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Huadong Medicine Co., Ltd.

Environmental, Social and Governance(ESG)Report

20232023

Stock Code000963

CONTENTSAbout This Report 01Message from theChairman 03

Company ProfileCorporate CulturePerformance in 20232023 MilestonesMajor Honors 2023

About Us05

1.Governance through the General

Meeting of Shareholders, Board of Directors, and Board of Supervisors

2.Risk Management and Operational

Compliance

3.Business Ethics

4.Safeguarding Stakeholders' Rights

and Interests

ª¡E¬Ëaª¡cª¡iª¡eª¡nª¡tª¡ ª¡Gª¡oª¡vª¡eª¡rª¡nª¡aª¡nª¡cª¡eª¡ª¡Bª¡oª¡lª¡sª¡tª¡eª¡rª¡iª¡nª¡gª¡ ª¡Sª¡tª¡eª¡aª¡dª¡yª¡ª¡Dª¡eª¡vª¡eª¡lª¡oª¡pª¡mª¡eª¡nª¡tª¡1ª¡7

ESG Management FrameworkESG RatingsESG GoalsESG HonorsCommunications with StakeholdersMateriality Identification

ESG Management13

Protecting Lucid Waters andLush Mountains, Custodiansof Ecological Refuge

ª¢35ª¢39

1. Environmental Management

2. Actions against Climate Change

3. Energy Management

4. Water Resource Management

5. Materials Management

6. Pollution Prevention and Control

1.R&D and Innovation

2.Product Quality and Safety

3.Protection of Customers'

Rights and Interests

4.Responsible Supply Chain

5.Information Security and

Privacy Protection

6.Promoting Healthcare Access

Innovation-Driven,Forging an ExemplaryBrand

1. Labor Relations Management

2. Training and Development

3. Occupational Health and Safety

4. Social Welfare

People-Centric Approach:

Fostering a Better Society

Looking Ahead 91Annex I: Indexes 93Annex II: FeedbackForm 95

0102

2023 Environmental, Social andGovernance(ESG)Report

About ThisReport

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

About This Report

This is the 2023 Environmental, Social and Governance (ESG) Report issued by HuadongMedicine Co., Ltd. This report intends to disclose the Company's practices and performancein respect of environmental protection, social responsibility fulfillment and corporategovernance, among others, in an objective, normative, transparent and all-inclusive manner.This report doesn't contain any false records, misleading statements, or material omissions.This report covers the period from January 1, 2023 to December 31, 2023. To improve thecomparability and completeness, some sections of this report may extend beyond thereporting period.The contents of this report relate to Huadong Medicine Co., Ltd. and its subsidiaries. Unlessotherwise specified, the scope of this report is consistent with that of the Company'sAnnual Report.

All information and data referenced in this report are sourced exclusively from officialdocuments, statistical reports and financial statements of Huadong Medicine, as well asinformation related to sustainable development practices gathered, consolidated and auditedacross various functional departments and business units within the company.This report doesn't contain any false records, misleading statements, or material omissions.Unless otherwise specified, all amounts in this report are expressed in RMB.

This report is available for download at the website of Shenzhen Stock Exchange (http://www.szse.cn) or the Company's official website (https://www.eastchinapharm.com/), whereyou can find further insights about the Company.

This report includes both Chinese and English versions. In case of any discrepancies betweenthe two versions, the Chinese version shall prevail.

To enhance clarity of this report, the references "Huadong Medicine","the Company" or"We" are used instead of consistently using the formal "Huadong Medicine Co., Ltd.".Companyª¢Shortª¢NameFullª¢NameHuadong Medicine/the Company/WeHuadong Medicine Co., Ltd.Zhongmei HuadongHangzhou Zhongmei Huadong Pharmaceutical Co., Ltd.Jiangdong CompanyHangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd.Jiangsu Joyang Jiangsu Joyang Laboratories Co., Ltd.Xi'an BohuaHuadong Medicine (Xi'an) Bohua Pharmaceutical Co., Ltd.Jiuzhou PharmaceuticalShaanxi Jiuzhou Pharmaceutical Co., Ltd.Doer BiologicsZhejiang Doer Biologics Co., Ltd.Meihua Hi-TechAnhui Meihua Hi-Tech Pharmaceutical Co., Ltd.Wuhu HuarenWuhu Huaren Science and Technology Co., Ltd.Magic HealthHubei Magic Health Technology Co., Ltd.Nanjing Nongda Animal Pharmaceutical Jiangsu Nanjing Nongda Animal Pharmaceutical Co., Ltd.Huida BiotechZhejiang Huida Biotech Co.,Ltd.Hibe Hibe Technology Co.,Ltd.Huadong TCMHangzhou Huadong Traditional Chinese Medicine Co., Ltd.Bailing HealthBailing Health Science (Hangzhou) Co., Ltd.SinclairSinclair (Shanghai) Medical Treatment Technology Co., Ltd.Supply Chain Management (Wenzhou) CompanyHuadong Medicine Supply Chain Management (Wenzhou) Co., Ltd.

ª¡Iª¡nª¡tª¡rª¡oª¡dª¡uª¡cª¡tª¡iª¡oª¡nª¡Pª¡rª¡eª¡pª¡aª¡rª¡aª¡tª¡iª¡oª¡nª¡ ª¡Bª¡aª¡sª¡iª¡s

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ª¡Rª¡eª¡pª¡oª¡rª¡tª¡iª¡nª¡gª¡ ª¡Pª¡eª¡rª¡iª¡oª¡d

Guide for Business Action on the SDGsSustainability Reporting Standards (GRI Standards) of the Global Sustainability StandardsBoardGuidelines on Corporate Social Responsibility Reporting for Chinese Enterprises (CASS-ESG

5.0) issued by the China Social Responsibility 100 Forum (ESG Expert Committee)

Self-regulatory Guidelines of Shenzhen Stock Exchange for Listed Companies No.1 -Standardized Operation of Main Board Listed Companies

To continually enhance our ESG information disclosure practices and promote ESGmanagement and initiatives, we appreciate and welcome your comments submitted throughcontacting us via the following channels:

Email: [e-mail] [e-mail].: 0571-89903388 (Switchboard) 0571-89903300 (Investor Hotline)

0304

2023 Environmental, Social andGovernance(ESG)Report

About This

Report

Message fromthe Chairman

About UsESGmanagement

I. Efficient Governance

Bolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an Exemplary

Brand

IV¡¢People-CentricApproach: Fostering a

Better Society

Looking Ahead

Message from the Chairman

The year 2023 unfolded against a backdrop of sweeping globaldynamics, presenting both greater uncertainty and complexityin business landscape, along with boundless opportunities andchallenges. Confronting industry shifts and challenges, as a listedpharmaceutical company integrating research, production anddistribution, Huadong Medicine recognizes the imperative ofrelentless perseverance to usher in a new era of growth, activelyfulfilling our corporate social responsibilities, and positivelyimpacting patients in China and beyond.With over three decades of entrepreneurial journey, we remainsteadfast in our commitment to core values such as "benefitmankind, honesty, persistence and pragmatism", persistentlypursuing our mission of "contributing to the well-being of thepublic" while striving towards our vision of becoming a globallyrenowned pharmaceutical powerhouse fueled by researchand innovation. In recent years, we've embarked on a journeyof transformative innovation, nurturing an ecosystem forpharmaceutical research and development, and venturing intoemerging business sectors. Amidst our steadfast pursuit ofsustainable growth, 2023 also witnessed us actively fulfilling ourcorporate social responsibilities and environmental protectionobligations, continually refining our environmental and socialgovernance frameworks, and delivering a gratifying response toour nation and society.Embracing the corporate philosophy of "Scientific Research-based and Patient-centered", we actively drove forward innovativeR&D efforts, ramped up investment, and delved deeper into coreproduct areas like endocrinology, oncology and autoimmunity.Our R&D pipeline has been constantly evolving in terms ofboth quality and scope. This year, our sustained efforts werestarting to pay off: Liraglutide injection took the lead, securingits position as the first domestically-produced medication to beapproved for market launch in diabetes, obesity or overweightindications, making us the frontrunner in the domestic GLP-1 arena. Additionally, a slew of groundbreaking productshave applied for market launch: ELAHERE?(MirvetuximabSoravtansine Injection), the world's first ADC drug, madeits debut in Hainan, benefiting over 30 patients by now.Its domestic market application was accepted in October2023. Ustekinumab injection QX001S has become the firstin China to submit a BLA and gain acceptance. Furthermore,

the New Drug Application of Rilonacept injection, targetingCryo-Pyrin-Associated periodic syndrome and recurrentpericarditis, has also been accepted by NMPA, promisingrelief for rare disease sufferers. Moreover, the Company'sindependent innovations were gaining traction: HDM1002, anorally administered micromolecule GLP-1 receptor stimulantboasting global innovation, secured IND approvals in bothChina and the United States, with clinical trials progressingsmoothly. HDM1005, a new GLP-1/GIP dual-target drug,received the green light for IND in China, entering theclinical phase. Meanwhile, HDM2005, our inaugural self-developed first-in-class ADC drug, has its IND applicationsubmitted and accepted. Our unwavering dedication aimedto continually leverage R&D prowess, striving to offer aplethora of high-quality products and therapeutic options tothe wider patient community.Huadong Medicine deeply embraces the concept ofliving in harmony with nature, unswervingly following thenational principles of sustainable development. Recognizingenvironmental protection as an unwavering duty andsticking to business ethics, we pursue environmentalprotection through "managing at the source, minimizingresource waste, and reducing pollution". Our compliancemanagement and ESG governance standards are continuallyadvancing. Particularly in production and R&D, we prioritizeefficiency and emission reduction, harnessing technologyand managerial expertise to mitigate environmentalfootprint. Embracing the philosophy of green operations,we integrate environmental protection seamlessly into ourbusiness operations.At our core lies a commitment to a people-centric approachto management. Huadong Medicine understands thatnurturing talent is the lifeblood of organizational dynamism.We have always been dedicated to foster a harmoniousand orderly work environment characterized byfairness, openness and equal opportunity. By providingcomprehensive pathways for career development as wellas a complete package of compensation and benefitsand establishing robust training and developmentframeworks, we empower each team member to unleashtheir full potential. Through shared successes, we

aim to cultivate a sense of fulfillment and activeengagement across our workforce.We take proactive steps to fulfill our social responsibilitiesand actively engage in philanthropic endeavors. As asocially responsible entity, Huadong Medicine not onlypursues corporate development but also harnesses itsresource advantages to actively participate in communitywelfare activities. Through tangible actions, we uphold ourcommitment to social responsibility, fostering positiveinteractions between the Company and the community,and jointly contributing to the fabric of a harmonioussociety.Reflecting on our journey, Huadong Medicine hasweathered its fair share of challenges and steadily forgedahead; looking forward, we are buoyed by hope andsteadfast in our commitment to progress! The guidelinesof the 20th National Congress of the Communist Partyof China have illuminated the path for the developmentof our nation's life and health industries, with the notionof "new quality productive forces" setting a benchmarkfor pharmaceutical firms. In this era of transformativechange, Huadong Medicine will embrace evolution withan open, inclusive and confident mindset, confrontingchallenges head-on. We will continue to deepen ourinnovative transformation, seamlessly integrating ESGmanagement principles into our business trajectory,and, through our growth and advancement, collaboratewith industry peers to propel China's health sectorforward. Ultimately, our aim is to reciprocate to societyand benefit a wider populace.

Striving towards our visionof becoming a globallyrenowned pharmaceuticalpowerhouse fueled byresearch and innovation

¡±

Huadong Medicine Co., Ltd.

Lv Liang,Chairman

¡°

0506

2023 Environmental, Social andGovernance(ESG)Report

About ThisReport

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an Exemplary

Brand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Company Profile

Top 10

PharmaceuticalBusinessEnterprise in China

RegionalSubsidiaries

Pharmaceutical Industry EcosystemGeared towards the Global Market

Strategic Product Partnershipswith Leading MultinationalPharmaceutical Firms

Ensuring itsServices Reach

PrefecturalCities

Ensuring itsServices Reach

Districts andCounties

More than

Productsalready Launched in China

and Abroad

More than

GloballyInnovative Products inDevelopment

Aesthetic MedicineIndustrialMicrobiology

Scale and Technological

Prowess in MicrobialFermented ProductsPlace it at the Forefront

of the Industry

Operating in theIndustrial MicrobiologySector for over

Years

Corporate CultureVisionMission

CorporatePhilosophy

CoreValuesBecome a GloballyRenownedPharmaceuticalPowerhouse Fueled

by Research and

Innovation

Contribute to theWell-being of thePublic

ScientificResearch-basedand Patient-centered

Benefit Mankind,Honesty,Persistence,Pragmatism

About Us

Pharmaceutical

Industry

Four Major Business Segments

Founded in 1993 and headquartered in Hangzhou, Zhejiang Province, Huadong Medicine Co., Ltd. (stock code: 000963) was listedon Shenzhen Stock Exchange in December 1999. With its businesses covering the entire pharmaceutical industry chain thanks toover 30 years of vigorous development, the Company has now fostered four major business segments including pharmaceuticalindustry, pharmaceutical business, aesthetic medicine and industrial microbiology, and has evolved into a large comprehensivelisted pharmaceutical enterprise specialized in pharmaceutical R&D, production and marketing.

Specialized in the R&D, production and marketing of specialized medicines, chronic therapeuticsand specialized pharmaceuticals for years, the Company has established a robust pharmaceuticalmanufacturing and quality research system, with a core product pipeline centered around areas suchas chronic nephrosis, transplant immunology, endocrinology, and digestive system. It boasts several first-line clinical medicines that hold a strong market position domestically. Meanwhile, it strategically focuseson research and development of new drugs and high technology barrier generics in three coretherapeutic fields of oncology, endocrinology and autoimmunity through a blend of independentdevelopment, external introduction and project cooperation. This concerted effort has established aconsistent cadence of introducing innovative drugs to the market each year. The Company remainsactively engaged in international product registration, certification and consistency evaluation,consistently achieving milestones. It has cultivated a pharmaceutical industry ecosystem gearedtowards the global market. Additionally, it collaborates on research and development with variousinternational innovators and has forged strategic product partnerships for the Chinese market withleading multinational pharmaceutical firms like Pfizer and Takeda.With regard to the pharmaceutical business, the Company remains committed to innovative service,staying attuned to the evolving needs of both upstream and downstream clients. As a result, it hasbeen ranked among top 10 pharmaceutical business enterprises in China for consecutive years. Todate, the Company boasts four major business segments including traditional Chinese and Westernmedicine, medical devices, herbal medicines and ginseng & antler, and healthcare. Within ZhejiangProvince alone, it has set up 11 regional subsidiaries, along with three pharmaceutical logistics hubsin northern, central and southern Zhejiang. Furthermore, it operates a network of retail pharmacychains and outpatient clinics, ensuring its services reach 11 prefectural cities and 90 districts andcounties across Zhejiang Province. On one hand, the Company's traditional business excels with itscomprehensive product range, extensive network, and integrated wholesale and retail operations.In the traditional Chinese medicine segment, a complete industry chain has been established,encompassing cultivation of medicinal materials at planting bases, preparation of decoction pieces,automated decoction centers, and proprietary functional products. On the other hand, the Company'sinnovative business concentrates on distinctive wellness offerings, product agency, market expansion,pharmaceutical logistics with a cold chain emphasis, and proprietary pharmaceutical e-commerceplatforms, catalyzing a transformation in the business structure. The Company's pharmaceuticalbusiness segment prioritizes bolstering its competitive edge in services such as policy reinforcement,inventory management, distribution, and marketing. It enhances its comprehensive promotionalcapabilities across all channels to offer customers holistic solutions.

In terms of the aesthetic medicine segment, the Company embraces a strategy of "global operational layout anddual-cycle operation development", with an international outlook. Through forward-looking planning, it has crafteda comprehensive and distinct product portfolio, ranking at the forefront of the industry in both quantity and scope.With over 20 products already launched in China and abroad, and more than 10 globally innovative products indevelopment, the Company integrates diverse treatment methods such as "non-invasive + minimally invasive","facial + body", "product + technology" and "injection + energy source equipment". It has achieved full coverageof three major categories - regenerative, hyaluronic acid and botulinum toxin - in injectable products, establishinga differentiated pipeline. Its goal is to provide a more professional, safe, efficient and comprehensive solution forbeauty seekers worldwide, striving to become a premier global provider of comprehensive medical aestheticsolutions. Headquartered in UK, the Company's wholly-owned subsidiary Sinclair is a global aestheticmedicine operation platform that has R&D centers in UK, the Netherlands, France, Switzerland, Spain andIsrael, along with production bases in the Netherlands, France, the United States, Switzerland, Bulgaria andIsrael. Sinclair markets and sells injectable long-acting microspheres, hyaluronic acid and facial thread liftingproducts worldwide. It also expands its presence in the global market for energy-based aesthetic medicaldevices through its wholly-owned subsidiaries High Tech and Viora. Additionally, the Company's aestheticmedicine segment includes Sinclair (Shanghai), a wholly-owned subsidiary serving the Chinese market,as well as R2 in the United States and Kylane in Switzerland, two overseas technical development jointventures.

The Company has been operating in the industrial microbiology sector for over 40 years, boasting arobust industrial foundation and exceptional capability for industrial transformation. It has successfullypioneered the development and manufacturing of various microbial medicines, establishing a pivotaltechnical framework for microbial product research and production. Its current scale and technologicalprowess in microbial fermented products place it at the forefront of the industry. Being market demand-oriented, R&D-driven and industrial resource-coordinative in the industrial microbiology segment, theCompany focuses on two key business scenarios: the application of synthetic biological technologysystems and innovative advancements in biopharmaceuticals. It has already fostered differentiatedproduct pipelines and business solutions across four major domains: xRNA, specialized activepharmaceutical ingredients (APIs) & intermediates, wellness & biomaterials, and animal healthcare. TheCompany has established a robust R&D cluster centered around institutions like the Zhongmei HuadongIndustrial Microbiology Research and Development Institute, Huadong Synthetic Biology IndustrialTechnology Research Institute, as well as key entities such as Huida Biotech, Hizyme Biotech, PerfectmRNA, and Hibe Technology. Additionally, it has set up seven industrialization bases including HangzhouXiangfuqiao Base, Qiantang New Area Base, Jiangsu Joyang, Magic Health, Meihua Hi-Tech, WuhuHuaren, and Nanjing Nongda Animal Pharmaceutical. With the largest fermentation monomer workshopin Zhejiang Province and cutting-edge production capabilities in microbial medicines, the Companyexcels in various stages of microbial engineering technology, including strain construction, metabolicregulation, enzyme catalysis, synthetic modification, and separation & purification. It has established acomprehensive manufacturing system encompassing microbial research and development, pilot testing,commercial production, engineering, and public system support.

PharmaceuticalBusiness

AestheticMedicine

IndustrialMicrobiology

Operating IncomeRMB40,623,782,520.43

Net Profit Attributable toShareholders of the Listed Company

RMB2,838,860,542.80

Year-on-Year Growth Rate of Operating Income

7.71%

Year-on-Year Growth of Basic Earnings per Share

13.55%

Net Profit Attributable to Shareholders ofthe Parent Company after DeductingNon-recurring Gains and LossesRMB2,736,571,736.98

Year-on-Year Growth of Net Profit Attributableto Shareholders of the Parent Company afterDeducting Non-recurring Gains and Losses

13.55%

Year-on-Year Growth of Net Profit Attributableto Shareholders of the Listed Company

13.59%

Basic Earnings per ShareRMB

1.6219

Economic

General Meeting ofShareholders Convened

times

times

Proposals Deliberated andAdopted at General Meetingof Shareholders

itemsProposals Deliberated andAdopted at Meetings of theBoard of Directors

items

Meetings of the Board ofDirectors Convened

times

Meetings of the Boardof Supervisors Convened

items

Proposals Deliberated andAdopted at Meetings of theBoard of Supervisors

CorporateGovernance

R&D Investment(Notes: excl. equity investment£©RMB2,293 million

External DonationsRMB

27.37million

RMB

6.05million

Number of R&DPersonnel1,777Total Number ofEmployees

16,969

Total training sessionsdelivered to employees

428times

Social InsuranceCoverage

100%

Percentage ofContract Workers

100%

Total investment inemployee training

Cumulative PatentsGranted735itemsProduct Percentof Pass100%

Year-on-Year Growthof R&D Investment

23.67%

Social

EnvironmentalInvestmentRMB

73.15

millionRMB60,487.87EnvironmentalProtection Taxes Paid

152,103.45Total Emission ofGreenhouse Gases

General WasteProduction Intensity

0.52

t/ RMBper million(revenue)

Quantity of GeneralWaste Recycled

3,218.56tons

Quantity of HazardousWaste Generated

4,104.53 tons

Environmental

tCO2e/ RMB per million(revenue)

3.74

Greenhouse GasEmission Intensity

tCO2e

WastewaterDischarges180,028,800tons

WastewaterDischarge Intensity

48.96

per million (revenue)

Waste Gas Emissions

2,718,004,000m

Waste Gas EmissionIntensity

66,900 m

/ RMB per million (revenue)

Quantity of generalwaste generated21,188.53tons

ComprehensiveEnergy Consumption

39,755.590.9786tce

Total WaterConsumption

180,028,800

Energy ConsumptionIntensitytce/ RMB per million(revenue)

Water ConsumptionIntensity4,431.61t/ RMB per million(revenue)tons

t/ RMB

0708

2023 Environmental, Social andGovernance(ESG)Report

About This

Report

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering a

Better Society

Looking Ahead

Performance in 2023

0910

2023 Environmental, Social andGovernance(ESG)Report

About ThisReport

Message fromthe Chairman

About UsESGmanagement

I. Efficient Governance

Bolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

2023.1

The Company forged a commercialpartnership with CARsgen Therapeutics forits BCMA CAR-T cell product ZevorcabtageneAutoleucel Injection (Zevor-cel) in mainlandChina, which secured regulatory approval forthe Chinese market in March 2024.

2023.3The domestic biologics licenseapplication (BLA) for LiraglutideInjection was approved forcontrolling blood sugar levelsin adult patients with type 2diabetes, marking a pioneeringachievement domestically.

2023.4

Lanluma?, a poly-L-lactic acid (PLLA)collagen stimulator, clinched the BestBody Filler Injection accolade at theAMWC Conference 2023.The Company acquired a stake of 70% inNanjing Nongda Animal Pharmaceutical,becoming controlling shareholder of thatcompany.

2023.5

The first prescription for LiraglutideInjection (marketed as Liluping?) wasissued in China.Meftinib, designated for first-line therapy inadvanced non-small cell lung cancer (NSCLC)patients with rare epidermal growth factorreceptor (EGFR) mutations, was included inthe Breakthrough Therapy Designation(BTD) program.The first-in-class orally administeredmicromolecule GLP-1 receptor stimulantHDM1002, targeting adult patients withtype 2 diabetes, received IND approval inboth China and the United States.

2023.6

Reaction?, a bipolar RF facial beauty machine,was launched onto the domestic market.The domestic BLA for Liraglutide Injectionwas approved for treatment of obesityor overweight, marking a pioneeringachievement in the domestic market.

The registration application for the V20optical RF therapeutic system in Chinawas accepted.The IND application for the first-in-classorally administered micromolecule GLP-1receptor stimulant HDM1002 was approvedby the NMPA for treatment of overweightor obesity.

2023.9

2023.10Nanjing Nongda Animal Pharmaceuticalsecured exclusive distribution right forBaoshining?, the first new central opioidanalgesic for veterinary use in China.The Company obtained a global exclusivelicense (excluding India) from Korea-basedATGC for ATGC-110, an injection containingbotulinum toxin type A, and a non-exclusivelicense for the Korean market.The NDA for Mirvetuximab SoravtansineInjection, a global first-of-its-kind ADC drug,was accepted by the NMPA.2023.11

The NDA for the first-in-class RilonaceptInjection intended for treating cryopyrin-associated periodic syndromes wasaccepted by the NMPA.The Company acquired shares in ChongqingYuyan Pharmaceutical and obtained exclusivecommercialization right for YY001 (recombinantbotulinum toxin type A) for medicalaesthetics in mainland China, Hong Kong,and Macau.

2023.12The Company secured exclusive marketingright for the first-in-class PARP inhibitorSenaparib in mainland China from ImpactTherapeutics.The first-in-class Rilonacept Injection wasfast-tracked for priority review by theCDE for treating adults and adolescentsaged 12 and above with recurrentpericarditis (RP) and reducing the risk ofrecurrence.2023.7Mirvetuximab Soravtansine Injection, anADC drug developed in collaborationwith ImmunoGen, was fast-tracked fordomestic priority review.Later, Mirvetuximab Soravtansine Injectionmade its debut at Hainan Hospital of RuijinHospital affiliated to Shanghai Jiao TongUniversity School of Medicine (HainanBoao Research Hospital), benefiting over30 patients since 2023.

2023.8

The Company entered into a strategicpartnership with Arcutis Biotherapeutics forthe development, registration, productionand commercialization of roflumilasttopical formulations across Greater Chinaand Southeast Asian countries.The BLA of Ustekinumab Injection (HDM3001,QX001S) for adult patients with moderate-to-severe plaque psoriasis was accepted,marking a pioneering achievement in thedomestic market.The Company secured exclusive rights forthe development and commercialization ofWynzora? cream in Greater China from MC2Therapeutics.

2023 Milestones

1112

2023 Environmental, Social andGovernance(ESG)Report

About ThisReport

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Chinese PrivateEnterprises in 2023Top

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Top

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All-China Federation ofIndustry and Commerce

China Enterprise Confederationand China Entrepreneur

Association

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Chinese ListedPharmaceuticalCompanies in 2023Top

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Healthcare Executive

Fortune China Top 500Top

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Top 10 Innovative

PharmaceuticalEnterprises of 2023

Top 100 Chinese Pharmaceutical

Innovative Enterprises in 2023

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Five-Star HeadquartersEnterprise in Hangzhou City

Industry Front-RunnersTop 100 ComprehensiveEnterprises in Hangzhou City

Top 100 Enterprises inZhejiang Province

Enterprise of Significant

Contribution

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2023 Environmental, Social andGovernance(ESG)Report

About ThisReport

Message fromthe Chairman

About UsESGmanagement

I. Efficient Governance

Bolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians of

Ecological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

ESG ManagementESG Management Framework

ESG Goals

ESG Ratings

Huadong Medicine has long embraced the concept of sustainabledevelopment, seamlessly integrating the core principles of ESG intoits corporate strategy and day-to-day operations, thus establishinga robust governance framework for sustainable development. We'veestablished a Sustainability (ESG) Committee under the Board ofDirectors, tasked with formulating the Company's Environmental,Social and Governance (ESG) strategies, principles and policies, andensuring the continuous implementation of ESG policies approvedby the Board of Directors; conducting regular reviews of ESGgoal fulfillment; identifying and addressing ESG-related risks; andoverseeing compliance of ESG policies with national policies, lawsand regulations. Additionally, a Sustainability (ESG) Working Groupoperates under the Sustainability (ESG) Committee, tasked withproviding essential insights and preparations for decision-making bythe Sustainability (ESG) Committee.Huadong Medicine has joined the ESG Committee of China Association for Public Companies to stay informed about the current status,trends and challenges of ESG development among listed companies in China. By tapping into the latest international ESG practices andengaging in discussions with industry peers about ESG theories, governance practices, information disclosure, rating and investment,among others, the Company endeavors to cultivate a distinctive ESG management framework. This effort not only bolsters its ESGcapabilities but also actively reinforces its commitment to corporate mission and social responsibility, thereby enhancing its corecompetitiveness. Simultaneously, it contributes to fostering high-quality development within the industry and the real economy.We pledge to guide and innovate our various operations with a scientific approach to social responsibility, striving to become a rolemodel for fulfilling corporate social responsibility and drive sustained, healthy development in the pharmaceutical industry's socialresponsibility initiatives.

By embracing the concept of "carbon peaking and carbon neutrality" and integrating the United Nations' Sustainable DevelopmentGoals (SDGs) 2023, the Company has established a comprehensive ESG management philosophy and constructed an overarchingESG governance framework. Tailored to various aspects of the Company's growth, specific ESG development goals have beendevised to holistically drive the Company's sustainable development forward.Board of Directors

Supervisory

Level

Sustainability (ESG) Committee

Working Group

Sustainability (ESG)

Committee

ESG Honors Case Case

Huadong Medicine Honored as "Best ESG Practice Case forPublic Companies in 2023" by China Association for PublicCompanies

Huadong Medicine Selectedas Securities Times' Top 100Chinese Listed Companies byESG Performance in 2023On November 16, 2023, the China SustainableDevelopment Conference for Public Companieshosted by the China Association for PublicCompanies took place in Beijing. During theconference, the Best ESG Practice Cases andOutstanding Practice Cases for Public Companieswere announced. Huadong Medicine was honoredas the "Best ESG Practice Case for Chinese PublicCompanies in 2023" with its initiative "ContinuouslyEnhancing ESG Management Practices to DriveHigh-Quality Development", and was featured inthe "Best ESG Practice Cases for Chinese PublicCompanies in 2023" publication.

On September 22, 2023, the inaugural AlxaAnnual ESG Conference for Chinese ListedCompanies jointly organized by the Alxa LeagueAdministrative Office and Securities Timeswas held in Alxa Left Banner, Inner MongoliaAutonomous Region. Recognized as a sociallyresponsible enterprise, Huadong Medicine hasconsistently integrated the ESG concept intovarious aspects of its business development andoperations. With its outstanding ESG practices,the company was named one of SecuritiesTimes' Top 100 Chinese Listed Companies byESG Performance in 2023.

ª¡Cª¡Nª¡Iª¡?ª¡ ª¡Iª¡nª¡dª¡eª¡x

ª¡Mª¡Sª¡Cª¡Iª¡ ª¡Cª¡Sª¡I

ª¡Wª¡Iª¡Nª¡Dª¡Iª¡Iª¡Gª¡FAAA

BBBA

AA+

A+

Decision-making LevelExecutiveLevel

1516

2023 Environmental, Social andGovernance(ESG)Report

About This

Report

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians of

Ecological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Communications with Stakeholders

Materiality Identification

Huadong Medicine places a high emphasis on engaging and communicating withits stakeholders. These include shareholders, investors, employees, customers,suppliers, industry associations, research institutions, community organizations,public welfare organizations, media, government, and regulatory agencies.Through establishing diverse channels of communication, the Company delvesdeep into understanding the needs and expectations of stakeholders, activelysolicits and listens to their feedback and suggestions, and promptly addressestheir concerns. This ensures that stakeholders are well-informed about theCompany's current development status and future plans, fostering mutual growthand contributing to the achievement of sustainable development goals.

Huadong Medicine follows ESG policies, regulations and standards, both domestic andinternational, and monitors ESG evaluation criteria in the capital market. After benchmarkingESG disclosures from industry peers, aligning them with its sustainability and corporatedevelopment strategies, the Company identifies 23 material ESG topics across environmental,social and governance dimensions and produces an ESG materiality matrix. Adhering tothe principles of substance, integrity and stakeholder engagement, the Company compilesstakeholder questionnaires for shareholders & investors, employees, customers, suppliers, industryassociations, community organizations, media, and government & regulatory agencies. In total,426 responses were collected.Using this data, the Company conducts empirical analysis of material topics, rankingthem based on "materiality to corporate sustainable development" and "materiality tostakeholders". This process produces the materiality matrix.

Materiality to Stakeholders

highhigh

highLow

Low

Low

Low

StakeholdersDemands and ExpectationsCommunication and Response

Shareholders/Investors

?Corporate governance compliance?Compliance information disclosure?Investor relations management?Risk management?Returns to shareholders?usiness development and innovation

?General meeting of shareholders?Investor reception days?Roadshows and reverse roadshows?Investment strategies conferences?Performance briefings?Improving corporate governance?Enhancing investor relations management?Diversifying investor communication channels?Fulfilling information disclosure obligations

Employees

?Labor relations management?Compensation and benefits?Training and development?Occupational health and safety

?Enhancing talent recruitment system and processes?Refining compensation and benefits packages?Implementing diverse employee training initiatives?Establishing robust career development paths?Prioritizing occupational health and work safety?Employees' Congress?Prioritizing employee care

Customers

?Product quality and safety?Protecting legitimate rights and interests of customers?Responsible marketing?Information security and privacy protection

?Strengthening sales personnel training?Streamlining sales service processes?Developing a robust after-sales service system?Customer satisfaction surveys?Product quality management system?Prioritizing customer privacy protection

Suppliers

?Maintaining long-term, positive partnerships?Transparent and equitable procurement?Integrity and reciprocity?Adhering to business ethics

?Fulfilling contractual obligations?Actively pursuing collaborative projects?Conducting transparent and equitable bidding processes?Optimizing supply chain management platforms?Signing integrity agreementsIndustry Associ-ations/Research

Institutions

?Fostering open communication channels?Contributing to the industry development

?Facilitating exchanges and visits?Participating in industry forums

StakeholdersDemands and ExpectationsCommunication and Response

Shareholders/Investors

?Corporate governance compliance?Compliance information disclosure?Investor relations management?Risk management?Returns to shareholders?usiness development and innovation

?General meeting of shareholders?Investor reception days?Roadshows and reverse roadshows?Investment strategies conferences?Performance briefings?Improving corporate governance?Enhancing investor relations management?Diversifying investor communication channels?Fulfilling information disclosure obligations

Employees

?Labor relations management?Compensation and benefits?Training and development?Occupational health and safety

?Enhancing talent recruitment system and processes?Refining compensation and benefits packages?Implementing diverse employee training initiatives?Establishing robust career development paths?Prioritizing occupational health and work safety?Employees' Congress?Prioritizing employee care

Customers

?Product quality and safety?Protecting legitimate rights and interests of customers?Responsible marketing?Information security and privacy protection

?Strengthening sales personnel training?Streamlining sales service processes?Developing a robust after-sales service system?Customer satisfaction surveys?Product quality management system?Prioritizing customer privacy protection

Suppliers

?Maintaining long-term, positive partnerships?Transparent and equitable procurement?Integrity and reciprocity?Adhering to business ethics

?Fulfilling contractual obligations?Actively pursuing collaborative projects?Conducting transparent and equitable bidding processes?Optimizing supply chain management platforms?Signing integrity agreementsIndustry Associ-ations/Research

Institutions

?Fostering open communication channels?Contributing to the industry development

?Facilitating exchanges and visits?Participating in industry forums

StakeholdersDemands and ExpectationsCommunication and Response

Public Welfare/

Community Organi-zations

?Contributing to community development?Participating in philanthropic endeavors?Advocating for environmental protection?Addressing the needs of vulnerable groups

?Engaging in volunteer and philanthropic endeavors

Media

?Compliance information disclosure?Sustaining positive partnerships?Specialized interviews

?Strengthening routine communication?Organizing joint outreach activities

Government/Regu-latory agencies

?Operational compliance?Facilitating economic growth?Upholding corporate social responsibility

?Fulfilling information disclosure obligations?Strengthening routine communication and reporting?Implementing monitoring and evaluation

Materialityª¢toª¢Corporateª¢Sustainableª¢Development

¢ÙEnvironmental management

¢ÚEnergy management

¢ÛActions against climate change

¢ÜMaterials management

¢ÝWater resource utilization

¢ÞEmission management

¢ßLabor relations management

¢àTraining and development

¢áOccupational health and safety

¢âR&D and innovation?Product responsibility?Protection of customers' rights and interests?Information security and privacy protection?Responsible supply chain management?Social welfare?Product accessibility?Protection of shareholders' rights and interests?Governance strategy and organizational structure?Business ethics?Tax management?Risk management?Quality of information disclosure?ESG governance

Efficient GovernanceBolstering SteadyDevelopment

I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

2023 Environmental, Social andGovernance(ESG)Report

About ThisReport

Message fromthe Chairman

About UsESGmanagement

1.Governance through the General Meeting of Shareholders,

Board of Directors, and Board of Supervisors

2.Risk Management and Operational Compliance

3.Business Ethics

4.Safeguarding Stakeholders' Rights and Interests

ª¡Oª¡uª¡rª¡ ª¡Aª¡cª¡tª¡iª¡oª¡nª¡s

Our PhilosophyHuadong Medicine upholds the concept of integrity in its operations, bolstering riskmanagement to establish a robust foundation for compliance. It safeguards shareholderrights, adheres to business ethics, strengthens defenses against fraud, and intensifiesmeasures against unfair competition and monopoly. Prioritizing the protection of investorrights and guided by Party leadership, the Company lays down a solid groundwork for itslong-term development.

SDGs

1920

2023 Environmental, Social andGovernance(ESG)Report

About This

Report

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Secretary of the Board

of Directors

General Meetingof Shareholders

Board of Directors

Strategy CommitteeNomination Committee

Audit CommitteeRemuneration and Assess-ment CommitteeESG CommitteeExecutive ManagementInvestment Develop-ment Department

Finance Department

Legal AffairsDepartmentRisk Management and Audit

DepartmentHuman ResourcesDepartment

Board of Directors

Office

Other functional

departments

Board of Supervisors

Aesthetic MedicineAesthetic MedicinePharmaceutical

CommercePharmaceuticalCommerce

Pharmaceutical

IndustryPharmaceuticalIndustryMAH Management System Led

by Zhongmei Huadong

MAH Management System Ledby Zhongmei HuadongHerbal Medicines andGinseng & Antler SegmentTraditional Chinese andWestern Medicine Segment

Medical Device Segment

Healthcare Segment

International Aesthetic MedicineOperations Platform

Aesthetic MedicineInvestment Platform

Domestic Aesthetic Medicine Operations PlatformIndustrial Microbiology BUInnovative Drug R&D Center

Quality Management CenterProductionManagement Center

Pharmaceutical Services

Governance through the General Meetingof Shareholders, Board of Directors, andBoard of Supervisors

In accordance with the provisions of theCompany Law of the People's Republic of China(the "Company Law"),the SecuritiesLaw of the People's Republic of China(the "Securities Law"),the Goverance Guidelines for Listed Companies., and the

Stock Listing Rules of the Shenzhen Stock Exchangeand other laws and regulations, the Company has established agovernance framework comprising the General Meeting of Shareholders, the Board of Directors, the Board of Supervisors,various committees under the Board of Directors, and the executive management, creating an institutional system that isnot only lawful and compliant but also tailored to the Company's practical operational requirements. This institutional systemexplicitly delineates the responsibilities, authorities, rules of procedure, and workflows of each organizational tier, ensuringthe segregation of decision-making, execution and oversight functions, thereby fostering accountability and integrity whilesafeguarding the Company's compliant operations and sustainable growth.

(by business segments)

General Meeting of Shareholders

Board of Directors

? Board Diversity

The Company convenes and holds general meetings of shareholders in strict accordancewith the stipulations outlined in laws, regulations and regulatory frameworks such as theCompany Law, the Securities Law, theRules for the Shareholders' Meetings of ListedCompanies, theArticles of Association and the Rules of Procedure for General Meetingsof Shareholdersto safeguard shareholders' rights and obligations.General Meetings of Shareholders employ a blend of in-person and online votingmechanisms for resolutions, offering convenience for a broad spectrum of investorsparticipating in the voting process. Material matters impacting the interests of minorityinvestors undergo separate voting to effectively safeguard their rights and interests.To guarantee regulatory compliance in the conduct and decision-making processes ofGeneral Meetings of Shareholders, the Company engages legal counsel to participate inthe meetings and issue legal opinions affirming the meetings' legality.

The Company's Board of Directors is accountable to the General Meeting ofShareholders, ensuring execution of its resolutions. The Company has drafted theRules of Procedure of the Board

of Directorsin strict compliance with legal relevantlaws and regulations such as theCompany Law,theSecurities Law, theGoveranceGuidelines for Listed Companies., theStock Listing Rules of the Shenzhen StockExchange, and theArticles of Association.These rules set out the Board's powersand authorities as well as robust and standard processes regarding procedures forconvening and conducting Board meetings, deliberation and voting. This enhancesthe Board's operational efficiency, quality, compliance, and strategic decision-makingcapabilities.

Board diversity is a crucial factor in elevatingthe quality of corporate decision-making andgovernance, and in enhancing the Company'scompetitive edge. Adhering to diversityprinciples, such as gender, age, education,professional background and experience,the Company evaluates Board candidatesto achieve a balanced composition, thusimproving board efficiency.As of the end of the reporting period, theCompany's Board of Directors comprises 9members, including 3 female directors. These9 directors bring a wealth of experience infields such as finance, pharmaceuticals andmanagement.

the Company convened a total of

General Meetings of Shareholders,during which

proposals weredeliberated and adopted.

the Company convened a total of

meetings of the Board of Directors,during which

proposals weredeliberated and adopted.

During the reporting period

During the reporting period

Male 6Female 3Gender

Non-Independent

Directors 6

IndependentDirectors 3Position

Pharmaceuticals

Finance

Management

Others

ProfessionalBackground

Bachelor's

degree 1

Master'sdegree 4

Doctoraldegree 4Education

31-40years old 1

41-50years old 3

51-60years old 5

Age

2122

2023 Environmental, Social andGovernance(ESG)Report

About This

Report

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

?Board Independence

Board of Supervisors

Compensation Management

? Board Committees

The Company's Board of Directors comprises 3 independent directors, meetingregulatory requirements stipulating that at least one-third of board members shouldbe independent. These independent directors actively engage in the Company's day-to-day operations and major decision-making processes, diligently fulfilling their duties.They carefully consider matters requiring their opinions and present independent andobjective views, thereby safeguarding the rights and interests of minority shareholdersand investors.

The Board of Supervisors is accountable and reports to the General Meeting ofShareholders. In compliance with theCompany Law,theStock Listing Rules ofthe Shenzhen Stock Exchange,theGovernance Guidelines for Listed Companies.and other relevant laws and regulations, the Company has developed theRules ofProcedure of the Board of Supervisorstailored to the company actualities. Theserules set out the provisions regarding composition, powers & functions, conveningand procedures of the Board of Supervisors. Acting independently and lawfully,all supervisors oversee the Company's financial affairs and ensure the lawful andcompliant discharge of duties by the Company's directors and senior officers,demonstrating their accountability to all shareholders.The Board of Supervisors comprises 6 members, including 2 employeerepresentatives, meeting the requirement stipulated in theRules of Procedure of theBoard of Supervisorsthat at least 1/3 of its members must represent the interests ofemployees. Employee supervisors are elected by the Employee Congress.

The remuneration for members of the Company's Board of Directors is subject toapproval by the General Meeting of Shareholders in accordance with relevant lawsand regulations. It is then disclosed through separate public announcements andregular reports in compliance with relevant laws and regulations. The Company isdedicated to constructing a robust long-term assessment and incentive-constraintframework through capital operations, enhancing both positive incentives andnegative constraints. This ensures a balanced approach to incentives and constraints,addressing both long-term and short-term goals.In 2022, the Company initiated its equity incentive plan, unveiling the Proposal on theCompany's 2022 Restricted Share Incentive Scheme. In 2023, this plan successfullyallocated reserved shares and completed the initial release of restricted stocksfollowing the lock-up period. The smooth execution of this incentive plan furthersolidified and enhanced the Company's long-term incentive mechanism, guaranteeingthe realization of its development strategy and long-term business objectives.

The Board of Directors has set up five specialized committees, namely the StrategyCommittee, the Remuneration and Assessment Committee, the Audit Committee, andthe Sustainability (ESG) Committee. Each committee operates in accordance with theArticles of Associationand its own working procedures, providing full support to theprofessional and efficient deliberation and decision-making of the Board of Directors.Independent directors hold the majority of positions and serve as conveners in mostcommittees, providing scientific and professional insights for the Board's decisions.

the Board of Supervisors conveneda total of

meetings, deliberatingand adopting

proposals.

6ª¢Supervisors

ª¢

ª¢Independentª¢Directors

ª¢2ª¢Employeeª¢SupervisorsDuring the reporting period

During the reporting period

the Audit Committee convened

meetings, deliberating andadopting

proposals.The Remuneration and AssessmentCommittee convened

meeting,deliberating and adopting

proposal.The Nomination Committee convened

meetings, deliberating andadopting

proposals.

2324

2023 Environmental, Social andGovernance(ESG)Report

About ThisReport

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Risk Management and OperationalCompliance

Huadong Medicine has established systems and protocols such as theRisk ManagementSystemand theRisk Assessment Management Measures(Trial) to bolster its riskmanagement efforts. These initiatives aim to elevate operational quality, ensure operationalsafety, and facilitate the achievement of overarching strategic and operational objectives.The Company has set up a dedicated risk management team comprising seniorofficers and heads of major functional departments at the HQ, which is responsiblefor the deliberation and formulation of risk management strategies, articulation of riskmanagement objectives, and examination of major risk factors. This team assumes leadershipresponsibilities in steering the Company's risk management efforts.The Risk Management and Audit Department launches a minimum of 1-2 audit projectsmonthly, encompassing the entirety of business operations of the audited units. Theseaudits focus on establishing and fortifying internal control and risk management systems,ensuring the execution of control measures, and overseeing risk mitigation strategies.The Risk Management and Audit Department specifies in the audit reports the internalmanagement and risk control issues identified, responsible departments, impacts andrisks, and actionable suggestions for improvement. Besides, the department solicitscomments on the improvement proposals from the audited units, and conducts regularfollow-up audits to monitor the progress of remedial actions. In 2023, the departmentcompleted a total of 20 audits, including 11 routine audits and 9 other audits. Over 100audit recommendations were proposed in response to the identification of 110 issues.Quarterly follow-up assessments revealed that 70% of the audited units had completedremedial actions, with the remaining 30% actively engaged in the process.

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ª¡aª¡uª¡dª¡iª¡tª¡s

ª¢routineª¢audits

ª¢otherª¢audits

ª¢issuesoverª¢

ª¢auditª¢recommendations70%ª¢ofª¢theª¢auditedª¢unitsª¢hadª¢completedª¢remedialª¢actions30%activelyª¢engagedª¢inª¢theª¢process

Tax Management

The Company upholds the principle of "ensuring compliance with laws andregulations, fulfilling tax obligations, and enjoying entitlements within the legalframework". Pursuant to pertinent tax legislations and considering the Company'sactualities, it has established frameworks and protocols such as theGuidelinesfor Routine Tax Operations, theInvoicing Compliance Regulations, theRegulationsfor the

Process of Issuing VAT Credit Notes, and theOperational Directives forVarious Tax Categories. These frameworks exert stringent oversight over tax affairsand standardize the management of tax-related matters, invoice handling, tax riskmitigation, and tax documentation administration.

Ensuringcompliancewith laws andregulationsFulfilling taxobligations

Enjoyingentitlementswithin the legalframework

Tax Management ProcessPre-auditIn-process trackingPost-analysis

Integrate taxation into projectapproval and review processesto promptly identify significanttax risks in strategic matters

Handle tax declaration, reconciliation,invoicing and invoice verificationto drive the implementation of taxplanning schemesAddress various tax issues, identifyrisk warnings, and promptly reportthem

After the declaration period,conduct statistical analysis ofimportant tax information forretrospective improvementSummarize common tax issuesto provide reference and basisfor institutional enhancementand tax training

Tax complianceIndicatorUnit202120222023

Taxes paidMillion1,595.253,065.132,612.81

During the reporting periodthe Company organized

riskmanagement training sessions,attracting

participantsand delivering a total of

hours of training.

The Company conducts regular assessments of tax operations and compliance status, alongside the inventorying of tax resources,with comprehensive reports furnished to the management. Through monthly meetings, sharing sessions on tax insights and othermediums, the Company carries out dissemination of updates regarding tax laws and regulations to its subsidiaries promptly andeffectively.

2526

2023 Environmental, Social andGovernance(ESG)Report

About This

Report

Message fromthe Chairman

About UsESGmanagement

I. Efficient Governance

Bolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Management of Related Transactions

Professional Integrity

ª¥¬Ê

Integrity Training

Operational Compliance

Huadong Medicine exercises stringent control over related party transactions through theimplementation of the Related Party Transaction Management System.This system preciselydefines the scope of related party transactions, identifies related parties and their relationships,and incorporates a reporting mechanism for such transactions. Additionally, it establishes rulesfor abstaining from voting, ensures the fair pricing of related party transactions, and guaranteescompliance in all related party transactions. Each year, the Company forecasts the annual volumeof related party transactions, conducts comprehensive information disclosures as required,strictly follows the decision-making procedures for such transactions, diligently enforces rules forabstention from related party transactions, and prevents the transfer of benefits to stakeholdersthrough related party transactions. This approach ensures that all related party transactions areconducted in a legal and compliant manner.

Huadong Medicine upholds the professional ethics standard of "lawfulness, integrity,honesty, and dedication", steadfastly adhering to the core principle of "integrity anddedication". Throughout the reporting period, the Company successfully secured thecommitment of 106 senior executives through the execution of Integrity Commitmentand conducted ethical audits for 31 of them.

In 2023, the Risk Management and Audit Department organized a total 10 integritytraining sessions, drawing substantial participation and reaching a wide audience.Leveraging various audit engagements, company-wide meetings (such as businesssegment reflection summits) and subsidiary training events, the department activelypromoted a culture of integrity through educational initiatives and cautionary examples.By delving into and reflecting upon real-life cases, the department effectively educatedemployees using relatable scenarios, significantly enhancing the relevance and impactof their cautionary educational efforts. Furthermore, it compiled educational materialsand case studies as required to produce special reports.

Huadong Medicine prioritizes compliance in its operational management, strictly adheringto both national and local laws, regulations, and policies. It consistently monitors changes inpharmaceutical regulations and policies to ensure that its operations remain compliant withstatutory and regulatory requirements, providing robust support for the Company's complianceefforts.Subject to legal identification and management requirements, the EHS Department regularlyconducts legal identification and compliance assessments through government websites, offlinechannels and other means. Examples include theMeasures for Administration of EcologicalEnvironment Statisticsand theSafety Regulations on Working in Confined Spaces for Industrialand Trade Enterprises.The EHS Department implements various corrective actions in line withrelevant statutory and regulatory requirements, taking into account the Company's actualities.

Business Ethics

Adhering to standards of business ethics, Huadong Medicine has establishedframeworks and protocols such as theProfessional Integrity Regulations,theMeasuresfor Administration of Complaints Reporting

and Whistle-blowing,and theEthical AuditRules for Middle and Senior Management.These frameworks are intended to addressissues like negligence or omission and misconduct, combat various forms of misconductand illegal behavior, and cultivate a transparent, pragmatic, and productive workenvironment. Huadong Medicine has set up an Inspection Work Committee taskedwith developing and enhancing the Company's professional integrity framework andrefining its internal oversight system. The Company's Party Committee Office, DisciplinaryInspection Office, and Risk Management and Audit Department are responsible forjointly overseeing anti-corruption investigations, integrity supervision and inspection, andintegrity education and training. The leaders of the Company and its subsidiaries serveas the principal individuals responsible for integrity management, assuming fullaccountability for their units' integrity management efforts. They lead by example,take on managerial and supervisory roles, and promote a culture of integritycharacterized by active participation and vigilant oversight by all.

Entered intoIntegrity Cooperation Agreementwith suppliers, serving as amutually upheld code of conduct for integrity in collaboration.

Prepared theEmployee Handbook,emphasizing adherence to work and labordisciplines and specifying corrupt practices and their corresponding penalties.Middle and senior management signed theIntegrity Commitment.Included theIntegrity Cooperation Agreementas an integral part of biddingdocuments.

the Company successfullysecured the commitment of

senior executivesthrough the execution ofIntegrity Commitment andconducted ethical audits for

of them.

all activeparticipation

all vigilantoversight

During the reporting period

Company organized

legal training sessions,attracting1,839

participants

including

legalprofessionals

delivering a total of

hours of training.

During the reporting period

2728

2023 Environmental, Social andGovernance(ESG)Report

About ThisReport

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an Exemplary

Brand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Anti-monopoly and Anti-unfair Competition

Information Disclosure

Reporting Channels and Whistleblower Protection

Huadong Medicine adheres to relevant laws, regulations and standards such as the

Anti-Monopoly Law of the People's Republic of China, the Anti-Unfair Competition Lawof the People's Republic of China,and theModel Provisions on Protection against UnfairCompetition.The Company actively fosters an environment of honesty and fairness incompetition, steadfastly opposing unfair competition, abiding by commercial ethics, andguiding employees to cultivate good business ethics and conducts. This ensures compliantcompetition, fosters an orderly and healthy competitive environment, and contributessignificantly to the sustainable development of the industry.

Huadong Medicine maintains a strict zero-tolerance policy towards misconducts such ascorruption and bribery. It consistently regulates complaints reporting channels, offeringvarious avenues for reporting including hotlines, emails, the Company's official website, andintranet platforms. This reinforces compliance management and enables the Company toestablish an integrity-driven, open and transparent mechanism for oversight.

Case

Anti-monopoly TrainingIn July 2023, the Legal AffairsManagement Department conducteda specialized seminar on verticalmonopoly issues. The seminarcovered two main issues: thebackground and trends of anti-monopoly and practice highlights;compliance recommendations. Thisseminar deepened the understandingof frontline employees from variousbusiness departments regardingthe requirements for conductingbusiness in compliance with laws,thereby enhancing the Company'slevel of operational compliance.

Anti-monopoly Training

ChannelsWhistleblower Protection

Contact information (phone andemail) available on the Company'sintranetOfficial Website link: OfficialWebsite of Huadong MedicineCo., Ltd. - Complaints ReportingSectionOA System link: OA System- Internal Link - ComplaintsReporting Platform

The Company is committed to rigorouslyprotecting whistleblowers and maintainingutmost confidentiality regarding reportedinformation. It facilitates both anonymousand named reporting, appoints dedicatedpersonnel to handle complaints, andimplements robust information securitymeasures to ensure the highest level ofwhistleblower protection.

Safeguarding Stakeholders' Rightsand Interests

Huadong Medicine places great emphasis on information disclosure and hasestablished frameworks and protocols such as theMeasures for the Administration ofInformation Disclosureand theInsider Information and Insider Management System.These frameworks outline clear internal management requirements for truthful,accurate, complete, timely and fair information disclosure, effectively guiding thelawful and compliant conduct of information disclosure practices. To ensure thetimely dissemination of various significant information, the Company has developedand implemented theInternal Reporting Procedures for Significant Information.This framework breaks down disclosure standards and warning criteria into variousbusiness departments. Moreover, the Company conducts internal training sessions oninformation disclosure and reporting significant matters for all business departments.These sessions guide business departments to communicate, report and submitsignificant information through multiple channels such as email, telephone and internalprocesses. This approach not only enhances the compliance awareness of eachbusiness department but also ensures the promptness of information disclosure.

During the reporting period

During the reporting period

During the reporting periodthe Company organized

anti-monopoly trainingsessionsengaging

participantsdelivering a total of

hours of training.

the Company's Risk Managementand Audit Department processeda total of

reported complaints.These were thoroughlyinvestigated and addressed inaccordance with establishedprocedures, with appropriatemeasures taken based on thefindings of the investigations.

the Company disclosed atotal of 141documents,including

regular reportsand

interimannouncements, withoutincurring any penaltiesfor information disclosureviolations.The Company ramps up its proactive approach to information disclosure, actively promoting its production operations, researchand development system construction, and strategic development to bolster understanding among capital markets and investors. Itwillingly shares English versions of annual, semi-annual and quarterly reports, facilitating overseas investors' grasp of the company'sdynamics.Simultaneously, the Company strategically diversifies its information disclosure methods. In recent years, it has adopted innovativeformats of information disclosure such as "Quick Grasp" regular reports and multi-dimensional promotions incorporating "report+ video + Quick Grasp " presentations. This dynamic showcases reports in a more intuitive and engaging manner, rendering datamore accessible. Such initiatives aid investors in swiftly grasping company insights within constrained timelines.

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I. Efficient Governance

Bolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering a

Better Society

Looking Ahead

Performance

BriefingsMediaInterviewsInvestorSeminarsCompany

Email

Roadshowsand ReverseRoadshowsInvestorHotlineInvestmentStrategiesConferencesirm.cninfo.

com.cn

InvestorReceptionDays

Communication

Channels

Investor Relations ManagementHuadong Medicine places a premium on investor relations management, establishing and implementing relevant frameworkssuch as theInvestor Relations Management System,thePublicity Management Systemand theInvestor Reception and PromotionSystem.These frameworks establish clear investor relations management workflows. Additionally, the Company annually developsdisclosure plans and investor relations management plans, which are rigorously adhered to and executed. The Company ensurescomprehensive, accurate and timely dissemination of all operational information to investors, with a particular focus on upholdinginvestors' rights to informed decision-making and voting. This commitment fosters a robust trust relationship between the Companyand its investors.Moreover, the Company goes beyond conventional communication channels such as irm.cninfo.com.cn and Investor hotline. Itactively engages in outreach initiatives, including hosting performance briefings, investor seminars, roadshows, investor receptiondays, and participating in institutional investor strategy conferences. These efforts aim to bolster the frequency of communicationand interaction with global institutional investors through diverse channels. Furthermore, the Company has instituted a new mediadissemination network, encompassing platforms such as the Company's Investor Relations Management WeChat OfficialAccount,RoyalFlush account, and Xueqiu/ Snowball Finance account. Leveraging new media tools, we employ compact and innovativeformats to convey the latest business developments, BD project outlines, research and development advancements, awards andinterpretations of periodic reports to both the capital market and the broader investor community.

the Company's Board Office garnered awards

such as

the "Outstanding Practice Case of ListedCompany Board Office in 2023" from China

Association for Public Companiesthe "Comein Award forBest IR Team of Value

Delivery"

the "Quanjing IR GoldAward for OutstandingIR Company"the "Quanjing IR GoldAward for Outstanding IR

Team"

the "Securities TimesTianma Award for IR

New Media"

the "Quanjing IR GoldAward for Best InstitutionalCommunication"

the "Quanjing IR GoldAward for Best InstitutionalCommunication"

During the reporting period

During the reporting periodthe Company hosted one "Investor Reception Day" event, conducted

online and on-site investorsurveys, welcomed2,393investors, engaged with investors

times on irm.cninfo.com.cn, andcommunicated through email/social media platforms

times.

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Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Returns to Shareholders

The Company places a strong emphasis on management innovation, striving to meetmarket demands by enhancing operational quality. We achieve this through thedelivery of high-quality products, exceptional commercial capabilities, compliant andefficient marketing services, differentiated market positioning, innovative research anddevelopment, and robust talent planning, all of which drive the Company's sustained andsteady long-term growth. Over its 24-year listing history, the Company has distributeddividends 20 times, totaling RMB 5,593 million ¡ª a remarkable 22.37 times the RMB250 million raised during its IPO ¡ª providing shareholders with consistent and stablereturns on investment.The Company strictly adheres to shareholder dividend and profit distribution policies.From 2020 to 2022, the cumulative cash dividend as a percentage of average annualnet profit attributable to shareholders of the parent company stood at 55.84%, with anaverage annual cash dividend representing 18.61% of the same metric.In 2023, the Company's profit distribution plan entails a cash dividend of RMB 5.8(tax-inclusive) for every 10 shares held, based on the current total share capital of1,754,327,548 shares, without distributing bonus shares or capitalizing reserves. Thisamounts to a total cash dividend of RMB 1,017,509,977.84 (tax-inclusive), with anyremaining undistributed profits carried forward to the next fiscal year. In the event ofchanges to the Company's total share capital before implementation of profit distributionplan, adjustments would be made to maintain the total distribution amount unchangedwhile recalibrating the per-share distribution ratio accordingly.the Company's profit distributionplan entails a cash dividend ofRMB

5.8

(tax-inclusive)

total cash dividend ofRMB1,017,509,977.84Note: The 2023 annual equity distribution is the company's proposed plan. The actual dividenddistribution will be based on the implementation announcement.

Awards Collection

the Company's Board Secretaryreceived awards such as

a 5A rating in the "2023Performance Evaluation of BoardSecretaries of Listed Companies"by China Association for Public

Companiesthe 12th JRJ "GoldenWisdom Award" for Investor

Trusted Board Secretaries

the "Quanjing IR GoldAward for Outstanding Board

Secretary"the "Outstanding IR BoardSecretary of Chinese ListedCompanies" at the 14thSecurities Times' TianmaAwards Ceremony

the "China Times Top10 Outstanding BoardSecretaries in theHealthcare Industry 2023"

During the reporting period

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I. Efficient GovernanceBolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians of

Ecological Refuge

III¡¢Innovation-Driven,Forging an Exemplary

Brand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Protecting Lucid Watersand Lush Mountains,Custodians of EcologicalRefuge

1. Environmental Management

2. Actions against Climate Change

3. Energy Management

4. Water Resource Management

5. Materials Management

6. Pollution Prevention and Control

Our PhilosophyEmbracing the environmental protection objective of "managing at the source, minimizing resource waste, andreducing pollution", Huadong Medicine has significantly fortified its environmental management endeavors. TheCompany proactively identifies climate risks and opportunities and take actions to address them. It enhancesmanagement of energy, water resources and materials to curtail resource wastage while rigorously controllingpollutants generated during production, thereby markedly reducing pollutants.

SDGs

Our Actions

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Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Adhering to theEnvironmental Protection Law of the People's Republic of Chinaand other pertinent laws and regulations, Huadong Medicine operates under theenvironmental protection principles of "managing at the source, minimizing resourcewaste, and reducing pollution". Underpinned by the ISO 14001 environmentalmanagement system, we've formulated theHuadong Medicine EHS ManagementSystemwhich addresses diverse environmental concerns throughout the Company'sproduction and operation. During the reporting period, we've crafted internal andexternal audit schemes for the EHS system, conducted internal auditor training, andexecuted comprehensive internal and external system initiatives. Notably, ZhongmeiHuadong, Jiangdong Company, Xi'an Bohua, Jiuzhou Pharmaceutical and JiangsuJoyang all successfully concluded their ISO 14001 external audit processes.

Huadong Medicine has devised a pollutant sources self-monitoring scheme for 2023 in strict compliance with the industry's self-monitoring technical guidelines, which has been formally registered with the competent environmental regulatory authority. Andaccredited entities have been engaged to conduct periodic monitoring of pollutant sources issue self-monitoring reports. Moreover,we file and disclose the results of self-monitoring endeavors in a timely manner. Environmental monitoring aims to identify andquantify various pollutants such as air, water and soil pollutants. It enables us to promptly detect environmental issues, followed byimplementation of tailored interventions to curtail or eradicate pollutant sources, thereby safeguarding both ecosystems and humanwell-being. Furthermore, it furnishes invaluable data supporting sustainable development initiatives.

Huadong Medicine complies with pertinent regulations governing environmental impact assessments for new, renovation andexpansion projects. Throughout the project conception and operation phases, the Company constructs supporting environmentalprotection infrastructure and ensure their proper functioning as stipulated by national and local regulations. This effort aims torealize substantial emission reduction, facilitate compliance with emission standards and eventually mitigate the environmentalfootprint of new projects.During the reporting period, the Company secured approvals for five EIA reports, as detailed below:

The Company has established the EHS Committee and implemented a tieredcommittee accountability system. The first and second tiers serve as governing bodiesfocusing on accountability management. And the third tier acts as the executive bodyconcentrating on specific risk identification and control as well as the investigation andrectification of hazards. At the first tier lies the parent company, where the chairmanassumes the role of committee director, and the EHS Department of the parentcompany serves as the dedicated management body at the parent company level.The parent company's organizational structure encompasses five principal businesssegments: commercial operation, industrial marketing, industrial production, industrialmicrobiology, and management departments, forming the second tier. Subsidiaries,departments and workshops within these business segments constitute the third tier,with the general manager concurrently serving as the director of the EHS Committeeof each independent legal entity subsidiary. Furthermore, the Company enforcesEHS responsibility management, integrating the EHS supervision and management ofsubsidiaries into the annual assessment of their key executives.

Subsidiaries that have passed ISO 14001 Environmental

Management System Certi?cation

Environmental Management

Environmental Monitoring and Management

Environmental Impact Assessment

Zhongmei Huadong andJiangdong Company attainedrecognition as a "HangzhouLow-Carbon Green Factory,"with Jiangdong Companyfurther receiving acclaim asa provincial-level "Zero WasteFactory".

the Company invested a totalof RMB

73.15

million inenvironmental protectioninitiatives,with an accompanyingenvironmental protectiontax payment of RMB60,487.

ZhongmeiHuadong

JiangdongCompany

Xi'an BohuaJiuzhouPharmaceutical

JiangsuJoyang

Company/Subsidiary

Name

Regulations

Violated

Grounds forPenalty

PenaltyAmount

Corrective Actions

JiangsuJoyang

Law of thePeople'sRepublic ofChina on thePreventionandControl ofEnvironmentPollutionCaused bySolid Wastes

It engaged inunlawful activitiesby recyclinghazardouswaste solvents,repurposingthem into twoseparate batchesfor disposal byindividuals lackinghazardous wastemanagementpermit, therebygenerating a profitof RMB 30,800.

A fineof RMB750,000;and illicitgainsamountingto RMB30,800confiscated

The company retrieved the recycled solvents from the site andcommissioned third-party hazardous waste disposal entitiesfor proper handling. To address the compliant utilization anddisposal of recycled solvents, the company implemented thefollowing measures to standardize management and mitigatecompliance risks after consultation and research:

1. Enhance the rate of solvent reuse to curtail the generation of

recycled solvents. So far, all ethyl acetate has been effectivelyreclaimed.

2. Employ biochemical degradation for ethanol treatment in

wastewater to ensure complete ethanol recovery.

3. Employ alternative methods for the disposal of non-reusable

solvents classified as hazardous waste (HW02 code) throughlegal channels by outsourcing to third-party disposal entities.

Company/SubsidiaryName

Regulations Violated

Grounds forPenalty

PenaltyAmount

Corrective Actions

JiangsuJoyang

TheRegulations onPollutant Discharge

Permits, and the

AtmosphericPollution Prevention

and Control Lawof the People'sRepublic of China

Workshop 104 was found topossess two waste gas dischargeoutlets, which deviated from theemission limits stipulated in the

discharge permit.The waste gas treatment facilities

installed in the Workshop 101were not functioning properly,with nearly half of the UVlamps of the UV photocatalyticoxidation system being impaired.

A fineof RMB188,600

During the period of shutdown overhaul,the company consolidated the dischargeoutlets and adjusted the inspectionand replacement frequency of the UVlamps within the photocatalytic oxidationsystem from once every three monthsto a monthly basis. Additionally, it affixedlabels on the exterior casing, indicatingthe permissible UV lamp damage rate,thereby enhancing maintenance efficacy.WuhuHuaren

Water PollutionPrevention andControl Law of thePeople's Republic

of China

Water pollutants were illicitlydischarged through clandestine

pipelines.

A fineof RMB560,000

The company took prompt correctiveactions by having wastewater disposedof at the wastewater treatment plant.

Company/SubsidiaryName

Regulations Violated

Grounds forPenalty

PenaltyAmount

Corrective Actions

JiangsuJoyang

TheRegulations onPollutant Discharge

Permits, and the

AtmosphericPollution Prevention

and Control Lawof the People'sRepublic of China

Workshop 104 was found topossess two waste gas dischargeoutlets, which deviated from theemission limits stipulated in the

discharge permit.The waste gas treatment facilities

installed in the Workshop 101were not functioning properly,with nearly half of the UVlamps of the UV photocatalyticoxidation system being impaired.

A fineof RMB188,600

During the period of shutdown overhaul,the company consolidated the dischargeoutlets and adjusted the inspectionand replacement frequency of the UVlamps within the photocatalytic oxidationsystem from once every three monthsto a monthly basis. Additionally, it affixedlabels on the exterior casing, indicatingthe permissible UV lamp damage rate,thereby enhancing maintenance efficacy.WuhuHuaren

Water PollutionPrevention andControl Law of thePeople's Republic

of China

Water pollutants were illicitlydischarged through clandestine

pipelines.

A fineof RMB560,000

The company took prompt correctiveactions by having wastewater disposedof at the wastewater treatment plant.

Date of ApprovalApproved by ProjectMarch 22, 2023

Huayin Branch of Weinan MunicipalBureau of Ecology and Environment

Renovation Project of the Tank Area in API Workshop 2 (W.H.Y.FNo. 34 [2023])April 25, 2023

Qiantang Branch of HangzhouMunicipal Bureau of Ecology and

Environment

Indobufen Tablet and Clarithromycin Tablet Production Transferand Expansion & Acarbose Chewable Tablet Production Expansionand Renovation Project (H.H.Q.H.P.P. No. 28 [2023])September 27,2023

Qiantang Branch of HangzhouMunicipal Bureau of Ecology and

Environment

HDG1901 Formulation Workshop Construction Project (H.H.Q.H.P.P.No. 68 [2023])November 8, 2023

Ma'anshan Municipal Bureau ofEcology and Environment

Nucleoside Production Project of Anhui Meihua Hi-TechPharmaceutical with a Capacity of 14,100 kg/y (M.H.S. No. 45[2023])November 17, 2023

Gaoling Branch of Xi'an MunicipalBureau of Ecology and Environment

Oral Liquid Production Line Renovation Project of Shaanxi JiuzhouPharmaceutical (S.H.G.P.F. No. 28 [2023])

Note: Data compilation encompassesZhongmei Huadong, JiangdongCompany, Xi'an Bohua, JiangsuJoyang and Wuhu Huaren.In 2023, the Company's subsidiaries incurred administrative penalties associated with environmental issues. However, these penaltieshad no significant bearing on the Company's production and operational activities.

During the reporting period

During the reporting period

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Ecological Refuge

III¡¢Innovation-Driven,Forging an Exemplary

Brand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Environmental Emergency ManagementEnvironmental Protection ActivitiesHuadong Medicine has developed anEmergency Response Plan for EnvironmentalAccidentsin accordance with theMeasures for Administration of Response toEnvironmentalAccidents and other relevant regulations. This plan aims to enhance theCompany's emergency response mechanisms for environmental accidents, ensuringswift, well-organized and efficient emergency response to control, mitigate and eliminateenvironmental hazards. This approach minimizes casualties and economic losses whilefostering comprehensive, coordinated and sustainable development.The Company's subsidiaries, including Zhongmei Huadong, Jiangdong Company, Xi'anBohua, Jiangsu Joyang , Jiuzhou Pharmaceutical and Huadong TCM, have formulated theirrespectiveEmergency Response Plan for EnvironmentalAccidents and revise and updatethem on a regular basis as required. In 2023, Zhongmei Huadong revised itsEmergencyResponse Plan for EnvironmentalAccidents; Jiuzhou Pharmaceutical also updated thatplan, adjusting its emergency organization structure, personnel and emergency supplies.

Zhongmei Huadong held specialized emergencytraining on hazardous waste leakage, coveringkey aspects such as basic information, drillprocedures and emergency response. The trainingfamiliarized employees with emergency responseprocesses and their respective responsibilities.Subsequent on-site exercises assessed employees'understanding of their duties and emergencyprotocols, as well as the coordinated responseabilities and practical skills of emergency teams,aiming to enhance their abilities to prevent,mitigate and respond to accidents.

Meihua Hi-Tech conducted an emergency drillon hazardous waste leakage accidents, furtherimproving the emergency response abilities ofoperators and assessing the feasibility of on-site disposal plans.

Jiangdong Company conducted an emergency drill on hazardous waste leakage to raiseemployees' environmental awareness and underscore the importance of environmental safety.This drill also enhanced the coordination and operational effectiveness of various roles inresponse to hazardous waste leakage incidents.

April 12, 2023April 23, 2023

August 8, 2023

Emergency Drill on HazardousWaste Leakage

Note: Data compilation encompassesZhongmei Huadong, JiangdongCompany, Xi'an Bohua, JiangsuJoyang and Wuhu Huaren.

the Company organized a total of

environmental training sessions,engaging

participantsdelivering

hours of training.

During the reporting period

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Bolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians of

Ecological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Opportunity TypeClimate OpportunitiesPotential Impacts

Resource efficiency

Technological innovation will catalyze improvement ofresource efficiency, ultimately reducing operational costsover the medium to long term.

Cost reductionEnergy source

Augmenting the utilization of renewable energy willfacilitate emission reduction and curtail energy cost.

Cost reductionProducts andservices

Given that more customers may prefer low-carbongoods and services, the Company's emissions reductionendeavors will ultimately fortify its competitive edge andcorporate image.

Augmented operating incomeImproved corporate image

Greenhouse Gas(GHG) Emissions

Unit20222023

Direct GHG emissions(Scope 1)

tCO2e11,305.6014,288.85Indirect GHGemissions (Scope 2)

tCO2e97,290.49137,814.60Total Emission ofGreenhouse Gases

tCO2e108,596.09152,103.45Greenhouse GasEmission Intensity

tCO2e/ RMB per million(revenue)

2.883.74

Greenhouse Gas(GHG) Emissions

Unit20222023

Direct GHG emissions(Scope 1)

tCO2e11,305.6014,288.85Indirect GHGemissions (Scope 2)

tCO2e97,290.49137,814.60Total Emission ofGreenhouse Gases

tCO2e108,596.09152,103.45Greenhouse GasEmission Intensity

tCO2e/ RMB per million(revenue)

2.883.74

ResponseMeasures

Specific Actions

Enhancing energymanagement

The Company's Energy Conservation Committed promulgated theEnergy Management System

andEnergy Management Assessment Procedures, while consistently implementing energy-savinginitiatives.Leveragingenergy-efficienttechnologies

The Company launched a project to recover waste heat from boiler flue gas, whereby waste heatfrom boiler flue gas is reused to preheat boiler feedwater. This transition from steam heating for boilerfeedwater significantly reduced costs of gas consumption.Tackling extremeweather events

The Company's EHS Department disseminated directives such as theNotice on StrengtheningEnterprise Emergency Response Capacity Building,

Notice on Enhancing Typhoon and FloodPrevention Efforts,andRequirements for Strengthening Typhoon and Flood Emergency Drills.Thesemandates underscore the imperative for member companies to meticulously execute measures totackle extreme weather events.Enhancing low-carbon awareness

The Company organized comprehensive energy-saving advocacy campaigns through both digital andphysical avenues. Leveraging platforms such as exhibition boards, posters, interactive engagements onofficial channels and energy management proficiency challenges, the Company bolstered employeeconsciousness regarding low-carbon practices.

ResponseMeasures

Specific Actions

Enhancing energymanagement

The Company's Energy Conservation Committed promulgated theEnergy Management System

andEnergy Management Assessment Procedures, while consistently implementing energy-savinginitiatives.Leveragingenergy-efficienttechnologies

The Company launched a project to recover waste heat from boiler flue gas, whereby waste heatfrom boiler flue gas is reused to preheat boiler feedwater. This transition from steam heating for boilerfeedwater significantly reduced costs of gas consumption.Tackling extremeweather events

The Company's EHS Department disseminated directives such as theNotice on StrengtheningEnterprise Emergency Response Capacity Building,

Notice on Enhancing Typhoon and FloodPrevention Efforts,andRequirements for Strengthening Typhoon and Flood Emergency Drills.Thesemandates underscore the imperative for member companies to meticulously execute measures totackle extreme weather events.Enhancing low-carbon awareness

The Company organized comprehensive energy-saving advocacy campaigns through both digital andphysical avenues. Leveraging platforms such as exhibition boards, posters, interactive engagements onofficial channels and energy management proficiency challenges, the Company bolstered employeeconsciousness regarding low-carbon practices.

Risk TypeClimate Risks and Potential ImpactsPotential Impacts

Acute risk

Aggravated severity of extreme weather events,including but not limited to typhoons and floods,may exacerbate economic losses and humancasualties.

Disruption of business continuity

Cost increaseDiminished operating incomeChronic risk

Global warming may escalate the operatingcosts of the Company's foundational publicutilities.

Cost increase

Risk TypeClimate Risks and Potential ImpactsPotential Impacts

Acute risk

Aggravated severity of extreme weather events,including but not limited to typhoons and floods,may exacerbate economic losses and humancasualties.

Disruption of business continuity

Cost increaseDiminished operating incomeChronic risk

Global warming may escalate the operatingcosts of the Company's foundational publicutilities.

Cost increase

Risk TypeClimate Risks and Potential ImpactsPotential ImpactsPolicy and regulatory

risk

More policies addressing climate change willbe unveiled, accompanied by increasinglystringent regulatory frameworks.

Cost increase

Technical risk

Improvements and innovations in low-carbon,energy-conserving technologies, coupledwith upgrades to equipment and facilities,may drive up production costs, therebyundermining product competitiveness.

Cost increase

Market risk

Climate change may disrupt the supply chainof raw materials, and customers may bemore concerned about products and services'contributions to a low-carbon economy.

Cost increase

Reputational risk

The Company's contributions to transitioningtoward a low-carbon economy may influencestakeholders' perceptions of the Company.

Detrimental effects on corporate reputation

and revenue

Recognizing climate change as a paramount global concern essential for sustainabledevelopment, both governments and enterprises worldwide are increasingly prioritizing thisissue. Given the potential significant impacts of climate change on business operations, itis imperative for us to take proactive actions. We should analyze and identify potential risksassociated with climate change and take proper measures to address them.

Actions against Climate Change

Climate Risks

Climate Opportunities

Actions against Climate Change

? Transitional Risks

? Physical Risks

Note: Data compilation encompasses Zhongmei Huadong, Jiangdong Company, Xi'an Bohua, Jiangsu Joyang and subsidiaries specializedin industrial microbiology. GHG emissions are calculations in line with theGuidelines for Calculation Method and Reporting Guidanceon GHG Emissions for Other Industrial Enterprises (Trial)published by the National Development and Reform Commission, along withtheNotice on the Management of GHG Emissions Reporting by Power Generation Enterprises in 2023-2025issued by the Ministry ofEcology and Environment.

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II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

SubsidiaryName

Project Name Description

Cost Savingsin 2023 (TenThousand Yuan)JiangdongCompany

Purified WaterReclamation

Phase 1: Captured water is allocated for cooling tower operations,thus supplanting the demand for tap water; Phase 2: Captured waterundergoes reverse osmosis treatment before being distributed toequipment such as cooling towers and eco-friendly RTO boilers.

61.49

ZhongmeiHuadong

Reuse ofReclaimedWater fromPurified WaterStation

A recycling device is installed within Building 33 to collect wastewaterfrom the four purified water stations. Following systematic treatmentto eliminate suspended particles and impurities, the water is fed intothe Company's pressurized water tank, resulting in an annual recyclingcapacity of approximately 31,600 tons.

20.56

Reduction ofPurified WaterRO MembraneExpenditure

A secondary cleaning process is executed on old membranes, renderingthem compliant with RO membrane specifications and integrated withina standardized management framework.On-site deployment and continuous real-time monitoring ensure adesalination rate surpassing 85% and an electrical conductivity ofproduced water below 10us/cm.Extensive data collection and analysis confirm the efficacy of post-cleaning RO membrane utilization, resulting in a notable 45% reductionin associated costs.

33.82

SubsidiaryName

Project Name Description

Cost Savings(Ten ThousandYuan)JiangdongCompany

Photovoltaic PowerGeneration

The rooftop photovoltaic power generation project of Jiangdong Company wascompleted in November 2022. Following over two months of commissioning, itcommenced regular operation in February 2023.

166.43

HVAC System WasteHeat Recovery inPlant Area (Phase 2)

The deployment of heat pump units and air compressor units produces hotwater at approximately 50¡ãC. This hot water is supplied to air conditioning units,thereby reducing steam consumption. While the heat pump units produce hotwater, they also prepare chilled water which is fed into the chilled water systemfor cooling purposes, thus mitigating the cost associated with chilled water.

283.09

ZhongmeiHuadong

Centralized ControlEnergy-savingTransformation forAir Conditioning

Systems

Leveraging a centralized control backend, this project enables remotecentralized monitoring and energy-saving management for central airconditioning fan coils and VRV air conditioning indoor units. Through meticulousmanagement, temperature settings across multiple time periods can beadjusted, scheduled shutdowns can be implemented, and real-time faultalarms can be promptly sent. Moreover, this centralized control managementeffectively addresses concerns related to temperature settings and servicehours management for air conditioning systems, thereby preempting instancesof extreme temperatures or undue usage.

16.76

Energy-savingTransformationfor Bottle KilnWarehouse

The transformation of the warehouse lighting system, employing microwaveradar human body induction switches, not only enhances the convenienceand energy-saving efficacy of lighting usage but also facilitates an automatedoperation whereby lights are activated upon human presence and deactivatedupon departure, thereby streamlining the functionality of lighting switches.Furthermore, the adjustment of aisle lighting fixture densities on each floorensures compliance with actual lighting requirements.

15.15

Electricity Reductionfor Workshop B-10Refrigeration Stationat Kanrun Factory

This project facilitates the interconnection of power supply pipelines betweenWorkshop 1 and Workshop 2 during non-summer periods, utilizing onlyone refrigeration unit for energy supply. This optimization results in reducedoperating costs for 1 cooling water pump and 1 chilled water pump.

23.91

The Company upholds an energy management philosophygrounded in "prioritizing energy conservation and efficiency,innovation-driven, embracing environmental protection,fostering collaborative partnerships, employing scientificplanning, engaging all personnel, and assumingresponsibility", aiming to curtail energy consumption,bolster energy efficiency, protect the environment, andcontribute to the Company's sustainable development.We've instituted theEnergy Management System,settingout a hierarchical energy management structure comprisingthe Company's Energy Management Leadership Team,Energy Management Department, and departmental-level energy management units. Additionally, we'veestablished an Energy Management Committee that iscomprised of members from the Energy ManagementLeadership Team, departmental heads, part-time energymanagement staff, and pertinent personnel fromthe Energy Management Department, with the EnergyManagement Department serving as the primary dedicatedenergy management entity.

The Company attaches great importance to water resourcemanagement, guided by the principles of "conservation, preservation,recycling, equitable distribution and scientific management". Wepredominantly utilize water for industrial and domestic purposes,with daily potable water sourced from purchased barreled purifiedwater while municipal water supply serves as the primary watersource for production. Xi'an Bohua was honored as a "Water-saving Enterprise" by the Shaanxi Provincial Department of WaterResources, Development and Reform Commission, and Ministry ofIndustry and Information Technology. During the reporting period,Xi'an Bohua and Zhongmei Huadong engaged third-party entitiesto conduct groundwater monitoring, with results meeting relevantregulatory standards.

During the reporting period, major water conservation projects undertaken by the Company's subsidiaries Zhongmei Huadong andJiangdong Company are summarized below:

Energy ManagementWater Resource Management0304

Case

Huadong Medicine Launches WaterConservation Advocacy Campaigns

Water conservation advocacy initiatives are disseminatedthrough signage campaigns across water consumptionzones such as dining facilities, lavatories, administrativebuildings, and residential quarters. These efforts aimto instill a culture of water and energy conservation,encouraging individuals to make incremental contributionsin their daily routines. By aligning with cost-savingimperatives, the objective is to conserve every droplet ofwater and every unit of electricity, thereby embedding theethos of ecological civilization into all facets of operation.

During the reporting period, major energy conservation projects undertaken by the Company's subsidiaries Zhongmei Huadong andJiangdong Company are summarized below:

Note: Data compilation encompasses Zhongmei Huadong, JiangdongCompany, Xi'an Bohua and subsidiaries specialized in industrialmicrobiology.

Note: Data compilation encompasses Zhongmei Huadong,Jiangdong Company, Xi'an Bohua and subsidiaries specialized inindustrial microbiology.

SubsidiaryName

Project Name Description

Cost Savings(Ten ThousandYuan)JiangdongCompany

Photovoltaic PowerGeneration

The rooftop photovoltaic power generation project of Jiangdong Company wascompleted in November 2022. Following over two months of commissioning, itcommenced regular operation in February 2023.

166.43

HVAC System WasteHeat Recovery inPlant Area (Phase 2)

The deployment of heat pump units and air compressor units produces hotwater at approximately 50¡ãC. This hot water is supplied to air conditioning units,thereby reducing steam consumption. While the heat pump units produce hotwater, they also prepare chilled water which is fed into the chilled water systemfor cooling purposes, thus mitigating the cost associated with chilled water.

283.09

ZhongmeiHuadong

Centralized ControlEnergy-savingTransformation forAir Conditioning

Systems

Leveraging a centralized control backend, this project enables remotecentralized monitoring and energy-saving management for central airconditioning fan coils and VRV air conditioning indoor units. Through meticulousmanagement, temperature settings across multiple time periods can beadjusted, scheduled shutdowns can be implemented, and real-time faultalarms can be promptly sent. Moreover, this centralized control managementeffectively addresses concerns related to temperature settings and servicehours management for air conditioning systems, thereby preempting instancesof extreme temperatures or undue usage.

16.76

Energy-savingTransformationfor Bottle KilnWarehouse

The transformation of the warehouse lighting system, employing microwaveradar human body induction switches, not only enhances the convenienceand energy-saving efficacy of lighting usage but also facilitates an automatedoperation whereby lights are activated upon human presence and deactivatedupon departure, thereby streamlining the functionality of lighting switches.Furthermore, the adjustment of aisle lighting fixture densities on each floorensures compliance with actual lighting requirements.

15.15

Electricity Reductionfor Workshop B-10Refrigeration Stationat Kanrun Factory

This project facilitates the interconnection of power supply pipelines betweenWorkshop 1 and Workshop 2 during non-summer periods, utilizing onlyone refrigeration unit for energy supply. This optimization results in reducedoperating costs for 1 cooling water pump and 1 chilled water pump.

23.91

Main EnergyUnit20222023

Gasolineton33.5735.23Dieselton164.96174.50Natural gas10,000 m3494.16630.51Total purchased

heat

GJ41,767.43131,020.16Total purchasedelectricity

kWh162,539,149.00216,381,530.00ComprehensiveEnergyConsumption

tce28,263.2439,755.59EnergyConsumption

Intensity

tce/ RMBper million(revenue)

0.750.98

Main EnergyUnit20222023

Gasolineton33.5735.23Dieselton164.96174.50Natural gas10,000 m3494.16630.51Total purchased

heat

GJ41,767.43131,020.16Total purchasedelectricity

kWh162,539,149.00216,381,530.00ComprehensiveEnergyConsumption

tce28,263.2439,755.59EnergyConsumption

Intensity

tce/ RMBper million(revenue)

0.750.98

IndicatorUnit20222023Total WaterConsumption

ton98,609,202.07180,028,789.20Waterconsumption

intensity

t/ RMBper million(revenue)

2,614.624,431.61

4344

2023 Environmental, Social andGovernance(ESG)Report

About This

Report

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering a

Better Society

Looking Ahead

Materials management plays a pivotal role in optimizing resource utilizationand mitigating environmental degradation. Through effective materialsmanagement, companies can meticulously regulate the procurement,utilization and storage of resources, thereby minimizing wastage andenhancing resource efficiency. Moreover, recycling initiatives convert discardedmaterials into valuable resources, resulting in cost savings and a reduction inenvironmental pollution.During the reporting period, major material recycling and reuse projects undertaken by the Company's subsidiary JiangdongCompany are summarized below:

In strict compliance with the Water Pollution Prevention and Control Law of the People's Republic of China, theEmission Limits ofWater and Air Pollutants for Biopharmaceutical Industry(DB 32/3560-2019) and other pertinent laws and regulations, the Companyhas established theWastewater Discharge Management Systemto effectively oversee the management of wastewater generatedduring its operations. This ensures that the discharged wastewater meets national emission standards, thereby safeguardingthe environment against contamination. The primary categories of wastewater generated by the Company and its subsidiariesencompass production wastewater, domestic wastewater, research center cleaning wastewater, and laboratory cleaning wastewater.During the reporting period, the wastewater discharged by the Company's major subsidiaries consistently adhered to regulatorystandards, with all wastewater treatment facilities operating at full capacity.

Materials Management

Pollution Prevention and Control

Wastewater Management

ProjectDescription

Enhancing RecoveryRate of Circular Paper

Barrels

TheCircular Paper Barrel Recovery SOP(G01-SOP-B012) was developed to govern thelifecycle management of circular paper barrels from use, retrieval, placement, processing,restocking, inspection, release and delivery to disposal. By implementing correspondingmeasures and standards, the recovery rate of circular paper barrels was heightened,consequently diminishing the need for new purchases. During the reporting period, atotal of 83,106 barrels were reclaimed, with 81,677 meeting processing criteria, yielding arecovery rate of approximately 98%.

Recycling of Packaging

Barrels

Following the depletion of materials such as glycerol, acetone and n-heptane, the 200Liron barrels that once contained them were not carelessly discarded. Instead, they wererepurposed for storing waste solvents generated by the Production Unit 5.

Recycling and Reuse ofOrganic Solvents

Heightened efforts were made to recycle and reuse organic solvents such as ethanol,acetone, ethyl acetate and isobutyl acetate. Ethanol was reclaimed using a supergravityrotating bed, while acetone, ethyl acetate and isobutyl acetate were recovered throughvacuum concentration. These organic solvents underwent stringent quality inspectionsbefore being reintegrated into production processes.

Management

systems

Wastewater Discharge Management System, etc.

Categories of

wastewater

discharged

Production wastewater, domestic sewage, research center cleaning wastewater, and laboratory cleaningwastewaterInspectionindicators

Chemical oxygen demand (COD), pH level, ammonia nitrogen, suspended solids, total phosphorus, andtotal nitrogenPollutioncontrol facilities

Six wastewater treatment facilities such as the new sewage station wastewater treatment system, PhaseI/Phase II sewage treatment stations, and sewage treatment station wastewater treatment system, all ofwhich were functioning properly

Treatment

procedures

?Department cleaning wastewater, laboratory cleaning wastewater and research center cleaningwastewater, along with aqueous waste containing medicinal compounds, undergo collection throughdepartmental collection systems before being conveyed to the regulating tank at the sewage treatmentplant.?Wastewater containing bacterial cultures from various departments undergoes alkaline deactivationtreatment within the respective departments, and upon approval by the EHS Department, is conveyed tothe regulating tank at the sewage treatment plant.?Highly alkaline or acidic effluents from various departments undergo neutralization treatment beforebeing routed to the regulating tank at the sewage treatment plant.?Established handling procedures are observed for disposal of effluents containing chemical reagentsfrom research center and laboratory; acidic or alkaline wastewater undergoes neutralization before beingdischarged into the sewage pipeline, while hazardous or organic chemical reagents are collected usingdedicated containers and transported to the temporary repository of hazardous waste.?Domestic wastewater from facilities such as canteens and public restrooms undergoes preliminary

treatment, typically via septic tanks, prior to discharge into the sewage pipeline leading to the dilutiontank at the sewage treatment plant.?The wastewater treatment process at the sewage treatment plant strictly adheres to the SewageTreatment Plant Control Room SOP.?Effluents undergoing wastewater treatment according to regulatory standards are then discharged intothe municipal sewage network.

Management

systems

Wastewater Discharge Management System, etc.

Categories of

wastewater

discharged

Production wastewater, domestic sewage, research center cleaning wastewater, and laboratory cleaningwastewaterInspectionindicators

Chemical oxygen demand (COD), pH level, ammonia nitrogen, suspended solids, total phosphorus, andtotal nitrogenPollutioncontrol facilities

Six wastewater treatment facilities such as the new sewage station wastewater treatment system, PhaseI/Phase II sewage treatment stations, and sewage treatment station wastewater treatment system, all ofwhich were functioning properly

Treatment

procedures

?Department cleaning wastewater, laboratory cleaning wastewater and research center cleaningwastewater, along with aqueous waste containing medicinal compounds, undergo collection throughdepartmental collection systems before being conveyed to the regulating tank at the sewage treatmentplant.?Wastewater containing bacterial cultures from various departments undergoes alkaline deactivationtreatment within the respective departments, and upon approval by the EHS Department, is conveyed tothe regulating tank at the sewage treatment plant.?Highly alkaline or acidic effluents from various departments undergo neutralization treatment beforebeing routed to the regulating tank at the sewage treatment plant.?Established handling procedures are observed for disposal of effluents containing chemical reagentsfrom research center and laboratory; acidic or alkaline wastewater undergoes neutralization before beingdischarged into the sewage pipeline, while hazardous or organic chemical reagents are collected usingdedicated containers and transported to the temporary repository of hazardous waste.?Domestic wastewater from facilities such as canteens and public restrooms undergoes preliminary

treatment, typically via septic tanks, prior to discharge into the sewage pipeline leading to the dilutiontank at the sewage treatment plant.?The wastewater treatment process at the sewage treatment plant strictly adheres to the SewageTreatment Plant Control Room SOP.?Effluents undergoing wastewater treatment according to regulatory standards are then discharged intothe municipal sewage network.

IndicatorUnit20222023

Chemical oxygen demand (COD)ton110.10273.40Ammonia nitrogen (NH3-N)ton1.513.47

Total phosphorus (P)ton3.707.60

Total nitrogen (N)ton641.3948.24Total wastewater dischargeston1,246,347.501,989,052.70

Wastewater Discharge Intensity

t/ RMB per million(revenue)

33.0548.96

Note: Data compilation encompasses Zhongmei Huadong, Jiangdong Company, Xi'an Bohua, Jiangsu Joyang and Wuhu Huaren.

4546

2023 Environmental, Social andGovernance(ESG)Report

About This

Report

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Subject to the laws and regulations of theLaw of the People's Republic of China onthe PreventionandControl of Environment Pollution Caused by Solid Wastes, theStandard for Pollution Control on Hazardous Waste Storage(GB 18597-2023) andother pertinent laws and regulations, the Company has established the Solid WasteManagement System to classify, utilize and ensure the compliant disposal of solidwaste, thereby effectively managing and controlling its impact. All waste generatedby the Company is entrusted to accredited third-party entities for compliant disposal.Regular inspections of waste storage in warehouses and the operational status ofrelevant emergency facilities are conducted to ensure that hazardous waste, generalsolid waste and recyclable solid waste are disposed of in full compliance withregulatory requirements.

In strict accordance with theAtmospheric Pollution Prevention and Control Law of the People's Republic of China,theEmission Standard of AirPollutants for Pharmaceutical Industry(DB33/310005-2021) and other laws and regulations, the Company has drafted theWaste Gas EmissionManagement Systemto effectively oversee, manage and dispose of waste gas generated during production and experimental activities.This ensures that emissions are mitigated to safeguard both the environment and human health. During the reporting period, the waste gasdischarged by the Company and its subsidiaries consistently adhered to regulatory standards, with all waste gas treatment facilities operatingat full capacity.

Management of WastesWaste Gas Management

Managementsystems

Waste Gas Emission Management System, etc.Categories of

wastewaterdischarged

Exhaust gas containing H2S produced from the wastewater treatment processes conducted by theEHS Department (encompassing regulating tank, aerobic tank, CASS tank, and air flotation tank); wastegases or dust produced from various production processes across departments; waste gases producedby diverse test platforms; canteen-generated waste oil fumes; automotive exhaust emissions; anduncontrolled emissionsInspectionindicators

VOCs, dust, particulate matter, nitrogen oxide, sulfur dioxide, odor concentration, acetone, ethyl acetate,hydrogen sulfide, ammonia, and canteen oil fumesPollution controlfacilities

69 fully operational waste gas treatment facilities

Treatmentprocedures

?Treatment of waste gases from wastewater treatment: Waste gases are treated through photolytic

catalysis pretreatment, alkaline solution absorption in spray towers, and activated carbon adsorptionprocesses.

?Control of waste gases or dust from production and testing: Various organic solvents and waste

gases containing antibiotics generated during production and testing processes are treated throughphotolytic catalysis pretreatment, alkaline solution absorption in spray towers, and activated carbonadsorption in waste gas treatment facilities. Waste gases generated during testing processes such asfermentation and refining are also treated using waste gas treatment facilities.?Control of oil fume emissions: Oil fume purification equipment is installed to treat emissions, andventilation equipment is installed to ensure air circulation.?Control of automotive exhaust emissions: Annual inspections of motor vehicles within the jurisdictionare conducted to ensure that vehicle exhaust emissions meet national standards.?Control of uncontrolled emissions: Collection of uncontrolled emissions is intensified, and measuresare taken to ensure equipment sealing and timely covering to reduce solvent volatilization. Operatorsare required to wear protective equipment.

IndicatorUnit20222023

Nitrogen oxide (NOX)ton1.461.51

Sulfide (SOX)ton0.190.20Volatile organic compounds (VOC)ton5.599.40Waste Gas Emissions10,000 m3248,225.40271,800.40Waste Gas Emission Intensity

m3/ RMB per million

(revenue)

6.586.69

IndicatorUnit20222023

Nitrogen oxide (NOX)ton1.461.51

Sulfide (SOX)ton0.190.20Volatile organic compounds (VOC)ton5.599.40Waste Gas Emissions10,000 m3248,225.40271,800.40Waste Gas Emission Intensity

m3/ RMB per million

(revenue)

6.586.69

Management systemsSolid Waste Management System, Hazardous Waste Temporary Storage Management System,etc.Categories of

wastewaterdischarged

Hazardous waste (including medical waste), general industrial solid waste, domestic solid waste,recyclable solid waste, and construction waste

Pollution controlfacilities

There are 8 sets of hazardous waste warehouses and general solid waste yards, all of which arestored in a standardized manner and are entrusted to qualified units for legal disposal

Treatmentprocedures

?Hazardous waste: bio-safety disposal by accredited entities?General waste: disposal or recycling by accredited entities

Management systemsSolid Waste Management System, Hazardous Waste Temporary Storage Management System,etc.Categories of

wastewaterdischarged

Hazardous waste (including medical waste), general industrial solid waste, domestic solid waste,recyclable solid waste, and construction waste

Pollution controlfacilities

There are 8 sets of hazardous waste warehouses and general solid waste yards, all of which arestored in a standardized manner and are entrusted to qualified units for legal disposal

Treatmentprocedures

?Hazardous waste: bio-safety disposal by accredited entities?General waste: disposal or recycling by accredited entities

IndicatorUnit20222023Quantity of general waste generatedton13,447.8821,188.53General Waste Production Intensity

t/ RMBper million(revenue)

0.360.52Quantity of General Waste Recycledton3,397.223,218.56Quantity of Hazardous Waste Generatedton2,923.684,104.53

Hazardous waste production intensity

t/ RMBper million(revenue)

0.080.10

Note: Data compilation encompasses Zhongmei Huadong, Jiangdong Company, Xi'an Bohua, Jiangsu Joyang and Wuhu Huaren.Note: Data compilation encompasses Zhongmei Huadong, Jiangdong Company, Xi'an Bohua, Jiangsu Joyang and Wuhu Huaren.

Innovation-Driven, Forgingan Exemplary Brand

1.R&D and Innovation

2.Product Quality and Safety

3.Protection of Customers' Rights and Interests

4.Responsible Supply Chain

5.Information Security and Privacy Protection

6.Promoting Healthcare Access

Our Philosophy

Embracing the corporate philosophy of "Scientific Research-based and Patient-centered", weare committed to steering the Company towards a new era of high-quality development. Withcore values centered on "benefit mankind, integrity, persistence and pragmatism", we pursueexcellence and precision in every detail while rigorously controlling quality management. Guided bytechnological innovation, we foster synergy across all facets, creating a new paradigm of integrationand mutual reinforcement between technological innovation and business. This injects robustmomentum into the Company's sustainable and robust development.

4748

I. Efficient GovernanceBolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering a

Better Society

Looking Ahead

2023 Environmental, Social andGovernance(ESG)Report

About This

Report

Message fromthe Chairman

About UsESGmanagement

SDGs

Our Actions

4950

2023 Environmental, Social andGovernance(ESG)Report

About This

Report

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

R&D and Innovation

Innovation and R&D SystemThe Company places significant emphasis on innovation, research and development,consistently maintaining a high level of investment in this area. Guided by the principleof "Scientific Research-based and Patient-centered", we leverage the triad of "clinicalrelevance, pharmacoeconomic viability and commercial potential" as its cornerstone.Through years of development, we have cultivated a comprehensive, self-sufficientinnovation structure spanning from drug discovery and pharmaceutical research topreclinical and clinical studies, culminating in industrialization. This endeavor has ledto the establishment of a global hub for new drug development.Our innovation and R&D initiatives are concentrated within three pivotal therapeuticdomains: oncology, endocrinology and autoimmunity. Through a blend of independentdevelopment, collaboration and License-in, we perpetually advance and diversifyour product pipeline, thereby ensuring a steady progression of innovative productsfrom clinical development to market entry and fueling the Company's medium- andlong-term development. Simultaneously, strategic collaborations with domestic andinternational pharmaceutical pioneers, facilitated through product partnerships andequity investments, have enabled the infusion, assimilation and innovation of cutting-edge practices, fostering the creation of a global R&D ecosystem under the auspicesof Huadong Medicine. After years of dedicated research, we have pioneered global

weª¢investedª¢RMBª¢

2,293

millionª¢inª¢researchª¢andª¢development.Note: excluding equityinvestment

HUADONGMEDICINE

The company has built a comprehensive and

differentiated GLP-1 target product pipeline

Liraglutide

Semaglutide¡¤Indications for glucose reductionand weight loss have been approvedfor marketing¡¤Trademark:Àû³ƽ?¡¤phase III, completed all subjects enrollment

HDM1002 (for oral administration)¡¤oral chemical molecule GLP-1 receptor agonist developed by Huadong¡¤phase II in ChinaHDM1005¡¤ª¡ GLP-1R / GIPR is a dual-target long-acting polypeptide agonist developed by Huadong¡¤ phase I in China

DR10624¡¤FGF21R / GCGR / GLP-1R multiple target long-acting agonists¡¤Completed Phase I SAD in China and NewZealand, currently in Phase Ib/IIa clinical trials in New Zealand

TripleTarget

DualTarget

SingleTarget

HUADONGMEDICINE

HuaDongMedicineADC GlobalR&D ecosphere

Huadong Medicine Innovative Medicine

Global Development Center

Heidelberg Pharma

Norion biology

Chongqing PEG-BIO Biopharm

Qyuns Therapeutics

Huida biological

DOER Biologicsª¡xª¡Lª¡Oª¡Nª¡Gª¡yª¡lª¡aª¡tª¡iª¡oª¡nª¦uª¡Mª¡uª¡lª¡tª¡iª¡pª¡lª¡eª¡Bª¡oª¡dª¡yª¦uª¡Aª¡cª¡cª¡uª¡Bª¡oª¡dª¡yª¡,ª¡ª¡Hª¡Tª¡Sª¡-ª¡Vª¡Hª¡Hª¡Bª¡oª¡dª¡yª¡ ª¡fª¡oª¡uª¡rª¡ ª¡tª¡eª¡cª¡hª¡nª¡oª¡lª¡oª¡gª¡yª¡ ª¡pª¡lª¡aª¡tª¡fª¡oª¡rª¡mª¡s

ª¡Aª¡Dª¡Cª¡ ª¡dª¡rª¡uª¡gª¡ ª¡pª¡rª¡oª¡jª¡eª¡cª¡tª¡ ª¡ ª¡(ª¡iª¡nª¡dª¡eª¡pª¡eª¡nª¡dª¡eª¡nª¡tª¡ ª¡rª¡eª¡sª¡eª¡aª¡rª¡cª¡hª¡ ª¡aª¡nª¡dª¡ª¡dª¡eª¡vª¡eª¡lª¡oª¡pª¡mª¡eª¡nª¡tª¡,ª¡ ª¡Bª¡Dª¡ ª¡iª¡nª¡tª¡rª¡oª¡dª¡uª¡cª¡tª¡iª¡oª¡nª¡,ª¡ ª¡eª¡tª¡cª¡.ª¡)ª¡ ª¡iª¡nª¡tª¡eª¡gª¡rª¡aª¡tª¡eª¡sª¡ª¡tª¡hª¡eª¡ ª¡tª¡eª¡cª¡hª¡nª¡oª¡lª¡oª¡gª¡yª¡ ª¡aª¡nª¡dª¡ ª¡aª¡dª¡vª¡aª¡nª¡tª¡aª¡gª¡eª¡sª¡ ª¡oª¡fª¡ ª¡eª¡cª¡oª¡sª¡yª¡sª¡tª¡eª¡mª¡ª¡eª¡nª¡tª¡eª¡rª¡pª¡rª¡iª¡sª¡eª¡s

ª¡Tª¡hª¡eª¡ ª¡Aª¡Tª¡Aª¡Cª¡ ª¡pª¡rª¡oª¡pª¡rª¡iª¡eª¡tª¡aª¡rª¡yª¡ ª¡tª¡eª¡cª¡hª¡nª¡oª¡lª¡oª¡gª¡yª¡ ª¡pª¡lª¡aª¡tª¡fª¡oª¡rª¡mª¡Tª¡hª¡eª¡ ª¡wª¡oª¡rª¡lª¡dª¡'ª¡sª¡ ¬Ë_ª¡rª¡sª¡tª¡ ª¡cª¡oª¡mª¡pª¡aª¡nª¡yª¡ ª¡sª¡uª¡cª¡cª¡eª¡sª¡sª¡fª¡uª¡lª¡lª¡yª¡ ª¡dª¡eª¡vª¡eª¡lª¡-ª¡oª¡pª¡eª¡dª¡ ª¡Aª¡mª¡aª¡nª¡iª¡tª¡iª¡nª¡,ª¡ ª¡tª¡oª¡xª¡iª¡nª¡sª¡ ª¡fª¡oª¡rª¡ ª¡cª¡aª¡nª¡cª¡eª¡rª¡ ª¡tª¡rª¡eª¡aª¡tª¡mª¡eª¡nª¡tª¡tª¡oª¡xª¡iª¡nª¡ ª¡lª¡iª¡bª¡rª¡aª¡rª¡yª¡ ª¡cª¡oª¡nª¡sª¡tª¡rª¡uª¡cª¡tª¡iª¡oª¡nª¡ ª¡fª¡oª¡rª¡ ª¡Aª¡Dª¡C

ª¡Tª¡hª¡eª¡ ª¡Pª¡Eª¡Gª¡-ª¡mª¡oª¡dª¡i¬Ë_ª¡eª¡dª¡ ª¡pª¡lª¡aª¡tª¡fª¡oª¡rª¡mª¡ ª¡E¬Ëaª¡cª¡iª¡eª¡nª¡tª¡ª¡pª¡oª¡lª¡yª¡pª¡eª¡pª¡tª¡iª¡dª¡eª¡ ª¡tª¡aª¡nª¡dª¡eª¡mª¡ ª¡eª¡xª¡pª¡rª¡eª¡sª¡sª¡iª¡oª¡nª¡ ª¡pª¡lª¡aª¡tª¡fª¡oª¡rª¡m

ª¡Lª¡iª¡nª¡kª¡eª¡rª¡,ª¡ ª¡Tª¡hª¡eª¡ ª¡cª¡oª¡uª¡pª¡lª¡iª¡nª¡gª¡ ª¡tª¡eª¡cª¡hª¡nª¡iª¡qª¡uª¡eª¡Pª¡oª¡lª¡yª¡mª¡eª¡rª¡ ª¡cª¡oª¡uª¡pª¡lª¡iª¡nª¡gª¡ ª¡tª¡eª¡cª¡hª¡nª¡oª¡lª¡oª¡gª¡yª¡ ª¡pª¡lª¡aª¡tª¡fª¡oª¡rª¡m

ª¡Tª¡eª¡cª¡hª¡nª¡iª¡cª¡aª¡lª¡ ª¡cª¡aª¡pª¡aª¡bª¡iª¡lª¡iª¡tª¡yª¡ ª¡oª¡fª¡ ª¡iª¡nª¡dª¡eª¡pª¡eª¡nª¡dª¡eª¡nª¡tª¡ ª¡dª¡eª¡vª¡eª¡lª¡oª¡pª¡mª¡eª¡nª¡tª¡ª¡oª¡fª¡ ª¡iª¡nª¡nª¡oª¡vª¡aª¡tª¡iª¡vª¡eª¡ ª¡mª¡Aª¡b¬Ë?ª¡pª¡rª¡oª¡cª¡eª¡sª¡sª¡ ª¡dª¡eª¡vª¡eª¡lª¡oª¡pª¡mª¡eª¡nª¡tª¡,ª¡ ª¡pª¡iª¡lª¡oª¡tª¡ ª¡sª¡cª¡aª¡lª¡eª¡ª¡aª¡nª¡dª¡ ª¡bª¡iª¡oª¡lª¡oª¡gª¡iª¡cª¡aª¡lª¡ ª¡dª¡rª¡uª¡gª¡ ª¡sª¡cª¡rª¡eª¡eª¡nª¡iª¡nª¡gª¡ ª¡pª¡lª¡aª¡tª¡fª¡oª¡rª¡mª¡ ª¡Gª¡Mª¡Pª¡ ª¡cª¡oª¡mª¡pª¡lª¡iª¡aª¡nª¡tª¡ ª¡aª¡nª¡tª¡iª¡bª¡oª¡dª¡yª¡ ª¡pª¡rª¡oª¡dª¡uª¡cª¡tª¡iª¡oª¡nª¡ ª¡pª¡lª¡aª¡tª¡fª¡oª¡rª¡mª¡ ª¡pª¡lª¡aª¡tª¡fª¡oª¡rª¡m

HUADONGMEDICINE

The autoimmune field has achieved full coverage of oral small molecule drugs,

biological agents and topical preparations

ª¡Hª¡Dª¡M¬Û¡¤¬Û¨C¬Û¨C¬Û?¬Ë?ª¡Pª¡Rª¡Vª¡-¬Û¡¤¬Û?¬Û?¬Û¡±¬Ë?systemic lupuserythematosusª¡*ª¡Eª¡nª¡bª¡rª¡eª¡lª¡?

rheumatoid arthritisankylosing spondylitis

ª¡Aª¡Rª¡Cª¡Aª¡Lª¡Yª¡Sª¡TCold pyoline-associated

periodic syndromeRecurrent pericarditis

Tacrolimus ointmentatopic dermatitisHDM3701atopic dermatitisZORYVE?Cream£¨0.15%£©

Atopic dermatitis for patientof 6 years and olderZORYVE?Cream£¨0.05%£©atopic dermatitis forpatients of 2-5 years old

ZORYVE? Foam£¨0.3%£©

seborrheic dermatitis

Fusidicacid cream

skin infection

HDM3010

Pigmented skin

disease

HDM3704

cutaneousvascular diseaseCMCY2204hair follicle diseaseHDM7705pigmented skin

disease

ª¡Fª¡uª¡lª¡lª¡ª¡pª¡rª¡oª¡dª¡uª¡cª¡tª¡

ª¡lª¡iª¡nª¡eª¡ª¡lª¡aª¡yª¡oª¡uª¡t

ª¡iª¡nª¡ ª¡tª¡hª¡e

ª¡aª¡uª¡tª¡oª¡-ª¡iª¡mª¡mª¡uª¡nª¡eª¡

¬Ë_ª¡eª¡lª¡d

ª¡Hª¡uª¡aª¡Dª¡oª¡nª¡g

ª¡cª¡hª¡aª¡rª¡aª¡cª¡-ª¡eª¡rª¡iª¡sª¡tª¡iª¡cª¡ ª¡tª¡oª¡pª¡iª¡cª¡aª¡lª¡ ª¡pª¡rª¡oª¡dª¡uª¡cª¡tª¡ ª¡mª¡aª¡tª¡rª¡iª¡x

ª¡Hª¡Dª¡M¬Û¡¤¬Û¨C¬Û¨C¬Û?¬Ë?ª¡Qª¡X¬Û¨C¬Û¨C¬Û?ª¡S¬Ë?plaque psoriasisª¡*ª¡Xª¡eª¡lª¡jª¡aª¡nª¡zª¡?rheumatoid arthritisankylosing spondylitispsoriatic arthritisª¡Cª¡yª¡cª¡lª¡oª¡sª¡pª¡oª¡rª¡iª¡nª¡eª¡ ª¡ ª¡ ª¡ ª¡sª¡oª¡fª¡tª¡ ª¡cª¡aª¡pª¡sª¡uª¡lª¡epsoriasisrheumatoid arthritisatopic dermatitis

ª¡Zª¡Oª¡Rª¡Yª¡Vª¡Eª¡?ª¡ª¡Cª¡rª¡eª¡aª¡mª¡(¬Û¨Cª¡.¬Û¡¤ª¡%ª¡)ª¡plaque psoriasisª¡Wª¡yª¡nª¡zª¡oª¡rª¡aª¡?ª¡ ª¡cª¡rª¡eª¡aª¡mplaque psoriasisª¡Zª¡Oª¡Rª¡Yª¡Vª¡Eª¡?ª¡ ª¡Fª¡oª¡aª¡mª¡ ª¡(¬Û¨Cª¡.¬Û¡¤ª¡%ª¡)ª¡scalp and body psoriasisGold combination ofpsoriasis therapy

* commercial rights

In the realm of endocrinology, we've forged a diversification competitive edgecentered around the GLP-1 targetWithin oncology, we're cultivating a unique global R&D ecosystem for ADCs

Within oncology, we're cultivating a unique global R&D ecosystem for ADCsOur comprehensive competitive advantage in the autoimmunity sphere spansmultiple disease types

During the reporting period

first-in-class medications in all three core therapeutic spheres ¨C oncology, endocrinology and autoimmunity ¨C whilst establishingdistinctive R&D matrices centered around ADC, GLP-1 and topical formulations, thus cementing the Company's competitive edge.

5152

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Report

Message fromthe Chairman

About UsESGmanagement

I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians of

Ecological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Doctoraldegree

30 to 40 years old(including 30 butnot 40)

40 years oldor above

Under 30(exclusive) years old

Age Compositionof R&DPersonnel

17. 33%

52.45%

17. 33%

30.22%

41.25%

Bachelor's degree

29.66%

Master'sdegree

30.22%

23.69%

Belowbachelor'sdegree

23.69%

EducationComposition ofR&D Personnel

5.40%

Huadong Medicine, guided by the goal of fostering innovative vigor, has devised incentivessuch as theSpot Reward Packages and the Measures for Administration of R&DandInnovation Incentives,taking into account the Company's actualities. These frameworks outlinereward standards, allocation principles and implementation procedures to spur and harnessthe zeal and creative impetus of the R&D team.To further broaden and refine the Company's strategic footprint in drug innovation anddevelopment, the Company established the Scientific Advisory Board (SAB) during thereporting period. Comprising inaugural members drawn from the pharmaceutical andresearch spheres, domestically and internationally, these distinguished experts and scholarsboast global renown and extensive academic achievements. The Scientific Advisory Boardis established to unite eminent experts, scholars and research entities worldwide, furnishingthe Company with comprehensive, impartial and expert strategic guidance and counselthroughout the new drug development process. Together with the Company, they addresspivotal challenges encountered in the innovation process and relentlessly strive to meet theevolving needs of patients.

The Company's investment in the Innovative Drug Experimental Park spans approximately 3,000 square meters, housing various technicalplatforms such as non-clinical research, new molecule synthesis, early-stage formulation experiments, ADC research, and animal testingfacilities. With over 200 R&D devices, this Park enables the design, synthesis, optimization and screening of targeted small molecules andprotein degradation entities. It supports innovative drug DMPK research, target activity studies, in vitro cell-based efficacy evaluations,molecular mechanism investigations, and in vivo animal efficacy studies. Additionally, it offers capabilities in antibody and ADCmolecule design, in vitro functional screening, as well as physicochemical characterization and clinical formulation development ofPCC molecules, providing comprehensive support for drug development efforts.

Partial Display of Company

Certificates

? R&D Incentives

? Innovative R&D Team

? Innovative R&D Organization

The Company places a paramount importance on talent cultivation within its R&D team and continually intensifiesefforts to attract high-caliber individuals.

Achievements in Technological Innovation Platform Development

Newª¢Targetª¢Screeningª¢andª¢Validationª¢Platform

Intelligentª¢Newª¢Drugª¢Designª¢andª¢Synthesisª¢

Platform

Intelligentª¢Drugª¢Screeningª¢Designª¢Platform

PROTACª¢Drugª¢Developmentª¢Platform

ADCª¢Developmentª¢Platform

Wuhu HuarenHuida Biotech

Nanjing Nongda AnimalPharmaceutical

Zhongmei HuadongMeihua Hi-Tech

Jiuzhou PharmaceuticalJiangsu Joyang

Doer Biologics

Jiangdong Company

Xi'an Bohua

The Company's several subsidiaries, including Zhongmei Huadong,Jiangdong Company, Meihua Hi-Tech, Huida Biotech, Wuhu Huaren,Nanjing Nongda Animal Pharmaceutical , Doer Biologics, Xi'an Bohua,Jiangsu Joyang , Jiuzhou Pharmaceutical, and Magic Health, have been

certified as high-tech enterprises.

theª¢Companyª¢successfullyª¢convenedª¢

ª¢SABª¢sessions.

As of the end of thereporting period

theª¢Companyª¢employedª¢aª¢totalª¢ofª¢1,777ª¢R&Dª¢personnelrepresentingª¢

12.81%

ofª¢theª¢workforce

Note: This percentage is relativeto the total number of personnelin subsidiaries primarily engagedin pharmaceutical and industrialmicrobiology research andproduction.

During the reporting period

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I. Efficient GovernanceBolstering SteadyDevelopment

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Ecological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

In recent years, Huadong Medicine has been actively promoting innovationtransformation, fostering research and development ecosystems, and cultivatingindustry clusters. We've accumulated substantial resources in research, clinical trials,industry and market, showcasing robust capabilities in translating achievementsinto tangible outcomes. The Huadong Medicine Life Sciences Industrial Parkembodies a holistic approach, combining "research and development incubation,accelerated transformation, and industrialization implementation". It serves as aninclusive platform for innovation and entrepreneurship, specifically centered on lifeand health research and industrial conversion. Acting as a spatial hub, the industrialpark provides comprehensive support services for resident enterprises, including

The Huadong Medicine Biotechnology Innovation and IntelligentManufacturing Center was established through the collaborative effortsof Huadong Medicine and the Gongshu District People's Governmentfor high-end biopharmaceutical industrialization and commercialization.It is dedicated to the preparation of Phase III clinical samples andsubsequent production of sophisticated biologics such as antibodies,ADCs, peptides and therapeutic enzymes, alongside comprehensivesupport in research, development and quality assurance frameworks.

The Huadong Medicine Institute of Synthetic Biological Technologies was established in July 2022 through a collaborative effortbetween Zhejiang University of Technology, the Gongshu District People's Government of Hangzhou City and Huadong Medicine.With a primary focus on four key domains¡ªnutritional medicine, health-enhancing sugar alternatives, medical aesthetics biologyand bio-materials¡ªit aspires to create a national innovation hub in life and health sciences. Aligned with Zhejiang Province'sstrategic vision to forge a world-class innovation hub in life and health sciences, the institute harnesses cutting-edge tools suchas synthetic biology, artificial intelligence, big data analytics and intelligent automation. Through a concerted effort in pioneeringresearch and translating breakthroughs into tangible industrial applications, particularly in the realm of smart biomanufacturing,it aims to seamlessly integrate academic prowess, research excellence and talent cultivation with the economic demands of theGongshu District. Leveraging the robust technological and industrialization platforms provided by Zhejiang University of Technologyand Huadong Medicine, it seeks to catalyze a synergistic fusion of academic ingenuity and regional economic developmentimperatives.Natural product synthesis£º

Our research endeavors encompassthe amalgamation of traditionalbreeding techniques with syntheticbiological techniques to systematicallyreengineer the metabolic pathwaysof organisms such as Escherichiacoli, Bacillus subtilis, Corynebacteriumglutamicum, yeast, Streptomyces orfilamentous fungi. The objective is toelevate the industrial fermentationproficiency of natural products.

AI-assisted protein engineering£º

Our research involves the discovery andscreening of industrial enzymes characterizedby heightened activity and stability. Bydissecting the structural-functional intricaciesand mechanistic underpinnings of enzymes,complemented by computational modeling,analysis and strategic design interventions, weendeavor to enhance the industrial attributesof functional enzyme formulations. Thisfacilitates the environmentally sustainablebiofabrication of high-value compounds.

Offering R&D and clinicalresearch servicesencompassing pre-clinical research and PhaseI to Phase IV clinical trialtechnical services, clinicaltrial data managementand statistical analysis,registration application, andpost-marketing drug safetymonitoring, among othersSecurity monitoring, etc.

Furnished with worldleading R&D equipment,including GMP productiontransfer, large-scaleproduction management,production cost optimization,and services ensuringcapacity, quality andmanagement guarantee.

Supported by a professionaland robust marketing teamand resources, providingcustomers with productpromotion and salesservices. Tailoring efficientmarketing strategies anddeploying professionalacademic promotion teams.

Equipped with an efficientand professional R&Dand production team,offering services includingdesign development andtransformation, qualitymanagement system,sample/clinical samplecommissioned production,process optimization,special validation, and post-marketing maintenance ofcompliance managementsystem.

? Huadong Medicine Life Sciences Industrial Park?Huadong Medicine Biotechnology Innovation and Manufacturing Center

?Huadong Medicine Institute of Synthetic Biological Technologies

ªÈª÷ªðªåªöªëªñªðªãªî ªÑªôªëªçªðªöªãªöªëªñªðªÔªçªõªçªãªôªåªê ªÆªëªôªçªåªöªëªñªðªõ ªãªðªæ ªÃªòªòªîªëªåªãªöªëªñªðªõ

ªÔªçªõªçªãªôªåªê ªÆªëªôªçªåªöªëªñªðªõ ªãªðªæ ªÃªòªòªîªëªåªãªöªëªñªðªõªËªðªæª÷ªõªöªôªëªãªî ªÒªãªôªí ªÕªçªôªøªëªåªç ªÕªûªõªöªçªï

ªËªðªæª÷ªõªöªôªëªãªî ªÒªãªôªí ªÕªçªôªøªëªåªç ªÕªûªõªöªçªïªÕªçªöªöªîªçªæ ªÇªðªöªçªôªòªôªëªõªçªõ

ªÕªçªöªöªîªçªæ ªÇªðªöªçªôªòªôªëªõªçªõªÅªñªôªç ªÈªëªçªîªæªõ ªèªñªô ªËªðªøªçªõªöªïªçªðªö ªÃªöªöªôªãªåªöªëªñªð

ªÅªñªôªç ªÈªëªçªîªæªõ ªèªñªô ªËªðªøªçªõªöªïªçªðªö ªÃªöªöªôªãªåªöªëªñªðªÈªñªåª÷ªõ ªÃªôªçªãªõ

Innovative drugdevelopment

Syntheticbiology

Medicaldevices

Aestheticmedicalproducts

AntibodyTherapeutics

TherapeuticEnzymeFormulationsAntibody-DrugConjugates(ADCs)

Peptide-BasedMedications

CROCMOCSOCDMO

º¼ÖÝÔ£ÔªÉúÎï

Addressing the pressing needs for industrializationwithin the biopharmaceutical sector, both forHuadong Medicine and its wider ecosystem ofenterprises.

Seamlessly accommodating the industrializationdemands of emerging enterprises nurtured withinthe Huadong Medicine Life Sciences IndustrialPark.

Fields ofResearchNutritionalmedicines

Health-enhancing

sugaralternatives

Medical

aestheticsbiologyBio-materials

office facilities, research funding, technological innovation platforms, and financial assistance. Leveraging the Huadong MedicineR&D ecosystem and its integrated industry chain platform, this industrial park fosters a dynamic environment, attracting top-tiertalent and driving innovation in research and development.

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I. Efficient GovernanceBolstering SteadyDevelopment

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III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Contributing to the Industry Development?Innovative Drug Research and Development Forum

?Engagement in Industry Discourse

In 2023, the Huadong Medicine Innovative Drug Research and Development Forum, hosted by Huadong Medicine, tookplace in Hangzhou. Under the theme "Advancing Research for Innovation Empowerment", the forum gathered leadingdomestic and international experts, scholars and industry collaborators to delve deeply into the evolving landscapeof next-generation drug development and innovative technologies. Together, they aimed to propel the transformativejourney of Huadong Medicine towards high-caliber development.This forum served as a pivotal platform for scholarly exchange and dialogue between academia and Huadong Medicine,providing attendees with invaluable insights into industry dynamics and cutting-edge academic research. It offered anarena where participants could explore opportunities and confront the associated challenges in the realm of new drugresearch and development. Upholding the corporate philosophy of "Scientific Research-based and Patient-centered",the Company pledges to contribute to the global pharmaceutical innovation landscape through a spirit of collaboration,openness and mutual benefit.

The 2023 World Conference on LungCancer (WCLC), held from September 9 to12 in Singapore, stood as a premier annualevent in the field of lung cancer research.It witnessed the unveiling of numeroussignificant research findings. Among them,Huadong Medicine's KRASG12D-PROTACresearch program found its way to theconference.

Similarly, the 59th Annual Meeting of theEuropean Association for the Study ofDiabetes (EASD) was held in Hamburg ofGermany during the period from October2 to 6, 2023, gathering experts from acrossthe globe in the realm of obesity anddiabetes research. Huadong Medicine'sorally administrated micromolecule GLP-1 receptor stimulant HDM1002 researchprogram was honored with an invitation topresent at this gathering.

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I. Efficient Governance

Bolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

?Ethics in Clinical Trials

? Animal Welfare

Throughout the Company's drug clinical development process, rigorous adherence to various regulatory requirements and industrystandards is maintained, encompassing theHelsinki Declaration,Good Clinical Practice(GCP),Drug Registration Verification Criteriaand Principles,

Good Pharmacovigilance Practices and Guidelines for Ethical Review of Drug Clinical Trials,along with ICH GCPand internally established SOPs. This ensures that the drug development process meets both scientific and ethical standards.We've established standardized procedures to oversee and manage clinical research, with the Scientific Advisory Board conductingthorough ethical and scientific evaluations of projects before initiation. After approval, routine reviews of research progress, qualityand any issues encountered during implementation are conducted, guiding decisions on project continuation, modification ortermination based on clinical research outcomes.Meanwhile, we endeavor to ensure that each participant comprehensively grasps the attributes of the investigational drug andthe procedural intricacies of the trial, thereby guaranteeing voluntary participation in the clinical trial process. We've devised asuite of systematic SOPs to regulate the conduct of clinical trials and uphold regulatory and ethical standards. These includetheInitiation and Ethical Submission Processes for Research Centers and Institutions,theComposition, Approval and Revision ofInformed Consent Form, theFormulation and Adjustment of Clinical Trial Protocols,and theManagement of Protocol Deviations.Such measures aim to align clinical trial operations with regulatory and ethical standards, thereby safeguarding the interests of trialparticipants. Recognizing that certain clinical researches are entrusted to Contract Research Organizations (CROs), the Companyhas instituted a robust Supplier Management System. This entails meticulous oversight and management of CROs through routineprogress reviews, on-site inspections and independent audits, thereby ensuring the meticulous execution of researches to thehighest quality standards.

The Company actively advances collaborative R&D initiatives to bolster R&D efficacy and broaden technological horizons. Duringthe reporting period, major collaborative R&D endeavors undertaken by the Company are summarized below:

In compliance with the Regulations on theManagement of Experimental Animals, Guidelines for Humane Treatment of ExperimentalAnimalsand pertinent local regulations, the Company has developed theGuiding Principles for Ethical Review of ExperimentalAnimal Welfareand theCharter of the Ethics Committee for Experimental Animal Welfare. These documents serve to scrutinize andoversee management protocols, SOPs, animal care and utilization as well as equipment and facility operations at the ExperimentalAnimal Center. This ensures adherence to relevant regulations while effectively upholding the welfare of experimental animals andsafeguarding the safety of the environment, personnel and animals.To this end, the Company has established both an Experimental Animal Management Committee and an Ethics Committee forExperimental Animal Welfare. The former is tasked with the comprehensive oversight and guidance of experimental animals andrelated experiments, while the latter assumes responsibility for the pertinent review and supervision.

Safety assessmentand assurancePeriodic review

Insurance coverage issecured for all subjects, anda safety managementplan is implemented. Thisincludes timely monitoringof any adverse eventsoccurring during thecourse of the research,prompt documentation,and timely reporting.Medical interventions areundertaken as necessarybased on subject needs.

Informed Consentfrom subjectsIt is imperative to ensurethat all subjects areadequately informed andhave signed InformedConsent Form, with strictadherence to protocolssafeguarding subjectprivacy.

Research evaluationAll research projectsundergo comprehensiveevaluation and assessmentby the Scientific AdvisoryBoard to ensure bothscientific rigor and ethicalintegrity. Prior to conductinghuman clinical trials, all newdrug candidates undergopreliminary studies, withprogression to clinical trialscontingent upon establishingtheir safety and controllabilitythrough data analysis.

All research involving animals conducted at the ExperimentalAnimal Center requires approval and endorsement from theEthics Committee for Experimental Animal Welfare beforecommencement. This includes submission of researchbackground, experimental conditions, and protocols forreview and authorization. Embracing scientific principles,the committee advocates for the "3R" approach (Reduction,Replacement, Refinement) and conducts ethical reviews andoversight of animal welfare, guided by principles of animalprotection, welfare, ethics and comprehensive assessment.

In addressing the humane endpoint in animalexperiment, the Ethics Committee for ExperimentalAnimal Welfare abides by the principles of balance,harm minimization and ongoing optimization as outlinedin theGuidelines for Humane Endpoint Review inAnimal Experimentsunder the certification standardsof the People's Republic of China. Experimenters areexpected to anticipate, to the best of their ability, thepotential pain or distress animals may endure prior toexperimentation, striving to minimize the utilization ofhumane endpoints involving animal death, imminentdeath or severe pain and distress.Animal ExperimentProcedure Management

HumanitarianManagement

Individuals engaged in experimental animal work mustdemonstrate proficiency in relevant laws, regulations andinstitutional policies, coupled with a thorough understanding ofprofessional theory and skills. The Experimental Animal Centerimplements a stringent qualification system, and the EthicsCommittee for Experimental Animal Welfare organizes diversetraining sessions from time to time to ensure personnel obtainrequisite certification. Moreover, personnel are required to treatand care for experimental animals with diligence and compassion,employing scientific, reasonable and humane practices in usingexperimental animals, while refraining from any form of animalmaltreatment and acts of cruelty.

Management of AnimalExperimenters

The Ethics Committee for Experimental Animal Welfareadheres to the stringent requirements mandated bynational standards, conducting thorough reviews andoversight of various aspects including animal facilityenvironments, equipment, husbandry and managementpractices, as well as packaging and transportationprocedures. This diligent oversight aims to ensure thatexperimental animals are afforded a safe, comfortableand humane living environment.

Laboratory Day-to-DayManagement

?Cooperative R&D Initiatives

Ethics in Drug Development

Ongoing monitoring andreview processes tracktrial protocol adherence,informed consentdocumentation, subjectrecruitment, and protocoldeviations.

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I. Efficient Governance

Bolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Protection of Intellectual Property Rights

? Measures to Protect Intellectual Property Rights

Furthermore, the Company's subsidiaries, notably Zhongmei Huadong,successfully underwent recertification for its intellectual propertymanagement system, while Doer Biologics attained certification for itsintellectual property management framework.

The Company has implemented various strategies to fortify intellectual propertyprotection, elevate the standard of protection and safeguard the lawful rights andinterests stemming from the Company's innovative endeavors. The Global R&DCenter for Innovative Drugs holds a steadfast commitment to intellectual propertyprotection, meticulously managing intellectual property throughout the entirelifecycle of pharmaceutical products and formulating patent strategies accordingly.We've established a dedicated Intellectual Property BP position entrusted with thecritical tasks of analyzing patent landscapes, navigating application processes, andmaintaining patents both domestically and internationally. This concerted effort servesto holistically bolster product competitiveness while ensuring the robust safeguardingof innovative accomplishments.

The Company is committed to forging long-term partnerships with the StateIntellectual Property Office and provincial-level and municipal-level intellectualproperty management agencies. This collaborative effort focuses on conductingstrategic patent navigation tailored to key sectors and flagship products.Through analysis of prevailing market dynamics, the Company identifies criticalpatents, evaluates competitive landscapes, and assesses infringement riskswithin targeted domains.PatentNavigationDecision-making

The Company is committed to recruiting top-tier talent in intellectual propertymanagement, strategically aligning their knowledge backgrounds and professionalexperiences to bolster the Company's development strategy and broaden the scopeof intellectual property initiatives. Moreover, through diverse avenues such as patentsymposiums, online and offline expert seminars, training programs, competitions andother modalities, the Company consistently enhances internal intellectual propertyadvocacy and education, elevating the intellectual property consciousness and proficiencyacross its entire workforce.

FosteringIntellectual

PropertyAwareness

The Company mandates that all innovative projects meticulously executerobust patent strategies aligned with their research and development progress,while simultaneously vigilantly tracking patent applications from competitorsfor preemptive measures. The generics division is tasked with conductingreal-time evaluations of both original and rival patent portfolios, enablingswift identification of potential risks and implementation of corresponding riskmitigation strategies.

InfringementSurveillance

andRiskMitigation

Asª¢ofª¢theª¢endª¢ofª¢theª¢reportingª¢periodtheª¢Companyª¢hadª¢amassedª¢aª¢totalª¢ofª¢

ª¢patentedª¢authorizations,comprisingª¢

grantedª¢inventionª¢patents,

Moreover,ª¢thereª¢wereª¢

ª¢accruedª¢softwareª¢copyrights,

ª¢trademarksª¢andª¢

ª¢publishedª¢papers.ª¢Theª¢Companyª¢garneredª¢awardsª¢totalingª¢RMBª¢200,000forª¢itsª¢e?ortsª¢inª¢intellectualª¢propertyª¢protection.

ª¢utilityª¢modelª¢patents,ª¢andª¢

ª¢designª¢patents.

Note: Data compilationencompasses the primarysubsidiaries operating withinthe pharmaceutical industry,industrial microbiology andaesthetic medicine segmentswithin the scope of theCompany's consolidatedfinancial statements.

Huadong Medicine places a high priority on safeguarding intellectual property rights.Aligning with the Company's operational context, it has developed frameworks such asthePatent Management Specifications,

Patent Application IncentivesandIntellectualProperty Management Manual.These frameworks clearly define the requirementsfor intellectual property management and the respective responsibilities of eachdepartment. Consequently, a robust and scientifically sound intellectual propertyprotection system has been established, providing a solid institutional footing forintellectual property management endeavors.During the reporting period, the Company garnered awards amounting to RMB200,000 for its efforts in intellectual property protection.

Furthermore, in alignment with specific business imperatives and strategic exigencies, we've allocated resources to deploy externalprofessional databases and internal proprietary databases, thereby meeting the multifaceted management requisites of researchand development initiatives and intellectual property governance at every juncture. Moreover, we are poised to create a robustintellectual property management platform, fostering the standardization of various patent management workflows and facilitatingthe comprehensive lifecycle management of intellectual property assets.

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I. Efficient Governance

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Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering a

Better Society

Looking Ahead

Product Quality and Safety

Quality Risk Management

Product Recall

The Company implements a quality policy grounded in principles of integrity,efficiency, quality, global alignment and innovation excellence. It rigorously adheresto both domestic and international quality management regulations, including China'sGMP, FDA cGMP, EU GMP, and ICH standards. Through the implementation ofrobust process control measures, a comprehensive quality management framework isestablished to effectively oversee a myriad of interconnected quality activities.At the organizational level, the Company has structured its quality managementaround the Quality Management Center. A Vice President (Quality) assumes the roleof quality steward and authorized figure, tasked with crafting overarching qualitydevelopment strategies, defining strategic directives, and implementing qualityenhancement initiatives. Moreover, the Company operates under a quality veto system,empowering the QC managers with the authority to veto decisions pertaining to drugquality management. They are also integral in pivotal quality determinations, such asaddressing quality complaints, adverse reaction reports, and product recalls.

The Company has established a quality risk management framework in alignmentwith the requirements of GMP and the guiding principles outlined by ICH. This frameworkserves to regulate and oversee every aspect that could potentially impact product quality,thereby ensuring the consistency and dependability of product quality. To ensure theeffective execution of risk management practices, Company leadership allocates appropriateresources, assumes leadership responsibility for risk management endeavors, and ensuresthat individuals involved in risk assessment, implementation, and evaluation undergospecialized training and possess requisite knowledge and expertise to facilitate seamless riskmanagement operations.Within this framework, the Company has implemented a structured quality risk managementprocess comprising four pivotal stages: risk assessment, risk mitigation, risk communication,and risk review. This process is designed to identify and evaluate deviations in products orprocesses, as well as potential implications of product complaints on quality and regulatoryadherence. Spanning across various facets of the Company operations, including researchand development, production, facility and equipment management, and materialsmanagement, this quality risk management process guarantees adherence toanticipated standards of product quality.

The Company has devised operational protocols such astheDocumented Procedures for Product Recalland theReporting System for Major Drug Quality and Safety Incidentsin accordance with regulations such as theAdministrativeMeasures for Drug Recall and the Administrative Measures forDrug Production Supervision and Management.These protocolsoffer institutional guidance for addressing product recallincidents.Recalls are categorized into three tiers¡ªLevel I, Level II andLevel III¡ªbased on the severity of drug quality issues orother safety hazards. The Company has implemented recallprocedures to swiftly and effectively remove drugs fromcirculation if they exhibit quality or safety deficiencies, therebypromptly mitigating risks and eradicating hazards to safeguardthe welfare and health needs of patients. Furthermore, throughannual self-audits and simulated recall exercises conductedevery three years, the Company continually evaluates andensures the efficacy of its recall framework.

theª¢Companyª¢achievedª¢aª¢productª¢passª¢rateª¢ofª¢100%,ª¢conductedª¢

ª¢internalª¢qualityª¢auditsª¢annually,ª¢andª¢subjectedª¢

batchesª¢toª¢marketª¢samplingª¢inspections.

theª¢Companyª¢conductedª¢aª¢totalª¢ofª¢

ª¢riskª¢assessments.theª¢Companyª¢incurredª¢zeroª¢productª¢recallª¢incidents,ª¢andª¢regulatoryª¢authoritiesª¢didª¢notª¢mandateª¢anyª¢recalls.

During the reportingperiod

During the reportingperiod

During the reportingperiod

Vice President

(Quality)Quality Management

Center

QC DepartmentQA Department

Comprehensive Quality

Management Center

Risk assessmentRisk controlRisk audit

Risk reviewRisk mitigationAcceptable risk

Quality Risk Management

Flowchart

Risk identificationRisk analysisRisk evaluation

Identify potential triggers for recalls

Make a decisionon recall

Implement the recall

Issue recall informationIssue recall notification

Recall report (end)

Timely evaluatethe recalleffectiveness

File with/reportto the competentdrug regulatory

authority

For recallsto beconductedoverseas,ensurecompliancewith relevant

laws andregulationsof theimportingcountry(region) andprocurementagreements

Quality Management Department organizesrelevant department heads to investigate and assessdrug quality issues or other safety hazards

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IV¡¢People-CentricApproach: Fostering a

Better Society

Looking Ahead

PharmacovigilanceThe Company has implemented a comprehensive pharmacovigilance framework,committed to embedding pharmacovigilance across the entire drug lifecycle tosafeguard public medication safety. Pursuant to prevailing regulations and policiessuch as theMedicinal Product Administration Law of the People's Republic of China

and thePharmacovigilance Quality Management, the Company has crafted protocolslike theAdverse Drug Reaction Reporting and Monitoring Proceduresand theInternalAudit Management Process for Pharmacovigilance System,furnishing institutionalguidance for executing drug pharmacovigilance endeavors.Under the leadership of the Chairman, the Company has established a Drug SafetyCommittee entrusted with major risk assessment, management of significant orurgent drug safety incidents, risk mitigation decision-making, and other significantmatters pertaining to pharmacovigilance. Additionally, a dedicated PharmacovigilanceDepartment has been instituted to develop and maintain the pharmacovigilanceinfrastructure, formulate pertinent policies, and oversee pharmacovigilance initiatives.

Drawing upon policy papers such as theGood Pharmacovigilance Practices

andPharmacovigilance Inspection Guidelines,the Company has devised thePharmacovigilance Internal Audit ManagementProcess to delineate the focal pointsof quality management internal audits.Annually, the Company systematically conducts pharmacovigilance internal audits,analyzing identified issues and deficiencies, and enacting corrective and preventativemeasures. This continuous process aims to enhance the quality of pharmacovigilanceactivities, fortify the suitability, comprehensiveness and effectiveness of thepharmacovigilance system, and ensure ongoing compliance and efficient operation ofthat system.

The Company regularly arranges specialized pharmacovigilance training sessions forpharmacovigilance officers and specialists, coordinated with expert institutions suchas the National Medical Products Administration (NMPA). This ensures the trainees'acquisition of requisite expertise and skills. Additionally, the PharmacovigilanceDepartment organizes internal training sessions on pharmacovigilance knowledge,bolstering employees' foundational competencies in pharmacovigilance practices andfostering heightened awareness.During the reporting period, the Company conducted several pharmacovigilancetraining sessions, outlined as follows:

Chief Scientific Officer

Chief Medical Officer

Strategic MarketingDepartment Manager

Head of PharmaceuticalService CorporationProduction Manager

Quality Manager

Chairman

Clinical Trial Pharmacovigilance

ManagerPost-marketingPharmacovigilance ManagerOrganizational Structure of Drug Safety Committee

weª¢persistentlyª¢re?nedª¢ourª¢pharmacovigilanceª¢managementª¢system,ª¢introducingª¢theª¢Emergencyª¢Responseª¢Planª¢forª¢Seriousª¢Adverseª¢Drugª¢Reactionsª¢andª¢Massª¢Adverseª¢Eventsª¢toª¢enhanceª¢ourª¢capacityª¢inª¢promptlyª¢addressingª¢drugª¢adverseª¢events.ª¢Additionally,ª¢weª¢amendedª¢theª¢Rolesª¢andª¢Responsibilitiesª¢ofª¢theª¢Drugª¢Safetyª¢Committee,ª¢clearlyª¢delineatingª¢theª¢frequencyª¢ofª¢committeeª¢meetings,ª¢adjustingª¢coreª¢membership,ª¢andª¢enhancingª¢theª¢committee'sª¢organizationalª¢structureª¢toª¢furtherª¢standardizeª¢andª¢clarifyª¢itsª¢internalª¢functions.

?Pharmacovigilance Risk Monitoring

?Pharmacovigilance Internal Audit

?Pharmacovigilance Training

We've established multiple channels for collecting drug safety information, with thePharmacovigilance Department verifying and reviewing data gathered from these channels.Leveraging the eSafety pharmacovigilance system, the department manages the handling,analysis and assessment of individual safety reports, regularly consolidating and analyzingsafety information for each product to produce comprehensive summary reports. Thesereports are then submitted to competent drug regulatory authority within prescribed deadlines.

theª¢Companyª¢organizedª¢aª¢totalª¢ofª¢

ª¢pharmacovigilanceª¢trainingª¢sessions.

PharmacovigilanceManager

During the reportingperiod

During the reportingperiod

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II. Protecting Lucid Waters andLush Mountains,Custodians of

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IV¡¢People-CentricApproach: Fostering a

Better Society

Looking Ahead

Quality TrainingCustomer Complaints Resolution Mechanism

Customer Service Mechanism

The Company is dedicated to establishing a comprehensive quality training systemthat complies with theMedicinal Product Administration Law of the People'sRepublic of China,theGood Manufacturing Practice of Medical Products(GMP)and international regulations such as EU GMP, FDA and cGMP. This system ensuresthat all employees involved in drug production and quality continuously update andimprove their knowledge and skills. Each department associated with drug productionand quality is required to create an Annual GMP Training Plan, while the QualityDepartment is required to develop the Company's overarching Annual GMP TrainingMaster Plan and implements the training accordingly.The Company offers structured training for personnel involved in drug production andquality, covering laws, regulations, and quality management systems through a varietyof methods, including classroom lectures and hands-on practical sessions. To assessthe effectiveness of the training, participants are evaluated through written examsand practical exercises.

The Company has formulated theComplaints and Adverse EventsHandling and Reporting Management System,which intricately details themanagement procedures for addressing customer feedback, includingproduct adverse events/reactions, product quality complaints, andinquiries regarding products or services. This system explicitly definesthe specific roles and responsibilities of each department and individualinvolved in these processes. Additionally, the Company has put in place arobust procedure for addressing customer complaints in order to handlecustomer complaints with greater efficiency and compliance.

The Company upholds a patient-centric concept and shoulders the mission of"contributing to the well-being of the public". It is committed to furnishing societywith premium-quality drugs while continually refining both its products and servicesto bolster customer satisfaction and realize the corporate social value.To this end, we've instituted service protocols such as theControl Procedures forProduct and Service Specifications and theProduct Return Management Procedures.These frameworks aim to identify and evaluate customer needs and specifyrequirements and directives across pre-sale, in-sale and post-sale phases. Moreover,the Company has streamlined and standardized its return process, ensuring thatcustomers enjoy seamless and efficient service experiences.

theª¢Companyª¢organizedª¢

qualityª¢cultureª¢trainingª¢sessions,ª¢engagingª¢1,047participantsª¢andª¢deliveringª¢aª¢totalª¢ofª¢

hoursª¢ofª¢training.

theª¢Companyª¢receivedª¢aª¢totalª¢ofª¢

ª¢customerª¢complaints,ª¢successfullyª¢resolvingª¢

ª¢ofª¢them.Note: Data compilation encompassesthe primary subsidiaries operatingunder the pharmaceuticalcommerce, industrial microbiologyand aesthetic medicine segments.

Protection of Customers' Rights and Interests

Regular follow-up: The headquarters' business departments engage in discussions and follow-up sessions on a quarterly basis (comprising 26 queries raised by the departments). Additionally,monthly telephone surveys are conducted with hospital clients (indicating relative satisfactionlevels). These endeavors aim to ascertain customer needs, pinpoint company challenges,compile, report, address and re-evaluate these issues to heighten overall customer satisfaction.Monthly customer service meetings: These gatherings serve to unearth inherent challengesencountered in customer service operations and inter-departmental dynamics. By fostering opencommunication and providing emotional support, we enhance the well-being of our customerservice representatives, enabling them to perform optimally. Furthermore, these meetingsfacilitate more streamlined coordination and communication across departments.

Promptly forwardcomplaints to the QualityManagement Center foranalysis, determination,handling, improvement andfeedback

0102

040506

Regularly report the resultsto senior leadership

Collaborate with relevantdepartments to discuss andstudy customer complaints, anddevise phased improvementstrategies based on Companystrategy and customer needs

Conduct investigationsand improvements,documenting theoutcomes

Engage pharmaceuticalservice companies formarketing explanationand response to enhancecustomer satisfactionConduct trackinginspections (by the qualitysystem) and generateclosed-loop archivedrecords

During the reportingperiod

During the reportingperiod

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Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an Exemplary

Brand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Customer SatisfactionThe Company conducts regular satisfaction surveys, actively soliciting feedbackand recommendations from terminal customers on various aspects such asproduct quality, pricing, delivery and sales services. These inputs are compiled intocomprehensive written reports, which are then internally disseminated, accompaniedby detailed updates on the progress of addressing any identified issues.

ª¢aª¢totalª¢ofª¢1,810ª¢individualsª¢participatedª¢inª¢theª¢customerª¢satisfactionª¢survey,ª¢representingª¢approximatelyª¢

12.77%

ofª¢theª¢customerª¢base.ª¢Outª¢ofª¢theª¢distributedª¢1,792validª¢questionnaires,ª¢theª¢averageª¢customerª¢satisfactionª¢ratingª¢stoodª¢at

4.81

outª¢ofª¢5.Note:ª¢Dataª¢compilationª¢encompassesª¢theª¢primaryª¢subsidiariesª¢operatingª¢underª¢theª¢pharmaceuticalª¢commerceª¢segment.

Responsible Marketing

Supplier ManagementThe Company has instituted theInternal Review Standards and Procedures for CompanyPromotional Materials, aimed at standardizing the production and dissemination processesof promotional materials, thereby ensuring the authenticity and uniformity of promotionalcontent. Concurrently, through employee training sessions covering corporate culture andprofessional knowledge, efforts are made to enhance the staff's expertise and instill asense of responsible marketing.

In accordance with relevant national and local laws and regulations, and tailored tothe Company's actualities, the Company has prepared a suite of frameworks includingtheSupplier Management SystemandSupplier Selection and Review ManagementProcedures.These frameworks outline operational standards for supplier qualification,assessment and evaluation, providing clear directives for the entirety of the suppliermanagement process. This ensures the sustained stability and efficient functioning ofthe supply chain.Furthermore, the Company has developed theSupplier Performance Evaluation andGrading Management System,which entails the establishment of a comprehensiveperformance assessment framework. This system rigorously quantifies the performanceof approved suppliers of raw and packaging materials across various dimensionsincluding quality, production utility, commercial dealings, after-sales support, on-siteaudit compliance, and other pertinent criteria. Additionally, the Company has instituteda supplier grading management approach, delineating tailored management principlesand complementary measures for suppliers of different classifications.

Responsible Supply Chain

ª¢theª¢Companyª¢collaboratedª¢withª¢1,077ª¢suppliers.One of the Company's subsidiaries, Sinclair, actively promoteseducation on product authentication. It has introduced aproduct traceability certification mechanism and establishedan official anti-counterfeiting verification channel. This initiativeaims to provide consumers with clear and accessible steps forverifying product authenticity, thereby bolstering consumerawareness and safeguarding against counterfeit purchases.In 2023, Sinclair collaborated with law enforcement agenciesnationwide to successfully intercept over 3,000 counterfeitproducts.During the reporting period, the Company was honored as amember of the Trust and Integrity Enterprise Alliance (TIEA).

During the reportingperiod

During the reportingperiod

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IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

?Supply Chain Security Management

?Responsible Purchasing

?Supplier Risk Management

To guarantee a consistent supply of raw materials and finished goods and mitigate potentiallosses from supply disruptions, the Company has established appropriate safety stocklevels for various materials. The Business Logistics Department, in collaboration with theProduction Operations Department, oversees the monitoring of material transit volumes andcontract compliance. Following comprehensive analysis, they accurately forecast materialavailability, allowing for proactive material tendering and procurement while maintainingsafety stock levels. Simultaneously, the warehouse strategically plans the storage space forfinished products, ensuring the continuity and adequacy of finished goods supply to supportthe overall stability of the Company's operations.

Huadong Medicine is committed to embedding the principles of sustainable developmentthroughout its procurement management processes, thereby continuously bolsteringthe stability and sustainability of its supply chain. The Company has instituted variousframeworks, including theProcurement Management System, Raw and Packaging MaterialProcurement Management System,andRaw and Packaging Material Tender ManagementSystem,as foundational frameworks for supplier selection and procurement, ensuringadherence to stringent quality standards.In pursuit of transparent procurement practices, the Company has implemented an SRMsystem platform to facilitate qualification assessment, tender submission and order andcontract management for approved suppliers. This approach enhances the confidentialityand efficacy of inquiries and quotations for raw and packaging materials, with all suchtransactions now conducted online, achieving a 100% digital procurement rate. Moreover, theCompany enters into formal agreements, including IntegrityCooperation Agreement, SupplierAnti-Bribery Codes of ConductandCommitment to Integrity and Self-discipline,with eachcollaborating supplier, thereby delineating clear behavioral guidelines for both parties incommercial transactions and underscoring the penalties for any misconduct.Regular integrity training and educational programs are conducted for the procurementteam to foster a heightened awareness of integrity. Each member of the procurement teamis required to sign an Integrity Commitment, outlining the prescribed behavioral standardsto be adhered to during procurement activities, thereby ensuring the impartiality andtransparency of the procurement process.

The Company places paramount importance on information security and privacyprotection. In strict adherence to pertinent national legislation and the Company'sactualities, we have established a comprehensive, scientifically sound andeffective information security and privacy protection management framework andprotocols. These directives set out the roles and obligations of each departmentand staff member, ensuring the secure, steady and reliable operation of theCompany's information systems. This, in turn, furnishes a robust safeguard forthe sustainable development of our businesses and the unwavering trust of ourclients.

Huadong Medicine places a high priority on supplier risk management. We ensure thestability and reliability of our suppliers through meticulous oversight of supplier qualification,comprehensive management across all phases of supplier interaction, and a firmcommitment to preventing corruption. We are dedicated to enhancing these measures toguarantee product quality and supply chain security, thus providing a robust foundation forthe Company's steady growth.

Implement a real-namerecommendation system forsuppliers;Conduct supplier prequalificationto verify their robust internalcontrol systems;Perform site inspections toassess suppliers' contractualcapacity;Review potential legal risks andrelationships associated withsuppliers.

Integrate anti-corruption requirementsinto the specifications of tenderdocuments;Execute Integrity CooperationAgreements with suppliers;Engage third-party agenciesfor ongoing oversight and post-engagement reviews;Provide anti-corruption training toelevate employee awareness;Utilize digital platforms to conducttransactions, ensuring the utmostfairness and transparency.

Develop a detailed contractmanagement system that clearlydefines the responsibilities andobligations of bother parties;Enforce strict control over thereceipt and dispatch of goods,and establish rigorous proceduresfor inventory management;Evaluate suppliers' contractualcapacity.

Strict Control overSupplier Qualification

Firm Commitment toPreventing CorruptionComprehensive Managementacross All SupplierInteractions

Information Security Initiatives

Information Security and Privacy Protection

To fortify our information security capabilities, proactively preempt informationhazards, and safeguard the confidentiality, integrity and accessibility of our corporatedata, we have erected an information security architecture spanning four pivotallayers: the private cloud, network transmission, terminal and application systems. Weare committed to the ongoing fine-tuning and improvement of this framework toeffectively address the ever-evolving array of information security challenges.

PrivateCloud

NetworkTransmission

Terminal

Application

Systems

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I. Efficient Governance

Bolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians of

Ecological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering a

Better Society

Looking Ahead

Enforce network access controls to authenticate and authorize devicesseeking access, ensuring only those meeting security standards can accessthe networkEmploy SSL transmission encryption technology to establish secureconnections between clients and servers, safeguarding data againstdecryption and theftHarness SD-WAN (Software-Defined Wide Area Network) technologyfor centralized management and control of network traffic, ensuringuninterrupted availability and stabilityAdopt Zero Trust SDP (Secure Data Portal) technology to exercise strictcontrol over data access and transmission

Networktransmission

During the research phase of application systems, conduct thoroughassessments of information security protection capabilities at the systemlevel to ensure introduced applications possess adequate application-levelsecurity protection capabilitiesEstablish a company-wide document control system to ensure centralizedstorage, secure sharing and online collaboration of disparate unstructureddocumentsApplication

systems

Deploy next-generation firewalls, web application firewalls and threatwarning systemsImplement log audits and database integrity check

Conduct data backup

Privatecloud

Introduce bastion hosts, vulnerability sweeps and host security orchestrationsystems

Implement desktop management to uniformly oversee and monitoremployees' use of terminalsEnhance antivirus measures by conducting thorough virus scans and cleanupson terminalsDeploy Data Loss Prevention (DLP) systems to monitor sensitive data duringnetwork transmissions in real-timeIntroduce virtual desktop technology to store data solely on servers, mitigatingany data retention on local terminals

Terminals

Employ state-of-the-art encryption techniques to secure all critical data

Information Emergency Management

Fostering Affordable Accessibility to Products

Huadong Medicine, in compliance with applicable national laws and regulations and considering the unique circumstances ofits various subsidiaries, has instituted protocols such as theEmergency Response Management Systemand theInformationSystem Security Emergency Plan Management System.This has created a robust and effective information security emergencymanagement framework, which defines the specific responsibilities of each department and employee, standardizes the processfor handling information security incidents, and provides a solid institutional foundation and procedural guidance to address a widerange of information security threats.Additionally, the Company conducts regular risk assessments of its enterprise information systems, networks and data to identifypotential security vulnerabilities. Based on these evaluations, it has developed comprehensive emergency response plans and drills.Through routine drills and training sessions, the Company continually enhances its employees' skills and readiness in addressingsecurity incidents, thereby reinforcing its overall capacity to manage and resolve such events effectively.The Company strictly observes relevant privacy protection laws and regulations, ensuring the utmost confidentiality of customers'personal information, and strictly prohibits any unauthorized disclosure or misuse.

Shouldering the mission of "contributing to the well-being of the public", the Company places patients at the forefront, leveragingscientific research and market insights. Through strategic measures encompassing network expansion, medical insuranceintegration, personalized healthcare service solutions (PAP) and city-customized commercial medical insurances, we endeavor toenhance affordability. Upholding a dual focus on both internal and external markets, prioritizing both tertiary hospital and grassrootsmarket segments, we strive to ensure the widespread accessibility of our products.During the reporting period, the Company took proactive steps to alleviate the financial burden on patients for our strategiccollaboration product, Cariin Soft Capsule. This included implementing price adjustments, integrating the product into the coverageof city-customized commercial medical insurance across multiple regions, and engaging in charitable medication donations. Lookingahead to 2024, the Company plans to formally include Cariin Soft Capsule in the dual-channel directory spanning 31 provinces,municipalities, autonomous regions and directly administered cities nationwide. Backed by a diversified distribution network, weanticipate to deliver comprehensive and convenient services to a broad spectrum of patients.

Huadong Medicine is committed to the concept of extending access to more safe and efficacious products to patients across thenation. Across four key domains encompassing product portfolio expansion, strategic planning for new product launches, post-marketing clinical researches, and navigating various regulatory access protocols, the Company is expediting product availability tofulfill the evolving needs of a broader patient demographic.

Promoting Healthcare Access

As of the reporting period, the Company boasts a portfolio comprising 40 core productswith market approval (Class A: 12, Class B: 29), alongside 15 strategic collaborationproducts (Class A: 1, Class B: 14) featured in the 2023 Drug Catalog. Among these, theCompany's marketed products, including Acarbose Chewable Tablets, Corbrin Capsules,Metformin Hydrochloride and Glimepiride Tablets, alongside strategic collaborationofferings such as Etanercept for Injection, Mulberry Twig Alkaloids and Icariin SoftCapsule, were positioned within the "Negotiated Drugs during the Agreement Period"section of the "2023 Drug Catalog". Furthermore, the strategic collaboration productTofacitinib Sustained Release Tablet was positioned within the "Bidding Drugs" section ofthe same catalog.

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I. Efficient GovernanceBolstering SteadyDevelopment

II. Protecting Lucid Waters andLush Mountains,Custodians of

Ecological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

People-Centric Approach:

Fostering a Better Society

1.Labor Relations Management

2.Training and Development

3.Occupational Health and Safety

4.Social Welfare

Our Actions

Our PhilosophyHuadong Medicine is dedicated to creating anequitable and diverse employment environment,offering each employee a robust platform toshowcase their talents and achieve their fullpotential. The Company is deeply invested inthe well-being of its employees, prioritizing theirphysical and mental health while ensuring theirrights and interests are protected. It strives tofoster a work atmosphere that exudes warmthand compassion, allowing employees to flourishin a collaborative and supportive environment.

SDGs

?,????.??%

??,?????.??%

?,?????.??%

????.??%

?,????.??%

????.??%

ProductionSalesTechnologyFinanceAdministrationOther

?,?????.??%

?,?????.??%

?,?????.??%

????.??%

30 years old and below (excluding 30)30-40 years old (including 30, excluding 40)40-50 years old (including 40, excluding 50)50 years old and aboveNot disclosed

?,?????.??%Master's degree and aboveBachelor's degreeOtherJunior collegeNot disclosed (professional training)

Female

Note: Statistics on new hires do not includethe overseas subsidiary Sinclair.

Male

?,?????.??%

?????.??%

Social RecruitmentCampus Recruitment

?,?????.??%?,?????.??%SpecializationCompositionof Employees

?,?????.??%?,?????.??%

GenderCompositionof Newly HiredEmployees

RecruitmentChannelComposition of

Newly Hired

EmployeesGenderCompositionof Employees

FemaleMaleNot disclosed

????.??%

AgeCompositionof Employees

?,?????.??%

?,????.??%????.??%

????.??%

EducationCompositionof Employees

????.??%

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I. Efficient Governance

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Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Labor Relations Management

The Company adheres to relevant labor laws and regulations, such astheLabor Law of the People's Republic of China, the Labor ContractLaw of the People's Republic of China,and theEmployment PromotionLaw of the People's Republic of China. We've established variousmanagement policies including an Employee Handbook, Labor ContractManagement Regulations, and Recruitment Management System.Subsidiaries customize their management policies to address theirunique needs based on these overarching guidelines. We ensure thatour employee recruitment and onboarding processes are rigorouslystandardized to prevent any form of discrimination or prejudice. Thisapproach guarantees that recruitment is conducted in a fair, impartialand transparent manner.During the reporting period, we revised theRecruitment ManagementSystem,explicitly underscoring the need for fairness and impartiality inthe recruitment process. This transparency minimizes the risk of anyform of discrimination and promotes an inclusive workplace.

Employee Recruitment

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IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

In 2023, the Company continued to broaden its recruitment channels, aiming toattract a plethora of high-caliber talents. Regarding campus recruitment, strategicpartnerships were forged with esteemed institutions such as Zhejiang University,Zhejiang University of Technology, Wuhan University, Northwest University, JiangnanUniversity, Huazhong University of Science and Technology, Northeastern University,China Pharmaceutical University, Shenyang Pharmaceutical University, Anhui Universityof Chinese Medicine, Shaanxi University of Chinese Medicine, among others. Over adozen information sessions, excluding standard job fairs, were organized, culminatingin employment opportunities extended to 758 recent graduates. In terms of socialrecruitment, the Company harnessed diverse online platforms, alongside on-site jobfairs, headhunting agencies and internal referrals, resulting in the acquisition of 4,090exceptional talents.

In alignment with its operational imperatives and growth strategies, the Companyhas devised a differentiated and market-driven remuneration framework. Embracinga compensation design concept rooted in value creation, we align pioneeringremuneration strategies with individuals exhibiting commendable value propositions.Moreover, we've instituted flexible and diverse incentives for those actively engaged invalue creation.The Company's compensation management endeavors are anchored in compliance,steadfastly adhering to regulatory requirements of the respective nations and localeswhere it operates. This entails ensuring that the minimum wage average for regularattendance surpasses local statutory benchmarks across all operational domainsthroughout the fiscal year.The Company's compensation structure predominantly comprises fixed base pay,variable performance bonus and supplementary project-specific bonuses. Furthermore,it extends long-term equity incentives to key managerial and technical cadres. Weconduct periodic recalibration of salary benchmarks against market standards, therebyfacilitating the refinement of compensation frameworks and standards for distinctjob grades. Short-term performance bonus and other variable income streams arecontingent on routine and annual performance evaluation results, while project-specific bonuses are contingent upon pivotal project milestones. Concurrently, long-term incentives are linked to the overarching strategic performance of the Company.At Huadong Medicine, we uphold a performance-driven philosophy centered onvalue creation. We emphasize fostering employee engagement through effectivecommunication and coaching to motivate the employees and continuously elevatetheir performance, thus ensuring the realization of organizational performanceobjectives. At present, our performance assessment process involves setting,assessing, and providing feedback on performance goals through an online platform.We underscore the importance of performance feedback interviews conducted bydepartment managers, which serve to acknowledge employees' contributions andcollaboratively explore avenues for improvement in areas of weakness. For individualsfalling short of basic performance targets, we require the development of a writtenimprovement plan, coupled with necessary coaching and training to support theirperformance enhancement and goal achievement.Moreover, we've instituted a formal performance appeals mechanism. Shouldemployees contest assessment results, they are encouraged to first attempt resolutionthrough dialogue with their immediate supervisors. If such method fails, employeesmay, within ten days of receiving feedback on evaluation results, submit a writtenappeal to the Company's Human Resources Management Department. Failure tosubmit a timely written appeal or to have the appeal approved will result in themaintenance of the original evaluation results.

The Company unequivocally prohibits the engagement of child labor, prescribingage requirements within itsRecruitment Management System.A multi-stage auditprocess has been established to mitigate the risk of inadvertently hiring minors. Earlyin the recruitment cycle, prospective candidates required to complete comprehensiveregistration forms, inclusive of vital information such as dates of birth and ID cardnumbers, to facilitate preliminary age verification. Subsequently, a rigorous validationprocedure is conducted during later stages, encompassing scrutiny of identitydocumentation, educational credentials, and other pertinent records to corroborateapplicants' age.

? Recruitment ChannelsSalary and Welfare

? Compensation Structure

? Performance Feedback and Appeals Mechanism? Recruitment Audit

acquisition of4,090exceptionaltalents

Social recruitmen

Campus recruitmentopportunities extendedto

recentgraduates.

theª¢Companyª¢boastedª¢aª¢100%ª¢rateª¢ofª¢laborª¢contractª¢execution,ª¢coupledª¢withª¢100%ª¢socialª¢insuranceª¢coverage.

Offline Performance FeedbackProcess

Employees initiatefeedback processFeedback provided byimmediate supervisorsIn case of failure to solvethe case, employees submitwritten appeal materialsHuman ResourcesManagement Departmenthandles appealsOutcome of appealprocess communicated torespective employeesOnline Performance Feedback ProcessEmployees submitself-assessments

Evaluation conducted bymanagers at all levels

Feedback communicated torespective employees

During the reportingperiod

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I. Efficient GovernanceBolstering Steady

Development

II. Protecting Lucid Waters andLush Mountains,Custodians of

Ecological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

We guarantee our employees' entitlement to regular leaves, including statutory holidays, marriage leave,bereavement leave, maternity leave, sick leave and paternity leave, all of which are paid according to nationalregulations. Additionally, employees are entitled to paid annual leave as mandated by national regulations.

The Company upholds a commitment to equality and inclusivity throughout its recruitment practices,continuously strengthening recruitment information management. Prior to job postings, we meticulouslyreview recruitment content to ensure it lacks any discriminatory language or restrictive criteria based ongender, age, ethnicity, or residency. Regular audits of recruitment materials ensure alignment with currentmarket dynamics and company requirements. Timely updates to recruitment information highlight a range ofdiverse benefits, including salary, bonuses, training opportunities, career advancement prospects, and otherperks, aimed at attracting candidates from varied backgrounds and with diverse needs.

The Company rigorously adheres to theSpecial Regulations on the Labor Protection of Female Employees,clearly outlining provisions for paid marriage leave, maternity leave, prenatal care leave and breastfeedingbreaks for female employees within the employment framework, alongside offering paternity leave for maleemployees.

? Employee Bene?ts

Diversity, Equality and Inclusivity

Protection of Women's Rights

employeesª¢tookª¢maternityª¢leave,ª¢withª¢aª¢100%ª¢returnª¢rate;ª¢whileª¢

employeesª¢tookª¢parentalª¢leave,ª¢alsoª¢withª¢aª¢100%ª¢returnª¢rate.ª¢Womenª¢representedª¢

33.73%

ª¢ofª¢managerialª¢personnelª¢andª¢

50.15%

ª¢ofª¢technicalª¢sta?.

theª¢Companyª¢allocatedª¢RMBª¢

161.14

ª¢millionª¢towardsª¢welfareª¢expenses.

the Company investedRMB

6.05

millionin employee traininginitiatives, organizing

training sessionsengaging38,716participants and delivering346,089hoursof training, achieving acomprehensive trainingcoverage rate of100%.

Duringª¢theª¢reportingª¢period

Duringª¢theª¢reportingª¢period

Training and development

Huadong Medicine recognizes the cultivation of talent as a vital cornerstone for theCompany's sustained growth. Firmly embracing a talent-centric approach, we arededicated to establishing a diverse and multifaceted talent development framework todrive the Company's strategic transformation.For new hires, we deliver specialized induction training and oversee a comprehensiveprobationary period management, facilitating swift assimilation into the corporateculture. For recent graduates, the Company's "Voyage Program" expedites theirtransition into roles, instills an understanding of the corporate culture, and fostersrobust professional acumen. We effectively cultivate youthful talent by employinga range of methodologies, including collective training, talent selection, rotationalassignments, performance evaluations and hands-on experiences.

Concurrently, we are progressivelyenriching our digital traininginfrastructure, expandingcourse offerings across diversebusiness domains to establisha comprehensive learningecosystem. Through tailored digitaltraining modules, employees areempowered to engage in trainingand skill development seamlesslyand efficiently, bolstering their jobreadiness and effectiveness.

During the reportingperiod

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III¡¢Innovation-Driven,Forging an Exemplary

Brand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Career Development

Huadong Medicine is committed to continually refining its employee career development framework, providing employees withclear pathways for professional growth. Based on individual attributes and career aspirations, we've established dual-track careerdevelopment routes. Employees can choose to deepen their expertise in specialized fields, becoming industry experts, or transitioninto managerial roles to leverage their leadership abilities and foster team growth.

Dual-track Career Development Model for Managerial and Professional Roles

Strategic Decision-makerChief Scientist

ScientistSenior Expert

ExpertSenior Researcher

Deputy General ManagerDepartment DirectorDepartment Manager

Supervisor/ResearcherAssistant Researcher/Specialist

Trainee

Occupational Health and Safety

At Huadong Medicine, we prioritize the aspect of occupational health and safety in ourproduction processes, aiming to embed a safety-first mindset throughout every facetof our operations. We have instituted a company-wide safety production responsibilitysystem, with each employee annually signing a safety production responsibilityagreement, ensuring accountability across all levels and fostering active participationin EHS initiatives by all. In line with pertinent national and local regulations, andtailored to the Company's specific context, we have developed comprehensive safetyproduction management frameworks such as theEHS Responsibility System andthe Safety Production Responsibility Assessment and Management System.Theseframeworks form the backbone of our safety production responsibility structure,guaranteeing a secure and efficient environment for our production activities.To ensure the effective implementation of our responsibility system, regularassessments of safety production responsibilities are conducted across all levelsof personnel. We also enforce a merit-based reward and disciplinary mechanism,incentivizing proactive adherence to safety production responsibilities at every level.Furthermore, we have established a safety incentive fund to recognize exceptionalcontributions to safety practices, motivating our employees to actively engage insafety initiatives.In 2023, the Company firmly embraced the concept of sustainable developmentby deeply implementing national safety production laws and regulations. Westrictly adhered to legal requirements such as the Safety Production Law and theEnvironmental Protection Law, placing compliance and risk prevention at the forefrontof our objectives. We actively advanced the optimization and reform of our EHSmanagement system, using job safety manuals as a focal point and leveraging buildingstewardship management to promote a comprehensive EHS responsibility frameworkacross all staff. Through these efforts, we successfully achieved our established EHSobjectives and work plans, resulting in zero major incidents such as fires, explosion orcasualties, as well as zero environmental pollution accidents and occupational healthincidents throughout the year. This commitment has safeguarded the Company's safe,orderly and sustainable operations.

Safety Production Management

Safety FirstPrevention-OrientedComprehensive Management

Subsidiaries that have been

certified to ISO 45001Occupational Health and SafetyManagement System

Safety

Production Policy

Occupational Health andSafety Management System

Certification

ª¢theª¢Companyª¢investedª¢RMBª¢

28.98

ª¢millionª¢inª¢safetyª¢productionª¢initiatives.

Jiangdong CompanyZhongmei Huadong

Xi'an BohuaJiuzhou Pharmaceutical

Jiangsu Joyang

Note: Data compilation encompassesZhongmei Huadong, JiangdongCompany, Xi'an Bohua, JiangsuJoyang and Wuhu Huaren

During the reportingperiod

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Development

II. Protecting Lucid Waters andLush Mountains,Custodians of

Ecological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Case

Case

Comprehensive Fire Emergency Drill forHot Work

Specialized Fire Emergency Drill for Tank Area

The Company has instituted a robust and scientifically sound system for managing contractor safety,delineating the scope of responsibilities for departments involved in engineering projects, and clearlyoutlining the safety duties and obligations of contractors. In addition, a standardized approach to managingsafety requirements throughout the construction process has been adopted to ensure adherence to safetystandards, thereby bolstering the overall safety standard of engineering projects and effectively securing thelives and assets of construction personnel.In order to operationalize contractor safety responsibilities, we've implemented comprehensive mobilizationeducation and training programs for contractors. These programs encompass a spectrum of topics includingsafety protocols, hazard identification and prevention, and emergency response procedures. Moreover,contractors are mandated to endorse pertinent documents such as the Contractor Safety CommitmentandContractor Mobilization Instructionsupon mobilization. Following mobilization, a mechanism for conductingon-site safety inspections by contractors has been instituted to swiftly identify and rectify any safetyhazards encountered during the construction process, thus ensuring the secure and smooth progression ofconstruction activities.

The Company places a paramount emphasis on workplace safety, implementing a robust safety risk gradingand control system alongside comprehensive hazard identification and remediation measures. Throughrigorous risk assessment and diligent hazard mitigation efforts, the Company elevates its safety managementstandards, effectively preventing and reducing the occurrence of production-related safety incidents, therebysafeguarding the personal well-being of employees and ensuring the stable growth of the organization.

On July 13, 2023, Jiangdong Company,in conjunction with the Qianjin Sub-district Fire Brigade, conducteda comprehensive emergency drilladdressing a potential fire outbreakduring welding operations on the thirdfloor of the indole formulation project.This exercise served to elucidatethe graded emergency responseprocedures and mitigation strategiesfor fire incidents, bolstering thepreparedness of each emergency teamto tackle unforeseen contingencies andlaying a robust groundwork for futurecrisis management.

During the Safety Month campaign of2023, Meihua Hi-Tech, in collaborationwith the Chemical Industrial ParkFire Brigade, orchestrated andoversaw a specialized emergencydrill targeting fire accidents in thetank area. This exercise not onlyvalidated the practicality and efficacyof the specialized emergency planbut also markedly augmented thesafety awareness and emergencyresponsiveness of park personnel,thereby fortifying the framework foradeptly handling accidents in the timesahead.

?Safety Risk Grading and ControlThe Company organizes various departments to conduct safety risk identification at every operational level.Based on these assessments, we formulate control measures at both the organization, departmental andoperational levels, substantially mitigating job-related safety risks and enhancing the safety consciousnessand responsiveness of all employees.At the organization level, strategic control measures are devised to construct a robust safety frameworkacross the entire organization. Departmental-level initiatives aim to concretize corporate safety standards,implementing refined safety protocols tailored to the unique characteristics and operational demands ofeach department. Moreover, operational-level control measures delineate safety responsibilities for individualemployees, ensuring a pervasive safety culture. Simultaneously, detailed employee safety handbooks aredeveloped, explicitly outlining safety responsibilities and operational protocols for each role, facilitating acomprehensive understanding and diligent adherence to safety practices among staff.?Hazard Identification and ManagementThe Company has established systems such as theManagement System for Hazard Identification and Riskand Opportunity Evaluationand theSafety Risk Identification and Control System.These systems detail themethods for identifying hazards and specify the evaluation criteria for risks and opportunities. This ensuresthe accurate identification and assessment of all hazards within the organization, evaluating their risk levelsand identifying significant risk factors accurately. Subsequently, corresponding management measures areimplemented.During the reporting period, various safety inspections and patrols were conducted regularly throughmonthly comprehensive inspections, daily safety and fire patrols, and other similar means. Clear rectificationplans were formulated, with enterprise and department heads acting as the primary responsible parties forsupervising implementation. Control measures were established and implemented by designated personnelto decisively prevent the occurrence of related hazards and accidents until rectification was completed.

?Safety Emergency ManagementBased on the Company's actual operational imperatives, we've developed safetyproduction emergency plans and annual drill plans. Comprehensive emergencyplans, specialized emergency plans and on-site disposal plans are regularly practiced,providing employees with opportunities to encounter simulated real safety incidents.This ensures the rationality and operability of emergency plans and enables staff torespond quickly and efficiently in emergencies. Hence, the Company's stable operationis maximized, and the lives and property of employees are safeguarded.

Contractor Safety Management

Safety Risk Management

theª¢Companyª¢conductedª¢

ª¢safetyª¢emergencyª¢drills,ª¢includingª¢

comprehensiveª¢emergencyª¢planª¢drills,ª¢

ª¢specializedª¢emergencyª¢planª¢drills,ª¢andª¢

ª¢on-siteª¢disposalª¢planª¢drills.

During the reportingperiod

Note: Data compilation encompassesZhongmei Huadong, JiangdongCompany, Xi'an Bohua, JiangsuJoyang and Wuhu Huaren.

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I. Efficient Governance

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Development

II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

?Digital ManagementZhongmei Huadong, one of the Company's subsidiaries, has established a "Five-in-One" safety managementinformation platform. This platform encompasses five modules including hazard detection and early warning,personnel presence tracking, safety risk zoning, full-process management, and dual prevention mechanisms.It enables real-time monitoring and multi-tiered early warning for data originating from 21 risk zones, 169gas detectors, tank area (pressure & temperature), and other pertinent sources. Furthermore, it includes thedevelopment and integration of synchronized computer and mobile applications, ensuring a holistic approachto safety risk control characterized by "data integration, precise risk identification, real-time monitoring, earlywarning, and systematic assessment". This initiative significantly mitigates the likelihood of safety incidents.

Case

Fir Emergency Evacuation Drill at Project Site

On June 13, 2023, Magic Health organized a fire emergencyevacuation drill for all stakeholders involved at the projectsite. Employing smoke bombs to recreate a realistic firescenario, practical exercises were conducted on fireextinguisher operation and cardiopulmonary resuscitation(CPR) techniques. With participation from over 80individuals representing both the project management andconstruction units, this drill not only enhanced employees'emergency response and mutual aid capabilities butalso underscored the importance of teamwork andswift, coordinated crisis management, thus laying a solidfoundation for ensuring both the operational safety of theproject and the welfare of employees' lives and assets.

riskzones

gasdetectors

real-timemonitoring

earlywarning

FireDrill

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III¡¢Innovation-Driven,Forging an ExemplaryBrand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Safety Awareness Education

Occupational Health Management

The Company has developed an annual health and safety training plan and systematicallytrained employees in safety knowledge and regulations to deepen their understanding ofvarious safety risks and familiarize them with national and local safety regulations. This initiativeaims to comprehensively enhance employees' safety awareness. Additionally, the Companyactively participates in national "Safety Production Month" campaigns, promoting safetyknowledge through various methods such as displaying safety propaganda signs, playingsafety education videos, and organizing safety knowledge quizzes.

The Company conducts regular assessments of occupational disease hazards in productionworkshops, office areas and other workplaces. Key indicators such as concentrations ofhazardous substance in the air, noise levels and lighting conditions are measured andanalyzed to identify potential hazards comprehensively. Based on the assessment results,appropriate control measures are implemented to create a safer and more comfortableworking environment for employees.

Investment in work-relatedinjury insuranceRMB

2.39

million

Coverage rate of occupationalinjury insurance for employees:

84.40%

percentage of specialoperators licensed:

100%Coverage rate ofphysical examinations foremployees:

100%

Detection rate ofoccupational diseasehazards:

100%

Pass rate of occupationaldisease hazard detection:

96.03%

Number of new casesof new occupationaldiseases:

Social Welfare

Drawing upon its resource advantages, Huadong Medicine actively participates in community care initiatives, fulfilling socialresponsibility through tangible deeds and fostering symbiotic relations between the Company and the community.Community Engagement

Supply Chain Management (Wenzhou)Company Extends Regards to VeteransVolunteers Aid the Asian Games

August 1st Cooling Initiative at Supply Chain Management

(Wenzhou) CompanySupply Chain Management (Wenzhou)Company Extends Regards to Frontline

Delivery Personnel

the Company conducted

safety education and training sessions, engaging29,420participants, achieving a100%coverage rate for safety education and training and a100% coverage rate for safety risk protection training.

Duringª¢theª¢reportingª¢period

Duringª¢theª¢reportingª¢period

Note: Data compilation encompasses Zhongmei Huadong, Jiangdong Company, Xi'an Bohua, Jiangsu Joyang and WuhuHuaren.

Note: Data compilation encompasses Zhongmei Huadong, Jiangdong Company, Xi'an Bohua, Jiangsu Joyang and WuhuHuaren.

During the reporting period, the various volunteer service teams affiliated withHuadong Medicine remained active in major hospitals, communities and public eventsin 2023. Notably, the volunteer service team from Huadong Medical Retail Pharmacysteadfastly ventured into communities on a routine basis, extending care to the elderly.They conducted blood pressure screenings, provided medication and equipmentguidance, offered eye care and organized the collection of expired medications acrossdiverse Hangzhou neighborhoods. During holidays, they visited and tended to theelder aged 80 and above in their residences. Proactively responding to the directivesof the Municipal Party Committee Organization Department and the Company'sParty Committee, the Company's Youth League Committee handpicked three youngmembers to provide management services at the Asian Games Village for a 10-monthtenure. This team is made up of a Youth League Committee member, a Youth Leaguebranch secretary, and an ordinary member, all contributing zealously to the successof the Hangzhou Asian Games. Concurrently, the Company's subsidiary Supply ChainManagement (Wenzhou) Company, orchestrates annual summer cooling initiatives,August 1st tributes and community outreach endeavors, extending benevolence tofrontline sanitation workers while endowing them with summer essentials valued atRMB 10,000.

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Ecological Refuge

III¡¢Innovation-Driven,Forging an Exemplary

Brand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Case Case

Fragrant Rice Dumplings and Heartfelt Companionship: Huadong MedicineLivelihood Pharmaceutical Service Station Engages with the Community

"Flower of Life" - Public Welfare Initiatives in the Field of OrganTransplantationOn June 16, Huadong Medicine Livelihood Pharmaceutical Service Station madeits presence felt in the Hongyuan Community, offering a plethora of services rangingfrom blood pressure screenings to medication and equipment guidance, eye care,and the collection of expired medications. On June 20, Huadong Medicine LivelihoodPharmaceutical Service Station, in partnership with the Hongyuan Community ofZhaohui Sub-district, launched an event themed "Embracing the Spirit of Dragon BoatFestival: Crafting Rice Dumplings as a Gesture of Hospitality for the Asian Games".Residents and staff were invited to partake in the age-old tradition of rice dumplingmaking, transforming each leaf and grain of glutinous rice into meticulously craftedbundles of joy imbued with heartfelt sentiments. Following this, they paid a visit to theelder aged 80 and above living in the community, where Huadong Medicine Pharmacythoughtfully prepared and distributed complimentary sachets of fragrant herbs,extending warm wishes and festive greetings for the Dragon Boat Festival.Simultaneously, by the tranquil waters of the Canal Lake, personnel from thepharmaceutical service station and community workers collaborated on a knowledge-based quiz dubbed "Enriching Minds with Asian Games Insights, Rewarding CorrectAnswers with Fragrant Herb Sachets". Residents were encouraged to test theirknowledge on the Asian Games, with correct responses earning them fragrant herbsachets, fostering an atmosphere brimming with lively interactions and jovial exchanges.Residents praised the engaging format of the activities, noting how it not onlydeepened their understanding of the Asian Games but also enveloped them in thefestive ambiance of the Dragon Boat Festival.

Huadong Medicine spearheaded the creation of the nation's inauguralpublic welfare medical literature, "Flower of Life", a compendiumoffered free of charge to both organ transplant donors andrecipients. It aimed to fortify doctor-patient discourse and advancehealth education. Since its inception in 2003 until the close of2023, 70 issues have been disseminated, earning fervent praise andacknowledgment from professionals and patients engaged in thetransplantation domain.Collaborating with relevant foundations, the Company established the"Flower of Life" Family Living Organ Transplantation Charitable Fund,

Embracing a profound sense of societal duty and mission, Huadong Medicine ferventlychampions the cause of rural revitalization, actively engaging in the nationwide "TenThousand Enterprises Assisting Ten Thousand Villages" endeavor. Through generouscontributions, the Company has become a stalwart supporter of infrastructuredevelopment, agriculture modernization and the advancement of educational andcultural initiatives in rural areas. This concerted effort not only injects fresh vigor intothe economic landscape of rural areas but also propels the holistic rejuvenation ofthese communities.

"The noblest conduct resembles the flowing waters, and profound virtue bears the weight of all endeavors". Public welfare and charitableinitiatives transcend mere societal obligations; they epitomize actionable endeavors. As an enterprise deeply imbued with a profoundsense of social responsibility, Huadong Medicine not only pursues its own developmental goals but also champions the cause of socialwelfare with unwavering dedication. Actively contributing to the fields such as education, environmental conservation and culture, theCompany embodies a symbiotic relationship with the environment while fostering mutually beneficial alliances within society.

Social Welfare

Spring Breeze Action Love

AwardAltruistic Blood Donation Drive

Bailing Health's Involvement inPublic Welfare Livestreaming

Rural Revitalizationtheª¢Company'sª¢charitableª¢donationsª¢amountedª¢toª¢RMBª¢

27.37

ª¢million.

During the reportingperiod

dedicated to furnishing quantifiable immunosuppressive medications as acts of philanthropy. In 2023, this fund extendedits benevolence to 406 recipients of family living organ transplants, with contributions approximately RMB 800,000. Bythe end of 2023, this initiative had tendered compassionate support to 6,120 recipients of family living organ transplants,amassing a cumulative donation exceeding RMB 20.80 million.The establishment of the "Flower of Life" WeChat public account and "Flower of Life Broadcast" video platform facilitatedthe provision of Internet+ health education services. Organizing the "Companionship in the Journey of Transplantation- Endless Race" series of health-focused webinars, the Company extended invitations to preeminent experts in China'sorgan transplantation sector, along with youthful and seasoned clinicians, fostering robust online engagements aimedat elevating clinical acumen and scholarly discourse among medical professionals. As of the end of 2023, the "Flowerof Life" platform had organized a total of 545 Internet health seminars, reaching an aggregate on-demand viewershipsurpassing 1.66 million individuals.In 2023, a collaborative effort with the China Association for Promotion of Health Science and Technology materializedin the "Healthy E-Home - Integrated Follow-up Management Project for Organ Transplant Recipients". This strategicendeavor aimed to bolster the follow-up management capabilities of organ transplant recipients across prefecture-level hospitals, enhancing accessibility to superior medical services. In 2023, a total of 22 transplant centers and 23prefecture-level follow-up management hospitals participated in this project, with 138 prefecture-level follow-up medicalpersonnel undergoing rigorous training.During the reporting period, the Company organized the active participation of volunteers inaltruistic blood donation drives, garnering accolades such as the "Spring Breeze Action LoveAward 2023" and the "Guardian of the Asian Games Award" for their one hundredth blooddonation event. Simultaneously, the Company extended its philanthropic reach by sponsoringLaba porridge for the Disabled Association of Gongshu District, offering a generous donationtowards road expansion in Santan Village, and tendering heartfelt gestures of compassion inthe form of quilts to the elderly citizens of Yongjia Mountain District. Moreover, the Companyzealously engaged in Tmall's public welfare livestreaming activities, subsequently beinglauded with the title of "Best Partner" at the Hangzhou Marathon event.

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I. Efficient Governance

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II. Protecting Lucid Waters andLush Mountains,Custodians ofEcological Refuge

III¡¢Innovation-Driven,Forging an Exemplary

Brand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

Looking AheadAmidst today's swiftly evolving economic and social landscape, ESGfactors have emerged as the essential yardstick for gauging corporatesustainability and enduring value. Against the backdrop of escalating globalconcern regarding climate change, social equity and effective governance,we are acutely aware of the pivotal role that ESG performance plays insteering the organization's sustained growth.As we chart our course for the future, we will remain steadfast in ourcommitment to the corporate philosophy of "Scientific Research-basedand Patient-centered". We will unwavering dedication to research anddevelopment innovation stands as testament to this enduring principle. Wewill ramp up our efforts in R&D and innovation, striving to make advancedtechnologies and innovative pharmaceuticals accessible to a widerpatient base through a synergy of inhouse research efforts and externalpartnerships. Moreover, in our manufacturing processes, we will doubleour efforts to embrace ecologically sustainable practices. We will elevateresource efficiency, harness renewable energy sources and curtail ourcarbon footprint to eventually reduce operational costs.Moreover, we will carry forward our commitment to social welfareendeavors aimed at fostering inclusive growth and mitigating socialinequalities. We are dedicated to cultivating a culture of transparency andaccountability and pledge adherence to the most stringent ethical andgovernance standards. Through periodic assessment and disclosure of ourESG performance, we ensure that stakeholders are kept abreast of ourstrides and hurdles.Looking ahead, we steadfastly maintain that ESG considerations not onlyconstitute a cornerstone of corporate social responsibility but also serveas strategic imperatives for engendering long-term value and competitiveprowess. We pledge to persist in our pursuit of sustainable development,striving to carve out a brighter tomorrow for our employees, shareholders,clients and the broader community!

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III¡¢Innovation-Driven,Forging an Exemplary

Brand

IV¡¢People-CentricApproach: Fostering aBetter Society

Looking Ahead

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Governance through the General Meeting ofShareholders, Board of Directors, and Board ofSupervisors

2-9£¬2-10£¬2-11£¬2-12£¬2-13£¬2-14£¬2-19£¬2-20Risk Management and OperationalCompliance

207-1£¬207-2Business Ethics2-24£¬2-25£¬2-26£¬205-2Safeguarding Stakeholders¡¯ Rights andInterests

2-16ProtectingLucid Watersand LushMountains,Custodiansof EcologicalRefuge

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Innovation-Driven, Forgingan ExemplaryBrand

R&D and Innovation2-7Product Quality and Safety416-1£¬416-2Protection of Customers' Rights and Interests417-1Responsible Supply Chain2-6£¬308-1£¬414-1Information Security and Privacy Protection418-1Promoting Healthcare Access--People-CentricApproach:

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2-7£¬2-19£¬2-20£¬2-30£¬401-1£¬401-

2£¬401-3£¬405-1£¬406-1£¬407-1Training and Development2-7£¬404-1£¬404-2Occupational Health and Safety403-1£¬403-3£¬403-5£¬403-7£¬403-9Social Welfare203-2Looking Ahead--Indexes--Feedback Form--

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P3£¬G2.1-G2.4£¬G3.1-3.2£¬G3.5-G3.6£¬G3.11E?cientGovernanceBolsteringSteadyDevelopment

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G1.1-G1.2Risk Management and Operational ComplianceG1.3-G1.4Business EthicsG1.5-G1.9Safeguarding Stakeholders¡¯ Rights andInterests

G1.10-G1.11ProtectingLucid Watersand LushMountains,Custodiansof EcologicalRefuge

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Innovation-Driven, Forgingan ExemplaryBrand

R&D and InnovationV2.1-V2.6£¬V2.8Product Quality and SafetyS4.1-4.2£¬S4.4£¬S4.9Protection of Customers' Rights and InterestsS4.4£¬S4.7-S4.8Responsible Supply ChainS5.1-S5.3Information Security and Privacy ProtectionS4.6Promoting Healthcare Access--People-CentricApproach:

Fostering aBetter Society

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Annex I: Indexes

2023 Environmental, Social andGovernance(ESG)Report

About ThisReport

Message fromthe Chairman

About UsESGmanagement

Dear readers,Thank you for your time to read this report. To enhance the value of ESG information for you and other stakeholders, we kindlyrequest your assistance in completing the feedback form. Your feedback will greatly aid us in further enhancing our ESG managementperformance. Please use the details below to provide your feedback:

1. Which type of stakeholders do you belong to:

¡õ Shareholders or Investors ¡õ Employee ¡õ Client & Consumer ¡õ Supplier ¡õ Industry Association or Research Institution

¡õ Public Welfare or Community Organization ¡õ Media ¡õ Government or Regulatory Agency ¡õ Others

2. Your overall assessment of this year's ESG report:

¡õ Excellent ¡õ Good ¡õ Neutral ¡õ Poor ¡õ Bad

3. Your assessment on this report

?Information Disclosure

¡õ Excellent ¡õ Good ¡õ Neutral ¡õ Poor ¡õ Bad

?Layout Design

¡õ Excellent ¡õ Good ¡õ Neutral ¡õ Poor ¡õ Bad

?Readability

¡õ Excellent ¡õ Good ¡õ Neutral ¡õ Poor ¡õ Bad

4. Which topics are of most concern to you? (Choose up to 3)

?Environmental protection

¡õ Environmental Management ¡õ Energy Management ¡õ Response to Climate Change ¡õ Materials Management

¡õ Water Resource Utilization ¡õ Pollution Control

?Corporate Social Responsibility

¡õ Labor Relations Management ¡õ Employee Training and Development ¡õ Occupational Health and Safety ¡õ R&D and Innovation

¡õ Product Responsibility ¡õ Protection of Customers' Rights and Interests ¡õ Information Security and Privacy Protection

¡õ Responsible Supply Chain ¡õ Product Accessibility

?Corporate governance

¡õ Protection of Shareholders' Rights and Interests ¡õ Governance Strategy and Organizational Structure ¡õ Business Ethics

¡õ Tax Governance ¡õ Risk Management ¡õ Quality of Information Disclosure ¡õ ESG Governance

5. Does this ESG report provide any information that you are interested in:

¡õ Yes ¡õ No (What additional information would you like to see ____________________________________)

7¡¢Do you have any other comments or suggestions regarding our ESG report, ESG work, or sustainable development management?

Email: [e-mail].: 0571-89903300Address: 866 Moganshan Road, Hangzhou, Zhejiang

Annex II: Feedback Form

Huadong MedicineInvestor Relations

Management

Huadong Medicine Co., Ltd.

Scienti?c Research-basedPatient-centered

Contact Information

Address: 866 Moganshan Road, Hangzhou, ZhejiangEmail: [e-mail] [e-mail].:0571-89903388 (Switchboard) 0571-89903300 (Investor Hotline)