special training Emergency Drill at Xindu Base session monthly
Regular Internal Training
and Communication
73 74Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
External Audit In addition to improve the EHS risk management system of the supply chain the Company has formulated the Supplier
EHS Risk Assessment System formally incorporating EHS management into supplier audits. The results of these audits
To ensure continued compliance with ISO 14001 environmental management system certification requirements all are included in the overall supplier evaluation thereby effectively constraining and improving suppliers' EHS performance.subsidiaries/branches that have obtained certification and remain within the validity period engage independent external For suppliers willing to establish long-term strategic cooperation the Company clearly sets green and sustainable
third-party certification bodies each year to conduct supervisory audits of the environmental management system and development requirements and includes suppliers' performance in green and low-carbon operations as one of the
a re-certification audit is conducted every three years. The audit scope covers environmental management activities comprehensive evaluation factors in market-based procurement decisions.related to product design R&D production and related operational sites. Key audit focuses include:
Supplier EHS Audit Management and Execution Requirements
Establishment compliance and suitability of documented information; Basic Principles
Determination monitoring and review of internal and external factors (including climate change) that EHS audits should be incorporated into the supplier audit plan.affect the auditee's ability to achieve the intended outcomes of the management system;
Determination monitoring and review of the needs and expectations of relevant parties (including climate-
related requirements); Audit Scope and Frequency
Adequacy and suitability of the identification and planning of processes and their interactions; Consistent with the requirements for supplier audits. Please refer to the relevant content in
Evaluation of leadership awareness and the role played in the establishment and operation of the this report under "Building a Sustainable Supply Chain - Supplier Audits" for specific details.management system;
Policy and objective management (formulation decomposition applicability measurement achievement Audit Content
communication and improvement of policies and objectives);
The audit mainly includes the implementation of administrative licensing and environmental
Adequacy and suitability of risk and opportunity management and adequacy and effectiveness of management systems compliance with emission standards of pollutants (including harmful
management system planning and operational control; emissions such as exhaust gases wastewater and hazardous waste) compliance with the
Monitoring measurement evaluation and continued improvement of the management system. collection and disposal of solid waste safety progress emergency management and drills
education and training and hidden danger inspection.Subsidiaries/branches and production bases involved in international business are also required to undergo external Audit Method and Process
audits from partners on a regular basis. At the same time the Company actively benchmarks against advanced Remote or on-site audits are conducted. After the audit a Supplier EHS Audit Report is
international standards for internal self-assessment and continuous improvement to ensure that all business operations prepared and submitted to the Group's Supply Department for unified review resulting in
worldwide fully comply with relevant international standards and requirements. the final audit report.Audit Results
The audit results are divided into four levels based on EHS deficiencies: Danger Vigilance
Attention and Safety. For suppliers categorized as Danger it indicates that there are
extremely serious EHS risks. There is a high probability that the supply of their products
cannot be continued or stably provided due to EHS issues. Heightened vigilance is required
during the cooperation period and consideration should be given to excluding them from
future collaborations until the risk is reduced to "Vigilance" or below.Green Supply Chain Program
Encourage suppliers to obtain ISO system certification and apply for green factory
certification to enhance their EHS performance; prioritize environmentally friendly products
and services when selecting suppliers; given equal conditions give preference to suppliers
with higher EHS audit scores.
75 76Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
Environmental Training and Education Activities Promotion of Environmental Protection Concepts and Cultural Development
At the beginning of each year the Company formulates an EHS
training plan and organizes specialized training for environmental Subsidiaries/branches of KELUN PHARMA actively practice environmental protection concepts and continuously
protection leaders managers and technical personnel of its advocate the concepts of green production and living to employees by organizing activities themed around
subsidiaries/branches. The training content focuses on key World Environment Day playing environmental protection videos and producing promotional posters and
challenges in daily management and the latest regulatory trends display boards. These efforts not only promote the disclosure of environmental information within the Company
including core courses such as Specialized Training on New but also encourage the public to actively participate in ecological and environmental protection initiatives.Chemical Substances New Pollutants and Toxic and Hazardous
Pollutants Specialized Training on Management Requirements for
New Discharge Outlets (Waste Gas and Wastewater) Pollutant
Emission Accounting and Data Consistency Assurance and
Interpretation of the New Hazardous Waste Regulations and
Response Strategies ensuring that the awareness and capabilities
of professional teams remain up to date.Subsidiaries/branches of KELUN PHARMA design internal training
systems tailored to their own business characteristics and
conduct differentiated and comprehensive training according
to hierarchy and job roles. Through diversified approaches
combining "online + offline" "theoretical + practical" and "general
+ specialized" training the Company continuously conducts
training on environmental emergency response and hazardous Henan Kelun's "Protecting Our Mother River" Yueyang Branch's "June 5"
waste management facility operation and maintenance policy Volunteer Service Activity Environment Day "Children Planting
promotion and EHS management for special projects. – Young Experience Officers" Activity
Environmental Awards and Honors of KELUN PHARMA's Subsidiaries and Branches (Examples)
During the reporting period subsidiaries/branches of KELUN PHARMA received the following honors:
8subsidiaries/branches voluntarily conducted
clean production audits;
9 municipal-level environmentally credible
Environmental Protection Training at KELUN
PHARMA's Guang'an Branch enterprises and 5 provincial-level environmentally
credible or green-label enterprises; Henan Kelun's Provincial-Level Green Factory
7 national-level green factories 5 provincial-level Certificate
green factories and 1 provincial-level green supply
chain enterprise;
1 water-saving enterprise and 3 zero-waste
factories;
2 enterprises selected as "Outstanding EHS
Management Cases for Pharmaceutical Enterprises Certificate of "Outstanding EHS Management
in 2025". Cases for Pharmaceutical Enterprises in 2025"
awarded to the Xindu Base
77 78Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
Indices and Goals Pollution Prevention and Ecosystem
Protection
Based on the collection calculation and statistical analysis of historical emission data the Company scientifically
formulates clear emission reduction and management targets and promotes their implementation while regularly
reviewing and supervising the progress and achievement of related work and targets. The Company is committed to reducing pollutant generation at the source through continuous technological innovation
and process optimization while strengthening end-of-pipe treatment to achieve coordinated effects in pollution and
carbon reduction minimizing the environmental impact of operational activities and promoting sustainable development.Key Performance Waste Gas Treatment
During the reporting period the Company's indices and goals for environmental compliance management The Company strictly complies with laws and regulations such as the Law of the People's Republic of China on the
were as follows: Prevention and Control of Atmospheric Pollution. For waste gas emissions generated during production processes the
Company has formulated the Regulations for Air Emission Control Systems and Guidelines for Developing Volatile Organic
Compound (VOCs) Management Ledgers to comprehensively guide and standardize waste gas treatment activities in
production operations.To further reduce pollutant emissions during production and operations the Company persists in promoting waste gas
treatment projects across the Group including but not limited to upgrading waste gas treatment processes replacing
0 environmental accidents; 100% compliance 100% compliance with advanced treatment equipment implementing fugitive emission collection and disposal and optimizing production
processes thereby consistently reducing emissions of nitrogen oxides VOCs particulate matter and other types of waste
(Achieved) rate for pollutant emissions; rate for total pollutant
gases. The Company regularly tracks the operational performance and treatment effectiveness of these projects to
(Achieved) discharge; (Achieved)
ensure the effective implementation of emission reduction efforts.Toxic Emissions and Waste Reduction Management Goals Key Waste Gas Treatment Projects of KELUN PHARMA in 2025
Company Project
Category Item Index 2030 Final Goal Achievements in 2025 Name Type
Project Implementation Details and Effects
Not Achieved (With three new subsidiaries (branches) commencing
Wastewater A decrease by operations in 2025 total wastewater discharge increased significantly
Wastewater Wastewater discharged per 5% compared compared to 2024 resulting in the failure to meet the goal for reducing Discharged output of RMB wastewater discharge per RMB 10000 of output value. Subsequent Upgrading the photo-oxidation activated car-
10000 with 2024 measures including optimizing water usage structure and promoting
water reuse will be implemented to strengthen control.) bon equipment to a catalytic combustion de-Henan Kelun vice reduced VOC emissions by approximately
33%.
Nitrogen Nitrogen oxide Achieved (Through measures such as low-nitrogen combustion
Waste Gas Oxide emissions per
A decrease by
3% compared retrofitting and centralized steam supply in the industrial park the
Emissions output of RMB with 2024 Group's nitrogen oxide (NOx) emissions per RMB 10000 of output value
Henan Kelun's Catalytic Combustion
10000 decreased by 10.76% compared to 2024 exceeding the annual goal.) Equipment
Treatment
Not Achieved (Due to product structure optimization and adjustments Process
at certain production bases hazardous waste such as organic waste Upgrade and Completed the main sealing works of the A/
Hazardous Hazardous liquid which could be recycled and utilized in previous years was Transformation
Hazardous Waste waste resource An increase by no longer generated in 2025. Consequently the utilization rate of O tank cover plates of the aerobic system of
Resource utilization per 5% compared hazardous waste per RMB 10000 of output value decreased by 43.3% Waste
Utilization output of RMB with 2024 year-on-year. The Company will continue to optimize production
the wastewater treatment facility effectively
10000 process routes strengthen process control and steadily improve the reducing emissions of fugitive volatile organic
reduction resource utilization and harmless disposal of hazardous CHUANNING compounds and odorous gases.waste to support green and low-carbon development.) BIOTECH
CHUANNING BIOTECH's A/O Tank
Cover Sealing Project
Completed the bacterial residue plate-and-frame drying project. Cephalosporin
residues were treated through plate-and-frame filtration and disc drying reducing
the operation of the spray drying tower. After implementation the project achieved a
reduction of 34.19 tons of non-methane hydrocarbons emissions per year.
79 80Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
Company Project
Name Type Project Implementation Details and Effects Waste Management
The Company strictly complies with laws and regulations such as the Law of the People's Republic of China on the
Prevention and Control of Environmental Pollution by Solid Waste and has formulated internal policies such as the Solid
Waste Management Regulations to standardize and guide the management of solid waste prevention facilities and the
full lifecycle management of solid waste across all subsidiaries/branches. To promote the reduction resource utilization
Installed pulse bag filters to capture and and harmless treatment of waste generated during production and operations the Company has implemented waste
Waste Gas treat particulate matter generated during Guang'an management improvement projects across the Group and ensures the effective implementation of waste reduction
Branch Collection the material feeding process in production initiatives through measures such as improving production processes optimizing product structures and implementing Equipment workshops. Compared with 2023 total clean production.particulate emissions of the plant decreased
by approximately 55.37%. KELUN PHARMA's Key Waste Management Projects in 2025
Guang'an Branch's Dust Treatment
Facility - Pulse Bag Filter Kunming Nanjiang Guizhou Kelun
Technology and Process Improvement: Comprehensive Technology and Process Improvement: Adoption of carbon-
Production By insulating steam pipelines adopting low-nitrogen combustion technology and implementation of carbon-free process technology upgrades free processes effectively reduced the use of activated
Hubei Kelun Process reducing gas boiler operation time the total emissions of waste gas pollutants were significantly reduced the generation of hazardous waste carbon and the associated disposal costs. Through this
Optimization reduced by 43% with nitrogen oxide emissions decreasing by 52%. with the annual generation of waste activated carbon measure activated carbon usage decreased by 6.73 tons
decreasing by 67.49% year-on-year. year-on-year.Wastewater Treatment Noise Treatment
The Company strictly complies with the Water Pollution Prevention and Control Law of the People's Republic of The Company strictly complies with regulatory requirements such as the Law of the People 's Republic of China on the
China and guides and standardizes wastewater management across the Group by formulating documents such Prevention and Control of Environmental Noise Pollution and has formulated the Environmental Noise Management
as the Regulations for Wastewater Treatment System Management and the Wastewater Management Manual . All Measures to guide production bases in implementing noise control during equipment selection installation and production
manufacturing subsidiaries are required to establish and improve their internal management systems in accordance with operations. All manufacturing enterprises strictly conduct regular monitoring of plant-boundary noise in accordance with
these documents and their specific operational conditions ensuring the stable and compliant discharge of wastewater national requirements to ensure that both daytime and nighttime noises continuously meet the limits specified in the
while continuously improving effluent quality and increasing the proportion of wastewater reuse. Environmental Noise Emission Standard for Industrial Enterprises at Factory Boundaries.KELUN PHARMAl's Key Wastewater Treatment Projects in 2025 Key Noise Treatment Projects of KELUN PHARMA in 2025
Company Project Project Implementation Details and Effects Company Project Name Type Name Type Project Implementation Details and Effects
Based on the distribution of high-noise equipment and surrounding environmental
Noise
The newly expanded wastewater treatment conditions comprehensive noise reduction measures were implemented including
Wastewater Xindu Base Isolation system was officially put into operation Upgrade installing various silencers acoustic barriers structural modifications and supporting Hunan Treatment effectively improving system treatment sound-absorbing walls to reduce noise impact.Kelun System efficiency and reducing ammonia nitrogen
Expansion emissions by 20% compared with 2024.Hunan Kelun's Newly Expanded
Wastewater Treatment System Silencers were installed to address high
Hubei Kelun implemented comprehensive process optimization measures including Noise exhaust noise generated during the
Hunan Kelun Isolation
phased treatment of scrapped products and further homogenization of influent operation of rooftop sterilization cabinets
Hubei Upgrade
Kelun concentration. The chemical oxygen demand (COD) emission concentration decreased
achieving significant noise reduction.Technology by approximately 83% compared with 2023 and the total COD emissions decreased
and Process by approximately 80%. Hunan Kelun's Rooftop Silencer
Improvement
Upgrading and transforming the aeration system and packing materials of the
Henan Noise Noise isolation upgrades were implemented at the light inspection room of a
Kelun wastewater treatment station reduced ammonia nitrogen emission concentration by
Guizhou
Kelun Isolation production line reducing workplace noise from 85-90 dB to approximately 80 dB and approximately 58%. Upgrade effectively improving the working environment for employees.
81 82Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
Biodiversity Protection Resource Utilization and Circular Economy
KELUN PHARMA adheres to the principle of balancing development and protection. For all newly built renovated and
expanded projects the Company implements comprehensive ecological and environmental management throughout the
entire lifecycle integrating biodiversity and ecosystem protection into project decision-making planning construction and KELUN PHARMA integrates efficient resource utilization and the concept of circular economy into its daily management
operation. and production practices forming a circular economy model through clean energy substitution resource recycling and
the promotion of energy conservation and emission reduction thereby advancing green production and green ecology.The site selection of all construction projects strictly follows the regulatory requirements of the Energy Management
"Three Lines and One List" framework (ecological protection red line environmental quality
bottom line resource utilization limits and the environmental access list) proactively avoiding The Company strictly complies with laws and regulations such as the Law of
ecological protection red lines and ensuring that predicted emissions from operations do not the People's Republic of China on Conserving Energy and the Renewable Energy The Company has set a
exceed environmental quality bottom line and that resource consumption does not surpass Law of the People's Republic of China and has formulated internal management target to reduce electricity
regional resource utilization limits. At the same time project attributes and scale are fully aligned policies such as the Energy Management Measures and the Energy Conservation consumption per RMB 10000
with the ecological and environmental access list of the respective region ensuring compliance and Emission Reduction Management Trial Measures clarifying the responsibilities
from the source. Moreover the Company strictly complies with national and local ecological and requirements of relevant departments for energy management establishing
of output value by 5%
Project and environmental protection laws regulations policies and planning requirements proactively dedicated positions responsible for energy conservation and consumption by 2030 compared to the
Assessment avoiding ecologically sensitive areas such as nature reserves drinking water source protection reduction and promoting the allocation planning tracking implementation 2025 baseline.zones and habitats of protected species thereby fundamentally preventing significant negative and statistical analysis of energy resources to ensure their scientific and
impacts on biodiversity. efficient utilization. At the same time the Company continuously implements
energy efficiency improvement projects actively develops photovoltaic power
generation facilities optimizes the energy structure and increases the proportion
of renewable energy to improve energy utilization efficiency.For new projects priority is given to locations within government-approved pharmaceutical KELUN PHARMA's Energy Conservation and Consumption Reduction Projects in 2025
industrial parks ensuring their nature scale and layout are fully aligned with the regional master
planning and industrial development plan. Project construction plans strictly comply with and
follow the review conclusions and opinions of the Environmental Impact Assessment Report Company Project Name Type Project Implementation Details and EffectsCoordination for the Regional Master Planning ensuring that project development is aligned with regional
Between environmental carrying capacity and long-term sustainable development goals.Planning and Replaced old equipment with "first-level energy efficiency" SCB18 series dry-type Equipment
Environment Xindu Base transformers achieving an annual electricity saving of approximately 226800 kWh and Upgrade a corresponding reduction in indirect electricity-related emissions of 23.38 tons of CO2
equivalent.During project design and implementation the Company prioritizes the adoption of advanced
Electricity Established a peak shoulder and off-peak electricity consumption monitoring platform environmental protection technologies and clean production processes to ensure stable and Hunan Kelun Planning along with a peak-shifting electricity usage adjustment mechanism to enhance energy
compliant discharge of pollutants and establishes a comprehensive environmental monitoring utilization efficiency.and risk management system as core safeguards. According to professional assessments and
forecasts after fully implementing these environmental protection measures the overall impact Pipeline Promoted the separation modification of steam pipelines for sterilizer use and for production Henan Kelun Modification operations; the electricity consumption indicator per ten thousand bottles for low-pressure
Minimizing of construction projects on surrounding residents environmentally sensitive targets and regional products was optimized.Ecological ecosystems remains within an acceptable range and the site selection and construction plans
Impact demonstrate sufficient feasibility in terms of environmental protection. Focused on energy conservation in the utility
system (accounting for 52% of electricity
consumption) implementing a sterilization
cooling water system modification with AI
Kunming Utility System technology. Post-modification the system's
The Company encourages and advocates that all manufacturing subsidiaries actively carry out Nanjiang Upgrade energy consumption decreased by 31.37%
biodiversity impact assessments based on the ecological characteristics of their respective regions compared to before the modification the
and the nature of their business activities in order to identify and gain an in-depth understanding average cooling time of the production line
sterilization process dropped by 18.65% and
of the potential impacts of daily operations on local and regional biodiversity. On this basis product quality was improved. Sterilization Data Information Integration
targeted and implementable localized protection measures are studied and formulated. Through and Collaborative Control System
systematic management actions the Company supports the protection of endangered species and
Biodiversity their habitats thereby making a positive contribution to maintaining and promoting the balance Hunan Kelun Equipment Installed a steam-water separator upstream of the flow meter on the biomass boiler steam Assessment and long-term stability of regional ecosystems. Yueyang Modification pipeline to improve steam dryness and quality enhance steam utilization efficiency and Branch reduce energy consumption.
83 84Living in Harmony with Nature: Low-carbon Transition and Environmental Friendliness
Water Resource Management In the selection and management of packaging materials the Company actively implements circular economy principles:
The Company strictly complies with the requirements of the Water Law of the People's Republic of China and local Circular Economy Principles of KELUN PHARMA
regulations. Throughout all business processes from drug R&D and production to waste disposal it implements diverse
measures such as water-saving management process optimization wastewater reuse and water recycling. These
efforts continuously reduce the water intensity per unit of output and by improving the internal recycling efficiency of
water sources effectively decrease the volume of purchased water striving to ensure that every drop of water is used to
its fullest potential.To effectively integrate the concept of water conservation into daily operations
each subsidiary and branch of KELUN PHARMA has formulated specific water Prioritize Recyclable Establish a Standardized Promote Green Material The Company has set a
conservation management methods based on its own production characteristics. Materials Recycling System Substitutiontarget to reduce water
Special task forces have been established with designated heads of water resource consumption per RMB 10000 Require all subsidiaries (and Collaborate with suppliers and Actively increase the proportion
management and specialists responsible for supervising the implementation of branches) to prioritize the use of professional recycling agencies of renewable materials (e.g.water-saving measures and conducting statistical analysis of water intake and of output value by 5% recyclable packaging materials to establish a safe and compliant recycled pulp packaging) and such as paper drums cartons standardized recycling process biodegradable materials. Through usage thereby continuously strengthening the refined management of water
by 2030 compared to the and plastics. This facilitates post- for reusable packaging materials close collaboration with packaging resources. Concurrently at the Group level efforts are actively made to promote use recycling and regeneration such as cores. This enables the suppliers jointly conduct R&D
water resource utilization efficiency across all production-oriented companies 2025 baseline. reduces landfill and incineration closed-loop reuse of certain and performance validation of
through multiple avenues including enhanced management innovation in and promotes resource packaging materials effectively environmentally friendly materials
production processes upgrades to water-saving equipment and the implementation circulation. reducing waste generation and to ensure their reliability in
resource consumption. terms of safety compliance and
of reclaimed water recycling and comprehensive utilization projects. functionality. This systematically
2025 Water Conservation Projects of KELUN PHARMA drives the transformation of the
packaging system towards greater
sustainability.Xindu Base Shandong Kelun
By conducting a water balance test the Company A new waste heat recovery tank with a capacity of 10 m3
performed a rational analysis and evaluation of its current was added reducing the usage of industrial steam in the All production bases actively practice the concepts of green procurement and the circular economy carrying out a series
water usage situation calculated and analyzed key water process of producing water for injection. This extended the of innovative practices in areas such as packaging design material substitution and resource recovery.usage technical indicators and accurately identified weak operating time of the waste heat recovery system of the
links and potential areas for water conservation. Based thermocompression distiller by approximately 40 minutes
on this the Water Balance Test Report was compiled effectively saving steam consumption during the heating of 2025 Resource Utilization Projects of KELUN PHARMA
and practical water-saving measures were formulated feed water.effectively reducing overall water resource consumption.Company
Name Project Implementation Details and EffectsCircular Economy
The Company deeply integrates the concept of green development into the lifecycle management of its products striving Implemented lightweighting modifications for packaging optimized its structure and used inkjet
to reduce resource consumption and minimize its environmental footprint. During the product R&D phase the Company Xindu Base printers to print label information directly on boxes and cartons replacing traditional backing paper or
prioritizes the use of non-toxic or low-toxicity environmentally friendly solvents and reagents to reduce potential impacts separate labels thereby reducing paper consumption.on the environment and health at the source. By continuously optimizing production processes technologies and
equipment the Company minimizes the unit consumption of solvents and reagents to the greatest extent possible while
ensuring product quality effectively reducing resource consumption and pollution emissions during production. To ensure
the quality safety compliance and sustainability of raw materials auxiliary materials and packaging materials the After sorting and collecting production waste and discarded
Company has established a stringent material management system. packaging the Company entrusts professional institutions for
Material Management System of KELUN PHARMA resource recovery achieving an annual material (including
Kunming materials used in production and packaging) recycling and
The Logistics Department has established the Material Receipt Storage and Issuance Nanjiang recovery rate of over 54%. Additionally in material selection
Material Admission
and Storage Management System covering the entire process of warehousing storage and insurance. All
green materials are comprehensively applied with 100%
Management materials must be inspected and qualified by the Quality Department according to established of plastic inner packaging materials using medical-grade
quality standards before being released for use. polypropylene (PP).An information system is used to label material statuses in real-time and manage them by Medical Grade Polypropylene
Full-Chain
Traceability and zone to prevent mix-ups and misuse. Key materials are assigned unique codes ("one item one
Packaging Materials
Information Control code") to enable full-chain traceability from the source to end-use strongly supporting quality
deviation analysis and supply chain transparency management. Yongning The use of higher-purity raw material n-hexane has improved the recovery efficiency of the n-hexane
biology recovery unit thereby reducing exhaust emissions and resource waste.
85 86Cultivating Talent: Employee Growth and Health Security
Cultivating Talent
Employee Growth and
Health Security
KELUN PHARMA regards talent as the core driving force for the
Company's sustainable development and places high importance
on the protection of employee rights and their comprehensive
development. We are committed to fostering a diverse
equitable and inclusive workplace culture. Through systematic
talent attraction cultivation and incentive mechanisms we
continuously enhance organizational vitality and employee value.Concurrently the Company actively builds a healthy and safe
working environment earnestly safeguards the physical and
mental well-being of its employees and promotes the mutual
development of both the Company and its staff.Talent Acquisition and Retention
Employee Rights and Benefits Protection
Employee Training and Development
Employee Communication and Care
Occupational Health and Work Safety
Contribution to the United Nations Sustainable
Development Goals (SDGs):
87 88Cultivating Talent: Employee Growth and Health Security
Talent Acquisition and Retention The Company has formulated and implemented the Internal Referral Talent Management Regulations setting up referral awards for talents at different job levels and regularly publishing internal job openings. When positions become vacant
the Company encourages prioritizing internal competition and job rotation to fulfill talent needs thereby promoting
internal talent mobility and optimal allocation.KELUN PHARMA adheres to the employment principle of "utilizing strengths through education and training; facilitating
promotion and demotion as well as employee inflow and outflow; strictly selecting and upholding meritocracy; rewarding Regarding the cultivation of management trainees in addition to conventional campus recruitment the Company
without regard to distance and penalizing without regard to kinship." The Company is committed to continuously continuously deepens university-industry cooperation by establishing long-term connections with key institutions such
strengthening its employer brand attracting talents with diverse backgrounds and experiences to join thereby laying as China Pharmaceutical University and West China School of Pharmacy Sichuan University. This enables the early
a solid talent foundation for the Company's long-term development. The Company has formulated effective talent identification and attraction of outstanding young talents laying the foundation for the construction of a talent pipeline.development strategies. Leveraging a digital human resources management platform and talent pool it conducts
forward-looking talent planning aligned with business needs continuously expanding and solidifying its talent reserve. By Gender By Age
Talent Strategy of KELUN PHARMA 45.10% 28.68% 7.49%
907757721508
Development: Create a conducive learning environment
Selection: Selection is more important than training. and conditions. Through mentorship military training 22.05%
The focus is on candidates with both integrity and and team-building exercises and frontline internships
professional competence possessing a strong inner the Company cultivates a new generation of employees 4438
drive to achieve outstanding results. acquired with new knowledge and who can thrive in 54.90%
the face of fierce future competition.
1105041.78%8409
Retention: Provide a favorable working environment
fos te r s imp le and amicab le i n te rpersona l Utilization: Offer opportunities for fair competition
relationships and build a development platform for irrespective of background or seniority where Male employeesperformance speaks for itself. Female employees Aged 30 and under Aged 31 to 40employees to achieve personal success.Aged 41 to 50 Aged over 50
By Employment Type By Job Level
Employee Recruitment
0.39%
To meet the demand for talents at various levels driven by business development the Company actively broadens
its talent acquisition channels encompassing campus recruitment social recruitment headhunter collaborations 79 2 10
government talent fairs and internal referrals. During the reporting period the total number of employees in the Group 1.44%
was 20127. 98.17% 289
2025 Innovative Talent Recruitment Initiatives of KELUN PHARMA 19759 3779
16338
Recruitment Demand Talent Pool Update and AI Interview 172
Forecasting Development Application 1864
Establish a systematic mechanism The Company has fully In 2025 the Company innovatively
for forecasting human resource digitalized and transitioned its introduced an AI interview system for
needs. Each October the recruitment process online. By the initial screening of key positions Employees under labor contract Dispatched workers Senior management Female employees in senior
Company formulates the annual building a systematic online including Industrial Management management
headcount plan based on the talent pool the Company Trainees and Marketing Management Part-time outsourced or Other forms Middle management
forthcoming year's strategic proactively builds a pipeline of Trainees. This achieves an efficient temporary workers Female employees in
business objectives and potential candidates currently and objective preliminary talent Junior employees middle management
departmental business plans with a reserve of tens of assessment and is deeply integrated
enabling accurate forecasting thousands of individuals. with the Company's existing evaluation
of recruitment needs across the methods—such as structured Employer Honors
entire group. interviews situational simulations and
group discussions—to collectively build
a more scientific and comprehensive In 2025 the Xindu Base was honored with the national title of "National Advanced Private Enterprise in Employment and
talent selection system. Social Security" which fully attests to the Company's continuous investment and remarkable achievements in areas such
as employee rights protection labor relations management and corporate culture construction.
89 90Cultivating Talent: Employee Growth and Health Security
Compensation Management Performance Management
The Company strictly complies with national and local laws and regulations concerning labor remuneration. It has In accordance with the Employee Performance Management Measures and various special assessment plans the
established and continuously improves its compensation management system adhering to the principles of "distribution Company conducts performance appraisals for all employees including those in non-managerial and non-sales positions
according to work fairness and justice and consideration of efficiency." By integrating its production and operational based on different assessment cycles achieving an effective linkage between organizational performance and individual
characteristics market supply and demand conditions and employees' actual contributions the Company has built a performance.compensation system that ensures internal equity and external competitiveness. Concurrently the Company strictly
implements the minimum wage guarantee system ensuring that the wages of employees who provide normal labor are To accommodate the characteristics of different positions the Company adopts a diversified approach to performance
not lower than the local minimum wage standard. appraisal including methods such as Key Performance Indicators (KPIs) Management by Objectives (MBO) and
Behavioral Observation. This ensures a 100% coverage rate for performance evaluations. Annual appraisals are
Besides the Company upholds the principle of equal pay for equal work. Under conditions of equivalent job value and conducted through a combination of self-assessment and supervisor evaluation. The results are widely applied in bonus
equal contribution employees receive equal pay thereby continuously promoting workplace fairness and diversified distribution salary adjustments promotion selection and talent development forming a performance culture with closed-
development. loop management.Measures Related to KELUN PHARMA's Compensation Management
Performance Feedback Mechanism
The Company has established a compensation structure covering all employees comprisingfixed and variable
pay strictly adhering to the pay-for-performance principle. To promote value creation and equitable development The Company has established a comprehensive performance feedback and appeal mechanism ensuring that all
Compensation across the Companyemployees in non-management and non-sales roles are also eligible for variable pay.Their
Structure variable pay is closely linked to their individual professional contributions team performance and the Company's employees receive timely and clear evaluation feedback and communication opportunities after their performance
overall operational results effectively motivating the enthusiasm and creativity of all employees and contributing appraisal. Following the appraisal the appraiser must provide feedback on the performance results to the appraisee
to the Company's sustainable development. through methods such as face-to-face meetings or phone calls clarifying strengths and areas for improvement and
jointly formulating a performance improvement plan. During this process the appraisee may also raise difficulties
encountered at work and seek support and guidance from their supervisor. After both parties reach an agreement they
The Company has established a regular compensation monitoring mechanism to periodically review and assess must jointly sign the Performance Feedback Interview Record Sheet to ensure the communication process is traceable
the compensation status of all employees. A transparent and open compensation appeal channel has been set
Compensation and the results can be implemented. If an employee has any objection to the appraisal results they may file a complaint up allowing employees to raise appeals regarding compensation benefits attendance performance appraisals
Appeals and rewards/punishments. This ensures the fairness and reasonableness of compensation distribution is in writing with the Human Resources Department.adequately maintained.Talent Retention
Equity Incentives
Upholding a sustainable talent philosophy the Company has systematically built a comprehensive talent retention system
The Company regards equity incentives as a vital component of its long-term incentive system. By implementing multiple encompassing multiple dimensions such as compensation incentives career development promotion pathways and
phases of equity incentive plans and employee stock ownership plans (ESOPs) it closely aligns the interests of core humanistic care aiming to continuously enhance employees' sense of belonging value and organizational stability. The
employees technical core personnel and the management team with those of the Company and its shareholders Company conducts special statistics and analysis on employee turnover each year and based on this formulates and
enabling them to share in the fruits of development. implements targeted retention and improvement measures. During the reporting period the Company's overall employee
turnover rate was 18.33%.As of December 31 2024 the 2021 Restricted Stock Incentive Plan has been fully implemented. All Company Key Performance
shares held under the 2021 Employee Stock Ownership Plan and the 2022 Employee Stock Ownership Plan
have been completely sold and their liquidation and distribution have been completed. These plans were
terminated early on April 24 2025. The existing equity incentive plans/employee stock ownership plans at From 2023 to 2025 the Company and its subsidiaries/branches did
Kelun-Biotech and CHUANNING BIOTECH cover a total of 445 employees.not experience any major layoff events or any major mergers
Kelun-Biotech employee stock ownership platform covering 161 employees; or acquisitions that impacted employees.CHUANNING BIOTECH 2023 Restricted Stock Incentive Plan covering 33 employees;
CHUANNING BIOTECH Employee Stock Ownership Platform covering 263 employees.
5 N ote: The total coverage of 445 employees differs from the sum of the details below because 12 grantees were granted repeatedly across
these plans.
91 92Cultivating Talent: Employee Growth and Health Security
Employee Rights and Benefits Protection Anti-Child Labor and Anti-Forced Labor
The Company prohibits the employment of child labor and resolutely eliminates all forms of forced labor. Through
standardized management mechanisms and process safeguards it effectively protects employees' rights to free career
KELUN PHARMA strictly complies with national labor laws and regulations such as the Labor Law of the People's Republic choice and their personal dignity. During the recruitment process the Company strictly implements an age review system
of China the Labor Contract Law of the People's Republic of China the Special Regulations on the Labor Protection of verifying employee identities through document checks interview confirmations and background investigations to ensure
Female Employees the Law of the People's Republic of China on the Protection of Minors and the Provisions on the that the age of new hires meets the national statutory minimum employment age. In daily management the Company
Prohibition of Using Child Labor. It also refers to international standards including the Ten Principles of the UN Global conducts regular compliance audits across all processes including recruitment employment payroll distribution and
Compact and the core conventions of the International Labor Organization. The Company systematically establishes a labor relations ensuring that all working relationships are established on a voluntary equal and fair basis.compliant employment management system comprehensively protects the legitimate rights and interests of employees
and is committed to creating and maintaining a diverse equitable inclusive and respectful workplace environment. The Company continuously conducts employee rights advocacy and training to enhance employees' self-protection
awareness and capabilities. Should any suspected case of child labor or forced labor be discovered the Company will
immediately initiate an investigation procedure. Upon verification it will terminate the violation properly relocate the
Compliant Employment Key Performance affected personnel strictly hold those responsible accountable and improve relevant processes. The related results will
be made public subject to supervision from all parties.The Company has established relevant employment
management pol ic ies such as the Recruitment
Management System and the Employee Diversity and Key Performance
Labor Employment System. These policies explicitly
prohibit the use of child labor and all forms of forced
labor are committed to maintaining employee diversity During the reporting period both the labor
firmly oppose discrimination and harassment and contract signing rate and the employee social During the reporting period the Company had
ensure that employees' legitimate rights and interests
insurance coverage rate were 100% no incidents of using child labor or forced labor and all in areas such as fair compensation occupational health employees met the statutory minimum working age requirement.and safety development pathways and democratic
participation are fully protected.Anti-Discrimination and Anti-Harassment
We are committed to building and maintaining a fair inclusive and Key Performance
respectful work environment and resolutely oppose all forms of
discrimination and harassment. Company policies explicitly protect
employees from discrimination or disparate treatment based on
diverse identities such as race color gender age religion nationality
or disability status. In daily management the Company attracts a wide
range of talent through fair and transparent diversified recruitment
processes and strictly prohibits the use of child labor and all forms of
discrimination ensuring that all applicants and employees enjoy equal During the reporting period the
opportunities and fair treatment. Company had no incidents
of employees experiencing
We actively advocate for diversity in team composition and respect
discrimination or harassment.the individual differences of each employee. The Company upholds
a "zero-tolerance" principle towards any form of harassment
intimidation and bullying in the workplace and strictly cracks down
on misconduct including sexual harassment to effectively protect
employee rights.
93 94Cultivating Talent: Employee Growth and Health Security
Diversity Equality and Inclusion Employee Training and Development
KELUN PHARMA is committed to integrating diversity equity and inclusion into all aspects of its corporate operations.In 2024 the Company officially promulgated and implemented the Employee Diversity and Labor Employment System To build a grand hall one must first secure the pillars. Kelun is deeply aware
which covers all employees of the headquarters and each subsidiary/branch including various forms of employment that talent is the primary element of the Company's development. We have KELUN PHARMA's Talent
such as full-time part-time outsourced and temporary workers. This system explicitly protects employees' rights related established a talent development strategy providing a platform for young Development Principles
to diverse identities such as race gender age religion nationality and disability status. As of the end of the reporting talents to practice and grow through multi-level cultivation mechanisms
period the Company employed 2019 employees from ethnic minorities. such as graduate traineeships internships and apprenticeship programs.We are committed to fostering an organizational environment of continuous
Strategy-
The ESG Committee under the Company's Board of Directors is responsible for supervising the formulation revision and learning and development stimulating employee potential and building a Guided
implementation of this system and has incorporated diversity goals into the Company's ESG management performance talent pipeline that supports the Company's long-term competitiveness.system. The Company has established a quantitative target regarding employee diversity which is linked to the
compensation of senior management. Training System
Talent
The Company has established a tiered and categorized employee Training
training system that covers all employees (including full-time part-time PrinciplesLearning-
The Company's Employee Diversity Target outsourced and temporary workers) to support the comprehensive growth Application Tiered
of employees and the enhancement of organizational capabilities. This Integration Training
system encompasses three main modules: New Employee Training General
Achieve a proportion of female employees in the entire Competency Training and Professional Skills Training. New employees
company of no less than 46% by 2030 undergo systematic integration through orientation training base internships experiential expansion activities and on-the-job learning. The
Company broadens employees' horizons through internal courses external
study programs invited external training and industry benchmarking while
continuously strengthening corporate culture heritage. In the professional
domain the Company designs targeted development pathways for systems
Comprehensive Diversity Training for All Employees Building an Inclusive Culture such as R&D production and marketing conducting training on product
and Promoting Long-term Development knowledge financial knowledge and professional skills to ensure that the
competency and development needs of employees in all job families are
During the reporting period KELUN PHARMA systematically conducted special training on the Employee Diversity and Labor
effectively met.Employment System for employees at the headquarters and all subsidiaries and branches. The training content covered core
topics such as awareness of diversity culture fair practices in recruitment and development labor compliance management Based on the career development stages and competency improvement
and feedback mechanisms reinforced by case study analyses to enhance understanding. The Company implemented online needs of employees at various job levels the Company implements
training for all employees via the ELN e-learning platform ensuring learning flexibility and broad coverage. A unified assessment differentiated management and leadership development training. It
was organized after the training achieving a 99% pass rate an increase of 11 percentage points compared to the previous has built a full-link cultivation mechanism ranging from campus-hired
year. The results indicate that employees' awareness of key provisions such as "diverse employment anti-discrimination and management trainees to senior management. Training content and delivery
anti-harassment" has significantly improved and the implementation of the system has been effectively strengthened further methods are designed hierarchically to precisely meet the capacity-building
consolidating the Company's inclusive and compliant employment environment. requirements of management talents at each level comprehensively
enhancing organizational management effectiveness.Promoting Diversity and Inclusion
KELUN PHARMA integrates diversity goals into its incentive system using material benefits to drive diverse and inclusive
practices. The Company has established a special recruitment reward to recognize teams that successfully introduce
talents with diverse backgrounds and achieve a high retention rate thereby strengthening the effectiveness of diverse
talent acquisition. Simultaneously for teams that implement measures such as effective cross-cultural communication
or develop support plans for employees with disabilities the Company provides a special activity fund to support their
continued organization of diversity-themed practices.Furthermore the Company has established a normalized management mechanism. At the beginning of each year the
Human Resources Department reviews the implementation of the previous year's diversity work and conducts data
analysis. It then reports on goal progress to the ESG Committee under the Board of Directors ensuring that diversity-
related initiatives are effectively aligned with the Company's strategy.
95 96Cultivating Talent: Employee Growth and Health Security
Management and Leadership Development Training KELUN PHARMA's Training System
Based on the Company's talent development principles and the compounding interest mindset the Company implements
management and leadership development training that covers employees at all job levels including junior employees KELUN PHARMA's Training System
first-line management middle management and senior management. This ensures that every employee can access
management and leadership enhancement opportunities that match their career development stage.New Employee Development Management Training
Orientation Base Military Training On-the-Job International Program in Pharmaceutical
Training Internship and Expansion Learning Senior Engineering Management (IPEM) Education Course
Training for Campus-hired Management Trainees Management
Cadres PBC School of Finance Tsinghua University General Training Executive MBA in Finance
For campus-hired management trainees the focus is on cultivating their execution team cohesion
and thinking skills. Regular "Elite Plan" intensive training camps are conducted aiming to reserve new Middle "Return to Study After a Hundred Battles" Program
strength for Kelun's fourth decade. and Senior
Managers Quality Module Leader Management System ...... Project
Training for First-line Management Management Skills Training
For first-line managers in the production and marketing systems the Company implements special First-line Team Leadership Training
training for team leaders and projects to enhance product knowledge and management skills Professional Training Managers
continuously strengthening the professional capabilities and leadership of the front-line management R&D System Production Marketing Functional Group Team Leader Training Program
team. System System Systems
Elite Plan Intensive Training Camp
Training Pathways Management
Training for Middle and Senior Management TraineesInternal External Training Invited External Benchmarking Marketing Management Trainee Training Program
Training Assignments Training Learning
For middle and senior managers in quality and marketing the Company implements a dual-
competency cultivation system for quality module leaders and a university-industry cooperation KELUN PHARMA Company Culture Training
project named "Return to Study After a Hundred Battles" systematically conducting targeted training
on professional skills management capabilities and industry policies.Training for Senior Management E-learning Online Platform
Differentiated development is implemented for management cadres at various levels. Senior The Company has built a blended training system that integrates online and offline methods as well as combining
management cadres focus on enhancing decision-making capabilities through high-end courses such external assignments with internal training. The Company deeply applies the E-learning online learning system achieving
as IPEM and Executive MBA in Finance. Group management cadres primarily engage in systematic digital integrated management of processes such as training implementation check-in evaluation assessment and
operational management learning through training integrated with meetings. knowledge sharing. This model not only enhances the flexibility and coverage of training but also strengthens the
cultivation of talents in key areas such as quality management.In 2025 the Company meticulously planned and executed 15729 online training programs accumulating rich educational
Case: Xindu Base Conducts Team Leader Training to Strengthen resources during this period. The total number of internal online courses has reached 45708 covering areas such as:
the Foundation of Front-line Production Management pre-job training management regulations safety and environmental protection corporate culture reference learning
professional technical knowledge job skill operations employee psychological counseling new employee orientation
During the reporting period to strengthen the professional capabilities and product knowledge. During the reporting period the activity level of the ELN platform reached a new high with
of the front-line production management team the Xindu Base under platform logins totaling 1964300 and a cumulative total online duration of approximately 4.5 million hours. This data fully
the collaborative leadership of the Human Resources Department and
the Production Department systematically implemented a special demonstrates the employees' strong desire for self-improvement and their high recognition of the platform's resources.training project for team leaders. This project targeted current and
reserve team leaders adopting a comprehensive training model
that combines "theoretical instruction case study discussions and
practical drills." The course content covered core skills such as on-site
management team communication and problem-solving. The training
achieved precise empowerment through a tiered design and introduced
mechanisms for performance linkage and review guidance to ensure Company meticulously planned and With platform logins totaling A cumulative total online duration
the integration of learning with application and training with practice. Scene from the Team Leader Training Project
This initiative effectively enhanced the comprehensive performance executed online million person-times of approximately million
capabilities of front-line managers laying a solid foundation for ensuring 15729 1.96 4.5
production quality and optimizing on-site operations. training programs hours
9798
E-learning Online Platform
Corporate System
Management
Safety Education
Business Reception
Etiquette Training
Anti-Fraud Training
Laws and
Regulations Training
Product Knowledge
Training
Financial Knowledge
Training
Kelun WindowCultivating Talent: Employee Growth and Health Security
New Employee Training For recent graduates we have launched the "Elite Plan" aiming to cultivate a "New Kelun Force" possessing both ideals
and a striving spirit thereby reserving core talents for the Company's medium-to-long-term development. This plan
innovatively adopts the "536" cultivation principle (5 stages + 3 mentors + 6 months). Through a structured growth path
and a multi-dimensional mentoring mechanism it helps campus recruits smoothly complete the role transition from
The Company places high importance on the integration and development of new employees. To ensure they quickly campus to workplace quickly integrate into the corporate culture and unlock their professional potential.adapt to their positions and deeply understand the corporate culture the Company requires a 100% participation
rate in new employee training. This training systematically helps new employees quickly integrate into the Company "Elite Plan" Cultivation Program (536 Cultivation Principle)
from four dimensions: ELN online training orientation communication base internship and experiential expansion
laying a solid foundation for their subsequent career development.
5 Orientation Front-line Centralized On-the-Job Tenure Review Training Workshop Practice Intensive Training Learning Presentation
Headquarters New Employee Induction Training Management Process Uniform food and After the first 4
1.On-site teaching accommodation 1. 3-day military 1. Rotation learning stages are completed
(Responsible: Human Resources Department) in production training2. E-Learning online
learning and exams workshops
centralized tenure
2. 2-day expansion 2. Fixed-post
centralized learning learning review presentation is activities
and training arranged
Collection of Pass/Fail determined
Training information related One-week full- comprehensively based 3 Department Mentor On-the-job Mentor HR Department Mentor
Notification to new employees' time experiential on performance in
physical condition etc. expansion experiential expansion activities 6 6-month incubation period
Training Department training Internship food Comprehensive evaluation
Group administrator submits and accommodation of grades (Excellent Good Case: Systematic Implementation of the "Elite Plan" Injects Core New Strength into Xindu Base
coordinates the Headquarters New for new employees Average Poor) based on
with the base Employee Induction uniformly arranged internship exams and Internship Application Form by the base internship reports
In July 2025 the Xindu Base held a special offline orientation meeting
for the 8 newly recruited "Elite Plan" trainees of that year. These
recent graduates from core departments such as R&D Quality and
Induction Department training Production had already been introduced to the company culture
Precautions administrator notifies every two weeks (depending Training duration:
Assessment results are and training requirements through online pre-orientation. At the
(Personnel 3.5 hours presented in ELN online meeting base leaders business heads and mentors engaged in in-
Group) on specific onboarding examscircumstances) depth communication with the trainees helping them deepen their
understanding of job responsibilities and the Company's fourth
entrepreneurial strategy. This event marked the comprehensive
launch of this year's "Elite Plan" at the Xindu Base. The Company aims
New employees must to accelerate the trainees' mindset transformation and capability Activate ELN Notify departmental Full score: 100 points 1
platform training administrators complete learning and retake opportunity
enhancement from campus to workplace laying a solid foundation for
accounts every Friday exam within 2 months their long-term development on the Kelun platform and continuously Xindu Base "Elite Plan" Orientation Meetingof joining >=80 points: Pass reserving core young talents for business development.
99100
ELN Online Base Base Experiential
Training Internship Internship ExpansionCultivating Talent: Employee Growth and Health Security
Job Development Training Academic Qualification and Professional
Certification Support
The Company places high importance on building job competency firmly believing that targeted skills training is a key
measure to enhance employee professional effectiveness support the Company in responding to market changes
and maintain core competitiveness. Based on the responsibility requirements of each position and future capability The Company actively advocates and supports the continuous learning
development needs the Company systematically designs and implements a series of professional and precise training and development of employees providing systematic support to all
courses. In the area of comprehensive employee quality the Company conducts special training on image management employees (including full-time part-time outsourced and temporary
and safety emergency response continuously enhancing employees' professional competence and risk response workers). This support covers multiple development pathways including
capabilities. academic qualification advancement application for professional titles
and vocational qualifications and application for government talent
In quality management the Company has built a quality knowledge base and a "Knowledge Lecture Hall" platform rewards. Through supporting policies and resource backing the Company
combining online and offline methods which conducts training on 22 professional topics including statistical application comprehensively empowers employees' personal growth and builds a
and data governance significantly strengthening the quality theory and practical skills of various bases. The production learning organization.management sector launched a special training camp for high-potential international talents focusing on cultivating
manufacturing management talents with a global perspective to support the modernization of the production system Academic Qualification Advancement
and its alignment with international standards. The marketing sector comprehensively enhances the capabilities of
managers at all levels in strategic thinking compliant operations and team collaboration through systematic leadership
and business training. KELUN PHARMA encourages and supports all employees (including full-
time part-time outsourced and temporary workers) to pursue on-the-job
At the same time the Company continuously promotes corporate culture construction integrating core values and social academic education in their spare time aiming to systematically enhance
responsibility concepts into employees' daily behaviors through a series of training activities striving to build excellent the professional quality and comprehensive capabilities of its workforce.teams that value both professional competence and professional character. Through this measure the Company continuously strengthens its talent
competitiveness to better adapt to and support the needs of rapid
business development.Case: International High-Potential Talent Training Continuously
Empowering Global Business Expansion
To support the Company's international development strategy Key Performance
KELUN PHARMA has continuously carried out the special
"International High-Potential Talent Training Camp" cultivation
project since 2023. This project aims to systematically select
and cultivate composite talents possessing both professional
skills and cross-cultural communication abilities in order to meet
the higher demands placed on the talent pipeline by global
business expansion. As of the end of the reporting period the During the reporting period The Company has distributed
project has been implemented for three consecutive years the Company supported
cultivating over 20 high-potential talents effectively enriching 1.92 million RMB in
the Company's international talent reserve and strengthening 111 employees in their academic subsidies to 827
the backup force for key positions. International High-Potential Talent Training Project academic qualification employees.advancement
Provided certain subsidies to eligible general employees
according to standards with a maximum subsidy of
300 RMB/month
101 102Cultivating Talent: Employee Growth and Health Security
Vocational Title or Professional Qualification Support Employee Communication and Care
The Company actively builds a learning organization and supports all employees (including full-time part-time
outsourced and temporary workers) in using their spare time to apply for professional technical titles or vocational
qualifications related to their positions. To this end we have formulated special management regulations to systematically KELUN PHARMA places great importance on ensuring smooth communication channels with employees establishing a
encourage employees in key professional positions to enhance their professional competence and optimize the talent diversified communication and feedback system. This system includes regular employee satisfaction surveys periodic
structure. During the annual title evaluation period the Company systematically compiles and publishes evaluation employee forums democratic life meetings and workers' congresses. It also integrates communication channels such
information from various regions proactively assists eligible and willing employees in completing their applications and as the general manager's onsite office regular work meetings and team leader meetings with management personnel
provides institutionalized support for their career development. as well as instant interactive platforms like the employee wish wall and WeChat groups. These initiatives systematically
collect employee feedback and suggestions ensuring that issues are resolved in a timely and effective manner.Key Performance During the reporting period the Company implemented the Chairman's Hotline Reporting System which allows
employees to report significant issues directly to the chairman bypassing hierarchical levels. Additionally a "General
Manager's Mailbox" was set up to stay in touch with employees' concerns and encourage them to actively offer
suggestions and ideas for the Company's development.Employee Grievance Mechanism
During the reporting period the Company
In 2025 the Company granted a total of RMB 1.29
supported 392 employees in applying for million in subsidies for title certifications or professional KELUN PHARMA has established a smooth and confidential employee grievance Employee Appeal
vocational titles/professional qualifications qualifications to 480 employees channel designed to respond promptly and properly address a wide range of
workplace issues including but not limited to matters related to discrimination Channels
harassment unfair treatment and violations of legal rights.In accordance with the Employee Grievance System the Company has set up
two levels of grievance handling committees: one at the headquarters and
Employees who obtained corresponding titles or qualifications after joining the Company and who met the one at the subsidiary (branch) level. These committees are responsible for
investigating providing feedback on and responding to employee grievances.criteria were provided with subsidies with the maximum subsidy reaching RMB 1000/month Separate grievance handling procedures have been formulated for the
headquarters and subsidiaries (branches). The Company is committed to
thoroughly investigating each grievance handling it seriously and promptly
Supporting to Apply for Government Talent Awards informing the complainant of the progress.Under the guidance of provincial and municipal governments' strategies for prioritizing talent development KELUN
PHARMA headquarters and subsidiaries (branches) actively implement government talent incentive policies at all levels. Employee Grievance and Handling Procedure
We proactively assist eligible technical and managerial talents in applying for relevant rewards. While providing material
incentives and spiritual recognition for outstanding talents the Company continues to optimize the organizational
environment that attracts values respects and utilizes talents. This approach supports talents in focusing on The Company has established a hierarchical standardized and time-sensitive employee grievance handling procedure
professional development providing stable talent support to build the Company's long-term competitive advantage. to ensure effective protection of employee rights. Employees are generally required to submit a written real-name
grievance within 10 working days after the grievance matter occurs via the internal OA system (headquarters) or directly
to the subsidiary (branch) grievance handling committee. Upon receipt of the grievance the committee should first
Key Performance determine whether the case falls within its scope of acceptance.For grievances at the subsidiary (branch) level the grievance handling committee shall complete the investigation collect
evidence discuss and form a resolution within 5 working days. If the complainant does not accept the resolution they
have the right to appeal to the headquarters grievance handling committee. The headquarters committee may review
cases that were mishandled at the subsidiary (branch) level and issue a final ruling within 5 working days.All grievance handling processes need to be documented. After resolution the complainant shall sign a confirmation of
During the reporting period the Company applied successfully obtained talent award funding the outcome and the records shall be archived. This procedure combines grievance evaluation with hierarchical review
for talent awards for 673 eligible employees amounting to RMB 23.49 million providing employees with a clear and efficient internal mechanism to safeguard their rights.
103104
Written
Correspondence
Designated Email
Dedicated
Telephone LineCultivating Talent: Employee Growth and Health Security
Complainant Protection Employee Engagement and Satisfaction Survey
KELUN PHARMA continually improves the Employee Grievance System and during the reporting period further enhanced To systematically evaluate organizational atmosphere
the protection measures for complainants. The Company strictly safeguards the personal information and legal rights accurately understand employee needs and continuously Key Performance
of complainants. Regardless of whether the grievance is filed under real-name or anonymous conditions the Company optimize management practices the Company has
commits to taking necessary measures to protect the complainant's personal safety property work democratic rights establ ished a regular employee engagement and
reputation and other legitimate interests. satisfaction survey mechanism. Every year an online
questionnaire survey is conducted for all employees. The
The system strictly prohibits any form of retaliation harassment or persecution. It also defines clear disciplinary actions engagement survey assesses three dimensions: emotional
for leaking complainant identities concealing information delaying processing or obstructing investigations which commitment cognitive investment and behavioral
may include warnings demerits major demerits termination of the labor contract or even criminal prosecution. The contribution while the satisfaction survey focuses on five
Company ensures that no employee will face unfair dismissal persecution or unauthorized disciplinary actions due to key areas: work content work environment management During the reporting period the
their legitimate grievance filing. If the complainant suffers personal injury economic loss or damage to reputation due to style compensation and benefits and career development. Company conducted an engagement
retaliation they are entitled to seek compensation in accordance with the law and may file a lawsuit in court. The goal is to collect comprehensive feedback to provide and satisfaction survey covering all
data support for enhancing employee experience and employees with an effective response
organizational effectiveness. rate of
Trade Union Management 93.6%
Survey Results and Improvement Measures
In accordance with the Constitution of the All-China Federation of Trade Unions and the Trade Union Law of the People's
Republic of China the Company has established a trade union organization. Regular workers' congresses are held with The overall employee satisfaction decreased by 2%
representatives covering a wide range of groups including frontline employees technical staff management personnel compared to 2024. The areas with declining scores were
and female employees ensuring the inclusivity and representativeness of democratic participation. The workers' congress work-life balance career development opportunities Employee overall employee overall
plays a crucial role in coordinating labor relations overseeing labor protection and safeguarding the legal rights and and compensation and benefits. In response the Human engagement satisfaction was
interests of employees. Resources Department at the headquarters organized was rated at
all subsidiaries (branches) to review employee feedback 91%
combined with the survey results and data conduct 93%
Case: Workers' Congress Approves Key Systems to Deepen Democratic targeted analysis and develop specific improvement
Management and Rights Protection measures for the areas with declining scores:
In December 2025 KELUN PHARMA held a workers' congress where revisions to the Employee Attendance Leave and Health
Check System and the Management Performance Management System were reviewed and unanimously approved. The Pilot flexible working hours allowing employees to choose their working hours within set periods
congress involved extensive consultation and discussion among the Company the trade union and employee representatives Work-life
with all parties committing to adhere to and supervise the implementation of these systems ensuring the protection of both the Regularly organize diverse recreational and wellness activities such as basketball yoga book Balance
Company and employees' legal rights. This review process represents an important practice in the Company's implementation of clubs and mental health seminars catering to different interest groups
democratic management and standardized internal governance continuously driving the Company towards more democratic
regulated and human-centered management practices.Provide a variety of career training programs including new employee training general skills
training professional skills training and management/leadership development training
Career Regularly conduct internal recruitment release job opportunities transparently and broaden
Development
Opportunities employee career development paths
Pilot multi-channel career development management clarifying the qualifications and promotion
paths for each channel
Establish and improve a salary system based on job value employee capability and
Compensation performance
and Benefits Offer a variety of flexible benefits such as supplemental million medical insurance equivalent
consumption points/shopping cards paid vacation etc.
105 106Cultivating Talent: Employee Growth and Health Security
Benefits and Welfare System In the process of building a diverse and inclusive employee care system the Company has established the following key
non-wage welfare programs to provide employees with comprehensive protection and support:
KELUN PHARMA regards its employees as the most valuable asset and in strict compliance with national regulations Key Non-Pay Benefits
ensures full and timely payment of social insurance and housing provident fund contributions for all employees. The
Company continuously supplements and improves various non-wage benefits and special care programs. Through
Million Medical The Company continuously improves its employee protection system ("basic social insurance + commercial comprehensive welfare protection and employee activities we aim to enhance employees' sense of belonging fulfillment
Insurance supplement + internal assistance"). By deepening cooperation on million medical insurance plans it provides and well-being facilitating mutual growth for both employees and the Company. employees and their families with affordable premiums suitable coverage and efficient claims services.The Company is committed to creating an inclusive and supportive benefits system that covers all employees with a
focus on addressing the differentiated needs of various employee groups by providing targeted diversified benefits The Company actively organizes special promotional activities for the "Personal Pension" policy. Through
support. We fully guarantee female employees' legal rights to paid marriage leave maternity leave and breastfeeding Personal online and offline formats it explains key points such as eligibility criteria tax benefits and application
leave and additionally offer a late arrival leave for pregnancy to help female employees smoothly return to work and Pension procedures to employees. This aims to help employees deeply understand the national pension policy reasonably plan their personal pension savings and effectively benefit from the policy.continue their career development. We also respect the cultural backgrounds of foreign and minority ethnic employees
ensuring they enjoy their corresponding national cultural holidays in addition to regular public holidays.For overseas employees the Company has developed and implemented the Regulations on the Overseas Base Visits Kelun Love The Company has established the "Kelun Love Fund" to support employees facing family difficulties due to
serious illness sudden disasters or major accidents.
(Anti Visits) Management to alleviate the emotional strain of homesickness and family separation. The Company provides Fund
customized commercial insurance for overseas employees and their families organizes regular free health checkups and
implements holiday-specific care measures. These actions aim to strengthen the sense of belonging among employees Free Annual The Company provides free professional health check-ups for all employees annually. Through systematic
working in different regions supporting the deepening of the Company's diverse culture and collaborative development. Health Check- early screening and health assessment it helps employees understand their health status promptly
ups effectively preventing and reducing the risk of major diseases.KELUN PHARMA Benefits List
Work-life Balance
Statutory Benefits for All Non-statutory Benefits for All Non-statutory Benefits for
Employees Employees Eligible Employees KELUN PHARMA strives to create a harmonious healthy and positive work environment that promotes work-life
balance for employees. The Company has set up various facilities such as an employee activity center gym library and
● Five social insurances & one ● Personal pension ● Work injury ● Employer liability ● Seniority allowance breastfeeding room and regularly organizes sports events like badminton and basketball tournaments. It also conducts
housing fund allowance insurance
● Love fund ● Breastfeeding room holiday-themed activities fun sports meets and interest-based clubs continually enriching employees' leisure activities
● Statutory holidays ● Bereavement ● Group commercial and enhancing team cohesion. At the same time the Company respects cultural diversity and fully supports foreign and
● Million medical ● allowance insurance Overseas employee
● Ethnic holidays insurance insurance minority ethnic employees in celebrating their traditional holidays fostering an inclusive and supportive corporate culture.● Exclusive ● Free dormitory
● Paid annual leave ● Annual health ● benefits for Overseas employee
check-up ● Free lunch subsidy
● Marriage leave maternity leave internal car
nursing leave breastfeeding leave ● Business trip purchases ● Education subsidy ● Insurance for Case: Rapid Response to Overseas Disaster Relief Practicing Humanistic Care
allowance families of overseas
● Bereavement leave ● Professional title employees
● Overseas assignment subsidy
● High-temperature allowance allowance ● Medical In November 2025 Sri Lanka was hit by tropical cyclone "Ditwa" causing severe floods and geological disasters. More
● Communication examinations for than ten employee families at KELUN PHARMA's life science base in Sri Lanka suffered varying degrees of damage to
● Holiday bonuses subsidy overseas employees
(gifts) their homes. In response the Company immediately activated its cross-border emergency response mechanism with
● Equity incentive
● Medical the General Manager personally overseeing the situation. The
● Wedding gifts plan examinations for Company swiftly conducted an assessment of the damage and
● Birthday gifts ● Women's Day families of overseas urgently provided essential supplies to affected families. At the
bonus (gifts)/ employees
● Factory anniversary same time a special disaster relief initiative was launched within holiday
gifts the group. Employees worldwide actively participated raising
● Children's Day gifts
● Maternity allowance funds in just one week which were distributed in full to support
● Family visit leave colleagues in need. This action not only alleviated the immediate
● Retirement
allowance Late arrival leave hardships of affected employees but also demonstrated KELUN ●
for pregnancy PHARMA's global commitment to people-oriented responsibility. It
● Sick allowance significantly strengthened the cohesion and sense of belonging of
The Company Provides Supplies to
the cross-cultural team. Affected Employees
107 108Cultivating Talent: Employee Growth and Health Security
Case: Xinkaiyuan Organizes "Two Cancers" Screening for Female
Employees Enhancing Health Care and Gender Equality Case: Time Flies Beauty Endures
In October 2025 the Xinkaiyuan Trade Union in collaboration with Jianyang Women and Children Health In July 2025 Kelun employees participated in a
Hospital organized a free "two cancers" screening event (cervical cancer and breast cancer) for all female promotional video shoot for Kelun Yongnian anti-aging
employees. The event not only covered core screening items but also included additional examinations such health products showcasing the slogan "Time Flies
as abdominal ultrasound checks and professional medical staff provided health consultations and knowledge Beauty Endures". The confidence and grace portrayed
dissemination on-site. A total of 20 female employees participated in the HPV screening and 26 employees were rooted in their inner fulfillment and order. With
underwent breast examinations. By delivering professional and convenient health services at the workplace the professionalism they conveyed the health message
Company effectively raised awareness among female employees about health protection and early prevention balancing multiple roles in both their careers and
demonstrating a substantial investment in gender equality and employee well-being. families. As they navigated the challenges of career
ambition and family support they remained gentle yet
resilient with clear eyes and an unwavering spirit. This
is the essence of Kelun women: elegant but powerful Kelun Employees Participate in Kelun Yongnian Anti-
poised but radiant. Aging Health Products Promotional Video Shoot
Case: Mental Health Awareness for Employees—Guizhou Kelun Hosts Special Lecture
In November 2025 Guizhou Kelun invited a senior
psychological expert to host a mental health lecture Employee Support
titled "Embracing a Positive Mindset" for employees.The lecture focused on workplace and life stress and
emotional challenges. The speaker shared practical KELUN PHARMA has established the "Kelun Love Fund" and supplementary million medical insurance to create a multi-
techniques for managing stress and regulating emotions layered health and life protection system for employees. These initiatives aim to alleviate the financial burden on
using theoretical explanations case studies and employees and their families when facing critical illness or accidents continuously improving their sense of belonging
interactive discussions to help employees establish security and well-being.positive mindsets and coping mechanisms. This initiative
effectively raised employees' mental health awareness
and self-adjustment capabilities contributing to a more Guizhou Kelun Employee Mental Health Lecture Key Performance
supportive and inclusive organizational atmosphere.Case: Jiangxi Kelun Women's Day Activities—Caring for Female
Employees and Promoting an Inclusive Work Environment
During the reporting period The million medical By the end of the reporting period the Company
insurance project reimbursed substantial provided love assistance funds totaling RMB
In March 2025 during International Women's Day
Jiangxi Kelun Trade Union organized a series of special medical expenses for 10 employees or their 1.2326 million to 88 employees and
events aimed at caring for female employees and family members who faced severe illnesses their family members who were affected by major
showcasing their contributions. Activities included a illnesses or accidents
roundtable discussion hosted by the General Manager
offering recognition and holiday blessings to female
employees as well as fun team-building activities like
balloon games and team cooperation games. These
activities provided female employees with an opportunity
to relax and engage in communication. By integrating
corporate culture into employee care practices the Jiangxi Kelun Women's Day Fun Activities During the reporting period the Kelun
Company successfully alleviated work-related stress Love Fund received a total of RMB
enhanced team cohesion and employee belonging
and reinforced the Company's commitment to social 1.1562 million in donations
responsibility and fostering harmonious labor relations.
109 110Cultivating Talent: Employee Growth and Health Security
Occupational Health and Work Safety
During the reporting period subsidiaries (branches) received the following honors
KELUN PHARMA places occupational health and safety at the core of its operational management adhering to the 2 enterprises were awarded
philosophy that "all accidents are preventable through proactive measures". The Company has established a robust the provincial and autonomous
occupational health and safety management system based on ISO 45001. Key policies include the Universal Work Safety region "Health Enterprise" title;
Responsibility System Safety Hazard Identification and Control System Emergency Plan Management System and
Occupational Health Monitoring Management System. Effective operation and closed-loop management are ensured
through processes such as monthly management reports internal audits and accident investigations. 2 enterprises were selected as
"Outstanding EHS Management
Additionally we have established a top-down EHS management organizational structure. An EHS management
committee led by senior management and supported by cross-departmental collaboration has been set up. Management C a s e s fo r P h a r m a c e u t i c a l ISO 45001 Occupational Health and Safety
compensation is linked to the Group's EHS performance and key performance indicators and corresponding reward and Enterprises in 2025"; Management System Certification (Partial Display)
penalty mechanisms have been implemented to create a management feedback loop. This continuous approach drives
improvements in EHS compliance and performance. 2 enterprises achieved "Level
2 Work Safety Standardization"
Key Performance certification;
3 enterprises achieved "Level
3 Work Safety Standardization"
certification. Occupational Health and Safety-Related Honors (Partial Display)
During the reporting period the Company The number of subsidiaries (branches) certified under the
invested RMB ISO 45001 Occupational Health and Safety Management
24.4989 System reached 20 with a certification rate of million in occupational Occupational Health and Safety Audit
health and safety management 60.61%
To systematically identify and manage environmental health and safety risks in production operations and ensure the
effective operation and ongoing compliance of the EHS management system the Company has established an EHS audit
mechanism covering the entire process. The Company has developed and implemented the EHS Internal Audit System
(Trial) which specifies audit procedures and standards. Periodic internal audits are conducted to drive the standardization
and continuous improvement of EHS management.Annual Occupational Health and Safety Target Achievement
100% signing rate for occupational disease Focusing on comprehensive reviews of regulatory and accident risks the internal audit assesses the 0 occupational disease cases
hazard notification forms for new employees construction and improvement of the EHS management system. It also thoroughly inspects on-site Internal
audit management practices and the implementation of procedural documents. By concentrating on critical
areas and conducting multi-dimensional checks for potential hazards the Company ensures the rigor
100% handling rate for abnormal 100% written notification rate for and effective ongoing operation of EHS management.
results in occupational health examinations occupational health examination results
Completion of annual declaration for In compliance with relevant standards from the International Organization for Standardization (ISO)
occupational disease hazards 100% rectification rate for safety hazards the Company actively engages independent third-party system certification audits to continuously External
demonstrate the high standards and norms of its EHS management system. This significantly enhances audit
the Company's credibility in occupational health and safety management and provides a solid
foundation for aligning with international best practices.
111 112Cultivating Talent: Employee Growth and Health Security
Occupational Health Management Key Performance
KELUN PHARMA's subsidiaries (branches) systematically conduct occupational disease hazard risk identification based
on workplace hazard factor detection and employee health check-up results. This ensures that all detection points and
relevant personnel are covered and that no risks are overlooked. Based on the concentration (intensity) of hazardous
factors and their potential impact on health the Company implements a graded control system for identified risks
classifying them into high- medium- and low-risk levels. During the reporting period a total of Achieving a The incidence rate of
occupational diseases was
For the risks that have been identified the Company adopts multi-layered integrated mitigation measures including employees participated coverage rate
engineering controls to reduce hazards at the source strengthening management controls by standardizing operational 9462 100%
processes and setting up warnings strict enforcement of personal protective equipment provision and usage supervision in occupational health examinations 0
regular monitoring and occupational health surveillance with the establishment and improvement of employee health
records as well as periodic assessments of control measures' effectiveness with continuous improvements to ensure
that occupational disease risks remain under control at all times.Occupational Health Examination Case: Customized Health Services to Enhance Employee Health Awareness and Well-being
KELUN PHARMA strictly adheres to national regulations and systematically conducts pre-employment in-service and In September 2025 Xinkaiyuan invited a team of professional
post-employment health examinations and monitoring for employees aiming to prevent and reduce occupational disease doctors from Jianyang People's Hospital to conduct a "Health
risks. The Company has established and continually improves its occupational health records management system Lecture and Health Examination Report Interpretation" activity
ensuring that the results of hazard factor detection and health monitoring are communicated to employees in writing for employees. The lecture focused on common workplace
safeguarding their right to know and their ability to protect themselves. Besides the Company optimized the process for health issues explained chronic disease prevention knowledge
with clinical cases and provided scientific lifestyle guidance.reporting abnormal examination results thus improving the efficiency of the management feedback loop. The subsequent one-on-one report interpretation session
offered personalized improvement advice based on individual
health status and work characteristics. This activity helped raise
employees' health awareness and self-management abilities
The Company's Occupational Health Examination Process serving as a practical implementation of the Company's commitment to employee care and the creation of a healthy Xinkaiyuan Health Lecture and Health
workplace environment. Examination Report Interpretation
Pre- Periodic
Employment Occupational Resignation
Health Check Health Checks Health Check
Case: Xindu Base Hosts Sleep Health Seminar Focusing on Employee Mental Health
Conduct targeted pre-employment Collaborate with qualified Ensure employees receive an exit
health checks for new employees occupational health check occupational health examination In July 2025 the Xindu Base Trade Union in collaboration with
based on occupational disease providers. Determine examination covering all hazard factors they the Xindu District Federation of Trade Unions successfully
hazard risk assessments for their items based on hazard factors were exposed to during their hosted a psychological health seminar themed "Happiness
positions. Establish standardized employees are exposed to and tenure and archive the results Begins with a Good Night's Sleep". A certified secondary-
investigation procedures for work- the National Classification and according to regulations. For level psychological counselor was invited to analyze the
related health incidents to ensure Catalogue of Occupational suspected occupational diseases causes of sleep disorders from physiological psychological
closed-loop management. The Diseases. Strictly implement or occupational contraindications and environmental perspectives while providing practical
Company also introduced a "near- regular occupational health identified during the examination techniques for stress reduction and sleep improvement
miss" reporting mechanism to checks. The Company establishes the Company handles subsequent including desk stretches and adjustments to work schedules.encourage proactive reporting of and maintains "one person one procedures and provides Employee feedback indicated significant benefits with
incidents that did not cause harm file" health records for each notifications in accordance with participants gaining knowledge about scientific sleep methods
but had the potential to thereby employee. While strictly protecting laws and regulations fulfilling its and stress management skills. This event demonstrated the
preventing potential major risks. privacy it provides full-process responsibilities as an employer. Xindu Base Employee Mental Health Service ActivityCompany's comprehensive care for employee physical and
health management services mental health extending the concept of a healthy workplace
including report interpretation from physical environment considerations to psychological
health consultation and follow-up support.on abnormal indicators.
113 114Cultivating Talent: Employee Growth and Health Security
Safety Culture Development Occupational Health Promotion and Education
Safety Training KELUN PHARMA actively responds to the national Occupational Disease Prevention and Control Law publicity week and under the theme "Prioritizing Prevention to Safeguard Occupational Health" systematically carries out occupational
disease prevention and education activities across the entire group. These efforts include organizing specialized training
In 2025 KELUN PHARMA continued to deepen comprehensive safety training and emergency response capability sessions posting informational materials and broadcasting educational videos among other methods to continuously
enhancement. A safety training and emergency drill system was established. Through blended online and offline training raise awareness about occupational disease prevention and protective skills among employees. This ongoing initiative
three-level safety education and regular continuing education the Company comprehensively improves employees' aims to effectively enhance overall awareness of occupational health and the ability for self-protection.safety awareness and emergency skills. Meanwhile leveraging key events such as work safety month and occupational
disease prevention law publicity week the Company conducts thematic campaigns and regularly organizes multi-scenario
emergency drills to continuously enhance risk prevention and emergency response capabilities solidifying the foundation
for safe corporate development. Case: Health and Care Activity During Occupational Disease Publicity Week Held by Hubei Kelun
Key Performance In April 2025 Hubei Kelun in collaboration with the Duhu
Community Hospital launched the theme event "Prevent and
Treat Occupational Diseases Protect Health at Kelun". The
event provided specialized health services to over 200 frontline
A total of 536500 hours of safety education training were completed across all subsidiaries employees in production sales and other roles. Occupational
(branches) with 124200 employees participating in training. A total of 769 emergency drills disease specialists conducted lectures on common risks such as the effects of prolonged sitting dust exposure and noise
(including fire and toxic gas leak drills) were organized; protection. Practical sessions included blood pressure and
blood sugar tests lung function screenings and first aid drills.Health assessments were completed for 26 senior employees
The investment in employee work-related injury insurance amounted to RMB 8.70 million. The identifying five potential cases of hypertension with follow-up records established. By integrating social healthcare resources
investment in employee work safety liability insurance amounted to RMB 490700 the Company is committed to establishing a long-term protection
mechanism for its employees ensuring "Safe Work Healthy Life". Health and Care Activity During Occupational
Disease Publicity Week at Hubei Kelun
The coverage rate of employee work-
related injury insurance was 100% and There were zero work-related fatalities
the coverage rate of employee work safety Supplier Safety Management
liability insurance was also 100%
We place high emphasis on contractor safety and have developed a comprehensive safety management system that
includes contractor selection contractor evaluation contract safety clause review contractor induction training work
safety management and post-contract evaluation.Case: Conducting Winter Fire Safety Training and Drill to Enhance
Employee Emergency Response Capabilities and Safety Awareness
Key Supplier Safety Management Efforts During the Reporting Period
In October 2025 Hubei Kelun organized a winter fire
safety training and drill campaign themed "Prevention
First Life Above All". The event followed a combined
approach of "theory explanation + practical drills" covering System Source Control Process Performance
key skills such as fire extinguisher use connecting fire Improvement Supervision Evaluation
hoses and simulated evacuation. Employees were able to
comprehensively master emergency self-rescue and initial Formulate and release Incorporate OHS Strictly implement Improve the
fire-fighting skills through hands-on practice. The immersive the Supplier Safety standards into pre-entry training performance
training effectively improved the overall fire safety literacy Management System procurement and and on-site work evaluation system
and practical skills of all employees laying the foundation to clarify management contract requirements safety supervision. and implement
for ensuring safe operations and mitigating fire risks during standards and strictly enforcing quantitative off-site
Hubei Kelun Conducting Fire Safety Training and
the winter season. This event demonstrated the Company's Practical Drill responsibilities. admission criteria. assessments.strong focus on the life safety and health of its employees.
115 116Striving for Excellence: Governance Foundation and Business Ethics
Striving for
Excellence
Governance Foundation
and Business Ethics
Governance is the cornerstone of sustainable development for
enterprises while business ethics serve as the guiding values
for enduring success. KELUN PHARMA continually improves its
governance structure and compliance mechanisms to solidify
the institutional foundation of decision-making and operations.By implementing a systematic anti-corruption framework and
fostering a culture of ethics the Company standardizes business
practices and upholds fairness and integrity. Furthermore
through the establishment of a comprehensive information
security defense system the Company ensures the safety of
data assets and customer privacy. These efforts work in synergy
propelling the Company toward a steady and sustainable
trajectory characterized by compliance transparency and
trustworthiness.Corporate Governance and Compliance Operation
Business Ethics and Anti-Corruption
Anti-Monopoly and Anti-Unfair Competition
Information Security Protection
Contribution to the United Nations Sustainable
Development Goals (SDGs):
117 118Striving for Excellence: Governance Foundation and Business Ethics
Corporate Governance and Compliance Key Performance
Operation
KELUN PHARMA adheres to laws and regulations such as the Company Law of the People's Republic of China the
Securities Law of the People's Republic of China and the Self-regulatory Guideline No. 1 for Companies Listed on the
Shenzhen Stock Exchange – Standardized Operation of Companies Listed on the Main Board . The Company continuously During the reporting period the
improves its governance structure effectively leveraging the collaborative governance functions of the General Meeting 3 Remuneration and 6 Audit 2 ESG
of Shareholders the Board of Directors and the Management enhancing the overall level of corporate governance and Company held 2 Strategy Committee Evaluation Committee Committee Committee
establishing a solid foundation for compliance-based operations. meetings meetings meetings meetings
Corporate Governance Structure
General Meeting of Strategy Committee
Shareholders
Remuneration and Diversity of the Board of Directors
Evaluation Committee
Board of Directors Nominating Committee The Company recognizes the importance of a diverse board background for making scientific decisions. When selecting
Office of the Board of Directors board members multiple factors such as industry experience educational background gender and age are carefully
(Securities Department) ESG Committee considered.General Manager
Audit Committee
Deputy General Internal Audit
Manager Department Name Position Gender Age
Education
Background Professional Background
Non-
Liu Gexin independent Male 75 Master's Pharmaceutical industry
Special Committees of the Board of Directors director degree background
Non-
Liu Sichuan independent Male 42 Master's Pharmaceutical industry
The Board of Directors of the Company has set up five specialized committees: the Strategy Committee Remuneration director degree background
and Evaluation Committee Audit Committee Nominating Committee and ESG Committee. Each committee is Non-
Ge Junyou independent Male 54 Doctoral Pharmaceutical industry accountable to the Board and operates based on the Company's articles of association and the Board's authorizations. degree background
These committees drive the implementation of various specialized tasks contributing to enhancing corporate governance director
and supporting sustainable development. Non-He Guosheng independent Male 58 Doctoral Economic financial and risk
director degree management background
Special Committees of the Board of Directors Non-
Zhou Xianxiang independent Male 52 Bachelor's
director degree
\
Employee
Strategy Committee Members: Liu Gexin (Chairman) Liu Sichuan Ge Junyou Wang Fuqing Zheng representative Female 52 Bachelor's Changyan director degree
\
Remuneration and Members: Gao Jinbo (Chairman) Liu Sichuan Ren Shichi Ren Shichi Independent Male 56 Doctoral director degree Accounting backgroundEvaluation Committee
Gao Jinbo Independent Male 66 Master's Risk management
Audit Committee Members: Ren Shichi (Chairman) Gao Jinbo Wang Fuqing director degree background6
Wang Fuqing Independent Male 63 Master's Pharmaceutical industry
Nominating Committee Members: Wang Fuqing (Chairman) Liu Sichuan Gao Jinbo director degree background
ESG Committee Members: Liu Sichuan (Chairman) He Guosheng Ren Shichi
6 Mr. Gao Jinbo Independent Director of KELUN PHARMA is currently the Managing Partner of Beijing Hanlong Law Firm and possesses extensive
experience in legal risk management and practice.
119 120Striving for Excellence: Governance Foundation and Business Ethics
Board Effectiveness Management In 2025 Mr. Liu Sichuan the Company's Executive Director and General Manager received a total remuneration of RMB
3.9330 million. The breakdown of remuneration is as follows:
To ensure the effective operation of the Board of Directors strengthen the mechanisms for supervising and constraining
internal directors and the management protect the interests of minority shareholders and creditors and promote the Fixed Remuneration (RMB Variable Remuneration (RMB
Company's standardized operations the Company revised its Independent Director Work System during the reporting Executive 10000) 10000) Total7
period. Independent directors make up no less than one-third of the Board of Directors with at least one being a Director Salary Benefits Annual Bonus (RMB 10000)
professional in accounting to ensure the Board structure complies with regulatory requirements and has a financial
expertise foundation. Liu Sichuan 354 9.30 30 393.30
Independent directors maintain their independence at all times with a primary focus on supervising potential
significant conflicts of interest between the Company its controlling shareholders actual controllers directors and Key Performance
senior management. To safeguard their independence we organize an annual self-assessment of independence for
independent directors. The Board also evaluates the independence of the incumbent independent directors and issues a
special opinion which is disclosed along with the annual report.At the level of special committees the role of independent directors has been further strengthened. Independent During the reporting period the Board of Directors consisted of 9 directors
directors constitute the majority of the members of the Audit Committee Nominating Committee and Remuneration
and Evaluation Committee ensuring their significant role in key governance areas such as audit supervision senior including 3 independent directors and 1 female director; A total of 5 full Board
management nominations and performance-based remuneration. This structure ensures effective oversight and checks
and balances. meetings were held; The average attendance rate of the Board was 100%;
Through clear composition requirements strict mechanisms to ensure independence and substantive roles in special
committees we have comprehensively enhanced the Board's ability to make independent judgments and scientific A total of 3 shareholders' meetings were convened.decisions at the structural responsibility and operational levels.Remuneration Management for Directors and Senior Management Investor Relations Management
To further improve the corporate governance structure and strengthen a balanced management system of both KELUN PHARMA strictly complies with the Self-regulatory Guideline No. 1 for Companies Listed on the Shenzhen Stock
incentives and constraints we have continuously optimized the remuneration and performance management system for Exchange – Standardized Operation of Companies Listed on the Main Board the Management Measures for Information
directors and senior management. Disclosure of Listed Companies the Investor Relations Management Guidelines for Listed Companies and other
On December 23 2025 we held the 10th meeting of the 8th Board of Directors during which the Proposal for the related regulations. The Company conducts information disclosure in a lawful and compliant manner and strengthens
Establishment of the "Remuneration Management System for Directors and Senior Management" was approved. This communication with external parties.system clearly outlines the Company's approach to remuneration adjustments for directors and senior management
as well as the mechanisms for suspension and clawback aiming to align responsibilities with rights and interests while During the reporting period the Company revised the Investor Relations Management System the Information Disclosure
enhancing the standardization and effectiveness of remuneration management. Additionally the system includes Management System and the Temporary Suspension and Exemption Management System for Information Disclosure
provisions for the remuneration of independent directors specifying that based on individual negotiations with the further improving its investor relations management and information disclosure mechanisms. These revisions aim to
Company the Remuneration and Evaluation Committee of the Board of Directors may establish relevant director enhance corporate governance and effectively safeguard the legitimate rights and interests of the Company investors
allowance standards which will be submitted to the Board of Directors and the General Meeting of Shareholders for and other stakeholders.approval before implementation.Easy Interaction Analyst meeting
platform
Director and Senior Management Remuneration Suspension and Clawback Mechanism
General Meeting On-site research
of Shareholders Investor
If Directors or senior executives cause losses to the Company by violating laws regulations or the Company's Articles of Association or are Communication
culpable for illegal activities such as financial fraud fund misappropriation or illegal guarantees the Company may based on the severity Channels
of the circumstances reduce or stop the payment of unpaid performance-based compensation and medium-to-long-term incentive income.Furthermore the Company may seek full or partial recovery of performance-based compensation and medium-to-long-term incentive income Performance Investor hotline call
already paid during the period when such violations occurred. briefings
When the Company restates its financial reports due to misstatements such as financial fraud it shall promptly reassess the performance- Roadshow Investor E-mail
based compensation and medium-to-long-term incentive income of the involved Directors and senior executives and correspondingly recover
any excess amounts paid.If a Director or senior executive engages in major illegal activities or other acts prohibited by laws and regulations during their tenure the
Company's Board of Directors has the authority to deduct from their compensation based on the severity of the situation. 7 Note: The difference of RMB 93000 between the total compensation figure and the "Total Pre-tax Remuneration Received from the Company" item
in the 2025 Annual Report represents welfare benefits (specifically the portion of social security and housing fund borne by the Company).
121 122Striving for Excellence: Governance Foundation and Business Ethics
Key Honors
The Company Holds Performance Briefing to Strengthen Capital Market Confidence
In May 2025 KELUN PHARMA held an online
performance briefing for the 2024 fiscal year. The
event provided detailed responses to questions
raised by investors and facil itated extensive
discussions on market concerns and feedback.This initiative significantly enhanced investors'
understanding of and confidence in the Company's
future development further strengthening the
positive relationship between the Company and its
investors. KELUN PHARMA Holds Online Performance Briefing 2025 Outstanding Practices Award for 18th China Listed Company Investor Relations Gold Award -
Listed Company Boards Outstanding Board Secretary Award Outstanding IR Team
Key Performance
During the reporting period the
Company disclosed a total of 1 performance briefing 2 online research sessions
88 session was held were conducted for specific announcements investor groups
Investor Relations Gold Award - Investor Relations Gold Award - Investor Relations Gold Award
Outstanding Board Secretary Outstanding Institutional Attention Award - Outstanding Market Value
Management Award
The Company responded to answered
62 questions on the Easy 1194 investor hotline calls
Interaction platform
Investor Relations Gold Award - Outstanding Public Securities News - Excellent
Small and Medium Investor Care Example of Investor Relations
123 124Striving for Excellence: Governance Foundation and Business Ethics
Internal Control Compliance and Risk Management Internal and External Audits
KELUN PHARMA strictly adheres to the Company Law of the People's Republic of China the Securities Law of the The Company's internal control auditing work is conducted through a combination of internal audits and external audits
People's Republic of China the Stock Listing Rules of the Shenzhen Stock Exchange the Basic Norms for Enterprise ensuring the effectiveness and continuous improvement of the internal control system.Internal Control and other relevant laws regulations and regulatory requirements. Based on the Company's operational
and management needs we have systematically established and continuously improved our internal control system. We According to the Internal Audit System we independently audit the establishment and implementation of the internal
have set up internal control and compliance teams at all subsidiaries (branches) and directly managed departments to control system each year covering all business segments such as production marketing procurement finance and
implement internal control systems at the business unit level ensuring comprehensive coverage and ongoing supervision human resources as well as subsidiaries. To enhance the accuracy and effectiveness of the audit the Company
across organizational levels. determines differentiated audit focuses each year based on the enterprise type business characteristics and risk
conditions. The audit plan is dynamically adjusted based on the Company's annual strategy and key tasks. For high-risk
We have formulated a series of internal control documents including the Internal Control Management Implementation areas and new business segments the audit frequency and depth are increased to ensure key risks are controlled.Plan and the Compliance System and have established a mechanism for regular revisions to ensure the effectiveness
of the internal control system design and its adaptability to execution. During the reporting period we further optimized At the same time the Company hires a qualified accounting firm every year to conduct an independent audit and
our internal control evaluation mechanism and revised the Internal Control Manual to clarify control standards and evaluation of the design and operational effectiveness of internal controls over financial reporting in accordance with
operational norms for various business processes providing clear guidelines for business execution across the Company. the Basic Norms for Enterprise Internal Control and relevant guidelines and a special report is issued. The external audit
results and internal self-assessment conclusions are cross-verified providing reliable evidence for the improvement of the
By integrating system improvements mechanism optimization and organizational implementation KELUN PHARMA has internal control system.continuously deepened the systematic construction of internal control compliance and risk management laying a solid
foundation for the Company's standardized operations and steady development.Key Performance
Internal Control Self-Assessment
Each year the Company organizes internal control self-assessments for its subsidiaries (branches) and directly managed
departments comprehensively identifying potential internal control deficiencies and promptly implementing corrective
actions to ensure the continuous and effective operation of the internal control system. The self-assessment focuses During the reporting period the Company held 3 Group-level internal control
on evaluating the design and operational effectiveness of internal controls. Multiple methods including surveys on- and compliance work meetings.site inspections and process testing are used to gather evidence ensuring the evaluation process is rigorous and the
conclusions are objective and accurate. No significant risks were identified during internal control audits reflecting the
The assessment results are compiled into a special report which is reviewed by the Board of Directors and the Audit overall effective operation of the internal control system.Committee serving as an important basis for continuously optimizing the internal control system so as to drive the
ongoing improvement of the internal control management mechanism. During the reporting period the Company
conducted an annual internal control self-assessment covering the entire group.Holding a Paper Cutting and Painting Activity with an Internal Equal Treatment for Small and Medium-Sized Enterprises
Control and Compliance Theme to Promote Compliance Culture
On September 10 2025 Shandong Kelun organized KELUN PHARMA has always adhered to the principle of "fair competition joint development" and actively practices
a paper cutting and painting event themed "Drawing corporate social responsibility. It treats small and medium-sized enterprises equally and strives to create a fair and
the Elegance of Internal Control Cutting the Beauty
of Compliance". This activity integrated internal transparent business environment contributing to the construction of a harmonious win-win industrial ecosystem.control and compliance concepts into artistic creation The Company has consistently applied the same payment terms to all small and medium-sized enterprises without
guiding employees to express their understanding and discrimination based on the size of the enterprise ensuring timely payment within contract terms.recognition of compliance operations risk prevention
and control and integrity in the workplace through
paper cutting and painting. An exhibition was also held
to promote communication and resonance. This event
using cultural creativity as a medium facilitated a shift
in internal control advocacy from "passive learning" to
"active communication". It represented an innovative
practice for promoting compliance culture and laid a
solid foundation for continuously enriching internal
control awareness and strengthening the Company's Shandong Kelun Organizing Paper Cutting Activity
internal control defenses. with an Internal Control and Compliance Theme
125 126Striving for Excellence: Governance Foundation and Business Ethics
Business Ethics and Anti-Corruption Internal Audit of Business Ethics and Anti-Corruption
Under the guidance of the Audit Committee the Company's Internal Audit Department carries out audits on the
implementation of business ethics and anti-corruption policies based on the Working Rules for the Audit Committee and
KELUN PHARMA has always adhered to responsible business conduct strictly complying with laws regulations and the Internal Audit System. The audit scope covers all directly managed departments and subsidiaries (branches). By the
business ethics integrating integrity into the foundation of its corporate development. Since joining the China Enterprise end of the reporting period the Company's Internal Audit Department had completed at least one audit covering the full
Anti-Fraud Alliance in 2015 the Company has actively participated in the alliance's activities and contributed to building a business processes of each major subsidiary (branch) within the Group. Among these the review of business ethics and
clean and transparent business environment. the implementation of related systems was a key focus of the comprehensive internal control audits.In terms of internal governance the Company explicitly prohibits any form of commercial bribery and requires all Business Ethics and Anti-Corruption Internal Audit Process and Content
employees to adhere to the highest standards of professional ethics and conduct. New employees are required to sign
the Kelun Group Compliance/Integrity Commitment Letter upon onboarding and existing employees shall reaffirm and re- Systematically conduct commercial bribery and corruption risk assessments covering all business areas.sign it annually during the compliance season. During the reporting period all employees required to sign the Kelun Group Identify positions and links prone to risks in key processes such as procurement sales and expense
Compliance/Integrity Commitment Letter have done so further solidifying the responsibility framework for compliance Before the Audit reimbursement and designate them as key focus areas for audit.and performance.Take the implementation of anti-commercial bribery and anti-corruption systems as a core inspection
item. Ensure the effectiveness of the Company's relevant management measures by reviewing and
Organizational Structure supervising the establishment and implementation of internal control systems the authenticity of
financial information and the integrity compliance of personnel in key positions.The Audit Committee of the Company's Board of Directors serves as the highest supervisory body for business ethics During the Audit All subsidiaries (and branches) conduct comprehensive annual internal control self-tests covering all
major business processes. These efforts combined with regularly held "Compliance Season" activities
anti-corruption anti-commercial bribery and anti-fraud management. The Company has established a joint working jointly promote the implementation of anti-commercial bribery and anti-corruption systems.group comprising the Internal Audit Department Internal Control and Compliance Department Legal Affairs Department
and Human Resources Department to collectively conduct systematic governance supervision and audit of the business
ethics conduct of all employees and partners. Employee Representative Director At the subsidiary (branch) and directly Based on the audit results the Company continuously optimizes its anti-corruption management mechanisms and related policies. To strengthen accountability compliance and business ethics-related
managed department levels internal control and compliance working groups and compliance officers are designated indicators have been incorporated into the performance appraisal system of all subsidiaries (and
to ensure the implementation daily management and monitoring of business ethics standards. These groups regularly After the Audit branches) and directly affiliated departments. This ensures the formation of an effective management
report their execution status to higher management thereby forming a multi-layered oversight and execution system closed loop and continuously improves the Company's integrity governance level.covering all major business processes of the Company.System Framework Internal Training and Publicity on Business Ethics and Anti-Corruption
To establish a systematic business ethics and anti-corruption management framework we have developed and The Company actively fosters and practices a corporate
implemented a series of policies including the Code of Business Ethics Anti-Commercial Bribery System Anti-Fraud culture of honesty and integrity. Through systematic
System Employee Handbook and Relatives' Relationship Disclosure and Conflict of Interest Reporting System. These compliance training the signing of integrity commitments and
policies address various dimensions such as employee conduct fraud risk prevention and control and identification continuous educational initiatives it strengthens all employees'
and avoidance of conflicts of interest. Together they form a comprehensive clearly-structured and well-coordinated understanding and recognition of business ethics norms and
business ethics and anti-corruption management system providing a solid institutional foundation and safeguard for our anti-corruption policies. This drives the internalization of integrity
management practices and effective prevention of integrity and ethical risks. values and their external manifestation effectively enhancing
employees' compliance awareness and self-discipline.Annually the Company holds regular business ethics and anti-
fraud training sessions for all employees making it a key activity
of the "Compliance Season". Additionally targeted specialized
training is organized irregularly based on the characteristics
of different business sectors and key roles to ensure a close
integration of risk prevention and job responsibilities. All new "Compliance Season" Anti-Fraud Training
employees are required to complete anti-fraud and integrity
training as part of their onboarding process reinforcing
compliance awareness from the very beginning.Furthermore the Company creates an integrity-focused atmosphere through diverse promotional activities. An integrity
column is set up on internal communication platforms and the "Integrity Kelun" official WeChat account regularly
publishes policy interpretations typical case studies and other relevant content establishing a continuous channel for
integrity education. Subsidiaries (branches) also carry out various integrity-themed activities such as creating short
videos on integrity and hosting integrity-themed auctions to communicate integrity concepts in a lively and engaging
way guiding employees to establish correct professional and ethical perspectives.
127 128Striving for Excellence: Governance Foundation and Business Ethics
Supervision of Business Ethics and Anti-Corruption Among Partners Anti-Monopoly and Anti-Unfair Competition
KELUN PHARMA has established a business ethics and anti-corruption supervision mechanism for its partners combining
institutional norms contractual agreements and ongoing monitoring to continuously enhance the overall compliance KELUN PHARMA has established a systematic management framework for anti-monopoly and anti-unfair competition
management level of the supply chain and the cooperation ecosystem. The Company has developed policies such as covering key areas such as promotional content review prohibition of monopoly agreements and abuse of market
the Supplier Code of Conduct Third-Party Due Diligence and Handling Management System Distributor Compliance dominance and the protection of trade secrets. The Company has developed and implemented specialized policies
Management System and Market Service Provider Management System. These documents impose clear control including the Promotional and Non-Promotional Materials Management System Anti-Monopoly Compliance Management
requirements on partners in areas such as business ethics quality management information confidentiality and System and Trade Secret Protection and Non-Competition System. These policies are interconnected forming a
compliance duties collectively fostering a fair and honest business environment. preventive supervisory and accountability loop that spans the entire business process. Regular training and inspections
are conducted to ensure the implementation of these policies thereby providing institutional support for fair competition
In business partnerships the Company mandates that the Sunshine Agreement be signed alongside external procurement and compliant business operations.contracts. The Sunshine Agreement explicitly prohibits both parties from soliciting or accepting any form of improper
benefits requires the avoidance of intentional barriers to cooperation and sets up dedicated reporting channels.Additionally the anti-commercial bribery clauses in contracts with clients explicitly define the anti-bribery obligations and Key Anti-Monopoly and Anti-Unfair Competition Measures in the Reporting Period
responsibilities of agents.The Company's Internal Control and Compliance Department in collaboration with the Supply DepartmentBusiness Contract Clause Reinforcement
Department and Project Management Team conducts anti-commercial bribery supervision. Training on Anti-commercial The Company has comprehensively incorporated "three-anti compliance clauses" (anti-monopoly anti-
Bribery Anti-monopoly and Anti-fraud Compliance is provided to distributors and service providers. The Business unfair competition anti-commercial bribery) into its standard sales contracts clearly defining the compliance
Department is responsible for daily supervision of compliance obligations during the contract performance period. If obligations of both parties contractually.false transactions or commercial bribery are discovered measures such as the deduction of security deposits supply
restrictions suspension of supply or contract termination will be implemented in accordance with the established policies. Specialized Training Deepening
Conduct special anti-monopoly compliance training for sales leaders. Through systematic review and case
analysis of the four dimensions—"personnel finance assets and operations" complete risk identification
Whistleblowing Channels and Whistleblower Protection and rectification a closed loop for key business processes.ProvideTrade Secret Protectiontraining for newly hired employees under the Elite Talent program to
To build an honest and healthy business ecosystem the Company has established a Whistleblower Protection and strengthen company-wide confidentiality awareness and prevent information leakage risks.Reward System which is publicly disclosed on the official website. This initiative encourages suppliers partners and
all employees to actively participate in supervision and report illegal or non-compliant behavior such as corruption or Compliance Commitment Signing
embezzlement. Organize the Company's senior management and key personnel to sign a writtenAnti-Monopoly Compliance
Commitment Letterto further clarify and reinforce individual compliance responsibilities.Throughout the whistleblowing process the Company strictly follows laws regulations and internal policies ensuring
complete confidentiality of the whistleblower's identity and the content of the report. From the acceptance of tips Integration into Performance Mechanisms
investigation and verification to processing feedback and archiving strict protection mechanisms and operational Incorporate anti-monopoly and anti-unfair competition compliance management into the annual performance
standards are in place to ensure the safety and control of whistleblowing information and to effectively safeguard the appraisal system. This promotes the deep integration of compliance requirements with business execution
legitimate rights and interests of whistleblowers. ensuring systems are effectively implemented.Company Whistleblowing Channels
Key Performance
Internal Audit Department WeChat 13710096516
028-82860620
E-mail jubao@kelun.com During the reporting period conducted covering with a total Whistleblow- Department of Legal Affairs WeChat/
ing hotline training duration of 028-82860470 Email Integrity Kelun WeChat Official 13 sessions of business ethics and anti- 20127
Account / Integrity Kelun Enterprise hours
Human Resources Department corruption training for internal employees employees 13418WeChat Platform
028-82860586
Business ethics and anti-corruption training
was conducted for partners covering 934
4485 service providersMailing Internal Audit Department / Legal Affairs Department / Human Resources Department Sichuan Kelun distributors
address Pharmaceutical Co. Ltd. 36 Baihua West Road Qingyang District Chengdu P.R. China
No commercial bribery or corruption-related litigation occurred; No administrative penalties or legal disputes
related to monopoly or unfair competition behavior were reported.
129 130Striving for Excellence: Governance Foundation and Business Ethics
Information Security Protection
KELUN PHARMA places a high priority on the protection
of customer business secrets data and personal privacy
strictly adhering to relevant laws regulations and industry
standards. The Company has established a comprehensive
information security management system through policies
such as the Information System Operation and Maintenance
Security Management Measures and the Data Backup and
Recovery Management Measures.In terms of organizational support the Company has
equipped a professional security management team that
covers network host application database and industrial
control systems. The team continuously carries out standard
improvements vulnerability repairs security monitoring The Company Holding Second-Level SAP System Protection Certificate
cybersecurity training system audits and emergency
response actions providing systematic support for
safeguarding company data security and customer privacy.Key Honors
Conducting Anti-Fraud and Cybersecurity Awareness Training to Enhance Company-wide Risk
Prevention Awareness
In June 2025 the Company jointly organized the "Xindu Public Security Entering Kelun" cybersecurity awareness
campaign with the Xindu District Public Security Bureau. This police-enterprise collaboration targeting the
Company's headquarters and various subsidiaries and branches used case studies on-site Q&A and other
methods to thoroughly educate employees on cybersecurity laws regulations and protection skills. It effectively
enhanced company-wide cybersecurity awareness and protection capabilities solidifying the network security
defense line.Company Recognized as Outstanding Unit in Annual Operations
by Sichuan Province Digital Transformation Promotion Center
Key Information Security Initiatives During the Reporting Period Key Performance
The VPN was transitioned to a Zero Trust architecture A database operation and maintenance audit system was
enhancing the security of endpoint access at the network deployed to achieve full-process control of operational The Company conducted information security-related training sessions totaling
perimeter. activities. 3
Firewalls at the exits of various bases were replaced to Internet behavior management systems were uniformly 4.58 hours of training;
centrally manage exit mappings and avoid unnecessary deployed across all bases implementing usage approval
boundary data exchange. and security responsibility assignment mechanisms.Quarterly inspections and vulnerability scans were completed 4 times; the Company also
A situational awareness system was deployed to Server endpoint protection was strengthened to effectively
proactively identify hidden security threats. defend against malicious attacks like ransomware. conducted 1 risk assessment of the information system and 1 backup recovery drill;
An emergency response agreement was signed with a No incidents of customer privacy infringement or data loss occurred.third-party cybersecurity firm to establish a collaborative
defense and response mechanism.
131 132Social Inclusion: Rural Revitalization and Social Contribution
Social Inclusion
Rural Revitalization and
Social Contribution
KELUN PHARMA deeply recognizes that the sustainable
development of a business is closely linked to the common
welfare of society. Our public welfare initiatives span multiple
areas including education culture healthcare technological
innovation rural revitalization and emergency rescue.Through continuous philanthropic efforts we have effectively
improved the living conditions of the beneficiary groups and
actively promoted social inclusion and overall progress. In
doing so we contribute to achieving broader social value and
sustainable development.Pooling Strength for Rural Revitalization
Practicing Public Welfare and Charity
Industry Collaborative Development
Contribution to the United Nations Sustainable
Development Goals (SDGs):
133 134Social Inclusion: Rural Revitalization and Social Contribution
Pooling Strength for Rural Revitalization Practicing Public Welfare and Charity
KELUN PHARMA actively responds to the national rural revitalization strategy focusing on consolidating the achievements KELUN PHARMA regards fulfilling its corporate social responsibility and giving back to society as an essential part of its
of poverty alleviation and fulfilling its social responsibilities. The Company is committed to promoting the socio-economic sustainable development. In compliance with the Public Welfare Donation Law of the People's Republic of China and
development of rural areas through actions such as supporting rural education revitalizing talent and upgrading other relevant laws and regulations the Company has established internal management systems including the External
infrastructure. During the reporting period the Company invested over RMB 1.5 million in rural revitalization efforts. Donation Management System and the Environmental Social and Corporate Governance Management System to ensure
stable standardized and transparent implementation of public welfare activities.For years the Company has leveraged its professional medical resources and industry advantages to precisely focus on
In response to strategic calls the Company invested resources in several regional projects during the reporting period: and actively respond to the real needs of vulnerable groups in society. The Company provides diversified and effective
humanitarian aid fully demonstrating its wealth philosophy of "taking from society and giving back to society" along
In Guang'an City Sichuan Province the Company supported the construction of an irrigation station in Shilongqiao Village with a deep sense of social responsibility.Goujiao Town Yuechi County to strengthen the foundation of agricultural development stimulate industrial potential and
provide stable support for local rural revitalization. Additionally the Company contributed to the repair of infrastructure such
as roads in Hanpoling Village Qiaojia Town further advancing the construction of livable rural communities.Collaborating with Social Forces to Support Education in Border Regions
In Ganzi County Sichuan Province the Company donated over RMB 400000 through the Sichuan Red Cross Foundation to
support the purchase of modern large-scale harvesters and greenhouse vegetable planting projects in Luola Village Renguo In 2025 Jiangning Biotechnology in collaboration with social forces donated a total of RMB 1.2 million in education
Township and Rongchawu Village in Ganzi Town. funding to Gongliu County Ili Prefecture Xinjiang with Jiangning Biotechnology contributing RMB 1 million.The funds were specifically allocated to assist economically disadvantaged students in the region focusing on
improving the learning conditions of students in remote border areas and alleviating the financial burden on their
In Maigaiti County Xinjiang a series of infrastructure improvement projects benefiting local villagers was implemented: families. This donation injected warmth and strength into the development of education in Gongliu County.Conducted electrical safety renovations for 22 households completely eliminating hazards such as wire aging and illegal
connections. Completed a 4.5-kilometer main road lighting project achieving full coverage of lighting facilities and effectively
ensuring villagers' travel safety at night. Constructed a new 5-ton capacity steel-structured bridge for villagers connecting
the main road optimizing traffic conditions and effectively facilitating villagers' daily production and living activities.In Guizhou Province the Company through the Guiyang Red Cross donated funds to the Qingzhen City CPPCC Office
to support the "Volunteer Service" initiative and the "Children's Day" charity educational assistance program. This effort
contributed to the development of local rural education and the growth of children in the area.Donations for Education in Gongliu County
135 136Social Inclusion: Rural Revitalization and Social Contribution
Earthquake Relief Industry Collaborative Development
We leverage our strengths to efficiently mobilize internal and external resources actively engaging in frontline
disaster relief efforts. Through cash and drug donations as well as emergency supplies we help affected regions and As an active leader in the healthcare industry KELUN PHARMA deeply understands that promoting collaborative industrial
communities restore normalcy mitigating disaster impacts and promoting social stability. development is key to enhancing the overall industry level meeting unmet clinical needs and safeguarding public health.We are committed to constructing an open inclusive and mutually beneficial industrial innovation ecosystem through in-
depth collaboration with global academia clinical institutions and supply chain partners. This approach aims to jointly
drive medical progress and improve drug accessibility.When Natural Disasters Strike Kelun Shows Its Care
On January 7 2025 a 6.8-magnitude earthquake hit Dingri Kelun-Biotech's Collaboration with Affiliated Hospital of
County Shigatse City Xizang causing significant casualties Southwest Medical University to Develop RDC Drugs
and widespread destruction of homes. KELUN PHARMA
immediately activated its disaster emergency response plan In March 2025 Kelun-Biotech and the Affiliated Hospital of Southwest Medical University made a significant
maintaining close contact with local health authorities and
medical institutions. The Company donated RMB 500000 breakthrough in the integration of production academia and research. The radionuclide-drug conjugate (RDC)
in cash to the local area helping medical staff and injured SKB107 jointly developed by both parties received clinical trial approval from the National Medical Products
individuals through the difficult period. Administration. This drug is intended for the treatment of advanced solid tumors with bone metastasis.This cooperative model not only accelerates the R&D process of specific candidate drugs but also deepens
Kelun-Biotech's understanding and strategic positioning in the RDC technology field. It transforms research
Donation Certificate for Xizang insights from top external academic institutions into a product pipeline with potential clinical value jointly
Earthquake Relief addressing unmet medical needs.Responding to Floods and Fulfilling Social Responsibility Kelun-Biotech's Research Achievements Published in
Top International Journals and Academic Conferences
In 2025 Rongjiang County in Qiandongnan Miao and In 2025 Kelun-Biotech's core research breakthroughs made significant strides on the international academic
Dong Autonomous Prefecture Guizhou Province suffered
severe flooding due to prolonged heavy rainfall resulting stage. The TROP2 ADC drug Sacituzumab tirumotecan (sac-TMT) developed by the company had several
in significant infrastructure damage and severely affecting key studies published in top-tier journals including the New England Journal of Medicine Nature Medicine the
the lives and livelihoods of local residents. To fulfill its British Medical Journal and Annals of Oncology. Additionally at major global oncology conferences such as the
corporate social responsibility and assist in disaster relief and ASCO Annual Meeting and the ESMO Congress Kelun-Biotech showcased 15 research findings signaling the
reconstruction the Company's subsidiaries Guizhou Kelun international academic community's high recognition of the research quality and impact of Chinese innovative
and Guizhou Kelun Medical Trade donated cash and urgently
needed medicines to the affected areas. drugs in the field of cancer treatment.This donation aimed to ensure the basic livelihood and health
of the affected population support post-disaster epidemic
prevention and recovery efforts and highlighted KELUN
PHARMA's quick response and mission-driven approach to
helping others during times of disaster. Donation Certificate for Rongjiang
County Flood Relief
137 138Social Inclusion: Rural Revitalization and Social Contribution
Multi-Dimensional Academic Collaboration to Promote Standardization of Nutritional Therapy
The "Standardized Nutritional Therapy Demonstration
Wards" Project sponsored by China Ant i -Cancer
Association and co-organized by KELUN PHARMA was
launched in 2021. By 2025 a "Co-Constructed Ward"
system had been established and nearly 500 hospitals
had completed training and successfully established
"Demonstration Wards". In 2025 the Company hosted an
experience-sharing session academic discussions and
interactive booths at the China Anti-Cancer Association's
conference on the summary and launch of the surgical
nutrition therapy standardization promotion project
promoting the development of standardized surgical Conference on the Summary and
nutrition practices at the grassroots level. Launch of the Surgical Nutrition Therapy
Standardization Promotion Project
By 2025 over 300 medical staff completed surgical nutrition skills training assessments over 700 medical staff
underwent surgical nutrition therapy training and over 400 surgical nurses received specialized nursing skills
In various medical fields such as nutrition anesthesia anti-infection infusion and emergency medical rescue KELUN training. Additionally 162 institutions nationwide successfully defended their applications for the program
PHARMA actively supports and participates in high-end academic conferences to promote standardized clinical diagnosis facilitating the implementation of standardized surgical nutrition treatment processes.and treatment and the development of disciplines thus fulfilling its corporate social responsibility and values.Academic Deepening in Anesthesia Supporting High-Quality Development of the Discipline Anti-Aging Technology Leads Industry Innovation Driving the Development
of the Comprehensive Health Industry
In 2025 KELUN PHARMA participated in academic activities As the core brand of Kelun Group's comprehensive health
such as the annual conferences of the Anesthesiology sector Kelun Yongnian participated in several major
Branch Chinese Medical Doctor Association and Chinese industry conferences in 2025. From its global debut at
Medical Association. The Company shared the clinical the China International Import Expo (CIIE) focusing on
application value of the long-acting local anesthetic product technology and brand strategy it garnered
Bupivacaine Liposome. During this period KELUN PHARMA top-level attention and collaboration opportunities. At
also collaborated with experts to promote the publication the Guangzhou Health Expo Kelun Yongnian further
of the Clinical Practice Guidelines for Perioperative Fluid integrated into the industry leading discussions through
Therapy in Chinese Adult Patients (2025 Edition) . This academic forums empowering the entire industry chain
initiative not only accelerated the application of multimodal and forming a consensus on the importance of clinical
analgesia schemes in perioperative care but also evidence at the core of anti-aging science. This not only
promoted high-quality development within the anesthesia Release Ceremony of Clinical Practice enhanced KELUN PHARMA's brand building and business
discipline further advancing the implementation of the Guidelines for Perioperative Fluid Therapy in expansion but also strongly propelled the comprehensive Kelun Yongnian at the 2025 CIIE Booth
Enhanced Recovery After Surgery (ERAS) concept for the Chinese Adult Patients (2025 Edition) health industry toward higher qual ity and more
benefit of patients. sustainable development.
139 140Conclusion
Business Ethics
Appendix
Index Unit 2023 2024 2025
Number of anti-commercial bribery and anti-corruption
Time(s) 12 11 13
Key Performance Indicator Table training sessions
Percentage of employees covered by anti-commercial bribery
%100100100
and anti-corruption training
Economic Performance
Percentage of major subsidiaries (branches) covered by
%100100100
business ethics audits
Index Unit 2023 2024 2025 Percentage of core suppliers engaging in business with the % 100 100 100
Company that have signed Sunshine Agreement
Total operating revenue RMB 10000 2145393 2181241 1851292
Investor Communication
Net profit attributable to shareholders
RMB 10000 245611 293589 170194
of the listed company Index Unit 2023 2024 2025
Number of disclosure announcements Copies 142 144 88
Governance Performance Number of earnings briefings held Time(s) 1 1 1
Number of online targeted research sessions Time(s) 5 3 2
Corporate Governance
Number of responses to questions on the Interactive Easy
Time(s) 56 73 62
Platform
Index Unit 2023 2024 2025
Number of investor hotline calls answered Time(s) / 718 1194
Total members of Board directors Person(s) 8 9 9
Including: Number of executive
Person(s) 1 1 1 Information Security Protection
directors
Index Unit 2023 2024 2025
Including: independent directors Person(s) 3 3 3
Number of information security incidents or breaches of
Time(s) 0 0 0
client privacy
Proportion of independent directors % 38 33 33
Specific amount involved in data security incidents RMB 10000 0 0 0
Number of board meetings convened Time(s) 11 9 5
Confirmed customer privacy breach incident Time(s) 0 0 0
Attendance rate of board members % 100 100 100
Specific amount involved in breaches of client privacy RMB 10000 0 0 0
Number of general meetings of
Time(s) 4 3 3
shareholders held
Number of cybersecurity training sessions conducted Time(s) 1 3 3
Number of cybersecurity awareness campaigns conducted Time(s) / 4 4
Number of cybersecurity emergency drills conducted Time(s) 1 1 1
141 142Conclusion
Environmental Performance Greenhouse Gas Emission
Environmental Management Index Unit 2023 2024 2025
Total greenhouse gas
Index Unit 2023 2024 2025 tCO?e 2659459.92 2845549.25 2781243.50emissions
Total investment in environmental protection RMB 10000 60535.51 66139.57 63501.52
GHG emissions (Scope 1) tCO?e 2190590.17 2361763.17 2244508.50
Total hours of environmental protection training Hour(s) 39949 46786 33934
Number of violations of environmental laws and GHG emissions (Scope 2) tCO?e 468869.75 483786.08 536735.00
Case(s) 0 0 0
regulations
Number of incidents punished for violating Greenhouse gas emission tCO?e/ RMB 10000
Time(s) 0 0 0 1.24 1.30 1.50
environmental protection laws and regulations intensity revenue
Energy Usage Waste Gas Emissions
Index Unit 2023 2024 2025 Index Unit 2023 2024 2025
Total exhaust emission Ton(s) 2637085.72 2947721.69 3070053.97
Total energy consumption Ton(s) of standard coal / 978600.17 1244592.51
Particulate matter (PM) emissions Ton(s) 23.79 57.54 69.67
Direct energy consumption Ton(s) of standard coal / 844877.61 1110794.24
Nitrogen oxides (NOx) emissions Ton(s) 368.50 466.01 436.41
Including: Coal Ton(s) 1349678.37 1376176.22 1260290.74
Sulfur oxides (SOx) emissions Ton(s) 82.84 126.77 131.99
Including: Gasoline Liter 232401.13 219057.97 259094.18
Volatile organic compounds (VOCs)
Ton(s) 183.43 270.36 256.46
emissions
Including: Diesel oil Liter 224719.02 230079.95 514972.11
Including: Natural gas m3 44933325.00 43741984.60 41907248.16 Wastewater Discharge
Index Unit 2023 2024 2025
Including: Liquefied petroleum gas (LPG) m3 301.00 240.00 725.76
Total wastewater discharged Ton(s) 4775858.88 5108191.20 5396405.40
Indirect energy consumption Ton(s) of standard coal / 133722.56 133798.27
Chemical oxygen demand (COD) Ton(s) 304.51 348.57 285.99
Including: electricity MWh 671943.05 728069.32 805368.16
Biochemical oxygen demand in 5 days
Ton(s) 81.34 94.35 98.71
(BOD5)
Including: steam Ton(s) 492423.04 609171.11 408642.89
Suspended solids Ton(s) 65.91 54.28 59.07
Renewable energy usage (Photovoltaic
MWh 68851.36 69671.14 22371.79
power generation)
Ammonia nitrogen Ton(s) 14.64 20.31 15.47
143 144Conclusion
Waste Discharge Product Performance
Index Unit 2023 2024 2025 Product Responsibility and Service
Hazardous waste (generated) Ton(s) 217767.81 251112.33 252201.12
Index Unit 2023 2024 2025
Hazardous waste (recycled) Ton(s) 197.96 1115.63 663.74 Percentage of production enterprises with % / 40.63 48.48
ISO9001 certification
Hazardous waste (disposed) Ton(s) 217748.41 250601.02 269179.78
Number of internal quality training sessions Time(s) 27457 28898 43227
Non-hazardous waste (generated) Ton(s) 219500.53 236909.06 234551.08
Coverage of internal quality training % 99.28 99.32 100
Non-hazardous waste (recycled) Ton(s) 7341.10 7298.64 13378.10 Total number of participants in internal quality
Person-times 498777 587962 1042360
training
Non-hazardous waste (disposed) Ton(s) 212243.11 229599.68 221165.18
Internal quality training hours Hour(s) 821934 725186 810799
Municipal solid waste (generated) Ton(s) 16809.81 17657.54 15918.57
Number of product quality tests conducted 10000 times 75 60 86.25
Municipal solid waste (recycled) Ton(s) 15.10 39.60 156.75
Number of pilot tests conducted for products 10000 times 13.00 15.00 14.04
Municipal solid waste (disposed) Ton(s) 16791.71 17617.94 15775.66 Number of existing product quality/safety tests
10000 times 60 50 69
conducted
Water Resource Utilization Coverage of pharmacovigilance training % / 100 100
Index Unit 2023 2024 2025 Number of pharmacovigilance training sessions Time(s) / 273 255
Total water consumption Ton(s) 28559448.92 31388028.53 29160553.54 Total number of participants in Person(s) / 10672 10503
pharmacovigilance training
Including: Fresh water consumption
Ton(s) 16109743.48 16397458.45 15505834.91
(=A+B+C) Total pharmacovigilance training hours Hour(s) / 825 405
Urban (or other water supply agencies)
Ton(s) 5948036.15 6187481.25 5661607.27
water supply consumption (A) Supplier Management
Surface water consumption (B) Ton(s) 9832299.63 9744798.00 9472020.00 Index Unit 2023 2024 2025
Groundwater consumption (C) Ton(s) 329407.70 465179.20 465471.64 Number of supplier training sessions Number 300 320 330
Coverage rate of high-risk supplier training % 100 100 100
Total volume discharged back to
Ton(s) / / 93264
surface water and groundwater (D) Supplier training hours Hour(s) 400 400 400
Number of suppliers participating in supplier
Reclaimed water reuse Ton(s) 12586330.43 15049294.08 13654718.63 Person(s) 2000 2000 2100training
Number of supplier audits Number 383 420 441
Coverage rate of high-risk supplier audits % 100 100 100
145 146Conclusion
Research and Development (R&D) and Intellectual Property Management Index Unit 2023 2024 2025
Index Unit 2023 2024 2025 Senior Management Person(s) 14 12 10
R&D investment RMB 100 Million 19.53 21.71 22.05 Female employees in the senior
Person(s) 3 3 2
management
Cumulative number of authorized
Case(s) 2153 1997 1922
patents held Number of Middle Management Person(s) 3283 3671 3779
employees by rank
Including: Invention patents Case(s) 707 735 809 Female employees in the middle
Person(s) 1612 1792 1864
management
Including: Utility model patents Case(s) 1237 1069 914
Frontline employees Person(s) / 18181 16338
Including: Design patents Case(s) 209 193 199 Chinese Mainland Hong Kong
Person(s) 19445 21470 19730
Number of Macau and Taiwan
Number of newly applied patents Case(s) 409 438 616 employees by region
Overseas countries or regions Person(s) 353 394 397
Number of newly granted patents Case(s) 184 231 224
Average tenure of female
Year(s) 6.1 6.0 6.8
employees in the Company
Employee tenure
Employee Performance Average tenure of male employees Year(s) 7.1 6.8 7.8
in the Company
Employee Employment
Number of newly hired employees Person(s) 3598 3598 2173
Index Unit 2023 2024 2025
Number of new Number of newly hired full-time Person(s) / 3304 2025
Total employees Person(s) 19798 21864 20127 employees employees
Number of newly hired female
Male Person(s) 10723 12086 11050 Person(s) 1606 1371 944employees
Employee count by
gender
Female Person(s) 9075 9778 9077 Number of employees from ethnic minorities Person(s) 1883 2197 2019
Labor contract system Person(s) / 21410 19759 Number of part-time outsourced or temporary employees Person(s) / 158 172
Number of
employees by type Labor dispatch system Person(s) / 158 79 Number of executive management personnel Person(s) / 3671 3779
of employment
Others Person(s) / 296 289 Number of female executive management employees Person(s) / 1792 1864
Employees aged 30 and below Person(s) / 7326 5772 Coverage rate of employee social security % 100 100 100
Employees aged 31 to 40 Person(s) / 8733 8409
Employee count by Employee Turnover Rate
age
Employees aged 41 to 50 Person(s) / 4399 4438 Index Unit 2023 2024 2025
Employees aged 51 and above Person(s) / 1406 1508 Overall employee turnover rate % 16.08 15.73 18.33
147 148Conclusion
Index Unit 2023 2024 2025 Occupational Health and Safety
Male % 17.36 18.12 19.90 Index Unit 2023 2024 2025
Employee turnover
rate by gender Health and
Female % 14.52 13.20 16.32 Times of safety drills conducted (fire safety training Time(s) 772 851 769
toxic gas leaks etc.)
and drills
Employees aged 30 and below % 24.23 24.65 29.53
Investment in occupational health
RMB 10000 2977.79 2886.24 2449.89
and safety management
Employees aged 31 to 40 % / 12.95 15.14
Employee turnover Investment in employee work injury
rate by age group RMB 10000 644.30 830.61 870.43insurance
Employees aged 41 to 50 % / 7.47 9.22
Investment in Investment in employee work safety
RMB 10000 24.73 30.92 49.07
work safety liability insurance
Employees aged 51 and above % / 7.38 8.37
Employee work injury insurance
%100100100
coverage rate
Coverage rate of employee
Employee Training and Development % 100 100 100production liability insurance
Index Unit 2023 2024 2025 Occupational health check coverage rate % 100 100 100
Total training hours 10000 hours 170.95 176.18 267.74 Lost days due to work injury Day(s) 904.5 1582.5 1167Work-related
injuries
Average training hours per employee Hour(s) 86.35 80.58 133.02 Incidence of occupational diseases % 0 0 0
Total training hours for female
10000 hours 76.07 76.63 128.42
employees
Social Contribution
Per capita training time for female
Hour(s) 83.82 78.37 141.48
employees Index Unit 2023 2024 2025
Employee
training hours Total training hours for male employees 10000 hours 99.55 94.87 139.31 Social contribution RMB 10000 4994.37 5759.96 1164520
Per capita training time for male
Hour(s) 88.47 82.18 126.08
employees
Total training hours for senior
Hour(s) 1032.16 977.67 820.36
management
Average training hours per senior
Hour(s) 73.73 81.47 82.04
management
Total number of training sessions per
10000 times 6.32 6.16 9.63
year
Employee Annual training expenditure RMB 10000 428.05 487.80 400.76
training
assessment
Number of employees trained Person(s) 19798 21864 20127
Employee training coverage rate % 100 100 100
149 150Conclusion
Report Index Table Sustainability Reporting
Guidelines GRI Content Index Report Locations and Descriptions
KELUN PHARMA referenced the Shenzhen Stock Exchange's Sustainability Reporting Guidelines and GRI standards to Social Information Disclosure
report the referenced information in the content index for the period from January 1 to December 31 2025.Section I Rural Revitalization and Social Contributions
Sustainability Reporting Guidelines GRI Content Index Report Locations and Descriptions
Rural Articles 38 GRI 203: Indirect Economic Impacts
Revitalization and 39 2016 Pooling Strength for Rural RevitalizationEnvironmental information disclosure
Social Articles 38 GRI 203: Indirect Economic Impacts
Section I Addressing Climate Change Contribution and 40 2016 Practicing Public Welfare and Charity
Addressing Articles 20 21 22 23 24 GRI 201: Economic Performance Addressing Climate Section II Innovation-driven Development and Technology Ethics
Climate Change 25 26 27 and 28 2016; GRI 302: Energy 2016; GRI Change Appendix I: Key 305: Emissions 2016 Performance Indicator Table
Innovation-
Driven Articles 41
Product R&D & Technological
and 42 / Innovation Appendix I: Key Section II Pollution Prevention and Ecosystem Protection Development Performance Indicator Table
Pollution Prevention and Technology Not applicable. The core business of the Company does not involve scientific research and
Pollutant GRI 2: General Disclosures 2021; Ecosystem Protection Ethics technology development in sensitive fields such as life science and artificial intelligence ethics.Discharge Articles 29 and 30 GRI 303: Water and Effluents 2018 Appendix I: Key Performance Indicator Table Section III Suppliers and Customers
Pollution Prevention and
Supply Chain Articles 44 GRI 308: Supplier Environmental Waste Articles 29 and 31 GRI 306: Waste 2020 Ecosystem Protection Security and 45 Assessment 2016 GRI 414: Supplier Building a Sustainable Supply ChainTreatment Appendix I: Key Social Assessment 2016
Performance Indicator Table
Equal
Ecosystem and Treatment
Biodiversity Article 32 GRI 304: Biodiversity 2016 Pollution Prevention and Ecosystem Protection for Small Corporate Governance and Compliance Protection and Medium- Article 46 / Operation
Sized
Environmental GRI 302: Energy 2016; GRI 303: Enterprises
Compliance Articles 29/33 Water and Effluents 2018; GRI Environmental Compliance
Management 306: Waste 2020 Management Safety and
Quality of Articles 44 GRI 416: Customer Health and Safety Customer Service Product Safety and
Products and and 47 2016 GRI 417: Marketing and Labeling Quality Appendix I: Key Performance Section III Resource Utilization and Circular Economy
Services 2016 Indicator Table
Resource Utilization and Data Security
Energy
Utilization Articles 34 and 35 GRI 302: Energy 2016
Circular Economy Appendix and Customer Articles 44
I: Key Performance Indicator Privacy and 48 GRI 418: Customer Privacy 2016 Information Security Protection
Table Protection
Resource Utilization
and Circular Economy Section IV EmployeesWater Resource
Utilization Articles 34 and 36
GRI 303: Water and Effluents
2018 Wastewater Treatment Appendix I: Key GRI 401: Employment 2016 GRI 403:
Performance Indicator Table Occupational Health and Safety Talent Acquisition and Retention Employee Rights Protection Employee
Employees Articles 49
2018 GRI 404: Training and Education
Resource Utilization and and 50 2016 GRI 405: Diversity and Equal
Training and Development Employee
Opportunity 2016 GRI 406: Non- Communication and Care Occupational Circular Articles 34 and 37 GRI 306: Sewage and Waste Circular Economy Appendix Health and Work Safety Appendix I: Economy 2016 I: Key Performance Indicator discrimination 2016 GRI 409: Forced
Table or Compulsory Labor 2016
Key Performance Indicator Table
151 152Conclusion
Sustainability Reporting Guidelines GRI Content Index Report Locations and Descriptions Reader Feedback Form
Sustainable Development Governance Information Disclosure Dear Readers
Section I Sustainable Development Governance Mechanisms Hello!
We sincerely appreciate your time in reading our 2025 Environmental Social and Governance (ESG) Report. To provide
Corporate Governance & Compliant you and other stakeholders with more comprehensive professional and valuable ESG information and to continuously
Due Diligence Article 52 / Operations Business Ethics & Anti-
Corruption improve our ESG efforts and enhance our ESG management capabilities we sincerely invite you to assist in completing
the relevant questions in the feedback form. Please do not hesitate to give us your comments.Stakeholder GRI 2: General Disclosures 2021 Sustainable Development 1. Are you satisfied with this report in general
Communication Article 53 GRI 3: Material Topics 2021 Governance
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Section II Business Conduct 2. Do you think this report reflects the significant impact of KELUN PHARMA on ESG
Anti-Commercial Business Ethics and Anti-Corruption Yes □ Fair □ No □
Bribery and Anti- Articles 54 and 55 GRI 205: Anti-corruption 2016 Appendix I: Key Performance Corruption Indicator Table 3. Do you think the analysis of the stakeholders identified in this report and their relationship with KELUN PHARMA is
accurate and comprehensive
Anti-Unfair Article 54 GRI 206: Anti-competitive Anti-Monopoly and Anti-Unfair Yes □ Fair □ No □Competition Behaviors 2016 Competition
4. Do you think the information provided in this report is comprehensive
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6. Is the overall design of this report satisfactory
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7. Your other comments and recommendations on the 2025 Environmental Social and Governance Report of KELUN
PHARMA are welcome.
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