About the Report
0102
About the Report
Report Scope
Information Sources
Preparation Basis
This report is the 13th Environmental, Social, and Governance (ESG) report publicly released by Sichuan KelunPharmaceutical Co., Ltd. (hereinafter referred to as "KELUN PHARMA", "the Company", or "We"). It provides acomprehensive disclosure of the Company's practices and performance in economic, environmental, social, andgovernance responsibility domains for the year 2024, systematically addressing the expectations and requirements ofstakeholders.
The report involves multiple subsidiaries (branches) of KELUN PHARMA. For the sake of convenience, the report willuse the following abbreviations for these subsidiaries (branches):
Timeframe: The reporting period covers January 1, 2024 to December 31, 2024. To enhance comparability and forward-looking insights, certain content extends appropriately to prior and subsequent years.Reporting Boundary: Economic, environmental, social, and governance responsibility information pertaining to theCompany and its subsidiaries/branches.
The information disclosed in this Report is sourced from internal ofcial documents, statistical reports, and annual reportsof the Company. The data disclosed is based on original operational data of the KELUN PHARMA, publicly availablegovernment data, annual nancial data, internal relevant statistical reports, third-party questionnaire surveys, and third-party evaluation interviews. Financial data in this report is denominated in RMB (or CNY).
Shenzhen Stock Exchange Self-regulatory Guidelines for Listed Companies No. 17 – Sustainability Reporting (Trial)Shenzhen Stock Exchange Self-regulatory Guidelines for Listed Companies No. 3 – Sustainability Report PreparationSustainability Reporting Standards by Global Sustainability Standards Board (GRI Standards)United Nations Sustainable Development Goals (UN SDGs)Morgan Stanley International ESG ratings (MSCI ESG rating)
Report Access
Appellation Note
Full NameAbbreviationSichuan Kelun Pharmaceutical Co., Ltd.KELUN PHARMASichuan Kelun Pharmaceutical Co., Ltd. Renshou BranchRenshou BranchSichuan Kelun Pharmaceutical Co.,Ltd. Guang'an BranchGuang'an BranchSichuan Kelun Pharmaceutical Co., Ltd. Anyue BranchAnyue BranchSichuan Xinkaiyuan Pharmaceutical Co., Ltd.Xinkaiyuan
Kunming Nanjiang Pharmaceutical Co.,Ltd.Kunming Nanjiang
Hunan Kelun Pharmaceutical Co., Ltd.Hunan KelunHunan Kelun Pharmaceutical Co., Ltd. Yueyang BranchHunan Kelun Yueyang Branch
Hubei Kelun Pharmaceutical Co., Ltd.Hubei Kelun
Jiangxi Kelun Pharmaceutical Co., Ltd.Jiangxi KelunGuizhou Kelun Pharmaceutical Co., Ltd.Guizhou KelunShandong Kelun Pharmaceutical Co., Ltd.Shandong Kelun
Henan Kelun Pharmaceutical Co., Ltd.Henan KelunGuangxi Kelun Pharmaceutical Co., Ltd.Guangxi KelunSichuan Kelun Pharmaceutical Research Institute Company LimitedKelun Pharmaceutical Research InstituteSichuan Kelun-Biotech Biopharmaceutical Company LimitedKelun-BiotechSichuan Kelun Pharmaceutical Co., Ltd. Qionglai BranchQionglai Branch
Yili Chuanning Biotechnology Co., Ltd.CHUANNING BIOTECHIli Jiangning Biotechnology Co., Ltd.JIANGNING BIOTECH
Khorgos Jinhe Biotechnology Co., Ltd.JINHE BIOTECHChengdu Qingshan Likang Pharmaceutical Co., LtdQingshan Likang
Chongzhou Junjian Plastic Co., Ltd.Junjian PlasticKelun-Kazpharm Co., Ltd.Kelun-Kazpharm
This report is available in electronic format for your review. You may access it by visiting our ofcial website (https://www.kelun.com/) or the CNINFO platform (http://www.cninfo.com.cn). For any inquiries or suggestions regarding this report,please feel free to contact us via email at kelun@kelun.com or by phone at +86-28-8286 0609.
Opening
0304
Main BusinessWe are mainly engaged in the research and development, production, and sales of 24 types of pharmaceutical products,including large-capacity injection (infusion), small-capacity injection (water injection), sterile powder for injection (includingpowder injection and lyophilized powder injection), tablets, capsules, granules, oral liquid and peritoneal dialysis uid,as well as antibiotic intermediates, APIs and pharmaceutical packaging materials. The main products cover areas suchas oncology, anti-infection, parenteral nutrition, liquid therapy, central nervous system, cardiovascular, anesthesia andanalgesia, respiratory, osteoporosis, andrology, diabetes, and rheumatoid arthritis.
Engine No.1Engine No.2Engine No.3
KELUN PHARMA maintains itsleading position in the area ofIV Solutions through continuousindustrial upgrading andrestructuring product portfolio.
KELUN PHARMA creates acompetitive advantage inantibiotics from intermediate,APIs to FPPs by innovativeexploitation of quality naturalresources.
KELUN PHARMA strivesfor longevity through theelaboration of R&D systemsand diversified technologyinnovation."Three Driving Engines and Innovative Growth" Strategy
OpeningDiscovering Kelun PharmaFounded in 1996 and headquartered in Chengdu, Sichuan Province, China, KELUN PHARMA has grown into one ofChina's most comprehensive pharmaceutical groups, spanning R&D, drug manufacturing, and commercial distribution.Recognized among China's Top 100 Pharmaceutical Manufacturers and Top 500 Manufacturing Enterprises, we haveearned the title of "Model Champion in Manufacturing Excellence" for our global leadership in large-volume injections in2018.Since our successful listing on the Shenzhen Stock Exchange in June 2010, we adhere to the development strategy of"Three Driving Engines and Innovative Growth". We boast both high-end manufacturing and novel material advantagesin the eld of IV solution and possess the strategic heights of technical innovations and quality benchmarks. Moreoverbased upon our mature fermentation technology and robust industrialization platform, we keep solidifying thefundamental base for our antibiotics main business, constantly optimize and upgrade our industrial structure and fullyenter into synthetic biology. In terms of our research and development (R&D) innovation, we focus on developing drugswith high technological content, including branded generics, innovative small molecules, novel drug delivery systems andbiotechnology drugs. We have successfully established an internationally renowned Antibody-Coupled Drugs (ADC) R&Dplatform, marking a new era in our innovative R&D efforts and global layout. The successful spin-offs and listings of oursubsidiaries, CHUANNING BIOTECH and KELUN-BIOTECH, have enabled us to establish a three-pillar operational structuresupported by "pin"-shaped capital platforms, further consolidating our industry-leading position.
Corporate Culture of KELUN PHARMA
Corporate VisionTo become an innovative-driven, internationallycompetitive pharmaceuticalenterprise with globalinuence, and a modernpharmaceutical group withstandardized management,social satisfaction, and civilizedand prosperous employees
Corporate Value
CorporateCulture
Corporate Philosophy
Righteous andTrustworthy,Excellence-pursuing,Customer-oriented,Team-cooperation
Pursuing Truth in Scienceand Kindness in Ethics
Infusion Products
Non-infusion
Products
OTC
Main Products
Innovative Injection
Packaging
APIs andIntermediates
Medical Devices
Opening
0506
2024 ESG Key Performance
Annual Key Performance
0506
Total investment in environmentalprotectionRMB
661.40
million
Net prot attributable to the parent companyRMB
2.94
billion
with a year-on-year increase of
19.53%
Total hours of annualenvironmental protectiontrainings
46,786 hours
Number of violations ofenvironmental laws andregulations
0506
Economic performance
Social performance
Environmental performance
Opening
Business incomeRMB
21.81
billion
with a year-on-year increase of
1.67%
Investment in R&DRMB
2.17
billionTotal number of R&Dpersonnel2,8552,860validpatent applicationsTotal number of employees21,864Labor contract signing rate100%overall employeeengagement rate95%
with a year-on-year increase of
11.20%
with a year-on-year increase of
9.30%
1,997valid patentgrantswith female middle managersaccounting for
48.82%
coverage rate of employee socialsecurity contributions100%and overall employeesatisfaction rate92%
accounting for
9.95%
of the total auditedoperating revenue for the yearaccounting for
13.06%
of the totalworkforceno product recalls
2,197ethnic minorityemployees
A total of61,600training sessionsconducted throughout the yearInvestments in occupational health andsafety managementRMB28,862,400
100%coverageof occupational healthcheckups
with employees receivingtraining for1,761,800
hours in totalwith100%coverage foremployee work-related injuryinsurance
case of occupationaldiseases
and an annual trainingexpenditure ofRMB4,878,000
and100%coverage foremployee production liabilityinsurance
The donation amount was approximatelyRMB
million
Opening
0708
Our 2024 Major Honors
February 2024March 2024
The People's Government of
Sichuan ProvinceChengdu Industrial Boutique (Basic Infusion)Most Caring Donation Enterprise
March 2024Sichuan Medical Association
2023 Charity Contribution Award
March 2024Pengzhou Charity Association2024 Caring Enterprise Award
August 2024September 2024China Association for QualityAll-China Federation of Industry
and Commerce
Exemplary Experience in QualityBenchmarking in 2024
China's Top 500 Private Manufacturing
Enterprises in 2024
ESG Rating
"AA" in WIND ESG rating(The highest Wind ESG rating amongpharmaceutical companies, ranking 1st outof 291 assessed pharmaceutical companies)
"BB" in MSCI ESG rating
"AA" in CSI ESG rating
"A" in SynTao Green Finance ESG rating
0708
Chengdu Municipal Bureau of Economy and
Information Technology, etc.
OpeningHonors and Awards
Opening
0910
December 2024Dazong Securities TimesExcellent Examples of ESG Practices
November 2024Taishan Pharmaceutical ForumOrganizing Committee
Law-Abiding and Trustworthy Enterprise inthe Pharmaceutical Industry (2023-2024)
November 2024Taishan Pharmaceutical ForumOrganizing CommitteeTop 100 Pharmaceutical Industrial Enterprises
by Revenue (2023-2024)
November 2024Taishan Pharmaceutical Forum
Organizing Committee
Top 50 Self-Innovative Enterprises in the
Pharmaceutical Industry (2023-2024)
October 2024Sichuan Federation of Industry and
Commerce
Top 100 Private Enterprises in
Sichuan (17
th)October 2024Chengdu Enterprise Confederation
2024 Chengdu Top 100 Enterprises
September 2024China National Pharmaceutical Industry
Information CenterOutstanding Corporate Social Responsibility Project
in China's Pharmaceutical Industry
September 2024Sichuan Enterprise Federation
Top 100 Enterprises in Sichuan
September 2024China Pharmaceutical Industry Information
Annual ConferenceChina's Top 100 Pharmaceutical
Companies in 2023
September 2024China National Pharmaceutical Industry
Information CenterBest Industrial Enterprise in China'sPharmaceutical R&D Sector
September 2024Sichuan Enterprise FederationTop 100 Manufacturing Enterprises
in Sichuan
September 2024China International Fair for Trade in
Services
Benchmark ESG IntegratedGovernance Enterprise in 2024
October 2024
October 2024Chengdu Enterprise Confederation
Chengdu Enterprise Confederation2024 Chengdu Top 100
Private Enterprises
2024 Chengdu Top 100Manufacturing Enterprises
0910
Opening
December 2024
Excellent Cases of Social Responsibility forChinese Private Enterprises (2024)All-China Federation of Industry
and Commerce
Upholding Integrity and Persevering for Long-Term Success
1112
Upholding Integrityand Persevering forLong-Term Success
KELUN PHARMA upholds integrity and ethics as thecornerstone of corporate development, rmly believingthat a robust governance structure is the foundation forsustainable growth. In 2024, we further strengthenedthe accountability of directors and senior management,enhancing corporate governance transparency andcompliance to ensure all operations strictly adhereto national laws, regulations, and business ethics.By continuously refining our internal managementsystem and reinforcing Party-building initiatives, weare committed to promoting standardized and efcientgovernance. Moreover, we integrate business practiceswith corporate values, international standards, andcustomer expectations, actively implementing ESGprinciples to create long-term sustainable value forshareholders, employees, clients, and society at large.This approach supports our pursuit of high-qualitydevelopment.
Upholding Integrity and Persevering for Long-Term Success
1314
ESG Governance System
ESG Governance Structure
KELUN PHARMA prioritizes corporate social responsibility (CSR) and sustainable development, embedding ESG principlesinto our operations through a structured ESG management system that undergoes regular strategy optimization. Weadvocate for transparent communication, maintaining close engagement with stakeholders to ensure ESG principles arefully reected in strategy and operation.
In compliance with the Company Law of the People's Republic of China, theCode of Governance for Listed Companies,and other relevant regulations, the Company's Board of Directors has established an Environmental, Social, andGovernance (ESG) Committee (hereinafter referred to as the "ESG Committee"). The ESG Committee is committed toadvancing the company's ESG development with the goal of achieving high-quality and sustainable growth. In January2024, we revised theWorking Rules of the Environmental, Social, and Governance (ESG) Committee, further refiningrelevant management rules.Our three-tier ESG governance structure is designed as follows: Board of Directors serves as the highest decision-makingbody for ESG matters, bearing ultimate ESG responsibility. ESG Committee is supervised by the Board of Directors,reporting directly to the Board and taking responsibility for its work to the Board. ESG Working Group operates under theESG Committee.
Board ofDirectors
ESGCommittee
ESGWorkingGroup
●Review and approve our ESG strategy and objectives and signicant matters relatedto social responsibility.
●Formulate ESG management policies, objectives, strategies, and structures;
●Identify ESG trends and assess ESG risks and opportunities facing the Company;
●Supervise and guide the work of ESG working groups.
●Formulate policies and implementation plans in line with our strategy and ESGobjectives;
●Manage ESG-related risks and issues in our daily operations;
●Coordinate and promote the implementation of ESG-related problems;
●Prepare annual ESG reports, etc.
ESG Vision
ESG Management Approach and Strategy
Our ESG vision is to practice high-quality ESG management, actively respond to the United Nations SustainableDevelopment Goals (SDGs) , support the Healthy China initiative and the national goals of peaking carbon emissions andsubsequent carbon neutrality, turn our corporate philosophy of "Pursuing Truth in Science and Kindness in Ethics" intoconcrete actions, seek health and well-being for more patients, and make more diseases to be treated. Moreover, weengage in climate change, embrace challenges, integrate resources, incorporate ESG principles into our developmentstrategy of "Three Driving Engines and Innovative Growth", effectively fulll our commitments to all sectors of society,collaborate with our employees and all partners, lead industrial sustainable and healthy development, promoteharmonious development between enterprises, employees, communities and environment, boost advances in medicaltechnologies, and make contributions to all.
We are committed to integrating the concept of sustainable development into our daily operation and managementpractice, while maintaining our ESG management strategy consistent with the United Nations Sustainable DevelopmentGoals (SDGs) and taking efforts to achieve excellent performance and continuous progress in key areas, so as to promotehigh quality and sustainable development of our Group's business.
Product responsibility
Environmental protectionSocial responsibilityEmployee development
R&D innovation
We strengthen quality managementand rmly establish the "GrandQuality Concept". We set up a reliablequality control and monitoring systemto ensure the safety and effectivenessof manufactured drugs, whilecontinuously improving our qualitystandards and brand reputation.
We actively respond to climatechange to achieve synergistic effectsin pollution reduction and carbonemission reduction. We always adhereto our business philosophy of "givingpriority to environmental protectionand sustainable development",pursuing green and sustainabledevelopment. Through continuousinvestment in environmentalprotection, and substitution ofclean energy, we advocate energyconservation and emission reductionto form a circular economy model andfurther to promote green productionand green ecology.
We fulll social responsibilitiesand care for patients' health.We actively participate in drugprocurement with quantitycommitment, voluntarily engagein national health insurancenegotiations and application workfor catalog of drugs of medicalinsurance, and improve ourproduction processes. Under thepremise of ensuring product quality,we reduce drug costs and therebylower drug prices, so as to relievepatients' burden and increasedrug accessibility. We alwaysrmly serve as pioneers in nationalinclusive healthcare and guardiansof patients' lives and health.
We advocate simple and friendlyinterpersonal relationships andsupport employee development.Adhering to the people-orientedprinciple, we aim to create acorporate culture that is diverse,equal, open, inclusive, collaborative,and mutually supportive. Our goal isto enable employees to live happilyand work joyfully. Meanwhile, wecontinuously improve employeewelfare benets, thereby enhancingtheir sense of belonging, happiness,and honor.
We continuously cultivate deeply intothe eld of new drug research anddevelopment, constantly promotingthe implementation of innovativeachievements, and introducing bettertreatment solutions for human beingto overcome diseases. We explore newinnovative models such as digitizationand articial intelligence, and promote theupgrading of pharmaceutical innovationmodels.
Upholding Integrity and Persevering for Long-Term Success
1516
Stakeholder Communication
We are fully aware of the vital role of various stakeholders in driving our sustainable development. Based upon athorough review, we have identied eight core stakeholder groups, including government/regulatory bodies/associations,shareholders/investors, suppliers, customers, employees, communities, potential users, and other business partners. Weactively advocate and practice a multi-dimensional communication strategy, striving to comprehensively and sincerelylisten to the authentic voices from all parties. This approach enables us to achieve sustainable development goalstogether with all stakeholders, share the fruits of our enterprise's growth, and jointly create social value.
Analysis of Material TopicsIn 2024, based on national macro policy orientation, domestic and international social responsibility standards research,industry benchmarking, and combined with our business development strategy, operational management status, and keyconcerns of stakeholders, we conducted analysis of material topics through identication, evaluation, and conrmationprocesses. There were 26 ESG material topics selected to actively respond to stakeholder demands. By assessing"importance to KELUN PHARMA's development" and "importance to stakeholders", we prioritized these ESG materialtopics to determine the focus and sequence of sustainability management for the year and to establish long-term andspecic ESG goals.
Evaluation Process for Material Topics
Step 1Step 2Step 3
Topic Benchmarking and
Screening
Stakeholder CommunicationTopic Importance AssessmentBased on our businessdevelopment and currentESG management status,with reference to the latestnational sustainabilitypolicies and mainstreamdomestic and internationalsustainability standards,and benchmarking againstleading peers' disclosurepractices and mainstreamESG rating agency focusareas in capital markets, wemade some upgrades andadjustments base on the ESGtopic list identied in 2023.
We actively monitored
social needs and policy
trends, including regulatory
requirements, sustainability
status and trends, and
capital market dynamics.
Through multiple channels, we
maintained communication
and engagement with
stakeholders, building and
sustaining necessary positive
relationships to understand
stakeholder perspectives on
sustainability matters.
We conducted analysis ofmaterial topics to identifytopics most relevant tothe company's sustainabledevelopment. Based onstakeholder concerns, therelevance of topics to thecompany's development andtheir impact on stakeholderswere evaluated, and thetopics were prioritized byimportance.
StakeholdersTOPICS OF INTERESTCOMMUNICATION AND RESPONSE
●
Tax Compliance
●Carbon Emission Management
●Water Resource Management
●Climate Change
●Compliant Operation
●Supervision and Inspection by AdministrativeAuthorities
●Periodic Work Reports and OfcialCorrespondence Emails and Phones
●
Regular Communication
●Policy Consultation and Implementation
●Compliant Operation
●Business Ethics and Anti-corruption
●Stable Returns
●ESG Management Approach andStrategy
●Periodic Reports to Shareholders' GeneralMeeting
●Ofcial Website Information Disclosure
●Investor Hotline
●Exclusive Appointment and Inquiry Email forInvestors
●Sustainable Supply Chain
●Business Ethics and Anti-corruption
●Energy Usage
●Industrial Development andCooperation
●Supplier Exchange and Inspection
●Supplier Training
●Supplier Evaluation
●Procurement Bidding Process
●Product Safety and Quality
●Responsible Marketing
●Compliant Operation
●Carbon Emission Management
●Universal Health and Access toHealthcare
●Customer Satisfaction Survey
●Communication with Customers via Email andPhone for Service and Complaint Handling
●Customer Visits
●Employee Compensation & Benets
●Occupational Health and Safety
●Compliant Operation
●Equality and Diversity
●Training and Education
●Internal Emails and Announcements
●Corporate Culture Platform
●Employee Suggestion Platform
●Internal Publication
●Company Labor Union
●Public Welfare and Charity
●Universal Health and Access toHealthcare
●Carbon Emission Management
●Waste Management
●Health Knowledge Popularization Activities
●Public Enquiries and Complaints
●Visits and Interviews
●External Announcements and Disclosure
●Compliant Operation
●Carbon Emission Management
●Waste Management
●Information Disclosure
●Ofcial Websites
●Social Media
●Employee Compensation & Benets
●Compliant Operation
●Carbon Emission Management
●
Climate Change
●Business Communication and AgreementSigning
●
Industry Activities, e.g., Exhibitions, Seminars
●Satisfaction Surveys
Government/Regulatory Bodies/AssociationsShareholders/Investors
Suppliers
Customers
Employees
Communities
Potential Users
Other Partners
Upholding Integrity and Persevering for Long-Term Success
1718
Environment ScopeSocial ScopeGovernance Scope1 Environmental compliancemanagement2 Carbon emission management3 Toxic emissions and wastemanagement4 Energy utilization5 Water resource management6 Ecosystem and biodiversityconservation7 Climate change response and
mitigation
20 Corporate governance andcompliant operation21 ESG management strategy22 Comprehensive riskmanagement23 Business ethics and anti-corruption24 Board diversity25 Data security and privacyprotection26 Stakeholder communication
8 Occupational health &safety9 Product safety and quality10 Employee compensationand benets11 Employee training anddevelopment12 Product R&D andtechnological innovation13 Labor rights protection
14 Supply chainmanagement15 Universal health andaccess to healthcare16 Intellectual property
protection17 Responsible marketing18 Rural revitalization and
social contribution19 Industry development
and collaboration
,×??
???
E?ē??×?ê×ē?ē?aē?????ê????
| ,×?? |
Corporate Governance System
Governance StructureWe comply with the requirements of theCompany Law of the People's Republic of China, theSecurities Law of thePeople's Republic of China, theRules for the Listing of Stocks on the Shenzhen Stock Exchange, theGuidelines for Articlesof Association of Listed Companies, theCode of Governance for Listed Companies, theShenzhen Stock Exchange Self-regulatory Guidelines for Listed Companies No. 1 – Standardized Operation of Main Board Listed Companies, and otherlaws, regulations, and normative documents to standardize corporate operations, continuously improve the corporategovernance structure, and fully leverage the roles of the Shareholders' General Meeting, the Board of Directors, and theBoard of Supervisors in major decision-making, operational management, and supervision, ensuring compliant operationsof the Company.
Board Re-election
Members of the Board of Directors are nominated by the Nomination Committee and approved by the Board of Directorsand the Shareholders' General Meeting. During the reporting period, we conducted a Board re-election as follows:
For information on the current status of corporate governance and the tenure of directors, supervisors, and seniormanagement, please refer to Section 4 "Corporate Governance" of theKELUN PHARMA 2024 Annual Report.
Re-election of Independent and Non-independent Directors for the Board of Directors
The three-year term of the Company's seventh Board of Directors expired. In accordance with theCompany Law of the People's Republic of China, the Securities Law of the People's Republic of China, andother relevant laws and regulations, as well as the provisions of the Company's Articles of Association, theNomination Committee, after consulting with eligible nominating entities, nominated Mr. Liu Gexin, Mr. LiuSichuan, Mr. Ge Junyou, Mr. Zhou Xianxiang, Mr. He Guosheng, and Mr. Wang Guangji as candidates fornon-independent directors of the eighth Board of Directors, and nominated Mr. Ren Shichi, Mr. Gao Jinbo,and Mr. Wang Fuqing as candidates for independent directors of the eighth Board of Directors. On May15, 2024, we held the 2023 Annual Shareholders' General Meeting, where cumulative voting was used toseparately vote on the aforementioned non-independent and independent director candidates, and therelevant proposals for the Board re-election were approved.
During the reportingperiod, we held
Shareholders'General Meetings
During the reportingperiod, we held
Board of Supervisors'meetings
During the reportingperiod, we held
Board meetings
with an averageattendance rate ofdirectors maintained at100%
2024 ESG Material Topics Importance Matrix of KELUN PHARMA
KELUN PHARMA Governance Structure
Shareholders' General Meeting
Board of DirectorsBoard of Supervisors
General Manager
Strategy CommitteeRemuneration andEvaluation CommitteeNomination Committee
ESG CommitteeAudit CommitteeInternal Audit Department
Ofce of the Board of Directors
(Securities Department)
Deputy General Manager
Upholding Integrity and Persevering for Long-Term Success
1920
Board diversity
The Company's Board of Directors consists of
directors, including
independent directors, accounting for
33.33%
, and
executive director. The Chairman of the Board is Mr. Liu Gexin, who is responsible for overseeing theimplementation of Board resolutions.Name
Independent Director or
Not
GenderAgeEducationProfessional backgroundLiu GexinNon-independent DirectorMale74Master
Pharmaceutical Industry
ExpertLiu SichuanNon-independent DirectorMale41Master
Pharmaceutical Industry
ExpertGe JunyouNon-independent DirectorMale53PhD
Pharmaceutical Industry
ExpertHe GuoshengNon-independent DirectorMale57PhD
Economic and nancial
expertsWang GuangjiNon-independent DirectorMale72PhD
Pharmaceutical Industry
ExpertZhou XianxiangNon-independent DirectorMale51Bachelor-
Ren ShichiIndependent DirectorMale55PhDAccounting ExpertGao JinboIndependent DirectorMale64MasterCompliance and Risk ExpertWang FuqingIndependent DirectorMale62Master
Pharmaceutical Industry
ExpertSpecial Committees of the Board of DirectorsThe Company's Board of Directors has established the Audit Committee, Remuneration and Evaluation Committee,Nomination Committee, Strategy Committee, and Environmental, Social and Governance Committee ("ESG Committee"),with separate rules of procedure formulated for each special committee. The special committees of the Company areaccountable to the Board of Directors and perform their duties in accordance with the Company's articles of associationand the authorization of the Board of Directors. Proposals from the special committees shall be submitted to the Board ofDirectors for deliberation and decision.
The composition of the Company's special committees and the number of meetings held are as follows:
CommitteeComposition
Number of Meetings
Held in 2024Audit Committee
Chairman: Ren Shichi; Members: Ou Minggang, Gao Jinbo3Chairman: Ren Shichi; Members: Gao Jinbo, Wang Fuqing5ESG CommitteeChairman: Liu Sichuan; Members: He Guosheng, Ren Shichi1Nomination Committee
Chairman: Gao Jinbo; Members: Liu Sichuan, Ren Shichi1Chairman: Wang Fuqing; Members: Liu Sichuan, Gao Jinbo1Remuneration andEvaluation Committee
Chairman: Ren Shichi; Members: Liu Sichuan, Ou Minggang1Chairman: Gao Jinbo; Members: Liu Sichuan, Ren Shichi1Strategy Committee
Chairman: Liu Gexin; Members: Ou Minggang, Gao Jinbo, Ren Shichi3Chairman: Liu Gexin; Members: Liu Sichuan, Ge Junyou, WangGuangji, Wang Fuqing
One Share, One Vote
Executive Equity Policy
We adhere to the principle of "one share, one vote". Shareholders enjoy equal voting rights for each ordinary share whenelecting directors or supervisors or voting on major corporate decisions. We have no preferred shares or "golden shares".As of the end of the reporting period, the total number of shareholders with restored voting rights for preferred shareswas zero.
In accordance with the Code of Governance for Listed Companies, ourArticles of Association, and theWorking Rulesfor the Remuneration and Evaluation Committee of the Board of Directors, and considering industry conditions, actualoperational performance, and business assessment requirements, we formulated the 2024 annual senior executivescompensation plan. Senior executives include the General Manager, Deputy General Managers, Board Secretary, andChief Financial Ofcer. Senior executives receive salaries according to the company's relevant compensation regulationsbased on their specific management positions within the company. Their compensation consists of two components:
xed salary and variable salary. The variable salary is assessed and disbursed at the end of the year based on their jobpositions, performance, and the company's operational performance.In 2024, Mr. Liu Sichuan, the Company's Executive Director and General Manager, received a total compensation of RMB
4.8883 million. His compensation details are shown below:
The Audit Committee of the Company consists of three independent directors. Mr. Ren Shichi, the chairman, has a seniorbackground in accounting. Mr. Gao Jinbo, a member, has extensive experience in pharmaceutical industry compliance.Mr. Wang Fuqing, another member, has profound knowledge and practical experience in the pharmaceutical industry.
Executive Director
Member
Fixed Compensation (RMB 10,000)Variable Compensation (RMB 10,000)
Total* (RMB 10,000)SalaryBenetsAnnual BonusLiu Sichuan420.008.8360.00488.83
*Note: The total compensation differs by RMB 88,300 compared to the "total pre-tax remuneration received from the Company" item in the2024 annual report, which represents the difference in welfare benets (Amount of social insurance and housing fund contributions borne by thecompany).
2122
Internal Control and Risk Management SystemBy the requirements of the Company Law of the People's Republic of China, theSecurities Law of the People's Republicof China, theRules for the Listing of Stocks on the Shenzhen Stock Exchange, theBasic Standards for Enterprise InternalControl, and other relevant laws and regulations, combined with our own operations and management needs, we haveprepared our internal control documents, including but not limited to theInternal Control Manual, theImplementationPlan for Internal Control Management, theCompliance System Documents, to ensure the effectiveness and adaptabilityof the design and implementation of internal controls.During the reporting period, we continuously optimized our internal control evaluation mechanism and refined theinternal control manual, specifying standards and procedures in detail to provide clear guidance for business operations.Meanwhile, we established internal control teams in all subsidiaries (branches) and direct departments to ensure theeffective implementation of internal control procedures in business units.
Pursuing high-quality sustainable development, we integrate risk management requirements into corporatemanagement and business processes, constructing three lines of defense for risk management:
Compensation Clawback and Malus Provisions
ESG Performance Linked to Executive Compensation
The Remuneration and Evaluation Committee of the Company has broad discretionary power. If any senior managementengages in improper conduct that harms the company's interests through the misuse of their afliations, accepting bribesor other illegal income, misappropriation of Company assets, violation of duciary duties, or violation of laws, regulations,or Company bylaws during the execution of their duties, they shall be held liable for compensation and such behaviorshall be reected in the annual performance assessment, which is linked to bonuses.
The Company has established theESG Assessment and Performance Incentive Adjustment Policyand disclosed it onthe official website, clarifying the linkage between ESG performance assessment and the performance assessmentand bonus of management at all levels. ESG indicators are included in the performance assessment table for seniorexecutives and heads of headquarters departments. The maximum score for performance is 100. If the ESG indicatorassessment fails to meet the annual target requirements, corresponding deductions will be made in the performanceassessment scores of management personnel, ranging from 2 to 20 points. In addition, the Company also includes EHS-related assessments in the ESG indicator assessment in the performance assessment table of general managers and EHSdepartment heads of subsidiaries (branches). This includes assessments of compliance with pollutant emission standards,the number of environmental administrative penalties, and the certication of environmental management systems andoccupational health and safety management systems. The weightage of these assessments ranges from 5% to 10%, inorder to implement the Group's environmental, safety, and health management requirements.
Systematic Monitoring MechanismWe systematically organize subsidiaries (branches) and direct departments to conduct internal control self-assessmentsannually, aiming to comprehensively identify potential internal control deciencies and take timely corrective measuresto ensure the effective operation of the internal control system. During the reporting period, we carried out an annualinternal control self-evaluation across the Group, covering units whose operating revenue accounted for approximately
93.04% of the Group's consolidated operating revenue.
Simultaneously, in accordance with the Internal Audit System, the Internal Audit Department independently audits theestablishment and implementation effectiveness of the Company's internal control system annually, covering subsidiaries(branches) and direct departments across all business segments, including production, marketing, logistics, procurement,nance, and human resources. To enhance the pertinency and effectiveness of audits, the Internal Audit Departmentdetermines differentiated audit priorities each year based on business types, operational characteristics, and risk proles,while dynamically adjusting audit plans in line with the Company's annual strategic goals and key work trends.Additionally, in compliance with relevant laws, regulations, and regulatory requirements, we engage a qualifiedaccounting firm annually to independently audit and evaluate the effectiveness of internal controls over financialreporting during the reporting period.
First Line of DefenseSecond line of defenseThird Line of DefenseBusiness units, identifyingand controlling risks duringoperations;
The Internal Control andCompliance Department andthe Department of Legal Affairsmanage the risks of businessunits collectively;
The Internal Audit Department,conducting independentsupervision and inspections andreporting directly to the AuditCommittee
Upholding Integrity and Persevering for Long-Term Success
Upholding Integrity and Persevering for Long-Term SuccessBusiness Ethics
We strictly comply with laws and regulations such as theAnti-unfair Competition Law of the People's Republic of China,theInterim Provisions on Prohibiting Commercial Bribery, theCriminal Law of the People's Republic of China, as well asthe provisions of the ourArticles of Association. We have formulated and rigorously implemented institutional documentsincluding theCode of Business Conduct,Anti-Commercial Bribery System, andAnti-Fraud System. During the reportingperiod, to enhance the our business ethics and anti-corruption system and strengthen compliance and integrity, we newlyissued theAnti-Commercial Bribery Systemand updated theCode of Business Conduct, both of which were publiclydisclosed on the ofcial website.The Audit Committee of Board of Directors serves as the highest supervisory body responsible for anti-corruption,anti-commercial bribery, and anti-fraud management. Relying on the Internal Audit Department, Internal Control andCompliance Department, Department of Legal Affairs, and Human Resources Department, it governs, supervises, andaudits the business ethics conduct of all employees and partners. Internal control team members and compliance ofcersin subsidiaries (branches) and direct departments are responsible for implementing and managing business ethics withintheir respective units and reporting regularly.In addition, the Company actively cooperates and exchanges in the work of business ethics, anti-commercial bribery, andanti-corruption with external parties.
Under the guidance of the Audit Committee and in accordance with theWorking Rules for the Audit Committee, andtheInternal Audit System, the Internal Audit Department conducts regular annual audits on business ethics and theimplementation of related policies. The audit scope covers all direct departments and subsidiaries (branches).By examining and overseeing the establishment and implementation of the company's internal control system, theauthenticity and integrity of financial information, and the integrity of personnel in key positions and processes, theInternal Audit Department ensures the effectiveness of the company's business ethics, anti-corruption, and anti-commercial bribery measures. Additionally, we assess commercial bribery and corruption risks across business areas,identify high-risk segments, and prioritize them in audits. To ensure management effectiveness, compliance andbusiness ethics indicators have been incorporated into the performance evaluations of subsidiaries (branches) and directdepartments.
We integrate applicable clauses of theCode of Business Conductintocontract management with suppliers and business partners. We prohibit allforms of commercial bribery, require all employees to adhere to the higheststandards of business ethics, and encourage upstream and downstreampartners and other stakeholders to support, accept, and implement theAnti-Commercial Bribery SystemandCode of Business Conductto conductbusiness ethically.During the supplier admittance stage, we include anti-corruption asa screening criterion, requiring all suppliers to complete theSunshineAgreement Training Videoon KELUN PHARMA's official procurementplatform, achieving 100% implementation. In business collaborations,contracts with partners include anti-commercial bribery clauses and the
Sunshine Agreement, clearly dening the obligations and responsibilities ofdistributors and agents in combating commercial bribery.
Anti-commercial Bribery and Anti-corruption
Business Ethics Audits
Anti-Corruption Oversight of Business Partners
As of the end of the reporting period,the Internal Audit Department of the Company has completed at least one audit of themajor subsidiaries within the group, covering the entire business process. The examinationof business ethics and the execution of relevant systems has been a key focus of thecomprehensive internal control audit.
During the reporting period,100%of coresuppliers conducting businesswith the Company signed theSunshine Agreement.
Actively participating in industryself-disciplineThe Company has joined theEnterprise Anti-Fraud Alliance(formerly known as the ChinaEnterprise Anti-Fraud Alliance)and actively fullls its socialresponsibilities as a memberenterprise of the ChinaPharmaceutical Industry Associationand the Provincial Federationof Industry and Commerce. TheCompany actively participates inthe formulation and complianceof industry self-discipline rules,promoting the construction ofbusiness ethics and anti-commercialbribery and anti-corruption work inthe industry.
Cooperation with thegovernment and lawenforcement agenciesThe Company maintainsclose communication andcooperation with governmentregulatory departments and lawenforcement agencies, keeps upwith changes in relevant lawsand regulations, and cooperateswith government departmentsin carrying out special actionsagainst commercial bribery andcorruption.
Engaging in externalexchanges and learningThe Company conductsexchange activities with otherenterprises within and outsidethe industry, learning fromadvanced experiences andpractices in anti-commercialbribery and anti-corruption,continuously improving its ownmanagement systems, andenhancing the professionalcapabilities of risk control andanti-fraud personnel.
2423
Upholding Integrity and Persevering for Long-Term Success
2526
We continuously strengthen business ethics development. In accordance with theCode of Business Conduct, weconduct at least one annual online/offline training session for all employees (including interns and other contractedworkers) covering business ethics, anti-fraud, anti-corruption, and anti-commercial bribery, with mandatory participation.Additionally, we provide at least one annual online/ofine business ethics training session for upstream and downstreampartners.Upholding integrity and honesty as core values, we enhance compliance awareness of anti-commercial bribery and anti-corruption through systematic training and diversied communication. A "regular + specialized" training mechanism isadopted, including annual anti-fraud training during the compliance season and targeted sessions based on businessneeds. During the reporting period, the Internal Audit Department organized over 10 anti-fraud training sessions,including company-wide, specialized, and new employee training. Meanwhile, subsidiary internal audit departmentsindependently conducted over 5 anti-fraud and anti-commercial bribery training sessions. To reinforce complianceawareness and effectively communicate corporate values, anti-fraud training has been included as a mandatory coursefor new employees. The Company adheres to the principle of "training must be followed by examinations" and requiresall trainees to participate in the exams and obtain a passing score.
We adhere to lawful and ethical operations, strictly complying with laws such as theAnti-Money Laundering Law of thePeople's Republic of China and the Anti-Unfair Competition Law of the People's Republic of China. Internal compliancemanagement systems, including theCode of Business Conduct,Anti-Fraud System, andTrade Secret Protection andNon-Competition System, have been established. TheCode of Business Conductexplicitly requires adherence to faircompetition principles and compliance with anti-monopoly laws and regulations in all jurisdictions of operation, ensuringhealthy competition within legal frameworks and avoiding direct or indirect monopolistic practices prohibited by law.During the reporting period, the Department of Legal Affairs added anti-monopoly clauses to sales contract templates.For participation in domestic and international markets, employees are required to uphold fair market order and complywith anti-unfair competition laws and regulations in China and operational jurisdictions.
We uphold the principle of "fair competition andshared development", actively fulfilling socialresponsibilities by treating SMEs equally andfostering a fair, transparent business environment.With practical actions we fulfill our corporate socialresponsibility, contributing to a harmonious and win-win industrial ecosystem. We consistently maintainequal payment terms for SMEs without discriminationbased on enterprise size, adhering strictly tocontractual payment periods for all SMEs.
Business Ethics Training
Fair competition
Equal treatment of SMEs
Department of Legal Affairs Conducts Anti-
commercial Bribery Training
Anti-fraud Training
We are committed to building a healthy and win-win business environment, encouraging suppliers, partners, and allemployees to participate in the supervision of the integrity management system. TheWhistleblower Protection andReward Systemhas been formulated and disclosed on the ofcial website to incentivize all parties to proactively exposeillegal activities such as corruption and occupational crimes.In handling whistleblowing matters, we strictly comply with national laws, regulations, and internal regulations,implementing full-process condentiality management for whistleblowers and the information they provide. From caseacceptance, documentation, investigation, and resolution to archiving and follow-up, we have established rigorousinformation protection mechanisms to resolutely prevent leaks or loss of whistleblowing information.
Whistleblowing Channels and Whistleblower Protection System
Whistleblowing
Phone:
WeChat/E-mail
WeChat: 13710096516Integrity Kelun WeChat Ofcial AccountIntegrity Kelun Enterprise WeChat PlatformE-mail: jubao@kelun.com
MailingAddress
Internal Audit Department/Department of Legal Affairs/Human Resources Department, SichuanKelun Pharmaceutical Co., Ltd., 36 Baihua West Road, Qingyang District, Chengdu, P.R. China
Internal Audit Department: 028-82860620Department of Legal Affairs 028-82860470Human Resources Department: 028-82860386
Upholding Integrity and Persevering for Long-Term Success
2728
Strengthening Investor CommunicationWe strictly comply with theShenzhen Stock Exchange Self-regulatory Guidelines for Listed Companies No. 1 –Standardized Operation of Main Board Listed Companies, theGuidelines for Investor Relations Management of ListedCompanies, theAdministrative Measures on Information Disclosure by Listed Companies, as well as internally establishedsystems such as theInformation Disclosure Management Systemand theAnnual Report Information Disclosure MaterialErrors Accountability System. These measures strengthen the standardization of our information disclosure managementand investor relations work, enhance corporate governance standards, and safeguard the legitimate rights and interestsof the Company, investors, and other stakeholders.
We strictly adhere to the principles of information disclosure, fullling our disclosure obligations truthfully, accurately,completely, timely, and fairly. We continuously deepen the institutionalization and standardization of informationdisclosure work, strengthen environmental, social, and corporate governance (ESG) disclosures, and consistently improvetransparency. From 2020 to 2023, we received an "A" rating in the annual information disclosure assessment by theShenzhen Stock Exchange for four consecutive years.
We support investors in fully understanding our operations and development trends by establishing multi-channelcommunication platforms for domestic and international investors.
Disclosure of information
Investor Communication
During the reporting period,we disclosed a total of
documents
During the reporting period:
We held
earnings briengresponded to
inquiries on the InteractivePlatform, all replied to on time
answered
investorhotline calls
conducted
online targeted research sessions
including
announcementdocuments
and
non-announcementonline documents
Interactive PlatformAnalyst MeetingGeneral Meeting ofShareholders
On-site Research
Earnings BriengInvestor Hotline CallRoadshowsInvestor E-mail
InvestorCommunicationMethods
2023 Online Earnings Brieng2023 Annual Shareholders' General Meeting
and addressed
hotlineinquiries
Upholding Integrity and Persevering for Long-Term Success
2930
Honors and Awards
Information Security Assurance
We attach great importance to the protection of clients' businesssecrets, data information, and personal privacy, strictly complyingwith laws and regulations such as thePersonal Information ProtectionLawandCybersecurity Law, as well as relevant policies and industrystandards. During the reporting period, we promoted the improvementand construction of our institutional framework, updating and issuing 19network and information security-related systems, thereby establishingsystematic network and information security management requirements.Our information systems have achieved Level 2 Certication for ClassiedProtection of Cybersecurity, meeting national standards in physicalsecurity, network security, and data security. This not only enhancessystem security and reliability but also strengthens trust among clientsand partners, reduces security and legal compliance risks, and providesrobust support for business development and market competitiveness.
During the reporting period, we implemented a series of information security protection measures:
Information Security Management System
Information Security Protection Initiatives
SAP System Level 2Protection Certicate
During the reporting period, we experienced zero information security incidents or breaches ofclient privacy.
Engaged third-party cybersecurity service providers to conduct network security risk assessments of ourinformation systems, promptly identifying potential risks and implementing corrective measures;
Commissioned third-party cybersecurity service providers to conduct source code audits, identifying andxing security aws in the code to improve system stability and security, thereby minimizing security riskscaused by code vulnerabilities;
Implemented internet port consolidation internally, reducing the attack surface exposed online, lowering thelikelihood of cyberattacks, and enhancing network security.
Internally conducted anti-virus inspections, vulnerability scans, and deployed database leak preventionmeasures, with regular scans ensuring 100% server coverage for anti-virus checks, effectively preventingvirus and malware intrusions, patching vulnerabilities promptly, and securing servers. Database protectiondevices were deployed to mitigate data leakage risks;
Hired third-party cybersecurity service providers to perform penetration tests on our information systems,identifying and remedying potential security vulnerabilities to enhance overall system security and reduceattack risks;
2023 Golden Disclosure Award2024 Best Practices Award for
Listed Company Board Ofces
2024 Outstanding PracticesAward for Listed Company
Boards
2024 "Exemplary InvestorRelations Model" in High-QualityDevelopment Practices of Listed
Companies
Upholding Integrity and Persevering for Long-Term Success
We have established an emergency management organizational structure consisting of the emergency decision-makinglevel (Cybersecurity Leadership Group), emergency command level (Cybersecurity Management Group), and emergencyexecution support level (Cybersecurity Implementation Group). To enhance our capability in handling cybersecurityemergencies, minimize the occurrence and impact of such incidents to the greatest extent, and ensure safe andsustainable operations, we have formulated theCybersecurity Overall Emergency Planduring the reporting period as theoverarching guideline for business continuity and recovery efforts.
We conduct at least one annual cybersecurity emergency drill to simulate responses to general cybersecurity incidents.These drills evaluate the effectiveness of emergency systems, operational mechanisms, and resource allocation ofemergency supplies, facilitating to identify issues, rene emergency plans, and improve response capabilities. Additionally,we fully utilize various communication channels and other effective publicity methods to strengthen the disseminationof laws, regulations, and policies related to the prevention and handling of sudden cybersecurity incidents. We organizetraining sessions on cybersecurity emergency management and incident response to enhance the awareness and skills ofinformation department information managers and emergency responders in risk prevention.
Information Security Emergency Management
Emergency Drills and Training
In December 2024, we cooperat-ed with a third-party cybersecuri-ty service provider to conduct anemergency drill, improving com-prehensive response capabilitiesfor cybersecurity incidents.
In May 2024, the InformationDepartment organized informationsecurity awareness training for allemployees. The training includedcase studies of informationsecurity incidents, introductionto common attack methods, andcultivation of information securityawareness, aiming to enhanceemployees' information securityand confidentiality awarenessand ensure compliance with thecompany's information securitybehavior standards.
Cybersecurity Emergency Drill
2024 Information Security Awareness Training
Emergency Drill Meeting
Information Security Awareness Training
During the reporting period,we conducted
cybersecurity training sessions
security awareness campaigns
emergency drill
3231
Excellence in Craftsmanship, a Commitment to Life
3334
Excellence inCraftsmanship, aCommitment to Life
KELUN PHARMA is dedicated to enhancing theaccessibility and affordability of medical services andpharmaceuticals, thereby driving the developmentof inclusive healthcare. We actively fulfill our socialresponsibilities by continuously innovating in R&Dand optimizing our product portfolio to ensure high-quality medicines reach a broader patient population.Additionally, KELUN PHARMA is deeply committed topublic welfare and charitable initiatives, supportingmedical aid, health education programs, and collaboratingextensively with various sectors to expand healthcarecoverage. Our goal is to bring premium medical resourcesto every household, collectively shaping a healthier futurefor all.
Excellence in Craftsmanship, a Commitment to Life
3536
Product R&D and Innovation
KELUN PHARMA rmly believes that innovation is the soul of corporate competitiveness. Guided by the core objectiveof "scientic strategic layout to drive sustainable growth and deliver superior treatment options for patients", we alignour efforts with market value and national policies. By setting clear R&D innovation strategic goals, strengtheningindependent R&D capabilities, and fostering external cooperations, we have built a robust product pipeline, consistentlyproviding patients and users with high-quality, accessible products.
We have fully leveraged domestic and international pharmaceutical research talent and other competitive resources toestablish a comprehensive, multi-technology R&D system with full-functional platforms. This system is structured withKelun Pharmaceutical Research Institute as the core entity focusing on high-end generic drugs, Kelun-Biotech specializingin innovative drug research, and Ruikang Biotech dedicated to synthetic biology products and enzyme engineering. Thisframework has created a novel R&D model that combines domestic-led forward development with overseas technologicalfeedback as complementary support, achieving full alignment with international standards. We rely on national-level innovation platforms such as National Enterprise Technology Centers, Postdoctoral Research Workstations, andEngineering Technology Research Centers to conduct high-level cross-disciplinary and cross-regional collaborations withknowledge alliance institutions, continuously expanding our product lines and R&D pipelines in core advantageous elds.We attach great importance to continuously improving our R&D capabilities. By persistently increasing R&D investment,we have procured internationally leading scientic instruments and equipment such as high-precision microplate readers,large-scale bioreactors, and high-performance liquid chromatography-mass spectrometers, providing researchers withaccurate and efficient experimental tools to accelerate the R&D process and improve quality. With our own profitaccumulation and external nancing, we actively seek government research project funding, tax incentives, and otherpolicy support to ensure sufcient funding for R&D projects and provide stable nancial guarantees for R&D work.
We have established a highly qualified scientific research team with arational talent structure and international standards. During the reportingperiod, the R&D team continued to expand, reaching 2,855 members,accounting for 13.06% of the total workforce, with a year-on-year increase of
9.30%.
To motivate R&D personnel to continuously enhance their research andinnovation capabilities, we have established a comprehensive internalsystem including theR&D Project Assessment and Reward SchemeandPerformance Management System, creating a multi-channel promotionsystem to ensure smooth career development for R&D personnel.Additionally, a project assessment and reward mechanism has beenimplemented for R&D and innovation achievements, with outstanding R&Dpersonnel incentivized through annual performance evaluations, employeerecognition, compensation adjustments, and equity grants.
We continue to solidify our R&D strategic positioning and further advanceour strategic layout in the global pharmaceutical market. To date, wehave initiated over 460 drug research projects targeting domestic andinternational markets, including over 400 generic and improved drugs withcluster, complexity, distinctive, and cost advantages, as well as over 30innovative drugs.
We focus on unmet clinical needs, strategically developing innovative drugs with differentiated advantages andinternational potential. The R&D pipeline includes over 30 innovative drug projects, primarily in oncology, along withimmunology and other therapeutic areas, forming disease clusters and product iteration advantages. Additionally, weleverage big data and artificial intelligence to empower innovation capabilities, thereby improving the efficiency andsuccess rate of innovative drug development.During the reporting period, Kelun-Biotech received National Medical Products Administration (NMPA) acceptancefor 3 NDAs, 5 new molecular INDs, and 1 Breakthrough Therapy designation. Jietaila? advanced both domestic andinternational clinical research, resulting in progress in 4 new indications into Phase III registration clinical trials in Chinaand effectively advancing 8 China registration clinical trials. Furthermore, innovative clinical trial data were prominentlyfeatured at top academic conferences such as AACR, ASCO, and ESMO, garnering global attention. Key R&D projects ofKelun-Biotech can be found in its "Annual Results Announcement for the Year Ended December 31, 2024" .
R&D Innovation System
R&D Team
R&D Pipeline and Progress
Innovative Drugs
Addressing unmet clinical needs with differentiated, globally potential competitiveinnovative drugsNovel DrugDevelopment
Maintaining leadership in China's generic drug R&D and as a top supplier fornational centralized procurement through scientific product planning and processmanagementHigh-qualityGeneric DrugDevelopment
Further strengthening the construction and iterative upgrading of ADC platformswhile developing new technology platforms to maintain pipeline innovation andsustainability; enhancing the application of artificial intelligence in innovative drugR&D processes to improve R&D efciency and success ratesTechnology
PlatformConstruction
Ensuring all R&D activities adhere to international and regional clinical trial standardsand supervision requirements, safeguarding patient safety and data reliability
Clinical
Trials andRegulatoryCompliance
During the reporting period, ourR&D investment reached RMB
2.17
billion
accounting for
9.95%
of our auditedannual revenue
During the reporting period,theR&D team continued to expand,reaching
2,855 members,accounting for
13.06%
of thetotal workforce,with a year-on-year increase of
9.30%
with a year-on-year increase of
11.20%
Core Strategies for R&D and Innovation of KELUN PHARMA
Excellence in Craftsmanship, a Commitment to Life
3738
Through in-depth analysis of pharmaceutical market trends and national policy directions, we continuously develop high-value generic drugs to meet the demand for more effective and safer clinical treatments. Core advantage productsand iterative product clusters have been established in areas such as parenteral nutrition, bacterial infections, and uidbalance, with gradual expansion and strengthening in anesthesia and analgesia, reproductive health, central nervoussystem, and other chronic disease areas. Besides, we continue to accelerate the development of complex APIs, complexformulations, NDDS, and improved innovation projects, while implementing the construction of rened whole-processmanagement system to ensure project delivery on schedule and form multi-series product clusters.During the reporting period, we achieved 34 production approvals (including 5 rst-to-market), 3 clinical approvals, andsubmitted 50 production applications, further strengthening and enriching our iterative product pipeline in core areassuch as parenteral nutrition, infections, and anesthesia/analgesia, as well as our chronic disease product pipeline.
We actively respond to the national strategy of Belt and Road and the 14th Five-Year Plan for the Development of thePharmaceutical Industry, and seek in-depth cooperation with the world's top pharmaceutical R&D institutions andenterprises. The overseas layout of the production and R&D includes Kelun Kazakhstan and Kelun Lanka, building adiversied international research network.
In response to the expanding risk of antibiotic resistance and to promote the safe utilization of antibiotic residues,CHUANNING BIOTECH has undertaken several initiatives in the eld of antibiotic resistance research.
Our second-tier subsidiary Ruikang Biotech has built upon its existing 4 chassis strains and compound platforms tosignicantly enhance R&D efciency by fully utilizing its automated high-throughput strain construction and screeningplatform. Currently, Ruikang Biotech has completed strain construction, small-scale fermentation, and extraction processoptimization for products such as cosmetic active ingredients, feed additives, and nutraceutical raw materials, with someproducts undergoing trial production at CHUANNING BIOTECH.
Through years of R&D breakthroughs and technological accumulation, our subsidiary CHUANNING BIOTECH hasestablished a large-scale industrial production system in the field of antibiotic intermediates. Its products cover keyintermediates for macrolide and broad-spectrum antibiotics, with thiocyanate erythromycin, cephalosporin intermediates,and penicillin intermediates ranking among the top globally.As antimicrobial resistance becomes increasingly severe worldwide, the rational use of antibiotics has become a criticalissue for safeguarding human health. As an R&D and manufacturing enterprise of anti-infective drugs, we recognizeantibiotic resistance as a major global public health risk. We actively respond to national initiatives by promoting rationalantibiotic use through awareness campaigns, standardized skin testing, and scientic popularization, so as to reduceantibiotic overuse and contribute to curbing the development and spread of resistance.
Generic Drugs
R&D Collaborations
Synthetic Biology
Antimicrobial Resistance
We actively participate in public welfare activitiesand academic conferences to advocate forrational antibiotic use. We support the "Pei YingProgram", a clinical pharmacist training projecton bacterial and fungal infection diagnosis andtreatment under the National Institute of HospitalAdministration of NHC, by donating over 1,100copies of
β-Lactam Antibiotic Allergy and SkinTestingto three batches of trainees. In addition,we supported academic conferences of variousassociations by donating over 1,300 copies of thesame book, contributing to the promotion of theconcept of rational antibiotic use.
We have consistently disseminated the latestacademic concepts and trends through ourWeChat public platform ""KELUN E Medicine",publishing over 40 academic articles relatedto rational use of anti-infective drugs in thepast three years with a cumulative readershipexceeding 100,000 visits. The content coversclinical rational application of antibacterial drugs,addressing challenges of fungal drug resistance,and standardization of cephalosporin skintesting procedures. By integrating professionalinsights from authoritative experts and guidelineconsensus, we amplify KELUN's voice in promotingthe concept of rational antibiotic use.
Progress in Kelun-Biotech's Collaboration with Ellipses Pharma
In March 2021, Kelun-Biotech entered a collaboration and licensing agreement with Ellipses Pharma,granting an exclusive, revenue-sharing, royalty-bearing, sublicensable license for the development,manufacturing, and commercialization of A400 (designated by Ellipses Pharma as EP0031).KELUN PHARMA is committed to addressing the needs of rare disease patients. In November 2023,A400/EP0031 received orphan drug designation from the FDA for the treatment of RET fusion-positivesolid tumors. In March 2024, A400/EP0031 obtained FDA Fast Track designation for RET fusion-positiveNSCLC. In April 2024, A400/EP0031 received FDA approval for Phase 2 clinical development. As of thereporting period, 33 clinical trial centers for A400/EP0031 have been established in the U.S., Europe, andthe UAE.
The research on antibiotic resistance, focusing on erythromycin, penicillin, andcephalosporin antibiotics, systematically examines the underlying causes ofresistance in major resistant strains. This research specically concentrates on keymechanisms such as the horizontal transfer of resistance genes and drug targetmodications at the genetic level.A targeted approach has been taken to develop technical solutions for resistancegene detection and a safety assessment system for antibiotic residues. Thissystem covers the entire process of gene screening, quantitative analysis, andecological risk assessment, providing a scientific basis for the safe utilization ofantibiotic residues.Based on fluorescence quantitative PCR technology, absolute quantificationmethods for erythromycin resistance genes ermB, ermC, and ermQ havebeen successfully established. Currently, efforts are underway to acceleratethe optimization of detection methods for core resistance genes of penicillin,cephalosporins, and other major antibiotics, forming a multi-plex detectiontechnology system that covers mainstream antibiotics.
Analyzing themechanisms ofantibiotic resistance
Establishment of
a standardizedevaluation system
Development ofprecise resistance gene
detection technology
Research Progress on Antibiotic Resistance in CHUANNING BIOTECH
Excellence in Craftsmanship, a Commitment to Life
3940
We are committed to creating a scientic and safe trial environment that perfectly integrates the social value of drugdevelopment with ethical responsibilities. The protection of clinical trial participants' rights is our top priority. Throughthe implementation of strict research protocols and sound management mechanisms, we ensure that the rights of eachindividual participating in clinical trials regarding informed consent, personal privacy, and health are fully respected andeffectively safeguarded.
Participant Protection
Our subsidiary Kelun-Biotech has established a dedicated InstitutionalAnimal Care and Use Committee (IACUC), which is responsible for in-depthdeliberation and decision-making on all major issues concerning animalwelfare. In the pharmaceutical R&D process, we attach great importanceto animal welfare ethics principles, strictly comply with relevant laws andregulations such as theRegulations on the Administration of LaboratoryAnimalsand the 3R principles, and formulate theHuman EndpointRegulations for Experimental Animals,Management of Control Substancesand Test Substances,Accuracy Control of Animal Administration,GeneralPrinciples of Animal Administration, and other internal regulations, ensuringthat animal drug use meets the rigor of scientic research and satises thehigh standard requirements of animal welfare ethics.Kelun-Biotech has launched a laboratory animal management system thatintegrates two animal welfare ethics-related modules: "Ethics Review" and"Animal Welfare Ethics Inspection". The ethics review mainly involves theIACUC's online review of animal use plans in experimental protocols, coveringkey aspects such as experimental information, animal information, animalfeeding, test article information, sample collection, euthanasia, experimentalendpoints, and anesthesia. The animal welfare ethics inspection mainlyinvolves regular offline supervision of whether humane endpoints arefollowed during experiments, with online records maintained.
Animal Welfare Ethics
During the reporting period,Kelun-Biotech's IACUCcompleted a total of
reviews of animal useplansand conducted
animal welfare ethicsinspections.
IACUC On-Site Inspection
Progress in Kelun-Biotech's Collaboration with Merck
Kelun-Biotech entered into a licensing and collaboration agreement with Merck to develop multipleADC assets for cancer treatment, granting Merck an exclusive, royalty-bearing, sublicensable license todevelop, use, manufacture, and commercialize sac-TMT outside Greater China. As of the release dateof Kelun-Biotech's 2024 results announcement, Merck has initiated 12 global Phase 3 clinical studiesfor sac-TMT as monotherapy or in combination with pembrolizumab or other drugs across multipleindications, including triple-negative breast cancer, non-small cell lung cancer, endometrial cancer,cervical cancer, and gastroesophageal adenocarcinoma.Beyond sac-TMT, Kelun-Biotech and Merck are collaborating on several other ADC assets (e.g., SKB410/MK-3120, SKB571/MK-2750, SKB535/MK-6204) to explore optimal ADC pipeline combinations. Throughits ADC pipeline, Kelun-Biotech aims to cover a broader range of tumor indications by targeting differentbiomarkers. By employing differentiated payload-linker strategies for ADC assets with various targets, itstrives to achieve better efcacy and/or differentiated safety proles, while exploring ADC combinationtherapies through diverse approaches. Kelun-Biotech has granted Merck an exclusive global license toresearch, develop, manufacture, and commercialize multiple ADC assets, along with an exclusive optionto obtain additional exclusive licenses for certain other ADC assets. Kelun-Biotech retains the rightsto research, develop, manufacture, and commercialize certain licensed and optioned ADC assets inMainland China, Hong Kong, and Macao.In Q3 2024, Kelun-Biotech was notied by Merck of its exercise of the exclusive option for SKB571/MK-2750. Kelun-Bota retains rights to develop, use, manufacture, and commercialize SKB571/MK-2750 inmainland China, Hong Kong, and Macao.
Additionally, Kelun-Biotech has comprehensively ensured the implementation of animal welfare practices by introducingadvanced equipment, upgrading facilities, replacing outdated devices, and conducting training related to animal welfare.
In May 2024, Kelun-Biotech's Animal Experiment Department introduced smallanimal respiratory anesthesia machines and completed training for their use.The deployment of this equipment enables painless blood collection in mice. Themachines are characterized by safe anesthesia, high efcacy, rapid recovery,and minimal side effects, making them suitable for various scenarios such asmodeling, blood collection, and surgery. They effectively safeguard animalwelfare by reducing pain and distress.
Kelun-Biotech Introduced Animal Respiratory Anesthesia Machines
Small Animal Respiratory
Anesthesia Machine
Excellence in Craftsmanship, a Commitment to LifeIntellectual Property Management
KELUN PHARMA's intellectual property management strategic goal:
Ensure effective protection of R&D achievements' intellectual property to secure long-term competitive advantages for the enterprise.We are deeply aware of the importance of IP protection for our core competitiveness. We have ensured that ourinnovative achievements in R&D, production and operation activities are strictly protected by law by stressing IP rightswork. Therefore, the efforts of IP protection could provide a solid guarantee for our strategic upgrade and development inthe long run.To fully implement the strategy of IP protection, we strictly comply with laws and regulations such as thePatent Lawof the People's Republic of Chinaand theTrademark Law of the People's Republic of China, formulate theIntellectualProperty Management Measures, continue to improve our internal IP management system and strive to promote thesystematic construction of IP work. We establish an intellectual property risk monitoring mechanism and strengthen ourtalent pool through recruitment of professionals and internal training. We actively follow the latest international anddomestic IP laws and regulations, integrate IP management into the entire life cycle from R&D project establishment toproduct launch, and eventually reinforce our competitive advantage of IP reserves.
The Company rst obtained the GB/T 29490-2013 intellectual property management system certication in 2016, passedtwo recertifications, and successfully underwent a supervisory audit in December 2024. To date, the Company haspassed the reassessment as a National Intellectual Property Demonstration Enterprise and met the acceptance criteriafor "Sichuan Province Intellectual Property Strong Enterprise Cultivation" and "Chengdu High-Value Patent CultivationCenter".
As of the end of the reporting period, the Company andits subsidiaries (branches) held a total of2,860
valid patent applications, including1,425inventionpatents,1,213utility model patents, and
design patents.
Among them,1,997applications have beenauthorized, including
invention patents,1,069utility model patents, and
design patents.
4241
In the drug R&D process, KELUN PHARMA strictly adheres to laws, regulations, and ethical standards, fully respecting andimplementing the ethical principles established by theDeclaration of Helsinki, ICH-GCP, China'sGood Clinical Practice, andGood Pharmacovigilance Practice. With continuous improvements in pharmaceutical regulations, KELUN PHARMA ensuresall R&D activities are conducted lawfully, compliantly, and ethically.
Clinical Medical Ethics
Preclinical Research & Trial Design
Participant Screening
Clinical Trial
Review & Communication
Emergency Management
Adverse Event Handling
Prior to clinical trials, preclinical studies must be conducted to demonstrate drug safety and controllabilitythrough research data. Clinical trial designs are patient-centered and clinically value-driven.
Before entering clinical trials: all trials must receive Ethics Committee approval; informed consent must beobtained and informed consent form must be signed by potential subjects to ensure their right to know andchoose; strict screening for potential subjects must be implemented based on inclusion/exclusion criteriaspecied in the clinical trial protocol.
It includes establishing and implementing subject privacy protection systems to fully safeguard subjects'rights.
It includes conducting regular follow-up reviews of trial protocols, informed consent forms, protocoldeviations and safety events, while maintaining effective communication.
It includes establishing robust emergency and contingency response mechanisms to ensure promptprotective measures for subjects' rights and safety in the event of adverse incidents.
It includes actively collecting, processing, and submitting individual case safety reports during clinical trials;preparing and submitting Development Safety Update Reports (DSURs); and conducting pharmacovigilancesignal detection and risk management to continuously and effectively identify, assess, and control safetyrisks associated with investigational drugs.
Clinical Research Management Process of KELUN PHARMA
Excellence in Craftsmanship, a Commitment to Life
4344
Accessibility of Healthcare Services
The Company's Board of Directors serves as the highest authority responsible for access to healthcare issues, withexecutive director Mr. Liu Sichuan acting as the head for these issues. Through the ESG Committee, the Board overseesthe management objectives and current status of the our access to healthcare issues. The ESG Committee, as therepresentative body for these issues, regularly reviews our strategies, institutional frameworks, and performance in thisarea. It supervises the implementation of related tasks, reports to the Board, and ensures our commitment to inclusivehealthcare is upheld across the organization.
To improve the accessibility of healthcare services globally, We focuson strengthening pharmaceutical innovation and R&D, optimizing drugprocurement and supply systems, and enhancing public health literacy andrational medication use. These efforts ensure that high-quality medicinesand medical services can widely benet the general public, improving publicawareness and utilization of pharmaceuticals.
We set annual management goals for drug accessibility. Newly launched products are swiftly submitted for provinciallisting approvals across China, completing the necessary provincial-level access procedures to prepare for sales in medicalinstitutions. We actively participate in national centralized and volume procurement projects, expanding the coverage ofthese drugs to improve accessibility and convenience for patients while reducing their nancial burden.In alignment with national and local policies, we adhere to the principle of "listing all eligible products" by submittingapplications for provincial listings immediately after obtaining approvals. This ensures timely access to major provincialmarkets, enabling sales in graded medical institutions, public hospitals, and pharmacies. During the reporting period,we launched 32 new products with 50 specifications, covering therapeutic areas such as oncology, endocrinology,anesthesia, cardiovascular diseases, and transplant anti-rejection.Beyond the graded hospital markets, we also strive to improve the coverage and supply stability of drugs in townshiphealth centers, village clinics, pharmacies, and medical institutions in remote areas, accelerating the layout of online andofine all-channel sales. By the end of the reporting period, our products had reached all 31 provincial-level administrativeregions in China.Additionally, we actively respond to the call of national policies, participate in and support the development of grass-roots medical institutions, and help improve the level of grass-roots medical services through technical support, personneltraining, and public donations.
Enhancing Product Accessibility
Domestic Market
During the reporting period, we launched
new product
with
specications, covering therapeutic areas suchas oncology, endocrinology, anesthesia, cardiovasculardiseases, and transplant anti-rejection
We are committed to providing high-quality pharmaceutical products and services to improve the health of global patients.The Company has established factories in Kazakhstan and Sri Lanka, and operates them directly through local teams formarket promotion and sales in those markets. In other emerging markets, we work closely with partners who have local marketdevelopment experience and resources to ensure that our products comply with local regulatory requirements, obtain necessaryapprovals and licenses, and jointly drive product sales in the local markets. As of the end of the reporting period, our overseasbusiness has covered pharmaceutical markets in over 50 countries and regions across Asia, Africa, South America, and otherparts of the world.
We place high importance on advancing healthcare in developing countries. Aligned with our international development strategy,we collaborate closely with local partners to participate in programs aimed at enhancing healthcare service capabilities, jointlydriving improvements in medical services.
During the reporting period, we successfully obtained market access for over 20 preparations in low- and middle-incomecountries across Asia, the Americas, and Africa, covering therapeutic areas such as parenteral nutrition, anti-bacterial infection,cardiovascular diseases, and anti-coagulation. Our antibiotic intermediates are primarily exported to India, Iran, Pakistan, andBangladesh, with 70% of sales directed to India, mainly penicillin and cephalosporin products. Moving forward, we will continueto focus on market demands and changes, constantly expanding our product coverage to meet the medical needs of low- andmiddle-income countries.
Overseas Market
Participating in Capacity Advancement Programs for DevelopingCountries
KELUN PHARMA establishes clear goals and strategies for expanding into emerging marketsbeyond its current operations:
The Company's expansion in emerging markets focuses on local medication needs and leveragesits product strengths to select appropriate sales methods and channels, enhancing accessibility toa wider range of medicines. In the next 3-5 years, the Company plans to engage in more productregistrations for different dosage forms and therapeutic areas. Additionally, the Company intendsto select multiple key products from its new generic drugs, covering more types and therapeuticareas, as key targets for internationalization, laying the groundwork for future export growth.The Company focuses on emerging and potential markets in Europe, America, Japan, and BRICScountries. The Company has developed clear international ling, promotion, and marketing plans.It has also established close, direct, and long-term reciprocal collaborations with well-knownprofessional agents and large local generic drug manufacturers in various countries and regions.This enables comprehensive coverage of the middle-end market from the high-end market.
Preparations
API Products
Over the next 3-5 years, the Company plans to further expand its overseas market presence,partnering with internationally renowned pharmaceutical companies on penicillin, cephalosporin,and other products.Antibioticintermediates
We have helped Kazakhstan master advanced manufacturing technologies in the infusion industry, enabling local capabilities inquality testing, drug R&D, and industrialization. This breakthrough ended Kazakhstan's history of lacking domestically producedinfusion products, providing the country with safe and effective medicines. During the reporting period, CELOGEN LANKA, investedby us in Sri Lanka, became the rst pharmaceutical company in Sri Lanka to receive EU GMP certication, signicantly elevatinglocal pharmaceutical production standards to international levels.
Assisting Local Manufacturers in Meeting International Drug ManufacturingStandards
Excellence in Craftsmanship, a Commitment to Life
4546
To enhance the efficiency and accessibility of drug supply in developing countries, we have established localizedproduction bases nationwide, reducing transportation costs and improving delivery speed and supply chainresponsiveness. This move effectively reduces drug costs. Meanwhile, we strictly follow the national "single-ticket" and"two-ticket" policy requirements and has set up distribution centers in several key regions nationwide to enhance deliverytimeliness and meet urgent demands.In developing countries such as Kazakhstan and Sri Lanka, the Company has established efficient and timely drugdistribution systems. In Kazakhstan, Kelun-Kazpharm has adopted an innovative cooperation model, establishing strategicpartnerships in various regions. With the help of local distribution agent networks, they have been able to deliver bidwinning products quickly and accurately to local hospitals, successfully addressing the challenges of tendering anddistribution in remote areas with a sparse population. KELUN LIFESCIENCES in Sri Lanka directly distributes drugs to end-user institutions through local agencies, signicantly reducing intermediate links and ensuring that drugs can be timelyand effectively provided to patients.While localizing operations in Kazakhstan and Sri Lanka, the Company prioritizes the development of local medical andhealth levels. Through strategic pharmaceutical production plant layouts, we actively engage in communication with localmedical talents, injecting "Kelun Power" into the training of medical talents and the overall improvement of medical andhealth levels.
We have always paid attention to the social welfare of developing countries and activelyfulfilled our corporate social responsibilities. In 2024, Kelun Lifesciences (Pvt) Ltd. carriedout a series of CSR donation activities in Sri Lanka, focusing on education, culture, andcommunity development. These initiatives included supporting local school infrastructureconstruction, funding lunch programs for underprivileged students, sponsoring cultural andartistic events, and awarding outstanding students. Through these targeted donations, wenot only provided better educational and developmental opportunities for local children andyouth but also contributed to the sustainable development of local culture and society.
Improving Pharmaceutical Supply Chains in Developing Countries
Training Local Healthcare Talents
Product Donations to Developing Countries
To elevate the professional skills of local healthcare talents and advance medical education, Kelun-Kazpharm signeda long-term cooperation agreement with Kazakhstan National Medical University in 2022. The two parties organizetraining courses, joint scientific activities, and practical workshops to foster interaction between educationalinstitutions and enterprises, improve the quality of medical and pharmaceutical education, and cultivate high-qualityhealthcare talents while driving innovation and development in the eld of pharmacy.
Kelun-Kazpharm Conducted Joint Training Project to Cultivate High-quality LocalHealthcare Talents
Kelun-Kazpharm Training Local Healthcare Talents
Improving Product Affordability
KELUN PHARMA adheres to the principle of "seeking truth through science and seeking goodness through ethics". We arecommitted to providing high-quality and affordable products and services for patients and customers, while formulatingfair and reasonable product pricing strategies.
To effectively address the diversity of global healthcare needs, drug payment mechanisms, and the affordability ofnancial systems, KELUN PHARMA has issued theEquitable Pricing Policyapplicable to all its products, based on the coreconcept of product affordability. This policy further advances the pharmaceutical industry's innovation to benet patientsand customers. The Company's ESG Committee oversees the implementation of theEquitable Pricing Policy, while themanagement is responsible for organizing and leading its daily execution to ensure effectiveness.When implementing the Equitable Pricing Policy, we thoroughly consider the economic conditions of target countries orregions, including but not limited to GDP level, social development level reected by the UN Human Development Index,and public healthcare system investments. In the same level of countries/regions and within the parallel level of market,drug pricing remains relatively consistent. At the same time, we also develop more accessible drug pricing strategiesbased on the needs and payment capabilities of patients in different countries/regions, serving more patients worldwide.
After a product is approved for market launch, we adopt a nationwide uniform pricing strategy, taking into account theeconomic disparities across regions to meet the medication standards of patients in the least economically developedareas. For generic drugs that have passed or are deemed to have passed the quality and efcacy consistency evaluation,the prices are set lower than those of the original reference drugs in the domestic market. This demonstrates ourcommitment to social responsibility and efforts to improve the fair accessibility and affordability of patient medications.
Furthermore, as the national centralized and volume procurement project becomes routine, we closely monitor local policyupdates and actively participate in initiatives to supply retail pharmacies, private medical institutions, and village clinicswith drugs from centralized procurement. We follow requirements to list eligible products at centralized procurementprices and publicly disclose drug pricing information, narrowing price gaps between medical institutions and pharmaciesto make medications more affordable for patients.We also place special emphasis on addressing the healthcare needs of vulnerable groups. We have launched multiplecharitable assistance projects to alleviate the medical burdens of low-income families, rare disease patients, and otherspecial populations, ensuring they have equal access to medical treatment when facing health challenges.
Equitable Pricing Policy
Domestic Market
Generic Drugs
●First-to-market generic drugs are priced no higher than 60% of the original referencedrug prices, in compliance with relevant national policies;
●For drugs with existing competitors of same generic name, pricing is based on themedian price of similar products already on the market
Business SegmentEquitable Pricing Strategy Based on Affordability
Excellence in Craftsmanship, a Commitment to Life
4748
To address the high drug cost pressures faced by the public in emerging markets and developing countries, we adoptreasonable pricing strategies tailored to local economic conditions and market situations when promoting productsin underdeveloped regions overseas. Additionally, we actively engage in local government drug procurement biddingactivities, striving to reduce the nancial burden of medications for patients.
We strictly adhere to national drug price regulations, ensuring all drug pricing complies with legal and regulatoryrequirements to maintain fairness and transparency. We closely monitor policy trends and market dynamics and activelyparticipate in national volume procurement and medical insurance negotiations to minimize product prices, effectivelyreducing patients' medical expenses, and improving medication affordability and accessibility.As of the end of the reporting period, we had secured winning bids for 59 varieties and 83 specifications of drugsbeen selected for the national drug volume procurement project, establishing as a leading supplier in centralized drugprocurement. The selected products are elded in treatment of multiple chronic and major diseases. The major eldsinvolved are anti-infection, oncology, diabetes, hypertension, rheumatoid, psychiatry, anesthesia analgesia, osteoporosis,and nutrition. Also, the average price reduction rate of selected products is higher than the average national volumeprocurement project level.KELUN PHARMA has 323 products listed in theNational Reimbursement Drug List (2024 Edition), including 308 chemicaldrugs and 15 traditional Chinese medicine preparations; by categories, there are 124 in category A and 199 in categoryB. In the national medical insurance negotiations in recent years, a total of 18 innovative varieties were added to thenational medical insurance negotiation (bidding) catalog, with 9 of our products in theNational Reimbursement Drug List(2024 Edition)holding negotiation (bidding) status. This not only improves public accessibility to medications but alsosignicantly alleviates the burden on the national healthcare system.
Overseas Market
Pricing Transparency
Equitable pricing strategies for overseas sales are tailored to local income levels. Forstrategic partners, we offer additional discounts on market prices through frameworkagreements to foster deeper collaboration.
A total of 150 preparations, covering therapeutic areas such as oncology, anti-bacterialinfection, parenteral nutrition, and anesthesia, are sold in East Asia, Southeast Asia, CentralAsia, Africa, and the Americas with equitable pricing strategies aligned with local incomelevels.Large-capacity injection products are priced over 20% lower in developing countries likeAfrica and Southeast Asia compared to prices in developed countries.
Preparations
Examples of Pricing Adjustments for Certain Products of KELUN PHARMAProduct Name
Product TypeEquitable Pricing Strategy Based on Affordability
Sugammadex Sodium
Injection
Fat Emulsion, Amino Acids (17)and Glucose (11%) Injection
Powder-liquid Double-
chamber Bag
An anesthetic agent used for clinical sedation, successfullyincluded in the medical insurance catalog through bidding(negotiation) at the end of 2022. Following the negotiation, thereimbursement price dropped from RMB 1,080/vial to RMB 136/vial, posing a reduction of 87.4%.
A widely used parenteral nutrition solution in clinical settings,specifically designed for patients who cannot consume foodorally after major surgeries and require intravenous nutritionalsupport. Previously, such parenteral nutrition injections inChina relied entirely on imports, costing over RMB 300 per bag.With the breakthrough in domestic production technology andfollowing the 5th national volume procurement, the price ofthis injection dropped sharply to just over RMB 70 per bag,representing a reduction of 75%.
A novel packaging format that separately stores powderedmedication and solvent for injection in two chambers of thesame bag, divided by a sealing strip. Before use, pressureis applied to mix the powder and liquid, allowing immediateinfusion.
●Ceftazidime for Injection/5% Glucose Injection is particularlysuitable for infections caused by multidrug-resistant Gram-negative bacilli in immunocompromised patients, nosocomialinfections, and central nervous system infections caused byGram-negative bacilli or Pseudomonas aeruginosa. It wassuccessfully included in the medical insurance catalog throughexclusive negotiation at the end of 2022. The reimbursementprice was set at RMB 29.2/vial, down from the pre-negotiationlisted price of RMB 166/vial, posing a reduction of 82.4%.
●
Ceftazidime-Avibactam Sodium for Injection/SodiumChloride Injection is applicable to severe infections causedby susceptible bacteria, such as peritonitis and cholecystitis.It was included in the medical insurance catalog throughexclusive negotiation at the end of 2024. The reimbursementprice was set at RMB 326/vial, down from the pre-negotiationlisted price of RMB 448/vial, posing a reduction of 27.2%.
Price Reduction Details
Antibioticintermediatesand APIs
Excellence in Craftsmanship, a Commitment to Life
4950
Industry Collaboration and Development
As an active leader and practitioner in the healthcare sector, KELUN PHARMA is unwavering in its commitment to socialresponsibility. We proactively foster in-depth interaction and cooperation across the industry chain, striving to build anopen, inclusive, and mutually benecial industrial ecosystem. Through active international collaboration, participation inacademic conferences, and engagement with industry associations, we continuously enhance the accessibility of medicalservices and strengthen global public health capabilities, contributing our expertise to a healthier and more equitablesociety.
In medical elds such as parenteral and enteral nutrition, anesthesiology, anti-infection, infusion, and emergency medicalrescue, we actively participate in academic conferences to exchange cutting-edge ideas and showcase our innovativeachievements and comprehensive product portfolio in the pharmaceutical sector. We also use academic ambassador"Kebao" as a bridge to enhance interaction with medical experts and attendees, boosting the brand's affinity andrecognition. Through these industry exchanges, we contribute to advancing medical academia, improving drugaccessibility, and safeguarding patient health, reecting our corporate social responsibility and value.
Industry Activities and Exchanges
Annual Conferences of the Anesthesiology Branch, Chinese Medical Doctor Association and Chinese
Medical Association
2024 18th Annual Conference of Parenteral and Enteral Nutrition, Chinese Medical Association
Guided by the operational goal of "patient-centered, clinical value-driven", we widely participate in industry exchangesfocused on inclusive health, promoting the sharing of medical technologies and experiences. We also support theimprovement of public hospital management and discipline-building capabilities, earning widespread acclaim fromexperts and medical institutions. These efforts underscore our steadfast commitment to advancing healthcare andsignicant contributions to the industry's prosperity.
Annual Conference on Bacterial and Fungal Infections of the Chinese Medical Association, The 18thAcademic Conference on Hematology of the Chinese Medical Association, The 18th Academic Conference
on Infectious Diseases of the Chinese Medical Association
The 11th China Nursing Management Conference
The 9th Asia-Pacic International Conference on Emergency Medicine and 7th Tianfu Critical Care Conference
Excellence in Craftsmanship, a Commitment to Life
5152
To standardize nutritional therapy for surgical patients, establish a standard process for surgical nutrition,standardize surgical nutrition diagnosis and treatment nationwide, and improve perioperative patients' quality oflife nationwide, we, in collaboration with the Cancer Nutrition Committee of the China Anti-Cancer Association,launched the "National Standardized Surgical Nutrition Demonstration Ward Project". Under the coordination of theassociation, experts, and KELUN PHARMA, key tasks such as standard development, business training, technicalguidance, quality supervision, and outcome review were completed. In 2024, we organized extensive academicactivities for 162 accredited units and 160 newly applying units.In March, we hosted the 2024 National Surgical Nutrition Diagnosis and Treatment Demonstration Ward ProjectKickoff Meeting in Chengdu. The event brought together top medical experts, scholars, and industry leaders todiscuss the latest advancements, challenges, and solutions in surgical nutrition. This high-level, multi-tiered platformstrengthened collaboration between the Company and external academic institutions to improve medical serviceaccessibility and public health level.
We partnered with the Integrated Supportive Therapy Working Committee of the Chinese Anti-Cancer Associationto organize core experts in surgical nutrition, promote the establishment ofstandardized surgical nutrition diagnosisand treatment demonstration units, and initiate the drafting of the Standardized Surgical Nutrition Diagnosis andTreatment Demonstration Unit group standard. The group standard has been drafted and nalized and is awaitingreview by the Chinese Anti-Cancer Association.
KELUN PHARMA Continuously Promotes National Standardized Surgical NutritionDemonstration Ward Project to Enhance Medical Service Accessibility
Social Feedback and Public Welfare
We recognize that sustainable corporate growth is closely tied to social welfare. We integrate the core principles ofpublic welfare and charity into our strategic planning and daily operations, actively responding to social expectations. Ourpublic welfare actions span multiple domains including education and culture, healthcare, scientic innovation, povertyalleviation, and disaster relief, delivering lasting and positive impacts to improve the quality of life for beneciaries andfoster social harmony and progress, and generating enduring positive momentum for sustainable development goals.
KELUN PHARMA always pays attention to and understands the needs ofvulnerable groups, and provides diversied humanitarian assistance. Basedon the Public Welfare Donation Law of the People's Republic of China andother relevant national laws and regulations, the Company has formulatedtheExternal Donation Management Systemand theSocial ResponsibilityManagement Systemfor itself and its wholly-owned and controllingsubsidiaries. Leveraging its medical resources, the Company serves societyand fullls its corporate social responsibilities. During the reporting period,the Company's total social welfare contributions exceeded RMB 57 million.
To fulll its corporate social responsibility and support higher education, the Company donated RMB 2 million to ChinaPharmaceutical University. The funds are earmarked for talent development in pharmaceutical management andeducational public welfare. The donation focuses on industry-education collaboration, offering specialized trainingprograms, course development, practical base construction, and scholarships to cultivate interdisciplinary talent alignedwith the requirements for upgrade of the pharmaceutical industry. It also enhances the university's teaching and researchcapabilities, fostering innovation for industry-university-research collaboration. This partnership deepens the synergybetween the Company and the university, building a talent pipeline for sustainable industry development and achievingshared social and industrial value.Additionally, we prioritize supporting students in impoverished regions as a key part of our social welfare efforts. Wededicate resources to address educational disparities, providing equal learning opportunities and development platformsfor students in underprivileged areas.
Practicing Public Welfare and Charity
Education Support
During the reporting period, theCompany's total social welfarecontributions exceededRMB
million
Upholding the values of "seeking truththrough science and seeking goodnessthrough ethics", we actively give back tosociety and support youth development.In 2024, KELUN PHARMA's sub-subsidiaryJIANGNING BIOTECH donated RMB 1 millionto the Charity Federation of Gongliu County,Ili Kazakh Autonomous Prefecture, XinjiangUygur Autonomous Region. The funds areused to assist economically disadvantagedprimary, middle, and high school studentsin Gongliu County, improving their learningconditions and alleviating family burdens.
JIANGNING BIOTECH's Donation Lights Up the Dreams of Economically Disadvantaged Students
KELUN PHARMA Participating in Gongliu County
Donation Ceremony
Excellence in Craftsmanship, a Commitment to Life
5354
We leverage our strengths to efciently mobilize internal and external resources, actively engaging in frontline disasterrelief efforts. Through cash and drug donations, as well as emergency supplies, we provide comprehensive support tohelp affected regions and communities restore normalcy, mitigating disaster impacts and promoting social stability.
We actively support China's rural revitalization strategy, focusing on consolidating and expanding poverty alleviationachievements. We fulll our social responsibilities by supporting rural education, talent development, and infrastructureupgrades, driving comprehensive socio-economic progress in rural areas. During the reporting period, we investedapproximately RMB 1.01 million in rural revitalization initiatives.
Disaster ReliefPooling Strength for Rural Revitalization
Key initiatives in rural revitalization during the reporting period:In July 2024, continuous heavy rainfall in Yueyang City, Hunan Province, triggered severe floods and geologicaldisasters, posing signicant challenges to ood control efforts. When disaster strikes, help comes from all sides.Responding swiftly, Hunan Kelun and Hunan Kelun Yueyang Branch representatives visited the flood-strickenareas in Linxiang City and donated RMB 400,000 to support relief efforts. This act of kindness highlighted KELUNPHARMA's strong sense of social responsibility and brought warmth and care to affected communities, bolsteringtheir determination and condence to prevent blood and rebuild homes.The same month, Hunan Kelun responded to the call of Yueyang Municipal Health Commission and donatedmedicines worth RMB 900,000 to Yueyang Municipal Health Commission and Red Cross Society. The donationstargeted acute and chronic diseases likely to arise during flood relief, addressing medication shortages andsupporting post-disaster epidemic prevention and medical treatment in affected areas.
Floods Bring Disaster, Kelun Brings Love
KELUN PHARMA donated lighting equipment and repaired infrastructures such as roads inNiuchangzhai Village and Changgou Village, Xiban Town, Yuechi County, Guang'an City, SichuanProvince, advancing the construction of livable villages. To promote equitable education and care fordisadvantaged youth, we provided assistance to over
registered disadvantaged adolescents inPingtan Town, Yuechi County, addressing their practical living and learning challenges;
We supported the resident village ofcials and villager representatives of Renguo Township, GanziCounty, Sichuan Province, in conducting eld research and learning. We introduced edible mushroomcultivation techniques and advanced management practices, assisting Renguo Township informulating development plans and goals to sustain local income growth;
In Songtao Miao Autonomous County, Guizhou Province, we donated solar streetlights to impoverishedmarginal villages in Mengxi Town, promoting the development of livable rural areas;
Under the organization of the Pharmaceutical Industry Association of Xinjiang Uygur AutonomousRegion, we provided aid to the resident work teams of the Xinjiang Medical Product Administration inHotan, supporting local construction efforts.
Industrial Collaboration to Create the Future
5556
IndustrialCollaboration toCreate the FutureKELUN PHARMA ensures product safety and qualitythrough a stringent product quality managementsystem and risk management measures. The Companystrengthens its pharmacovigilance system to safeguardpublic health. In customer service, KELUN PHARMAcontinuously improves service standards, prioritizescustomer privacy protection, and actively addressescomplaints and reports. Additionally, we are committedto building a sustainable supply chain by implementingsupplier access certification, risk management, andquality enhancement initiatives, thereby promotingintegrity and sustainable development across thesupply chain. These efforts underscore the Company'sleadership in the industry and its dedication to socialresponsibility.
Industrial Collaboration to Create the Future
5758
Product Safety and Quality
The Company adheres to a quality-centric development philosophy, upholds the principle of "quality first, safetyforemost", and strictly complies with national drug regulatory requirements to ensure the consistent stability andreliability of product quality. To achieve this, KELUN PHARMA has established clear quality objectives:
We have firmly established a concept of Grand Quality and have adhered to various national pharmaceuticalquality regulations, including but not limited to theDrug Administration Law of the People's Republic of China,GoodManufacturing Practice,Good Supply Practice, andGood Pharmacovigilance Practice. We have developed a programmaticdocument,Quality Manual, to guide the Company's total quality management practice, planning and implementation,control and supervision, guarantee improvement and continuous improvement. Each level of our production companieshas completed the product quality management system with standard system in accordance with the Quality Manual,ensuring that all products meet the requirements of registration regulations and pharmacopoeia standards. Additionally,we actively implement the ISO9001 quality management system, and apply the quality balanced scorecard model toensure product quality in multi dimensions.
To effectively address quality management risksacross the product lifecycle, including supply chaindisruptions and business interruptions, and ensurethe delivery of customer-satisfactory products, weadhere to a proactive and risk-predictive approachto quality management. We conduct comprehensiverisk identication and have established a Quality RiskContingency Plan, covering critical stages such asmaterial procurement, production & manufacturing,and post-market surveillance, with dened applicabilityfor both commercialized and pipeline products. Theplan mainly includes supply chain risk informationcollection, avoiding single source, diversifying suppliers,establishment of backup production bases, post-market product traceability and recall.
Product Quality Management System
Product Quality Risk Management
As of the end of the reporting period, all production bases under the Company have obtained GMP certication. Amongthem, 13 have also obtained ISO 9001 certication, accounting for 40.63% of all production-oriented enterprises. This fullydemonstrates the company's commitment to continuous improvement in quality management systems. The production-oriented subsidiaries of the Company have obtained the certication of ISO 9001 Quality Management System, as follows:
Quality System Certication
Zero instances of failed
random inspectionsannounced by drugregulatoryauthorities;
Zero failures ininspections conductedby drug regulatoryagencies;
Zero instancesof revocation orsuspension of drugmanufacturing licensesby drug regulatoryauthorities;
Grand Quality ConceptHigh quality · Expectation of stakeholder
Learning & Growth: Subject Matter Experts & Continuous Improvement
Powertrain (Headquarters): Audi Empowerment &Regional Supervision & Management Review
Powertrain (Base): Business Platform Development & Major
Project Development, etc.
Extraordinary risk
control
Base · Advanced
quality system
Quality informationempowermentLayered controlChange controlData reliabilitypracticesTechnology transfer riskcontrolQuality incident
management
Quality negative listQuality positive listQuality measurementFull value chainoperation system
Kelun Good Standard(KGS)Good Practice Guide(GPG)Major special programmanagementContinuous improvementof the platformSubject matter expert
platformIntensive management
(Supplier management &pharmacovigilance, etc.)
Quality technical support
Laboratory informationmanagement systemQuality managementsystemsKnowledge managementsystem
Pharmacovigilance system
Quality satisfactionFirst time correct rateProcess capabilityAudit ready
VMS for PP & PQ
(Process performance &product quality verication
and monitoring system)
CAPA systemChange management
systemManagement reviewReview and release
Quality riskmanagement system
Knowledgemanagement system
KELUN PHARMA's Quality Objectives
High qualityperformance
KELUN PHARMA
KELUN PHARMARenshou BranchGuang'an BranchAnyue BranchJunjian PlasticHunan KelunHubei Kelun
Guangxi KelunCHUANNING BIOTECHJINHE BIOTECHQingshan LikangJIANGNING BIOTECHKunming Nanjiang
Certied Entity
ISO 9001 Quality Management SystemCertication (Example)
Junjian Plastic
●Document (archive)management system
●Training managementsystem
●Quality reporting system
●Data analysis system,etc.
Headquarters · Advanced
quality platform
Industrial Collaboration to Create the Future
5960
We maintain proactive communication and regular visits with material suppliers tomonitor industry trends and collect supply chain data, enabling timely responses topotential risks. We track uctuations in market demand and assess upstream risks suchas raw material monopolies or price surges to adjust inventory or implement contingencymeasures. In emergencies (e.g., natural disasters, pandemics, environmental shutdowns,regulatory bans, or logistics disruptions), we evaluate risks and recalibrate safety stocklevel, procurement volume, and production plans based on projected demand to mitigateimpacts.
For commercialized products, we continuously qualify alternative suppliers byassessing material risks (quality/accessibility) and product sales (criticality) toprevent shortages caused by single-source dependency. For pipeline products,production bases collaborate with sales and supply departments to identify keyvarieties, assess material supply risks, and qualify backup suppliers prior to productapproval, aligning with launch schedule, especially for centralized procurementvarieties or other strategic varieties.
Suppliers are geographically diversified within China to avoid regionaldisruptions. For international suppliers, we avoid over-reliance on a singlecountry. Supplier evaluation criteria explicitly include operational scale,inherent risk resilience, and disaster preparedness/mitigation and businessrecovery planning.
Strategic partnerships Long-term strategic cooperation agreements areestablished with key suppliers to ensure stable supply.
We balance accessibility and cost for the establishment of material standardsfor new products or change of material standards for existing products,avoiding overly stringent standards that may lead to supply shortages orinated prices.
Material Procurement
We have established and continues to rene a multi-base production layout, with commonly used varieties licensed formanufacturing across multiple bases. This ensures local market distribution, reduces transportation costs, and enhanceslogistics efciency. In the event of natural disasters, public epidemic, or unexpected incidents, the backup factory systemguarantees sustainable supply for all products.
We have established a comprehensive traceability system. All pharmaceutical production andpackaging processes strictly adhere to approved technical protocols and standard operatingprocedures, with complete documentation maintained. Each sales package unit is assigned a drugelectronic supervision code. Additionally, we have implemented multiple digital systems, includinglaboratory management LIMS, quality assurance QMS, knowledge management DMS, personneltraining ELN, and warehouse management WMS. A unied quality information management platform,tools, and methodologies ensure full traceability from raw material procurement to nished productdelivery, commercial circulation, and clinical use.
We have developed guiding documents such as theDrug Recall ManagementandGuideline forHandling Sudden Drug Safety Incidents. Our subsidiaries (branches) have also established productrecall management systems in accordance with regulatory and corporate requirements, forminga robust recall framework. This ensures that any batch of products with potential safety hazardscan be recalled quickly and effectively from the market when necessary. Furthermore, we conductsimulated recall exercises to continuously evaluate the effectiveness of the recall system.
Production & Manufacturing
Post-market Surveillance
In 2024, we recorded
product recall incidents
and
regulatory warnings related to products
Informationcollection andrisk prediction
Avoiding singlesource
Producttraceability
Productrecall
Diversifyingsuppliers
Stable supply
Reasonablematerialstandards
Industrial Collaboration to Create the Future
6162
Quality culture is a pillar of soft power in corporate management. We believe in customer-centered quality culture andcontinue to promote the development by including all employees in training sessions. For quality and safety trainingmanagement, we implement a three-tier education and training system: the headquarters Quality Supervision Centeroversees training management from a regulatory compliance perspective, while each subsidiary (branch) designatesdedicated personnel to ensure the implementation, execution, and tracking of quality training.At the beginning of each year, training administrators at subsidiaries (branches) develop annual training plans basedon business needs and regulatory updates, which are then distributed to all departments. Departments tailor their owntraining plans by integrating company-wide objectives with specic requirements, and they are responsible for execution.The implementation of all training plans is monitored through a tracking mechanism and conrmed by both company anddepartment-level training administrators layer by layer, with the progress of each training recorded in tracking forms.
Additionally, the company organizes annual themed quality training for all employees, complemented by activities suchas debates and knowledge competitions. These initiatives foster a culture that prioritizes and respects quality, embeddingquality responsibility into the corporate DNA to support sustainable development.Product Quality and Safety Training
In 2024, KELUN PHARMA launched a "Quality & Safety Compliance Season", organizing a series of regulatory trainingactivities across group subsidiaries to strengthen compliance awareness and enhance production safety and qualitymanagement standards. The Quality Supervision Center provided a recommended list of laws and regulations, whileproduction companies conducted training and assessments, focusing on theDrug Administration Law of the People'sRepublic of Chinaand theMeasures for the Supervision and Administration of Drug Quality in Operation andUsage, to ensure that drug production, operation, and entrusted storage and transportation activities comply withregulatory requirements. Enterprises were encouraged to conduct comprehensive self-inspections based on product-specic regulations. For pharmaceutical distributors in cost-accountable regions, the center delivered training andassessments on core regulations likeGood Supply Practice(GSP), supplemented by industry case studies to elevatecompliance management.
Quality & Safety Compliance Season - Regulatory Training Series
Regulatory Training in Progress
Number of internal quality trainingsessions28,898Internal quality training hours726,186
Coverage of internal qualitytraining
99.32%
Total number of participants ininternal quality training
587,962
KELUN PHARMA Product Quality Training Management Matrix
Category Training TypeExample Training ContentFrequencyTraining Method
New employee induction
GMP training for newemployees
Clean Area Personnel BehaviorStandards,Microbiology Fundamentals,Personal Hygiene Requirements,
Pharmaceutical Fundamentals, etc.
Annual
On-site lectures +learningE-learning platformDrug production andquality laws andregulations
Drug Administration Law of thePeople's Republic of China,Measuresfor the Supervision and Management ofDrug Production,Good ManufacturingPractice and appendices, etc.
On-site lectures +learningE-learning platform
Pre-jobtraining
Productionstaff
GMP knowledge, drugproduction regulations,the Company's drugproduction managementsystems and position SOPs
SOP for Light Inspection Position,SOPfor Filling Position,SOP for PackagingPosition, etc
On-site lectures +learningE-learning platform+ practicalassessmentQuality staff
GMP knowledge, drugquality regulations, theCompany's drug qualitymanagement systems andposition SOPs
Deviation Management Procedure,Change Management Procedure,Electronic Balance SOP,ProductRelease Management Procedure, etc.
On-site lectures +learningE-learning platform+ practicalassessmentEquipmentmanagementstaff
Professional knowledgetraining
Equipment Maintenance Procedure,Equipment Lifecycle ManagementProcedure,Preventive EquipmentMaintenance Procedure, etc.
On-site lectures +learningE-learning platform+ practicalassessmentWarehousestaff
Professional knowledgetraining
Raw Material Receipt/Dispatch/StorageManagement Procedure,FinishedProduct Receipt/Dispatch/StorageManagement Procedure,FinishedProduct Shipping ManagementProcedure, etc.
On-site lectures +learningE-learning platform+ practicalassessmentContinuingeducation
All staff
Drug production andquality laws andregulations, revision ofdrug production andquality documents
Measures for the Administration ofDrug Registration,Measures for theAdministration of Vaccine Production,etc.
Internal trainerPPTs, online learningthrough recordedvideos
Industrial Collaboration to Create the Future
6364
We are committed to building a high-level testing platform to meet the diverse in-house testing needs of internalpharmaceutical production. As of the end of the reporting period, seven core member enterprises of the Companyhave had their laboratories pass the authoritative review by the China National Accreditation Service for ConformityAssessment (CNAS) and obtained CNAS certication. These laboratories provide accurate and efcient product testingservices, covering a wide range of testing items such as drug stability studies, impurity quantification analysis, andmicrobial limit testing, ensuring the delivery of high-quality, safe, and effective products to the market.
Product Quality Testing
Sichuan Kelun Pharmaceutical Co., Ltd. Xindu BaseSichuan Kelun Pharmaceutical Co., Ltd. Anyue BranchKunming Nanjiang Pharmaceutical Co.,Ltd.Hunan Kelun Pharmaceutical Co., Ltd.Hunan Kelun Pharmaceutical Co., Ltd. Yueyang BranchGuizhou Kelun Pharmaceutical Co., Ltd.Sichuan Kelun Pharmaceutical Research Institute Company Limited
The Company operates over 20 quality control laboratories equipped withmore than 2,000 high-precision instruments, including but not limitedto atomic absorption spectrophotometers, Fourier-transform infraredspectrometers, amino acid analyzers, fully automated microbial analyzers,ion chromatographs, and PCR thermal cyclers. These instruments enablecapabilities in physicochemical analysis, microbial testing, pharmacologicalexperiments, and safety testing of polymeric materials, covering over 2,000test items.The Company's QC laboratories boast a complete talent pipeline, with 1,073professional testing technicians, approximately 50% of whom hold bachelor'sdegrees or higher. The team is well-structured, experienced, and procient intechniques such as high-performance liquid chromatography (HPLC), relatedsubstance testing, and depressor substance testing, totaling 2,000 testingcapabilities. They serve as the core technical force ensuring the accuracy oftest results.
We place high importance on precautionary test. Annual test plans are developed to thoroughly analyze potentialimpurities in product formulations and manufacturing processes. From both quality and safety perspectives, we identifypotential issues early and optimize key aspects such as formulations, processes, packaging, and storage to controlproduct risks at the source.Before production, we conduct a series of tests and inspections to identify and resolve potential quality or safetyconcerns, ensuring no medication risks arise during subsequent use.
For new products or processes, we design inuence factor tests, accelerated stability tests,and forced degradation tests to simulate extreme conditions and evaluate product qualityand process parameter rationality.
We conduct validation runs for at least three consecutive batches, monitoring criticalparameters in real-time to ensure process stability and reproducibility, thereby reducingquality risks caused by process variability.
During process development, we comprehensively evaluate each step and parameter toidentify key factors and potential risks that may affect product quality.
Quality Testing Capabilities
Precautionary Quality Risk Test
When selecting pharmaceutical packaging materials, we conduct comprehensive evaluations, focusing on thecompatibility between packaging materials and drugs, as well as their protective properties. Through acceleratedand long-term stability tests, we observe quality changes under different packaging conditions to promptlyidentify potential issues such as moisture absorption, oxidation, or degradation. Additionally, we rigorously validatepackaging processes, including equipment operating parameters and operational standards, to ensure accuracy andstability, thereby guaranteeing the integrity and sealability of drug packaging.
Drugs are susceptible to environmental factors such as temperature, humidity, and light during storage and use.To assess potential risks of quality degradation, we employ accelerated stability test methods, simulating extremeconditions (e.g., 40°C high temperature, 75% relative humidity) to determine the drug's sensitivity to environmentalfactors and its quality stability. Data from accelerated stability test are used to extrapolate drug expiry date usingappropriate mathematical models. Scientically setting drug expiry date helps ensure that the quality of medicationsused by patients meets standards, thereby reducing medication safety risks.
Precautionary Test: Packaging Material Selection and Evaluation
Precautionary Test: Stability Assessment of Drug Storage and Usage
In 2024, we conducted over600,000productquality tests
In 2024, we conducted over
150,000
predictive tests
In 2024, we conducted over
500,000existingproduct quality/safety tests
CNAS Certicate
covering over
2,000 test items
Test and inspection
Risk assessment
Process validation
Industrial Collaboration to Create the Future
We have set up a comprehensive pharmacovigilance system in accordance with theGood Pharmacovigilance Practice
(GVP) and relevant guiding principles, and formulated the policies and procedures such asPost-marketing DrugSafety Management Procedures,Adverse Drug Reaction Reporting and Monitoring ProceduresandDrug Safety RiskManagement Procedures. The holders of marketing authorization for all our company drugs have established a completepharmacovigilance organizational structure and system documents in accordance with regulatory requirements, andcontinuously improved them in accordance with the latest regulatory requirements during implementation. At the sametime, all holders of marketing authorization for our company drugs have established drug safety committees, set updedicated pharmacovigilance departments, and appointed qualied personnel as pharmacovigilance responsible personsto ensure the safety and health of the public in drug use.
We have cultivated broad and accessible channels to collect adverse events from and give professional answers topatients, doctors, and pharmacists, enabling effective monitoring and control of drug safety. We have configured apharmacovigilance system, connecting with the National Medical Products Administration's Center for Drug Evaluation(CDE) and Center for Adverse Drug Reaction Monitoring (CDR) through gateway systems to achieve the monitoring ofadverse drug reactions through coding, analysis and evaluation, and timely reporting.
Ofcial WebsiteOfcial WebsiteWeChat Ofcial
AccountCustomer HotlineEmail Address
Adverse drug reactions obtained will be reported to the Drug Safety Risk Management Department of the headquarters.The HQ office will follow up on missing information in accordance with theAdverse Drug Reaction Reporting andMonitoring Procedures. For serious adverse reaction, we will report the investigation results of production, logistics andother links, to the drug regulatory authorities in a timely manner.
Sichuan Kelun Pharmaceutical Research InstituteCo., Ltd. is responsible for the establishment andoperation of the pre-market pharmacovigilancesystem for our company. Through the formulationof policies and procedures such as theStandardOperating Procedures for PharmacovigilanceRisk Control Planningand theProcedures forCollection, Processing, and Submission of Reportson Serious Adverse Incidents, we have effectivelyensured the efficient and orderly conduct ofpharmacovigilance work during the stage.
We maintain a group-based post-marketpharmacovigilance management system.Under the guidance of the Drug Safety RiskDepartment of the headquarters, each subsidiarymanages adverse reaction information collection,monitoring, reporting, signal detection, riskassessment, and post-market research,aimingto ensure consumer drug safety. In addition, theCompany regularly organizes independent auditsof the pharmacovigilance system to ensure itseffective operation.
PharmacovigilancePharmacovigilance System
Pre-market
Channel IChannel IIChannel IIIChannel IVChannel IV
Post-market
Pre- and Post-market Pharmacovigilance Management
Adverse Reaction Collection Channels
Contact usSuggestion andConsultation
Feedback
ProductServices
"KELUN EMedicine"pv.china@kelun.com4006860333Pharmacovigilance
Contact us
6665
Industrial Collaboration to Create the Future
We export products to regions such as Southeast Asia, South America, Africa and Europe, and conduct post-marketsurveillance in developing countries based on the Pharmacovigilance Monitoring and Reporting Management Procedure.We have established an overseas ADR monitoring and reporting mechanism and sign agreements with foreigndistributors, clarifying their responsibilities for collecting and transmitting post-market ADR information, follow-up, andinvestigation. Relevant departments handle and report ADRs in compliance with regulations, continuously identify andcontrol risks to ensure consumer medication safety.
Pharmacovigilance Mechanisms in Developing Countries
To enhance the professional capabilities of the pharmacovigilance team, we organize regular internal training sessionsand external expert lectures to ensure employees stay updated on the latest regulatory requirements and industrytrends. Through simulated exercises and case studies, we strengthen the team's ability to respond to drug safetyincidents, ensuring swift and effective action in emergencies. In 2024, we conducted 273 pharmacovigilance trainingsessions, covering all employees. The training includes both pre-job and continuing education programs.
Pharmacovigilance Training
Coverage ofpharmacovigilancetraining100%
Total number ofparticipants inpharmacovigilance training
10,672Number ofpharmacovigilance trainingsessions
Totalpharmacovigilancetraining hours
In 2024, we implemented a series of systematic and intelligent measures to improve the quality and efficiency ofpharmacovigilance work, ensuring comprehensive and timely drug safety monitoring and providing a solid foundation forpatient medication safety.
Pharmacovigilance Enhancement Activities
In 2024, Henan Kelun and Guangxi Kelununderwent pharmacovigilance inspections byprovincial ADR monitoring centers andpassedsuccessfully.
In 2024, five marketing authorization holdersunder KELUN PHARMA were recognized asnational-level outstanding ADR monitoringunits,and one was recognized asprovincial-level outstanding.
We continuously updated the pharmacovigilance document system in line withdomestic and international regulatory updates to ensure compliance and operability.Through regular reviews and a defect information-sharing mechanism, we promotedself-inspection and correction to optimize the pharmacovigilance system.We implemented a stringent individual case safety report quality control system,incorporating data verification and review mechanisms to ensure report accuracy.Regular data quality assessments were conducted to maintain the integrity andconsistency of pharmacovigilance data.We updated the ADR submission pages on the official website and WeChat publicaccount, improving user interfaces for easier reporting. An automated telephonerecording system was introduced to reduce manual errors and expand informationcollection channels.
We deployed a computer-aided detection system that leverages big data and articialintelligence to automatically identify and assess drug safety risk signals, enhancingdetection efciency and accuracy.
We upgraded the pharmacovigilance system to improve data processing capabilitiesand user-friendliness. Robotic Process Automation (RPA) technology was introduced toautomate repetitive tasks, optimizing workows and resource allocation.Enhancing DocumentSystem Maintenanceand Compliance
Establishing IndividualCase Safety ReportQuality Control System
LaunchingIntelligent QualityRisk SignalDetection
UpgradingPharmacovigilance
System andIntelligent Tools
Optimizing Multi-Channel Information
Collection
Industrial Collaboration to Create the Future
6970
Customer Service
Relying on our comprehensive advantages of stable product quality, top-notch packaging image, considerate service,and appropriate prices, we strongly broaden our development space. Currently our sales network covers all provinces,autonomous regions,and municipalities in China, excluding Taiwan, Hong Kong, and Macao. Meanwhile, we activelypromote our internationalization strategy, and our leading products have achieved bulk exports, with a high reputation inover 50 countries and regions.
We always adhere to the customer-centered service philosophy, continuouslyoptimizing and improving customer satisfaction. Regular customersatisfaction surveys are conducted, and during the reporting period, weresolved 100% of customer feedback and received a satisfaction rate of over98%. Upholding the principle of "customer rst", KELUN PHARMA maintainsa good communication channel with customers, continuously refines itsproducts and services, and wins public trust.
We always practice responsible marketing and closely align our business goals with the corporate social responsibilities.In the marketing process, we strictly adhere to theAdvertising Law of the People's Republic of Chinaand other relevantlaws and regulations, insist on promoting our medicine in an ethical, scientic, and objective manner, and prohibit anydistortion, exaggeration, overemphasis, omission, or other practices that may lead to factual misrepresentation.Compliance specialists are deployed across business frontlines, and a "guidance-supervision-management" tripartitemanagement system is established, focusing on three key responsibilities: Regular promotion, which involves periodicinterpretation of updates on compliance policies and regulations for business teams to strengthen organization-widecompliance awareness through specialized training sessions and case-based warnings; Full-process supervision, whichinvolves dynamic compliance reviews of marketing activities, with full-process oversight of academic conferenceplanning and execution through digital tools to promptly identify and mitigate non-compliance risks; High-risk expensemanagement, which involves pre-reimbursement review mechanism for high-risk expenditures such as businessentertainment and academic promotions. This contains a triple verication process, document validation, context tracing,and benchmarking against standards, to promptly intercept non-compliant expense claims.
We highly value customer feedbacks and suggestions. We have published guide documents such asProduct After-salesInformation Management. Each subsidiary (branch) has established a management system for collecting, classication,investigation and processing of customer feedback. The process ensures that all feedback can be handled properlyin a timely manner, protects the interests of consumers, promotes the audience's medication safety and continuouslyimproves our product quality.
In accordance with the Personal Information Protection Law, we have establisheda strict customer information protection mechanism to safeguard the storageand transmission of personal information, transaction records, health data, andother sensitive information, and to prevent unauthorized access, use or leakage.We only collect, use, and disclose necessary information permitted by law andexplicitly authorized by customers, and strengthen employees' awareness ofcustomer privacy protection through internal trainings.In addition, we fully respect customers' rights to make informed choices andkeep personal privacy while we are committed to improving customer serviceexperience. We maintain transparency in any operations involving customerprivacy, and promptly respond to customers' requests for inquiries, corrections ordeletions of personal information. Through a series of rigorous and comprehensiveprivacy protection measures, we strive to create a trustworthy environment sothat every customer can use our products and services without worries.
Improving Customer Services
Responsible Marketing
Customer Complaints and Reports
Customer Privacy Protection
In the international market,the Company exports tomore than
countriesand regions, includingSoutheast Asia, SouthAmerica, Africa, and Europe,among others.
In the domestic market,we served over5,000
distributors and morethan4,000tertiaryhospitals;
received a satisfaction rate ofover98%
In 2019, we issued theCompliance System of Sichuan Kelun Pharmaceutical Co., Ltd., defining compliant marketingpractices. This compliance system is updated annually. ThePromotional and Non-Promotional Materials ManagementSystemdefines requirements for externally published materials and information, mandating internal cross-functionalreviews of all materials (promotional or non-promotional) to ensure objectivity and compliance. TheMarket ServiceProvider Management System enhances end-to-end oversight of third-party service providers.In 2024, we revised the Responsible Marketing Policy, which is applicable to all company and subsidiary (branch)employees (full-time, part-time, outsourced, or temporary), and published it on official website. The policy coversinformation disclosure, employee training, audit supervision, environmental protection and social responsibilities, furtherstandardizing marketing practices to ensure all employee interactions with stakeholders and external business activitiescomply with laws, regulations and business ethics.
Responsible Marketing Policy
Industrial Collaboration to Create the Future
7172
We mandate that all marketing personnel complete training session on responsible marketing practices at least once ayear, with passing scores required on associated assessments. Additionally, the Company conducts ad-hoc training forthird-party partners collaborating with the marketing team (including but not limited to suppliers and distributors) tocommunicate company policy and ensure alignment with the company's standards in actual business operations.In 2024, we organized compliance training sessions with a total of 8,800 participants, accumulating 117,800 hours oflearning. The training covered all employees in the marketing system and addressed multiple key areas, including butnot limited to compliance system policies, common expense reimbursement procedures, and comprehensive compliancepolicies and risk guidelines. Through simulated marketing scenarios involving potential compliance risks, such asmisleading advertisements and unauthorized data usage, we demonstrated how to identify and mitigate these risks toemployees.
To ensure compliance in marketing activities, we implement a multi-dimensional and systematic approach to responsiblemarketing supervision and audit. The scope of audit covers the headquarters, subsidiaries (branches), and third-partypartners, encompassing all marketing operations, including infusion products, non-infusion products, OTC products, andAPIs.The Internal Control and Compliance Department conducts routine monitoring and inspections of the marketingteam's compliance practices. Annually, it organizes a series of compliance initiatives and self-assessments to enforcecorporate compliance requirements while supervising and spot-checking the implementation of compliance efforts. TheInternal Audit Department performs internal audits across various business segments in alignment with the company'soperational developments and audit priorities. Identied audit issues are tracked regularly until resolved, relevant policiesare continuously improved, and compliance awareness is strengthened through training.
Responsible Marketing Training
Responsible Marketing Audit
Academic Activity of Compliance TrainingCompliance Training for Common Expense
Reimbursement PracticesIn 2024, all marketing personnel completed an average of 5.7 training hours on theCompliance System.
Implementation of Unannounced Inspection Mechanism
The Internal Control and Compliance Department established an unannounced inspection mechanism formarketing activities. In 2024, over 130 unannounced inspections were conducted across headquarters departmentsand regional operations, focusing on the compliance and effectiveness of marketing activities. Through on-site oronline inspections without prior notice, the department reviewed original data such as business process records,observed on-site activities, and conducted interviews to promptly identify potential risks in marketing activities.This mechanism strengthens real-time oversight, ensures timely identication and rectication of issues, and formsa dynamic monitoring network covering the entire business chain, signicantly enhancing the standardization ofmarketing activities.
During the reporting period, we conducted
responsible marketing audits;Responsible marketing audits covered2,956employees, encompassing all personnel within themarketing system.
Quarterly Sampling Inspection for Marketing Compliance
The Internal Control and Compliance Department conductscomprehensive quarterly sampling inspections of headquartersand regional operations. In 2024, four rounds of quarterly samplinginspections were performed, systematically reviewing marketingactivity records, expense vouchers, and other documents to assessthe effectiveness of compliance policies and adherence to lawsand regulations. High-risk business segments were prioritizedfor retrospective analysis, and a classification mechanism foraddressing violations was established.
Sampling in Progress
Building a Sustainable Supply Chain
We strictly adhere to theDrug Administration Law of the People's Republic of China, theCompany Law of the People'sRepublic of China, theLaw of the People's Republic of China on Inviting and Bidding Tenders, and other relevant lawsand regulations. In alignment with GMP requirements and internal management standards, we have established aseries of policies and guidelines, including theMaterial Supplier Management Measures,Material Supplier QualityAudit Management Measures,Material Supplier Performance Management Measures, andMaterial Supplier LifecycleManagement Strategy, to standardize supply chain management. Additionally, we actively collaborate with suppliersto address product quality and safety issues, conduct on-site diagnostics, training, and improvement projects, promotecompliance and energy-saving initiatives within the supply chain, and support suppliers in obtaining certications for self-improvement. These efforts are aimed at building an efcient, healthy, green, and sustainable supply chain.
We implement a rigorous and standardized supplier accessprocess. Staff from the Supply Department strictly follow the
Material Supplier Management Measuresto screen qualifiedsuppliers based on material quality assessment (includingsuitability of quality standards), process suitability assessment(including test and process validation), and product qualityassessment (including stability) and strictly control basicthreshold requirements for supplier access. Beyond mandatoryqualifications, we place significant emphasis on suppliers'performance in quality management system, EHS managementsystem, social responsibility, and environmental protection.Under equal conditions, priority is given to suppliers certifiedunder ISO management systems, and the procurement share ofhigh-quality suppliers is continuously increased.
As of the end of the reporting period,100%of the company's API supplierspassed GMP compliance inspections;over95%of API manufacturers,90%of excipient manufacturers, andpackaging material manufacturers obtainedISO 9001 quality management systemcertication.
Supplier Access and Management
Supplier Access and Certication
Industrial Collaboration to Create the Future
7374
We classify the materials into Grade I to IV levels based on a comprehensive analysis of quality risks of the products,nature of materials, the use and dosage of materials, the degree of impact of materials on product quality, adoptingdifferent supplier management methods for different levels of materials.Additionally, we classify suppliers into three categories based on the qualication verication (approval) status: potentialsuppliers, approved suppliers, and unqualied suppliers. For approved suppliers, further classication is conducted basedon material supply risk and material purchase amount, and the rened categories include strategic suppliers, leveragedsuppliers, bottleneck suppliers, and general suppliers. Tailored management strategies are implemented for each suppliercategory.
HH
H
MMLL
LNN
Material Consumption Amount of Purchase
Material Classication and Supplier Categorization
Impact on Product
Supply Risk
Grade I Material
Grade III MaterialGrade IV Material
Upholding the risk management philosophy of "quality rst, prevention foremost", we have established a systematic andmulti-dimensional supplier risk management system. Through proactive planning and dynamic management, we aim tobuild a secure, stable, and sustainable supply chain ecosystem, providing a solid foundation for the company's steadyoperations and long-term growth.
Supplier Risk Management
Information Collection and Risk Prediction
We regularly monitor industry trends, assess market risks, anticipate supply monopolies andprice uctuations, and develop inventory and procurement plans. Emergency mechanisms areestablished for sudden risks, with dynamic adjustments to inventory and production plans.Avoiding Single Source
We diversify supplier base to reduce dependence on single supplier and ensure materialsupply continuity. For products under development, supply risks are evaluated in advance tobuild a diversied supply system.
Diversifying Suppliers
We adopt a multi-region, multi-country procurement strategy and assess suppliers' riskresilience to ensure supply chain stability.Reasonable Material Standards
We set scientic material standards to balance quality and cost, avoiding supply shortages orcost uctuations due to excessively high standards.Strategic PartnershipsWe establish long-term strategic partnerships with core suppliers and sign supplyagreements to ensure stable provision of key materials. Regular evaluations and in-depthcollaboration further enhance supply chain efciency.Grade II Material
Bottleneck Suppliers
General Suppliers
Strategic Suppliers
Leveraged Suppliers
We place high importance on supply chain quality management and implement risk control measures from the productionsource. Continuous support and guidance are provided to suppliers through workshops, training, on-site diagnostics, andbenchmarking activities to improve production quality management and product quality. These efforts ensure long-term,stable provision of qualied materials and foster mutually benecial partnerships.Specic measures for supply chain quality improvement include:
Supplier Quality Improvement
Developing and executing sup-plier quality audit plans. Throughaudits, we emphasize our specicrequirements for suppliers acrossall aspects. Audit results serve asa key factor in annual comprehen-sive performance evaluations anddirectly influence subsequent pro-curement shares.
Conducting targeted seminars withsuppliers to collaboratively addressproduct quality and safety issues,develop improvement plans, andreach consensus on corrective ac-tions.
Providing guidance on process im-provements, on-site management,quality inspection, and contam-ination control strategies whenmaterial supply or quality issuesarise. Multiple on-site diagnosticsand corrective measures are imple-mented to assist suppliers in timelyrectication and improvement.
Industrial Collaboration to Create the Future
7576
Supplier Quality Training in Progress
To effectively manage supply chain quality risks, we conduct quality management training for suppliers annuallythrough online, ofine, and material-sharing methods. The training content is customized based on supplier performanceevaluations and issues identied during audits to enhance relevance and effectiveness.In 2024, we systematically organized supplier training programs focusing on key areas such as change management,deviation management, lean production tool application, CCS (contamination control strategy), quality managementsystem development, and process and quality control improvements. Throughout the year, nearly 300 training sessionswere held, totaling approximately 400 hours, covering 320 strategic suppliers, leveraged suppliers, bottleneck suppliers,and some high-risk suppliers (those involved in high-risk quality incidents in 2023 and with audit results of "conditionalapproval"), and involving more than 2,000 participants. These targeted initiatives signicantly improved suppliers' qualitymanagement capabilities, further strengthening the foundation for supply chain quality and safety.
Supplier Quality Training
Number of supplier trainingsessions
Supplier training hours
Coverage of supplier training100%
Number of supplier participatingin supplier trainingover2,000
To establish a robust material supplier quality audit management system, proactively mitigate risks at the source, andcontinuously enhance supplier management capabilities across production companies, we have implemented theMaterialSupplier Quality Audit Management Measuresand adhere to them strictly. This system standardizes and institutionalizesmaterial supplier quality audit practices. Audits are conducted based on GMP's six major systems: quality assurance,quality control, production management, material management, facility and equipment management, and packagingand labeling systems, ensuring product quality and safety from the source. We conduct annual audits for Grade I, II, III,and IV material suppliers through on-site, documentary, or remote methods, in accordance with material classicationrequirements.
Supplier Audit
After each audit, we compile audit reports and conclusions based on audit records or data summary, supplier defectrectication reports, or rectication plans.
On-site Supplier Audit
In 2024, KELUN PHARMA's subsidiaries (branches) strictly followed the established audit plan and successfully completedcomprehensive supplier audits. 320 suppliers underwent on-site audits and 100 supplier underwent written audits,achieving 151% of the annual target. The audits covered strategic suppliers, leveraged suppliers, bottleneck suppliers,general suppliers, and "high-risk suppliers" (those involved in high-risk quality incidents in 2023 and with audit results of"conditional approval"). The audits signicantly improved supply chain quality management and ensured stable operationof the supplier system.
Number of supplieraudits
Number of writtensupplier audits
Number of on-sitesupplier audits
Number of remotesupplier audits
Audit conclusion of "approved": It indicates the supplier's quality management system meets theCompany's requirements, and production quality management is compliant. The supplier may continueproviding materials within the audit scope.Audit conclusion of "conditionally approved": It indicates gaps between the supplier's qualitymanagement system and the Company's requirements or non-compliant production quality management,requiring improvements. Follow-up audits are required for improvements when necessary.Audit conclusion of "not approved": It indicates the supplier's quality management system or productionquality management fails to meet the Company's requirements, posing signicant quality risks. The suppliermust rectify issues and undergo a full re-audit before resuming business.
Industrial Collaboration to Create the Future
7778
We are committed to promoting integrity construction in the supply chain, prohibiting all forms of commercial bribery, andrequiring all employees to adhere to the highest ethical standards of business. We encourage upstream and downstreampartners and stakeholders to support, accept, and implement theAnti-Commercial Bribery SystemandCode of BusinessConduct, ensuring compliance with applicable laws, regulations, and internationally recognized ESG standards.
Supply Chain Integrity Construction
We integrate applicable clauses of theCode of Business Conductinto contract management with suppliers and businesspartners. Notably, we mandate that all suppliers and business partners must unconditionally undergo our annualevaluations on anti-corruption policy formulation and implementation assessment.
External Restrictions and Supervision
As of the end of the reporting period,100%of core suppliers have signed theSunshineAgreement100%of suppliers have studied theSunshine Agreement Training Video
We highly value green development in the supply chain and actively fulll social responsibilities to promote its greenand low-carbon development. In alignment with theGreen Manufacturing - Green Supply Chain Management inManufacturing Enterprises - Specifications for Assessment, we manage suppliers across the entire product lifecycle,from product design and raw material procurement to production, transportation, storage, packaging, usage, recycling,and disposal. Furthermore, we continuously monitor suppliers' EHS (Environment, Health, and Safety) performance,integrating annual assessment results into their overall evaluation. When allocating procurement shares for the followingyear, priority is given to suppliers with stronger EHS performance under equal conditions.
Green Procurement
We have established comprehensive procurement management processes and a supplier lifecycle management system,adhering to the "three-three principle" and utilizing the information-based procurement management platform - KelunPharma Electronic Procurement System to track, manage, and trace procurement activities. These internal managementmeasures effectively mitigate the risks of malpractice in supplier management, ensuring fair and impartial procurementpractices while advancing integrity in the Company's supply chain.Additionally, we require all new employees to sign theKelun Group Compliance /Integrity Commitment Letterupononboarding, while existing employees reconfirm their commitment by re-signing the document annually during theCompliance Season. During the reporting period, all employees required to sign theKelun Group Compliance /IntegrityCommitment Letter had completed the signing process.
Internal Standardized Management
We mandate that all procurement contracts with suppliers must incorporate theSunshine Agreement, which stipulates:
Both parties shall prohibit the solicitation or acceptance of any improper benets. Either party shall not deliberately createobstacles for the other. Violations can be reported through designated channels specied in the agreement. Meanwhile,we include anti-corruption as a screening criterion from the supplier access stage, requiring all suppliers to study theSunshine Agreement Training Video on KELUN PHARMA's ofcial procurement platform, achieving 100% implementation.
Supplier Anti-Corruption Compliance Investigation
In 2024, we continued to conduct comprehensive anti-corruption compliance investigation of its suppliers, andthus assessing whether suppliers had established robust compliance management systems and examining thedevelopment and implementation of their anti-corruption policies.
87.88%
suppliers have internal independent compliance department;
96.46%
suppliers have anti-corruption and anti-bribery policy in place;
93.43%
suppliers hold anti-corruption and anti-bribery training to main positions;
91.41 %
suppliers have employees sign anti-corruption and anti-bribery agreement.
People-oriented and Shared Growth
7980
People-orientedand Shared Growth
KELUN PHARMA firmly believes that talent is thecornerstone of corporate development. We placehigh importance on protecting employee rights andhave established a fair and transparent employmentsystem, emphasizing equality and diversity in the talentstructure. With outstanding capabilities, we attracttalent, nurture them through independent innovation,and serve them with generous benefits. We regardtalent development as the most critical responsibility.At the same time, we adhere to occupationalhealth and safety standards, creating a safe andcomfortable working environment. We are committedto safeguarding employees' physical and mental health,fostering mutual growth between us and our employees,and sharing the fruits of corporate development.
People-oriented and Shared Growth
8182
Talent Development Strategy
Compliance in Employment
Recruitment and Employment Management
Opposing Child Labor and Forced Labor
Number andproportion ofemployees by
age
Number andproportion ofemployees by
rank
Number andproportion ofemployeesby type ofemployment
We consistently adhere to a people-oriented principle, strictly complying with domestic laws and regulations such astheLabor Law of the People's Republic of China, theLabor Contract Law of the People's Republic of China, theSpecialProvisions on Labor Protection for Female Employees, theLaw of the People's Republic of China on the Protection ofMinors, and theProvisions on Prohibition of Child Labor. Additionally, we actively implement international standards liketheUnited Nations Global Compactand theInternational Labor Organization (ILO) Core Conventionsto ensure compliantrecruitment, equal employment, and comprehensive protection of employee rights. We are dedicated to fostering a fair,just, diverse, and inclusive workplace environment.
We have established aRecruitment Management Systemapplicable to allemployees, aiming to build a transparent and fair recruitment mechanism thatensures equal employment opportunities for all candidates. Furthermore, wehave implemented theEmployee Diversity and Labor Employment System,which applies to all employees of the headquarters and its subsidiaries(branches), including full-time, part-time, outsourced, and temporaryworkers. This system explicitly prohibits child labor, opposes forced labor,protects employee diversity, and firmly rejects any form of discriminationor harassment. It ensures employees' legitimate rights and interests in faircompensation, workplace safety, career development, and democraticparticipation are fully realized.
We strictly abide by national and international labor protection laws andregulations. We have implemented theEmployee Diversity and LaborEmployment System, rmly prohibiting child labor and forced labor. Duringrecruitment, we enforce rigorous age verification to ensure all new hiresmeet the legal minimum working age (16 years old). This is achievedthrough ID verication, age inquiries during interviews, and pre-employmentbackground checks. We regularly review recruitment, employment, andcompensation processes to ensure all employees participate voluntarily,equally, and fairly, with no form of forced labor. Additionally, we providetraining and education to enhance employees' awareness and ability toprotect their rights, maintaining a positive labor environment.
During the reporting period, weachieved
100%social insurancecoverage for employees
Total number of employees
Unit：
Persons
Number of newly hired employees
Femaleemployees
9,778
Employees aged 30 and below
7,326
Employees aged 41 to 504,399
Middlemanagementemployees3,671
Employees underlabor dispatch
system
Other regions
Seniormanagementemployees
Employees aged 51 and above1,406
Male employees12,086
Employees aged 31 to 40
8,733
Grassroots employees18,181
Employees underlabor contract21,410
Number andproportion ofemployees by
gender
During the reporting period,
noincidents of childlabor or forced labor werereported. All employees metthe legal minimum working agerequirements.
Employee Composition
500010000150002000025000
People-oriented and Shared Growth
8384
Diversity TrainingThe Company actively cultivates an inclusive corporate culture and places strong emphasis on training related to theEmployee Diversity and Labor Employment System. With support from relevant departments, we organize at least oneannual mandatory training session on this system for all employees.
Talent AttractionWe adhere to the employment policy of "strict screening, only selecting true talents; Give rewards and punishmentsregardless of relation". We use various channels such as social recruitment, campus recruitment, internal and externalreferrals, and headhunting recommendations to attract talents with different backgrounds and experiences through adiversied, standardized, and transparent recruitment process, laying a talent foundation for the long-term developmentof the Company and strengthening employer brand building. In order to respond to the needs of internationalization, werecruit talents from the United States, Europe, India, and countries linked to the Belt and Road to help overseas businessdevelopment. During the reporting period, the Company has created a total of 3,598 job opportunities for society.In addition to introducing external talents, we also focus on the effective ow of internal talents. The Company regularlyinitiates internal selection and recruitment processes for vacant positions, and employees can apply through openchannels, making talent ow more efcient. To encourage all employees to recommend outstanding talents, we haveestablished theRegulations on the Management of Internally Recommended Talents. Employees can recommendcandidates through online or ofine channels such as the Company's ofcial website, "KELUN PHARMA Recruitment",WeChat public account, ofcial WeChat account, and corporate email.
Employer Honors
During the reporting period, KELUN PHARMA and its subsidiaries (branches) have demonstrated unremitting efforts andoutstanding results in building harmonious labor relations, and have won over 14 enterprise labor relations honors andawards from national, provincial, municipal, and district governments and authoritative institutions.These honors fullyconfirm the continuous involvements and significant achievements of KELUN PHARMA inemployee rights protection,labor relations management, and corporate culture construction.
Diversity and Inclusion
The Company is dedicated to fostering a diverse, equal, and inclusivecorporate culture to attract and retain exceptional talent while encouragingemployees from all backgrounds to excel. We have established andimplemented theEmployee Diversity and Labor Employment System,which designates the ESG Committee under the Board of Directors to beresponsible for the development, revision, execution supervision of thispolicy. This includes diversity training, diversity management goal setting,and progress tracking.Diversity and inclusion are core components of KELUN PHARMA's ESGstrategy. To ensure effective implementation, we have set a goal to "achievea female employee ratio of at least 46% by 2030". This goal is integratedinto the management's performance evaluations and directly linked to theircompensation. Additionally, recruitment teams are incentivized throughbonuses to promote diversity. The HR Department conducts an annual review of diversity progress at the beginning ofeach year, analyzes relevant data, and report implementation status to the ESG Committee to ensure goal attainment.
Number of femaleemployees
Number of female executivemanagement employeesNumber of female seniormanagement employees
Number of newfemale employees
150020002500
Number of ethnic minority employees
To enhance employees' understanding of diversity and labor policies, in 2024, the Company conducted specialtraining on theEmployee Diversity and Labor Employment Systemfor all employees. The training covered theimportance of diversity, talent recruitment and development, labor management, and feedback mechanisms.Through systematic explanations and case studies, employees gained a deeper understanding of diversity andits role in the workplace, as well as the principles and procedures of labor employment. We used the ELN learningplatform for online training, ensuring exible participation and review. Post-training online assessments showed an88% pass rate, indicating effective comprehension and mastery of the content.
KELUN PHARMA Conducted Special Training onEmployee Diversity and Labor EmploymentSystem
We set a goal to "achieve afemale employee ratio of atleast
46% by 2030"
2022
Unit: PersonsUnit: Persons
20232024
Female Employee Statistics
Ethnic Minority Employees
202220232024
People-oriented and Shared Growth
8586
Material Benets to Promote Diversity
Anti-Discrimination and Anti-Harassment
The Company actively enhances its performance in diversity and inclusion by offering diversified material benefits,thereby supporting the achievement of diversity goals. It strictly complies with theSpecial Provisions on Labor Protectionfor Female Employees, ensuring female employees enjoy special leaves such as paid marriage leave, maternity leave,and breastfeeding breaks. Additionally, it provides exible late-arrival leave for pregnant employees and fully equippedlactation rooms to facilitate a smooth return to work for new mothers. Furthermore, we care women's health bypromoting cancer prevention awareness, effectively reducing the risks posed by breast and cervical cancers to women'swell-being.We respect the customs and cultures of foreign and ethnic minority employees, granting them cultural holidays beyondstandard leave to demonstrate inclusion for cultural diversity. Moreover, for employees at overseas bases, the Companyadheres to a global operation philosophy and implements theRegulations on the Overseas Base Visits (Anti Visits)Management. It has introduced exclusive welfare plans, including commercial insurance coverage, complimentary healthcheck-ups, and holiday greetings for overseas employees and their families, further fostering the development of adiverse and inclusive corporate culture.
To better care for women's health, raise awareness of cancerprevention, and reduce the risks posed by breast and cervicalcancers, Xindu Base organized a health education lecture onprevention and treatment of two major cancers on May 16,2024. The event invited Dr. Zhou Li, Director of Gynecology,and Dr. Ma Bangying, Director of Breast Surgery, from XinduDistrict Maternal and Child Health Hospital to deliver expertinsights. The lecture aimed to enhance female employees'awareness of cancer risks, educate them on scientificprevention and early screening methods, and promote overallphysical and mental well-being.
Xindu Base Held Health Lecture for Female Employees
Xindu Base's Health Lecture onPrevention and Treatment of Two
Major Cancers
Talent RetentionCompensation Management
Performance AppraisalsIn order to establish a performance-oriented culture and achieve continuous improvement of organizational and individualperformance through standardized and effective performance management mechanisms, and ensure the achievement ofthe Company's strategic and operational goals, we have formulated theEmployee Performance Management Measuresand various specialized performance bonus assessment plans, covering all employees (including non-managementstaff and non-sales staff). We also regularly organize departments and employees to conduct performance evaluationsaccording to the agreed performance evaluation cycle (monthly/quarterly/semi-annual/annual), resulting in organizationaland individual performance.To meet the needs of different positions and job natures and to fully motivate employees, we have established diversiedemployee performance assessment methods, including Key Performance Indicator (KPI) method, goal managementmethod, behavioral observation method, and others. Taking the Key Performance Indicator (KPI) method as an example,it drives business development through the setting of KPIs. Employees extract and develop key performance evaluationindicators from the annual key work plan, departmental performance indicator decomposition, core job responsibilities,and other aspects to form a personal annual performance plan table; The performance is reviewed and adjusted in aquarterly or semi-annual manner, with department heads providing performance coaching during the process; At the endof the year, the assessment will be conducted through a combination of performance self-evaluation and departmenthead review. The evaluation results serve as important bases for bonus distribution, annual salary adjustments, annualpromotions, talent development, and awards of honors.
We are committed to maintaining a fair, just, and inclusive workplace, strictly enforce theEmployee Diversity and LaborEmployment System, and oppose all forms of discrimination and harassment. During recruitment, candidates of allgenders, races, ethnicities, pregnancy statuses, disabilities, or religions are treated equally. The Company fosters teamdiversity by valuing cultural backgrounds and perspectives. We respect employee diversity and differentiation, reject allforms of discrimination, bias, or unlawful differential treatment, and provide inclusive services.
In order to fully leverage the incentive effect of salary and benets and maximize the motivationof employees, we have established a comprehensive compensation system consisting of xed andvariable salaries, covering all employees (including non-management staff and non-sales staff).The principle of remuneration based on contributions and performance is adopted. The oatingsalary is linked to employee performance evaluation results, strengthening incentives and forminga healthy competitive mechanism within the Company.
We will regularly monitor employee compensation to ensure effective implementation ofrelevant policies. At the same time, a sound compensation appeal mechanism has beenestablished, and internal communication and appeal channels related to compensationhave been opened to all employees. The scope of appeal includes compensation, benefits,attendance, performance evaluation, and rewards and punishments.
We have established a standardized and reasonable salary distribution mechanism based onthe principles of "make use of talents, distribution according to work, fairness in treatments,and consideration of benets". This combined with the characteristics of production, operation,and management, and taking into account the supply and demand situation of the labormarket, differences among employees, and our paying ability. We ensure that the salary levelof employees is competitive compared with local peers and major domestic competitors, inorder to effectively attract, retain, and motivate talents, and improve the competitiveness. Wealso ensure that male and female employees with the same job functions, contributions, andperformance receive equal compensation in our Company.
KELUN PHARMA holds a zero-tolerance policy for harassment, intimidation,or bullying in the workplace and relevant environment. It upholds genderequality principles, takes strong action against sexual harassment, andsafeguards employee rights. We have established theEmployee AppealSystem, which outlines clear reporting procedures and corrective ordisciplinary measures for human rights violations, including discriminationand harassment. For such misconduct, employees can le a complaint withappeal handling committees following the channels and procedures speciedin the system. For more details on the reporting procedures, please referto relevant content under "appeal handling procedures" on page 3 of theEmployee Appeal System, available in the sustainable development sectionof the Company's ofcial website.
During the reporting period,KELUN PHARMA didnotexperience anyincidents of workplacediscrimination or harassment
People-oriented and Shared Growth
8788
Equity Incentives
Employee Benets
To further optimize the Company's long-term incentive mechanism, attract and retain outstanding talents, and fullymotivate the Company's management personnel and key employees, we actively integrate the interests of shareholders,the Company, and the incentivized individuals. This alignment ensures that all parties are focused on the Company'slong-term development. In accordance with relevant laws, regulations, and normative documents, the Company haslaunched multiple rounds of equity incentive plans.
The Company is committed to continuously improving employee well-being, fostering employee motivation, andenhancing a sense of belonging and team cohesion. We provide a wide range of non-pay benets benets and supportfor all employees, in addition to statutory benets such as social insurance and housing provident fund contributions. Wealso offer special benets for eligible employees.
The Company continues to enrich the diversity of non-pay benets and actively develops innovative welfare programs,as well as exploring welfare care plans tailored to specic employee groups. Each year, the Company takes into accountthe actual needs of human resources management and changes in the external environment. Consideration is givento different customs, legal requirements, and employee needs across various global operating locations. The Companyprovides overseas employees of companies not within China with overseas employee insurance, allowances, medicalexaminations, and also provides insurance and medical examinations for the families of overseas employees. Regularvisits and support are extended to overseas employees and their families.
Employee Care and WelfareThe Company always regards employees as its most valuable asset, and is committed to enhancing employee happinessand sense of belonging through a comprehensive welfare system and a wide range of employee activities and throughdiverse welfare and care measures.
Performance Feedback Mechanism
After the performance assessment, assessors provide timely feedback to the individual being assessed on the assessmentresults. This can be done through face-to-face interviews or phone conversations, allowing the individual to understandthe Company's expectations and areas for improvement in their performance. This process helps create a personalperformance improvement plan. The individual being assessed can also communicate any difculties they encounteredinachieving their performance goals and request guidance and assistance from their superiors. Once both parties have fullycommunicated and reached an agreement, they jointly complete and sign thePerformance Feedback Interview Record Form.If an employee has any objections to the assessment results, they should raise a written performance appeal to the HRDepartment. Upon receiving an employee's appeal, the HR Department should provide a response within 3 working days,indicating whether the appeal will be accepted. Once the appeal is accepted, an investigation should be conducted intothe appeal content. Communication and coordination should be carried out with relevant departments or individuals. Ifno resolution can be reached through coordination, the case should be escalated for a decision by the General ManagerDepartment. After the decision by the General Manager Department, the HR Department is responsible for providing theappeal resolution to the appellant.
Kelun Pharmaceutical 2021 RestrictedStock Incentive Plan, covering
employeesKelun-Biotech Employee StockOwnership Platform, covering
employees
Kelun Pharmaceutical 2021 EmployeeStock Ownership Plan, covering
employeesCHUANNING BIOTECH 2023 RestrictedStock Incentive Plan, covering
employees
Kelun Pharmaceutical 2022 EmployeeStock Ownership Plan, covering
employeesCHUANNING BIOTECH EmployeeStock Ownership Platform, covering
employees
By the end of the reporting period, there were existing equity incentive/employee stock ownershipplans in KELUN PHARMA, covering a total of
employees .
Material Non-Pay Benets Programs
The Company has partnered with well-known insurance companies to provide employees with an exclusivepurchasing platform for "Million Medical" coverage. This platform offers comprehensive medical coverage, includinghigh hospitalization expenses, special outpatient treatments, and chemotherapy for malignant tumors. Employeescan enjoy exclusive discounts and a seamless purchasing experience. Employees can purchase personalized healthprotection plans at discounted prices, effectively mitigating the nancial risks of illness.The Company has a deep collaboration with a renowned insurance Company to launch a "Personal Pension"program, aiming to create a secure and guaranteed retirement plan for employees. Through this policy, weencourage employees to actively participate in personal pension savings. They can choose to purchase designatedsavings deposits, financial products, commercial pension insurance, public funds, and other personal pensionproducts in accordance with relevant regulations. Full accumulation is implemented, and employees can enjoy taxincentives as per government regulations.The Company provides free annual medical examinations for all employees to safeguard their physical health,prevent major diseases, and reduce healthcare risks.The Company has established the "Kelun Love Fund" to provide timely assistance for employees and their familieswho are facing major illnesses or accidents.
●Five social insurance andone housing fund
●Legal holidays andvacations
●
Ethnic holiday breaks
●
Paid annual leave
●Marriage leave, maternityleave, paternity leave,breastfeeding leave
●Funeral leave
●High temperatureallowance
●Personal pension
●Love fund
●Million medical insurance
●Commercial insurance
●
Health examination
●
Annual medical examination
●
Paid tourism
●Travel subsidy
●Expatriation subsidy
●
Holiday bonuses (gifts)
●Wedding gifts
●Birthday gifts
●Congratulations on childbirth
●Factory anniversary gifts
●Retirement condolences
●
Comfort for illness
●
Comfort for work-related Injuries
●
Funeral funds
●
Exclusive benets for internal carpurchases
●
Employer liability insurance
●Free dormitory
●
Free lunch
●
Education subsidy
●
Title subsidy
●
Trafc allowance
●
Transportation allowance for Spring Festivaltravel
●Communication subsidy
●
Equity incentive plan
●
Women's Day bonus (gifts)/ holiday
●
Children's Day gifts
●
Home leave
●
Late arrival leave for pregnancy
●Service length subsidy
●
Breastfeeding room
●
Breastfeeding leave
●Overseas employee insurance
●
Overseas employee subsidy
●
Insurance for families of overseas employees
●Medical examinations for overseas employees
●
Medical examinations for families of overseasemployees
KELUN PHARMA BENEFITS LIST
Statutory benetsfor all employees
Non-statutory benetsfor all employees
Non-statutory benets for eligibleemployees
Note: The total number of employees covered is 966, which differs from the total sum in the breakdown below.This discrepancy is due to 12 recipients being granted duplicate awards.
People-oriented and Shared Growth
8990
Employee Care
Support for Employees in Distress
In order to create a more harmonious, healthy, and positive work atmosphere, the Company promotes work-life balanceby establishing employee activity centers, gyms, libraries, and other facilities. We have held various series of sportscompetitions multiple times, such as badminton, basketball, and table tennis; Organized various team building activities,including masquerade dance, Winter Solstice food themed festival activities, fun sport day, Chinese Valentines Dayfestival fellowship activities, etc; Established interest clubs such as choirs, tness groups, table tennis clubs, badmintonclubs, and dance clubs, greatly enriching the lives of employees.
The Company has always attached great importance to assisting employees in difcult situations. Through initiativessuch as the "Kelun Love Fund" and "Million Medical" insurance, the Company has established a comprehensive andsecure healthcare protection system. This enhances employee happiness and fosters unity within the Company.
On Women's Day 2024, the Shandong Kelun Reading Cluborganized a reading sharing event with the themeBeing aWoman in the Workplace. This event not only strengthenedcommunication and connection among employees but alsopromoted personal growth and development. By readingmore books, and reading good books, employees continuouslyenhance their cultural literacy and cultivate a life philosophyof loving life and being condent and resilient.
In July 2024, the "Little Kelun Employee - Exploratory Journey into pharmaceuticals" event, hosted by the HumanResources Department of the Company's headquarters and organized by Xindu Base, took place at ChengduMedical College. A total of 30 children of employees from the headquarters, Kelun-Biotech, Research Institute, andXindu Base participated in the event and had the opportunity to personally experience the allure of the medicaland pharmaceutical professions. The children had the opportunity to visit the university library, explore the LifeScience Museum, learn about emergency care at the rst aid center, experience traditional Chinese medicine tie-dyeing, and engage in in-depth interactions with professors. Through these activities, they gained a close-upunderstanding of the rigor and wonders of the medical and pharmaceutical elds. The event sparked their interestin the pharmaceuticals industry and deepened the emotional connection between the children and their parents'professions. They not only acquired valuable knowledge in pharmaceuticals but also experienced the academicatmosphere of a university, laying a solid foundation for their future academic planning. This event providedmore learning and growth opportunities for the children of employees and contributed to the preservation anddevelopment of the Company's culture.
Shandong Kelun Women's Day Reading Sharing Event, Empowering Women in the Workplace
Headquarters & Xindu Base: "Little Kelun Employee" (Children of Employees) Embark on anExploratory Journey into pharmaceuticals
Shandong Kelun "Reading Sharing
Conference"
Employee CommunicationTo safeguard employee rights, optimize management, enhance satisfaction,and foster enterprise cohesion, the Company has established systems such astheEmployee Appeal System, and created various channels for feedback andsuggestions. Employees can choose the appropriate channel to provide feedbackand raise concerns, and relevant departments will conduct joint investigations andprovide timely feedback. During the reporting period, the Company implementedtheChairman's Hotline Reporting System, allowing employees to report signicantissues directly to the chairman. The Company and its subsidiaries (branches) havealso set up a "General Manager's Mailbox" to actively listen to employee voices andencourage them to offer suggestions and ideas for the Company's development.Additionally, the Company conducts employee satisfaction surveys, organizesemployee forums and discussions, engages with university students, and providesplatforms for employees to express their wishes. This includes the use of WeChatgroups, democratic meetings, staff representatives meetings, on-site ofce sessionswith the general manager, regular inspections, team leader meetings, and workmeetings. These platforms ensure that employee concerns are promptly andeffectively addressed.Formal Grievance Reporting Procedure
Appellant Protection Measures
Labour Union Communication
The Company is committed to providing employees with a smooth and condential formal grievance reporting procedure.The condentiality of the appellant and their appeal information is strictly maintained, and necessary measures are takento protect the personal safety and lawful rights and interests of the appellant. During the reporting period, the Companyrevised theEmployee Appeal System, clarifying the departments responsible for handling appeals, the scope of appeals,and the channels for submitting appeals, while optimizing the appeal handling procedure. The scope of appeals includesinstances of unfair treatment by superiors or colleagues, as well as other matters where lawful rights and interests havebeen violated (such as any form of human rights violation, including discrimination, harassment, and bullying).The headquarters and subsidiaries (branches) have established "appeal handling committees" to carry out research,feedback, and response to employee appeals. Appellants can submit their appeals through the appeal handlingcommittees at the headquarters and subsidiaries (branches). They can also choose to report through other appropriatemeans as deemed suitable by the reporting person. Appeal channels include appeal hotlines, appeal emails, and writtenreports. The Company has separately established the "Appeal Handling Procedure for Employees of Headquarters"and the "Appeal Handling Procedure for Employees of Subsidiaries (Branches)" for the headquarters and subsidiaries(branches) respectively. For more details on the reporting procedures, please refer to relevant content under "appealhandling procedures" on page 3 of theEmployee Appeal System, available in the sustainable development section of theCompany's ofcial website.The Company has implemented measures to protect appellants. During the appeal handling process, relevant personnelare required to keep the information confidential and strictly avoid any retaliation against the appellant. Those whoviolate this requirement will face severe punishment.We rmly abide by local laws and regulations, and continuously improve the democratic management system within theenterprise. We have established trade union organizations in accordance with legal norms such as theConstitution ofthe Chinese Trade Unionsand theTrade Union Law of the People's Republic of China. The Company regularly conveneemployee representative conferences, with representatives including but not limited to frontline workers, technicalmanagers, leading cadres, party members, Youth League members, young employees and female employees., ensuringbroad democratic participation. This democratic mechanism has played a substantive role in resolving labor disputes,implementing labor protection supervision, fullling labor legal supervision functions, and protecting the legitimate rightsand interests of female employees, effectively safeguarding the democratic rights of all employees in participating in theprocess of enterprise reform and development.
During the reportingperiod, all employee-related complaintswere properly handled,and there were nodisputes raised by theindividuals who led thecomplaints.
The Kelun Love Fund Committee has received donations totaling over RMB 1.35 million from theheadquarters, subsidiaries, and certain regions. It has provided love and assistance funds totalingover RMB 1.39 million for 98 employees and their family members who are suffering from seriousillnesses or have experienced accidents. Since its establishment, the Group's Love Fund has providedassistance for 1,783 individuals in need, with a total assistance amount of over RMB 14 million.A total of 638 individuals have purchased medical insurance through the "Million Medical" exclusiveplatform.
During the reporting period:
People-oriented and Shared Growth
Employee Engagement and Satisfaction Survey
We firmly believe that employees are the core driving force and valuable asset for enterprise development. In orderto continuously optimize human resource management, improve organizational efficiency, and create a harmoniousand efcient work environment, we attach great importance to and continue to pay attention to the dynamic changesin employee engagement and satisfaction. In order to gain a deeper understanding of employee needs, improve thework environment, enhance team cohesion and work efficiency, the Company annually conducts a engagement andsatisfaction survey covering all employees.During the reporting period, the Company designed dedication-related questions from the dimensions of emotions,cognition, and behavior. For satisfaction, questions were designed based on five dimensions: job content, workenvironment, management, compensation and benefits, and career development. The survey was conducted onlinethrough a questionnaire.
The Company's Improvement Plan for Low-scoring Areas
Talent RetentionThe Company actively builds a comprehensive and sustainable talentmanagement system. Through key dimensions such as compensation andbenets, employee development, promotion channels, and employee care,the Company strives to enhance the value realization and career stabilityof employees. This helps to reduce employee turnover rate and improveorganizational effectiveness. Each year, the Company conducts statisticalanalysis of employee turnover data and formulates targeted improvementmeasures. During the reporting period, the employee turnover rate wasapproximately 15.73% (16.08% in 2023), with no signicant turnover amongsenior management personnel. Over the past three years, the employeeturnover rate has shown a decreasing trend, indicating the effectiveness oftalent retention strategies.
Employee Turnover Rate
17.00%
16.08%
15.73%
20%
| 2022 | 2023 | 2024 |
15%
During the reporting period, the Company conducted a engagement and satisfaction survey covering all employees,with an effective response rate of
95.4%
. The overall engagement score was95%, and theoverall satisfaction score was92%.The Company continues to track the results of the engagement and satisfaction survey and develops improvement plansfor areas with lower scores. The Human Resources Department at the headquarters organizes all subsidiaries (branches)to analyze employee feedback and conduct targeted interviews based on the survey results and data analysis. Thepurpose is to explore the possible reasons behind the levels of engagement and satisfaction. The department alsoorganizes key employees to discuss improvement measures, strengthen employee trust and sense of belonging, andfurther enhance employee engagement and satisfaction.
From 2022 to 2024, theCompany and its subsidiaries(branches) didnotexperiencesignicant layoffs or any majormergers or acquisitions thatadversely affected employees.
Specic Improvement MeasuresDimensionsWork-lifeBalanceCareerDevelopmentOpportunitiesValuingEmployeesPerformanceManagement
Work Processes
Remunerationand benets
●Implementing exible working arrangements (exible working hours, remote work)
●Encouraging paid leave and establishing a reasonable leave policy
●Organizing cultural and sports activities (such as badminton competitions, yoga classes, etc.)
●Establishing clear career development paths and specifying promotion criteria
●Providing diverse training opportunities (professional skills, management skills, etc.)
●Establishing an internal mentoring system and assigning mentors to employees
●Encouraging internal job transfers and providing more career development opportunities
●Establishing open communication channels (employee forums, general manager's mailbox, etc.)
●Establishing employee recognition and reward mechanisms (such as annual employee excellenceawards)
●Caring for employees' personal lives (birthday greetings, wedding wishes, etc.)
●Creating a positive and uplifting corporate culture (team building, cultural activities, etc.)
●
Formulating scientic and reasonable performance assessment indexes
●
Strengthening performance communication and feedback, assisting employees in developingimprovement plans
●
Linking performance assessment results to compensation and benets
●Regularly evaluating and optimizing the performance assessment system
●
Reviewing and optimizing existing work processes, simplifying procedures
●
Integrating information technology systems with AI to continuously improve system efciency
●Enhancing communication and collaboration between departments, breaking down information barriers
●Encouraging employees to provide improvement suggestions and rewarding excellent rationalizationproposals
●
Periodically conducting market salary surveys to ensure salary competitiveness
●Establishing a sound salary and compensation system based on job value, individual capabilities, andperformance
●Providing a diverse range of welfare programs (supplemental medical insurance, commercial insurance,paid annual leave, etc.)
●Addressing individualized employee needs and offering exible benet plans
People-oriented and Shared Growth
9394
Employee Training and DevelopmentEmployee Training System
Integration of Industry and Education
E-learning Online Platform Empowering Training System
The Company attaches great importance to talent development and continuously builds and improves an employeetraining system based on the principles of ''strategic guidance'', ''hierarchical training'' and "consistent learningand application". The Company closely integrates talent development with its strategic objectives and the needsof employees' positions. A diverse range of training programs are conducted, and various assessment methods areused to evaluate the effectiveness of training. In addition, the Company implements a lifelong learning concept thatcombines online and ofine learning. Since 2017, an online learning platform has been utilized to facilitate the integratedmanagement of online and ofine training. Based on three principles and the concept of compound interest, the Companyhas built special training programs that provide compounding benets for employees at different levels and positions.Customized training programs are developed for management cadres, sales personnel, quality management personnel,and other specic roles, aiming to promote talent development and contribute to the Company's sustainable growth.
In recent years, KELUN PHARMA has taken the construction of a nationalindustry education integration enterprise as an opportunity to deeplyparticipate in industry education integration and school enterprise cooperation.Through innovating the work mode of industry education integration,promoting deep cooperation between industry, academia, research andapplication, jointly building industry education integration internship bases,establishing a skilled talent training system, and promoting the construction ofa "dual teacher" teacher team, it has played an important role in the reform ofvocational colleges and higher education, and has produced a demonstrationeffect in improving the quality of technical and skilled talent training.The integration of industry and education is an upgraded version of traditionalschool enterprise cooperation. The Company has formulated a managementsystem for the integration, clarifying guiding principles, planning goals, keytasks, and guarantee measures. When carrying out the integration of industryand education, we focus on clinical needs and common technical challenges inthe industry. Projects serve as the link, allowing us to closely combine industry,university, and research. We collaborate with universities and researchinstitutions to achieve joint development and shared benefits. Through thiscollaboration, we drive breakthroughs in key core technologies and tacklechallenging problems. As of the end of the reporting period, the Companyhas established strategic cooperative relationships for talent training with 113universities and colleges, including 55 undergraduate universities, 52 colleges,and 6 vocational schools.
In implementing the educational philosophy of lifelong learning, KELUN PHARMA has adopted a diversified trainingstrategy that combines both online and offline, and both internal and external resources. By deeply integrating theapplication of the E-learning online learning system, a exible and efcient dual line training model has been constructed.Since the full launch of the platform in 2017, we have successfully covered online learning and training activities for25,000+ accounts, and achieved digital and rened management.As of the end of the reporting period, we have carefully planned and delivered over 5,824 online training programsannually, accumulating a wealth of educational resources. We have developed 25,807 internal online courses that covervarious fields, including pre-job training, management, regulations, safety and environmental protection, corporateculture, reference learning, professional technical knowledge, job skills, employee counseling, new employee onboarding,and product knowledge. During the reporting period, the activity level of our ELN platform reached a new high, with
1.9645 million logins and a total online duration of 867,300 hours. These gures demonstrate the strong desire for self-
improvement among our employees and their high recognition of the platform's resources.
Our Education and Training Model
E-learning Online Learning Platform
Window of KELUN PHARMA
Onboarding Training
R&D SystemInternal Training
Security
Education
AnticorruptionTraining
FinancialKnowledgeTrainingBusinessReceptionEtiquette Training
ProductKnowledgeTrainingRegulationsLaws and
Training
……
Base Internship
Production System
External Dispatch
Training
Expansion of Military Training
Logistics SystemExternal Hiring
Training
On-job Learning
Marketing SystemBenchmarkingLearning
New Employee Development
Professional Training
Training Approach
General Training
KELUN PHARMA Corporate Culture Training
ESG IndicatorUnit202220232024
Employeetraining hours
Total training hours10,000 hours134.32 170.95 176.18Average training hours per
employee
Hours70.84 86.35 80.58Total training hours for
female employees
10,000 hours/76.0776.63Per capita training time forfemale employees
Hours/83.8378.60Total training hours for male
employees
10,000 hours/94.8799.55Per capita training time formale employees
Hours/88.4782.18Total training hours for senior
management
Hours/1,032.16977.67Average training hours persenior management
Hours/73.7381.47
Employeetrainingassessment
Total number of trainingsessions per year
10,000 times4.44 6.32 6.16Annual training expenditureRMB'0,000189.02 428.05 487.80Number of employees
trained
Persons 18,42219,79821,864Employee training coverage
rate
%100100100
People-oriented and Shared Growth
9596
We have collaboratedwith Sichuan Universityto establish the"West China KELUNClass" to train seniorpharmaceuticalmarketing andmanagementprofessionals as well asengineers. There havebeen 8 sessions, with atotal of 192 participants.We also conduct jointtraining programs forpostgraduate students,with the third sessioncurrently in progress.
Xindu Base has deepened collaboration with Chengdu Medical College, participating in the developmentof teaching cases for graduate students. They are also advancing university-enterprise innovationprojects, exploring solutions based on the college's professional advantages to promote industry-university-research integration. All projects are steadily progressing.Qionglai Branch has partnered with Chengdu University, with General Manager Cui Dexiu serving as anoff-campus mentor. They are jointly training 4 master's students and participating in the compilation ofthe textbookPharmaceutics, which is used in multiple vocational colleges.Some management personnel of Guizhou Kelun have been appointed as off-campus industry mentors inGuizhou Medical University and other universities. They are involved in the compilation of the textbookPharmaceuticsused in Guizhou Healthcare Vocational University, Guangxi Vocational University ofAgriculture, and other vocational colleges.Hubei Kelun has enhanced cooperation with Wuhan University of Science and Technology. Theyexchange technical knowledge, establish expert workstations, and invite university mentors to provideguidance. In June 2024, they made a donation of the "Baopuzhong" scholarship and assistance fund.Graduate students participated in the transformation of the production line, fostering a virtuous cycle ofindustry, university, and research.Kunming Nanjiang has successfully completed the evaluation of the new apprentice dual trainingprogram in collaboration with Kunming Chemical Vocational and Technical School. They have alsojointly conducted the certification of pharmaceutical formulation technical skill levels. As a result, 96employees have achieved intermediate-level certication, and 94 employees have achieved advanced-level certication. This has contributed to an increase in the proportion of skilled frontline personnel. In2024, the Company underwent a review and conrmation of the new apprentice training program by thegovernment authorities.CHUANNING BIOTECH adheres to an innovation-driven philosophy and engages in academic exchangesand technological collaborations with renowned institutions such as Tsinghua University and HarbinInstitute of Technology. They have applied for 8 invention patents and published 7 academic papers. Bydeepening the integration of industry, university, and research, they are driving advancements in theindustry's technology.
We collaborate with ChinaPharmaceutical Universityfor the "Return from HundredBattles for Further Education"training program. Thisprogram involves invitingprofessors and leadersfrom China PharmaceuticalUniversity to provide regulartraining for executivesin the Group on policyinterpretation, investmentanalysis, and pharmaceuticalmarket-related management.The goal is to cultivate highlyspecialized talent, broadenthe talent cooperationinterface, and deepen theintegration of industry andeducation.
We have partnered withChengdu Universityfor the "Integration ofIndustry and Educationin Medicine and Health"demonstration project.By sharing resourcesand complementingeach other's strengths,we aim to cultivatepharmaceutical talentsthat meet industryneeds and promote theindustrial application ofresearch achievements.
The KELUN PostdoctoralResearch Workstationhas established a jointtraining mechanismwith the PostdoctoralResearch Station ofSichuan University.We have attracted 11postdoctoral fellows tothe station, with 7 ofthem completing theirtenure (6 of whom havebeen retained). Duringtheir tenure, they haveled over 30 high-techdrug research projects,creating a benecialcycle of talent andoutput.
KELUN PHARMA's bases have collaborated with educational institutions on joint training projects
West China KELUN Class Event Site
Launch Event of "KELUN Class" Joint Innovation Project Between Xindu Base and Chengdu
Medical College
Postdoctoral Defense Site
New Apprentice Dual Training Between Kunming Nanjiang and Kunming Chemical Vocational and
Technical School
KELUN PHARMA's headquarters have collaborated with educational institutions on joint trainingprojects
People-oriented and Shared Growth
9798
New Employee TrainingIn order to ensure that new employees can quickly adapt to the environment and efciently fulll their job responsibilities,KELUN PHARMA implements a comprehensive coverage policy in new employee training, requiring a 100% participationrate in new employee training to help them deeply understand the Company's development history, core values, andmanagement policies and behavioral requirements that need to be followed in daily operations.
Additionally, the Company has launched the "Program of Excellence" specifically targeting fresh graduates, with theaim of building a "Kelun New Army" with ideals and courage to strive, and reserving talents for Kelun's third decade ofdevelopment. With the talent cultivation model of "ve stages + three mentors", the employees from school recrementsto successfully go through the rapid transformation from school to the workplace. This ensures that they quickly integrateinto the Company's culture and unleash their potential.
"Program of Excellence" Training Program (536 Training Principles)
To comprehensively improve the job competence and professional skills of newemployees, the Quality Department of Xindu Base of KELUN PHARMA has innovativelylaunched a one-on-one apprenticeship program. Through a deep binding mechanismthat involves the mentor's whole process guidance and shared responsibilities, thisprogram achieves rapid development of new employees and efcient transfer of teamexperience. The program focuses on core positions in quality analysis technology,selecting senior employees with over 5 years of experience, solid technical skills, andexcellent communication abilities as mentors. Pairings are based on job compatibilityand complementary personalities. Mentors are required to develop customized trainingplans for a period of 1-3 months. They use a three-dimensional coaching method of"theory explanation + hands-on training + case review" to systematically teach qualityinspection methods, application of inspection tools, and disposal of typical issues. Theyalso keep daily teaching logs and provide weekly feedback and growth assessments.To strengthen process management, the department establishes a "Dual Assessmentfor Mentor-Apprentice" mechanism, directly linking the skill attainment rate of newemployees and the completion rate of independent tasks to the performance evaluationof mentors. Since its implementation, the average training period for new employees hasbeen reduced by 40%, and the pass rate for key equipment operation certication hasreached 100%. This has truly achieved a virtuous cycle of "experienced mentors guidingnew employees while new employees promoting the improvement of experiencedemployees".
The Quality Department of Xindu Base Innovates the "Master-Apprentice" Training Model toFacilitate Rapid Growth and Skills Inheritance of New Employees
Job-specic Development Training
We firmly believe that implementing job specific training can not only improve individual employee skills and workefficiency, but also ensure that the Company maintains a competitive advantage in the rapidly changing marketenvironment.
In the eld ofproductionmanagementIn the eld ofmarketingIn the eld ofcorporate cultureconstruction andtraining
In the eld ofquality control
We have launched an international high potential talent special training camp project, aiming to selectand cultivate senior talents with a global perspective and professional skills, and help Kelun achievemodernization and internationalization in production and manufacturing.We have implemented comprehensive leadership and business training programs that cover all levelsof management. These programs aim to enhance strategic thinking abilities, decision-making skills, andteamwork and communication skills by focusing on innovative business model thinking and interpretationof industry regulations and policies.We also spare no effort in promoting corporate culture construction and training. Through systematiceducational and training activities, we deeply imprint Kelun's corporate values and social responsibility inevery employee's mind, jointly shaping a team that combines professional skills and noble character.
The KELUN quality training system includes knowledge lectures and the Drug Vigilance Training Centerfor quality management personnel. It continuously improves the quality theory and practical skills ofeach production base by establishing online and offline quality knowledge databases. Through the"Knowledge Lecture Hall" online platform, experience-based knowledge is extracted, resulting in thelaunch of 22 professional themes such as statistical application, data governance, and technologytransfer. The total number of learners exceeds 200,000.
We have designed rich and targeted training courses based on the specic
requirements and future development needs of each position:
Company
History
Daily Management
System
ProductKnowledge
CorporateCulture
WorkKnowledge
Onboarding
Training
Sectoral MentorPost Mentor
Mentor, Department of
Human Resources
1.On-site
teaching
2. E-Learning
online learningand exams
1. 3-day military
training
2. 2-day
outreachUniedaccommodationsand meals inthe workshop,centralizedlearning andtraining
Upon completionof the rst 4stages, a formaljob performanceevaluation will beconducted
1. Rotational
learning
2. Position-
based learning
Workshop LinePractice
On-job LearningIntensiveTraining
6-month incubation period
Debrieng
New EmployeeTraining Module
In the eld ofprofessionaldevelopment of
employees
We have carefully organized business reception etiquette training courses to enhance the professionalimage and service ability of employees in external communication, and demonstrate the valueconnotation of the Kelun brand.
People-oriented and Shared Growth
99100
Promotion and Job Transfer Mechanism
The annual promotion mechanism is a regular channel provided by the Company each year to recognize and incentivizethe career development of outstanding employees. It is carefully planned and arranged by the headquarters' HumanResources Department in accordance with annual regulations, following strict evaluation procedures, to ensure orderlypromotions of employees to higher levels. At the same time, we also take into account the need for new positionsor vacancies in existing positions, ensuring that employees who meet the criteria and are capable of performing thecorresponding duties have a fair and equal opportunity to be promoted through the vacancy promotion process atany time during the year. This ensures optimal allocation of human resources, constantly improving overall Companyefciency.To clarify employees' career development paths and unleash employees' potential, the Company is exploring new modelsfor multi-channel career development. In addition to the traditional hierarchical promotion channels, we have establishedmultiple career development paths such as management, professional, technical, operational, and support sequences.Employees can make lateral transitions based on the Company's needs and personal abilities.
Succession Planning and Leadership Development
The Company places great emphasis on leadership training aimed at nurturing leaders with vision, a sense of socialresponsibility, and environmental responsibility. We implement a comprehensive leadership training program as part ofour succession planning initiative, which encompasses management personnel at all levels. The program aims to enhancetheir strategic thinking abilities, decision-making skills, and team collaboration and communication techniques.Succession Planning
Management and Leadership Development Training
We adhere to the principle of "internal training as main focus and external introduction as supplement", and hasdeveloped the "Long Bench Succession Program" to prepare excellent successors for department heads within theCompany. This program selects, trains, and reserves department heads and above, implementing dynamic managementand evaluation processes. It provides resources for team and project management to help successors grow rapidly.
Based on the principles of ''strategic guidance'', ''hierarchical training'' and "consistent learning and application", theCompany implements a comprehensive leadership development training program following the compounding mindsetmodel. Our management and leadership development training covers employees at all levels, including grassrootsstaff, junior management, middle management, and senior management. This ensures that every employee has theopportunity to receive management and leadership development opportunities that match their career stage.
New employeeorientation training
For our management trainees recruited from campus, we focus on developing their executionskills, team cohesion, and critical thinking capabilities. We conduct regular talent program bootcamps as part of our efforts to nurture and reserve new talents for Kelun's next decade.
Junior managementtraining
To enhance the management skills and mentoring abilities of grassroots managers in ourindustry, we have implemented a comprehensive team leader training program for theGroup. This program aims to continuously improve the managerial prociency and mentoringcapabilities of the team leaders in the production process.For grassroots marketing managers, we have implemented various training programs focusingon product knowledge, management skills, and team leadership.
Middle and seniormanagement training
For middle and senior management personnel in the quality field, we have implemented aquality module leader management system and developed a targeted training program thatfocuses on both quality technical skills and management capabilities.For middle and senior management personnel in marketing, we have initiated the "Returnfrom Hundred Battles for Further Education" program. This program regularly invitesprofessors and industry leaders from China Pharmaceutical University to provide training onpolicy interpretation, investment analysis, and pharmaceutical market-related topics for ourexecutives.
Senior managementtraining
For senior management executives, we offer various training programs, including InternationalPharmaceutical Engineering Management (IPEM) education course and the Finance EMBAat the Tsinghua University Wudaokou School of Finance. These programs cover not onlymanagement theory, business model innovation, and interpretation of industry regulationsand policies but also focus on decision-making in complex business environments, socialresponsibility practices, and the design and execution of environmentally-friendly strategies.For management executives in the Group, we implement learning activities that revolvearound meetings rather than traditional training, with a focus on the study of corporatemanagement.
At the same time, through a combination of online and ofine teaching modes, together with various teaching methodssuch as theoretical teaching, practical exercises, simulation operations, and mentor guidance, we ensure that employeescan fully grasp and prociently apply them to practical work, continuously broaden their horizons, and enhance industrycompetitiveness. By regularly evaluating the effectiveness of training and making dynamic adjustments, we continuouslyoptimize the job specic training system, ensuring that it always aligns with the Company's strategic goals and industrialdevelopment trends, thereby effectively driving the common growth of the enterprise and employees, and laying a solidtalent foundation for achieving sustainable and excellent performance.
In addition, we emphasize the long-term effectiveness of leadership training. Through regular evaluation of trainingoutcomes, tracking the growth trajectory of participants, and providing opportunities for continuous learning anddevelopment, we ensure that the results of training programs can be translated into enhanced leadership skills andeffective execution of the Company's strategies in practical work settings.
During the reporting period , the total duration of management and leadership development training provided
by the Company was approximately136,248hours, with the participation of4,866
employees. Among the employees who participated in the Company's management and leadership development
training,
employees were promoted (accounting for
2.32%
of the total workforce), with a
successful succession rate for managerial positions of
19.47%
.
People-oriented and Shared Growth
101102
In 2024, the Company conducted a Group's Team Leader Training program for junior management aiming tocultivate a team of outstanding team leaders with strong professional competence, high efciency, and exemplaryleadership qualities. This initiative aimed to support the Company in achieving effective growth. A total of 2,026employees from 20 production bases within the Group participated in this training. From developing personalizedtraining programs and launching the program to implementing the training, conducting mid-term reviews, andsummarizing the outcomes, each production base successfully completed the training project in strict accordancewith the requirements of the Human Resources Department at the headquarters.
Junior Management Training
Group's Team Leader Training Program
Education and Professional Qualication SupportThe Company encourages employees to continuously pursue further education and supports all employees (including full-time, part-time, contract, and temporary workers) in upgrading their educational qualications, applying for professionaltitles and qualications, and applying for government talent awards. The Company provides comprehensive measures toempower employees in their development.Education Upgrade Support
Support for Professional Titles and Qualications
The Company supports all employees (including full-time, part-time, contract, and temporary workers) in utilizing theirspare time to improve their educational qualications. This helps enhance the overall quality and professional technicallevel of the workforce, ensuring a sustained competitive edge in talent and meeting the rapid development needs of theCompany.
We support all employees (including full-time, part-time, contractors, and temporary workers) to apply for professionaland technical titles or professional qualications related to their positions in their spare time. In order to create a learningoriented enterprise, improve the professional technical/skill level and structure of the employee team, and enhancethe professional quality and business level of important positions, we have formulated theRegulations on EncouragingEmployees in Important Professional Positions to Participate in Professional Title Evaluations and Vocational QualicationExaminations. During the annual title examination period, the Company collects and organizes information about titleexaminations and professional qualication evaluations conducted by various provincial and municipal governments. Thisinformation is communicated to all employees, and active assistance is provided for employees who express interest andmeet the evaluation requirements in their application process.
In addition, the Company responded actively to the title management arrangements made by the Sichuan ProvincialParty Committee and Provincial Government. In 2024, in conjunction with talent development and industry needs, theCompany initiated an independent review project for senior-level title certifications in pharmaceutical engineering,supporting employees in their professional qualication advancements. The project has entered the preparatory stageunder the guidance of the competent department, contributing to the professional development of the talent pool.Supporting to Apply for Government Talent AwardsIn order to provide sustained talent support for the Company, under the guidance of provincial and municipalgovernments' strategies for prioritizing talent development, the headquarters and subsidiaries (branches) actively supportthe applications for various government talent awards by outstanding talents who meet the application criteria withinthe Company. This support includes providing material incentives and recognition in order to encourage and recognizeexcellent professionals and managerial talents, creating favorable conditions for talents to wholeheartedly pursuebusiness and technical expertise. It also helps foster an environment that values talent recognition, talent retention, andtalent utilization.
During the reporting period,we have supported
employees inupgrading their academicqualications
During the reporting period, theCompany supported
employees inapplying for title certicationsand professional qualications
During the reporting period, the Companyapplied for talent awards for
eligible employeesDuring the reporting period, all subsidiaries(branches) under the Group provided subsidiesfor eligible employees according to theestablished criteria. The highest subsidy reachedRMB
/month
the Company has granted a total of RMB
2.33
million in educational subsidies to942 regular employees
All subsidiaries (branches) within the Group providesubsidies for employees who obtain corresponding titlesor qualications after joining the Company and meetingthe requirements. The highest subsidy reachesRMB1,000/month
The Company has granted a total ofRMB
1.32
million in subsidies for titlecertications or professional qualications to654 employees
including
who havebeen promoted toassociate degrees
This includes
employeesapplying forjunior-level titles
who have beenpromoted tobachelor'sdegrees
employeesapplying forintermediate-level titles
and
who havebeen promotedto master'sdegree
employeesapplying forsenior-leveltitles
and
who havebeen upgraded todoctoral degree
and
employeesapplying forprofessionalqualications
and successfully obtained talent award funding amounting toRMB
19.8887
million
People-oriented and Shared Growth
103104
Occupational Health and Safety
EHS Management Structure
EHS Management Committee
Occupational Health and Safety Audit
In oder to effectively prevent the occurrence of occupation related diseases and injuries, optimize the workingenvironment and conditions, and effectively ensure the physical and mental health, safety and well-being of employees,we have ofcially established the EHS Management Committee, with senior leaders of the Company as the directors andrelevant department heads as members. In accordance with the authoritative standards of national safety productionstandardization, process safety management, and environmental health and safety management, the Company jointlyformulates and supervises the implementation of various policies and measures for occupational health and safety.
To comprehensively identify and evaluate EHS risks throughout the production process, ensure the efcient operationand legal compliance of the Company's EHS management system, and promote continuous optimization and upgradingof environmental and occupational health and safety management in the enterprise, we have established a completeand rened audit mechanism including internal and external assessments. During the reporting period, the Companydeveloped and implemented theInternal EHS Audit System (Trial)to further standardize internal occupational health andsafety audit procedures and standards.
Internal Audit System
INOUT
External Audit System
EHS Supervision
Department
HR Department
ProductionTechnologyDepartment
Engineering& EquipmentDepartment
EHS Management CommitteeGeneral Manager Department
Each subsidiary(branch)EHS Departmentof each subsidiary
(branch)
Occupational health and safety management system
We are deeply rooted in the core belief of "all accidents can be preventedthrough measures" in occupational health and safety management, firmlyadhering to the strict requirements of national laws and regulations such astheSafety production LawandOccupational Disease Prevention and ControlLaw. Based on this, we also actively adopts the occupational health andsafety management standard -ISO45001 Occupational Health and SafetyManagement System, and constructs a comprehensive EHS (EnvironmentalHealth and Safety) integrated management system, including but notlimited to core procedure documents such as the All Staff Safety ProductionResponsibility System, Safety Hazard Investigation and Governance System,Emergency Plan Management System, Occupational Health MonitoringManagement System, as well as series of process specifications for riskassessment, accident prevention, emergency response, education andtraining, and awareness enhancement, such as the Monthly Safety ProductionManagement Report and Accident Internal Investigation and Handling Report.During the reporting period, the Company continuously improved itsoccupational health and safety management system. It revised theEmployeeEHS Manual,Dust Explosion Safety Management System, andProcess SafetyInformation Management System (Template). It also added new proceduraldocuments, such as theInternal EHS Audit System (Trial),Guidelines forOccupational Disease Hazard Notification Management, andEnvironmentalFacility Safety Management System. These measures were implemented toensure the safety of employees and compliance with regulations.
ISO 45001 Occupational Health and Safety Management System Certication (Partial Display)
During the reporting period,KELUN PHARMA investedRMB
28.8624
million in occupational healthand safety management.The number of subsidiaries(branches) that have obtainedISO 45001 certication foroccupational health and safetymanagement has reached
●
occupational disease cases reported;
●
100%signing rate for occupational disease hazardnotication forms for new employees;
●
100%handling rate for abnormal results in occupationalhealth examinations;
●
100%written notication rate for occupational healthexamination results.
Annual Occupational Health and Safety Target Achievement
●
Completion of annual declaration foroccupational disease hazards.
●
major and catastrophic accidents;
●100% rectication rate for safety hazards.
●Focus on comprehensive examination of EHSregulatory risks and accident risks, delving intothe construction and improvement of the EHSmanagement system, meticulously inspectingthe execution status of various proceduraldocuments, and conducting a detailed evaluationof the current situation of EHS management onproduction sites;
●Focus on various key processes and explorepotential hazards from multiple perspectives toensure the rigor and effectiveness of internal EHSmanagement.
●Strictly follow a series of standards and guidelinesformulated by the International Organization forStandardization (ISO), and through independentand impartial third-party certification audits,showcase the high level and high standards of ourEHS management system to the outside world;
●
This mechanism not only enhances the credibilityof the Company's EHS management, but alsoprovides strong guarantees for promotingcontinuous improvement, aligning withinternational advanced management models,and achieving outstanding improvement inenvironmental and occupational health and safetymanagement.
People-oriented and Shared Growth
105106
Occupational Health Management
To achieve precision management and risk control, the Company has established a special working group tocomprehensively identify occupational disease hazards in the production environment, work processes, and productionprocesses. At the same time, the Company entrusts qualied third-party companies to conduct testing. Based on thetest results, job exposure frequency, work intensity, and relevant national standards such as theGrading of OccupationalDisease Hazardous Operations in the Workplace, a scientic grading assessment is conducted. For different risk levels,multidimensional measures such as engineering controls, management methods, and personal protective equipmentare implemented to effectively control occupational disease risks and ensure the occupational health and safety ofemployees.
The Company strictly adheres to regulatory requirements and organizes pre-employment, on-the-job, and post-employment health examinations and other health monitoring for employees to effectively prevent and reduce the risksof occupational diseases. Furthermore, the Company includes the results of occupational hazard factor testing andoccupational health surveillance in occupational health record management. The relevant information is communicatedto employees through written notications, bulletin board announcements, and other means to ensure that employeesare fully aware of potential hazards in the work environment and their own health conditions. This enables them to takeappropriate protective measures, effectively safeguarding their occupational health. During the reporting period, theCompany introduced an EHS management module that integrates electronic records for occupational health surveillance,enhancing the efficiency of record management. In addition, the reporting process for individuals with abnormalexamination results was optimized to ensure timely communication of abnormal information to relevant departments,establishing an efcient management system.
Occupational Health Examination
To strengthen employee care and psychological support, on November 25, 2024, the "Happy Work, Healthy Life"Employee Mental Health Fun Day, part of the 2024 "New Labor" brand service activities in Xindu District, ChengduCity, Sichuan Province, was organized by the Xindu District General Union. The event took place at KELUN PHARMA'sXindu Base, with nearly 50 employees participating. Led by a team of psychological counseling experts, the eventfeatured ve interactive zones, including personality analysis, stress exploration, effective communication, stressreduction and relaxation, and psychological health assessment. This helped employees learn self-regulationtechniques, alleviate stress, improve communication skills, and foster a positive work atmosphere. This eventeffectively enhanced employees' mental health and strengthened team cohesion.
"Happy Work, Healthy Life" Employee Mental Health Fun Day Successfully Held
Employee Mental Health Activity
Regular Testing for OccupationalDisease Hazards in Guangxi Kelun
Regular Testing for Occupational Disease Hazards in Xindu
Base
During the reporting period,a total of
8,497employeesparticipated in occupationalhealth examinations
achieving a100% coverage rate
The incidence rate ofoccupational diseases was
Occupational Health Examination
People-oriented and Shared Growth
Safety Awareness Campaigns
In response to the National Health Commission's publicity week for theLaw of the People's Republic of China on thePrevention and Control of Occupational Diseases, the Company further strengthens its responsibilities in the preventionand control of occupational diseases and promotes knowledge about occupational disease prevention and control.During the reporting period, each subsidiary (branch) focused on the theme of "putting prevention rst and safeguardingoccupational health". Through organizing training courses, posting promotional materials, and playing informationalvideos, various forms were used to widely promote theLaw on Prevention and Control of Occupational Diseasestoemployees. This effectively enhanced employees' awareness of occupational disease prevention and their ability toprotect themselves.
Safety Culture DevelopmentThe Company attaches great importance to safety culture development and promotes a safety-conscious environmentthrough regular training, emergency drills, and safety awareness campaigns. These activities aim to enhance employees'safety awareness and skills and foster an atmosphere of safety engagement where everyone is involved.
Guizhou Kelun was Invited to Attend the LaunchCeremony of the Promotion Week ofLaw on Preventionand Control of Occupational Diseasesin GuizhouProvince
General Manager of Xindu Base Sharing Safety Knowledge(management cadres within the Group sharing special safety work)
Safety TrainingThe Company always prioritizessafety production and enhancesemployees' safety awareness andsafety management capabilitiesthrough multi-level and multi-dimensional training and promotion.Every year, the Company organizesspecialized safety training conductedby EHS personnel. It also requiresEHS personnel at each subsidiary(branch) to provide comprehensivetraining for all employees, ensuringthe dissemination of safety conceptsat all levels and covering all staffmembers, thus strengthening the lineof defense for safety production.As of the end of the reporting period,KELUN PHARMA has a total of
subsidiaries (branches) that have beenrecognized as Health Enterprises
During the reporting period, there were
safety drills conducted,including re drills and toxic gas leakagedrills
The investment in employeesafety production liabilityinsurance amounted toRMB309,200
The investment in employeework-related injury insuranceamounted toRMB
8.3061
millionThe coverage rate ofemployee work-relatedinjury insurance was
100%
The number ofwork-relateddeaths was
The rate of lost worktime per one millionwork hours was
0.28
The coverage rate of employeesafety production liabilityinsurance was also
100%
Among them,
are at the provincial level
and
are at the municipal level
Guizhou Kelun Awarded the Provincial-level Health Enterprise Title in Guizhou
Province
108107
Persist in Green Development, Advocate Low Carbon
109110
Persist in GreenDevelopment,Advocate LowCarbon
KELUN PHARMA adheres to the principle of "giving priorityto environmental protection and sustainable development"and continuously improves its environmental managementsystem. Through enhancing energy efficiency utilizationand implementing water and electricity conservationmeasures, the Company achieves efficient resourcemanagement. It strictly complies with environmentalregulations, utilizes advanced pollution control technologiesto reduce waste, and enhances disposal efficiency toensure compliance with emission standards. In the faceof climate change risks, the Company strengthens itsresponse strategies, scientically measures and managescarbon emissions, and promotes low-carbon operations.We advocate integrating the concept of green ecology intothe entire production process, taking practical actions topromote harmonious coexistence between industry andnature, and writing a new chapter of green development.
Persist in Green Development, Advocate Low Carbon
111112
Environmental Management
Environmental Management System
The Company strictly adheres to the laws and regulations of the People's Republic of China, such as theEnvironmentalProtection Law of the People's Republic of China, theLaw of the People's Republic of China on the Prevention and Controlof Atmospheric Pollution, theWater Pollution Prevention and Control Law of the People's Republic of China, and theLaw of the People's Republic of China on the Prevention and Control of Environment Pollution Caused by Solid Wastes.During the reporting period, a comprehensiveEnvironmental, Occupational Health, and Safety Management Policy
was released, covering all key areas of environmental management within the Group. Internal management systems,including the Environmental Incident Investigation and Accountability Management System (Trial) and the Enterprise-wideEnvironmental Management Guidelines, were updated to further standardize environmental management processesand continuously enhance environmental management levels. In order to enhance environmental awareness amongall employees, the Company revised theKELUN PHARMA Employee EHS Manual (2024 Version)to emphasize internalenvironmental management objectives, principles, policies, and code of conduct.Furthermore, based on operational requirements and environmental regulations in the pharmaceutical industry, theCompany and its subsidiaries (branches) have developed a series of improved management practices in key areas ofenvironmental management. They rigorously follow the annual environmental key performance objectives and carry outvarious work activities accordingly.
During the reporting period, KELUN PHARMA did not have any violations of environmental laws and regulations, nor didit receive any administrative penalties from the Ministry of Ecological Environment or other relevant departments due toenvironmental incidents. The discharge of exhaust gases and wastewater met the required standards after treatment orreuse, and the disposal or recycling of waste was carried out in compliance with regulations.
Critical AreasInternal System Checklist (Example)
Wastewatermanagement
Measures for Energy Saving, Consumption Reduction, and Emission Reduction inWastewater Treatment Systems (Trial),Regulations for Wastewater Treatment SystemManagement,Wastewater Management Manual, andManagement System for WastewaterTreatment PlantsExhaust emissionRegulations for Air Emission Control SystemsSolid wastemanagement
Regulations for Solid Waste ManagementNoise managementEnvironmental Noise Management Measures,Noise Emission Control SystemSoil protection
Soil Hazard Investigation System,Interim Measures for Soil and Groundwater PollutionPrevention and Control
Expense investment categoryInvestment amount (RMB 10,000)
Total investment in environmental protection66,139.57Investment in environmental equipment construction
and operation maintenance
61,095.78Investment in environmental protection project
management
5,034.78Investment in environmental protection training9.01
Category ItemIndicator2030 Final Goal
WastewaterWastewater discharged
Wastewater discharged peroutput of RMB 10,000
A decrease by 5%compared to 2024Waste gasesNitrogen oxide emissions
Nitrogen oxide emissions peroutput of RMB 10,000
A decrease by 3%compared to 2024Hazardous waste
Hazardous waste resource
utilization
Hazardous waste resourceutilization per output of RMB
10,000
An increase by 5%compared to 2024
KELUN PHARMA's Environmental Protection Expenses in 2024
Environmental Management Objectives
Environmental Management Structure
To further strengthen the management of toxic emissions and waste, and to continuously improve resource efciency,the Company collects, calculates, and analyzes historical emissions data. Based on this, scientifically formulatedenvironmental management objectives are implemented and regularly reviewed to monitor progress and assess theachievement of environmental management goals. Improvement action recommendations are also proposed as needed.
The ESG Committee of the Company serves as the highest executive body for environmental protection, carbon emissionsmanagement, resource utilization, and climate change response. The Board of Directors oversees the progress of relatedwork. To ensure the effective operation of the Group's environmental management system and achieve environmentalmanagement objectives, the Company has established an environmental management structure from top to bottom.Environmental management tasks are systematically dened, and responsibilities for environmental management areimplemented to provide strong support for the continuous advancement of the Group's environmental management.Additionally, the Company links the compensation of the management team to environmental performance throughthe EHS Management Committee. By establishing key performance indexes and implementing an incentive mechanism,environmental compliance and sustainable management are effectively promoted.
KELUN PHARMA's 2024 Environmental Management Objectives and Achievement Status
Board ofDirectors ESGCommittee
EHSSupervisionDepartment
EHSManagementCommittee
It is the highest executive body responsible for environmental issue management. It isresponsible for formulating environmental strategies, reviewing environmental managementpolicies, and reporting on relevant matters to the Board of Directors.
It reports annually to the Company's EHS Management Committee on the environmentalmanagement work of each subsidiary (branch). The report includes information on pollutioncontrol, achievement of environmental performance indexes, and environmental managementresults such as the current status of internal management, categories in need of improvement,and future work to be conducted. Additionally, the EHS Supervision Department is responsiblefor preparing the environmental section of the Company's annual report and ESG report. Thesereports are then submitted to the ESG Committee for approval.
It is chaired by senior leaders of the Group serving as director and deputy director, withdepartment heads and general managers of the subsidiaries and branches as members. Theyjointly develop and supervise the implementation of development plans, policies, and measuresrelated to environmental, occupational health, and safety.The EHS Management Committee establishes an ofce within the EHS Supervision Department, responsiblefor organizing meetings of the EHS Management Committee. It executes tasks assigned by the committeeand handles daily work, while also implementing group-wide EHS tasks and coordinating and overseeingEHS-related work in subsidiaries (branches).
Persist in Green Development, Advocate Low Carbon
113114
Environmental Impact Audit
Internal Audit
External Audit
Supplier Environmental Impact Audit
To verify the effectiveness of the Group's environmental management system and ensure that all production andoperation sites within the Group implement a unied environmental management system to enhance the overall level ofenvironmental management. The Company conducts regular internal audits and external audits for all production andoperation sites within the Group to ensure the implementation of the Group's environmental management policies andthe achievement of management objectives.The Company has developed an internal audit system for EHS and established a relatively comprehensive environmentalassessment system, which includes performance indicators for subsidiary production companies. The Company followsa hierarchical control principle and conducts regular environmental management compliance audits for all productionand operation sites within the Group. The audit covers areas such as construction project environmental "threesimultaneities," including pollution discharge permit management, compliance with pollutant emission standards, full-process management of hazardous and non-hazardous waste, construction and operation of environmental protectionfacilities, and operation. For issues identied during the audit, the Company proposes corresponding corrective measuresand deadlines based on their severity, and continues to monitor the progress of improvement by each enterprise. Thefrequency of internal audits is as follows:
All subsidiaries (branches), which have been certied under the ISO 14001 environmental management system and withinthe validity period, hire independent third-party certification bodies to conduct a system supervision audit annually,and undergo a recertication audit every three years. The audits cover various aspects including the design, researchand development, production, and related environmental management activities of the Company's products and theassociated facilities.Subsidiaries (branches) and production bases involved in international business regularly undergo international externalaudits from partners. Furthermore, we continuously compare against international high standards, conduct inspections,and make improvements to ensure that all business operations fully comply with international norms and requirements.
To further enhance the assessment of EHS risks associated with suppliers and identify any existing EHS risks in a timelymanner, the Company has established aSupplier EHS Risk Assessment System. EHS management is incorporated intosupplier audits, and the results of EHS audits are included in the overall audit and evaluation of suppliers, therebyexerting substantive constraints on the EHS performance of suppliers. Furthermore, we impose requirements for greenand sustainable development on suppliers who are willing to engage in long-term partnerships. The green and low-carbonperformance of suppliers is effectively included as one of the comprehensive evaluation factors in market procurement.
Environment Management System CerticationWhile steadily advancing the construction of the environmental management system, the Company actively conductsthird-party certification work and fully supports the ISO 14001 management system certification for subsidiaries(branches). This systematic approach enhances the Group's environmental management standards As of the end of thereporting period, 16 of the Company's production enterprises had obtained ISO 14001 environmental management systemcertication, and 2 are currently in the process of certication. The proportion of production enterprises that have passedcertication and are in the process of certication among all production enterprises of the Company is 56.25%.
ISO 14001 Environmental Management System Certication Certicate of KELUN PHARMA and its Subsidiaries
(Branches)
For major core productioncompanies, at least 1comprehensive on-site EHS auditis conducted each year. For otherproduction companies, at least 1comprehensive on-site EHS audit isconducted every two years;
Production companiessubmit daily environmentalmanagement materials ona monthly basis, which arethen reviewed online;
Production companies holdat least 1 Company-level EHSmeeting each month to learnabout new EHS laws andregulations. Training is conductedon key laws and regulations, andthe implementation of relevantrequirements is tracked.
Basic principle
Supplier EHS audit management and execution requirements
Audit scope andfrequency
Audit methodand process
Green supply chainprogram
Audit content
Audit results
EHS audits should be incorporated into the supplier audit plan.Consistent with the requirements for supplier audits. Please refer to the relevant contentin this report under "03 Building a Sustainable Supply Chain - Supplier Audits" for specicdetails.
Remote or on-site audits are conducted. After the audit, a Supplier EHS Audit Report isprepared and submitted to the Group's Supply Department for unied review, resulting inthe nal audit report.
Encourage suppliers to obtain ISO system certification and apply for green factorycertification to enhance their EHS performance;Prioritize environmentally friendlyproducts and services when selecting suppliers; Given equal conditions, give preferenceto suppliers with higher EHS audit scores.
The audit mainly includes implementation of administrative licensing and environmentalmanagement systems, compliance with emission standards of pollutants (includingharmful emissions such as exhaust gases, wastewater, and hazardous waste),compliance with the collection and disposal of solid waste, safety progress, emergencymanagement and drills, education and training, and hidden danger inspection.
The audit results are divided into four levels based on EHS deciencies: Danger, Vigilance,Attention, and safety. For suppliers categorized as Danger, it indicates that there areextremely serious EHS risks. There is a high probability that the supply of their productscannot be continued or stably provided due to EHS issues. Heightened vigilance isrequired during the cooperation period, and consideration should be given to excludingthem from future collaborations until the risk is reduced to "Vigilance" or below.
Persist in Green Development, Advocate Low Carbon
115116
Management of Environmental Risk Factors
Specic Risk Control Measures
To further strengthen environmental risk control, the Company has developed theEnvironmental Hazard FactorIdentification and Control System,Environmental Factor Identification Evaluation Form, andList of ImportantEnvironmental Factors. By regularly identifying and reviewing environmental risk factors and assessing their level ofrisk impact, a list of important environmental factors is created. Targeted risk control measures are then formulated toenhance the Company's capability for emergency response to environmental incidents and continuously strengthenenvironmental risk management.
Process for Environmental Risk Factor Management of KELUN PHARMA
Each subsidiary (branch) shall conduct regular environmental monitoring inaccordance with the relevant requirements of theEnvironmental Impact AssessmentReport,Technical Guidelines for Self-monitoring for Pollutant Discharge Units, andthe industry's self-monitoring guidelines, taking into account their own actualconditions. This will effectively monitor the emission of pollutants and disclose theresults of environmental monitoring as required, subject to review by regulatoryauthorities and public supervision.Each subsidiary (branch) shall develop anEmergency Plan for EnvironmentalIncidentsbased on the actual environmental risks of the Company. They shallestablish an environmental emergency management system, improve theemergency response plan system, conduct regular drills, and maintain goodcommunication with local governments and relevant stakeholders. This includesestablishing a mechanism for early warning, receiving alarms, rescue and recovery,thereby enhancing the emergency response and rescue capabilities for varioustypes of incidents and major accidents.Each subsidiary (branch) shall allocate funds for environmental protection inaccordance with relevant regulations and actual needs, and fully guarantee them inthe annual cost budget.Encourage each subsidiary (branch) to actively engage in extensive environmentalmanagement exchange activities, learn from the environmental managementand technical experiences of advanced entities, and accelerate the introduction,absorption, and independent innovation of advanced environmental protection andmanagement technologies. Encourage and guide employees to actively participatein activities where they can provide rational suggestions for environmentalmanagement.
Emergency Management for Environmental Incidents
Honors and Qualications
The Company strictly adheres to the relevant regulations such as theEmergency Management of EnvironmentalEmergenciesand theRegulations on the Safety Management of Hazardous Chemicals, and has formulated a series ofenvironmental safety management systems, including theEmergency Plan for Environmental Incidents,ManagementSystem for Environmental Incident Investigation and Accountability, and Dangerous Goods Management System. Toeffectively prevent and handle environmental incidents, we regularly conduct environmental risk assessments, identify,and rectify potential environmental risks and hazards. Additionally, we continuously improve our measures for preventingand controlling environmental incidents, and dynamically adjust our plans based on actual situations.During the reporting period, the various subsidiaries (branches) of the Group actively conducted emergency trainingand drills, covering multiple environmental risk scenarios, including sewage accidents, hazardous waste leakage, andflood prevention at sewage stations. Through these emergency drills, the Company effectively enhanced employees'emergency response capabilities and coordination skills in dealing with environmental incidents, thus strengthening theoverall level of environmental risk prevention and control.
The Company places high importance on green development and encourages its subsidiary production-based enterprisesto boldly innovate and break through in environmental protection technologies. They actively participate in activitiessuch as clean production audits and green factory assessments, and have received multiple honorary titles. During thereporting period, among all the production-based enterprises within the Group, 13 companies passed the clean productionaudit, 7 companies obtained national-level green factory certification, 3 companies obtained provincial-level greenfactory certication, 1 Company obtained provincial-level green supply chain certication, 1 Company received provincial-level environmental-friendly enterprise recognition, 1 Company obtained provincial-level beautiful factory certication, 8companies received provincial-level environmental integrity enterprise titles, 2 companies obtained municipal-level zero-waste factory certication, and 1 Company was recognized as a climate-friendly enterprise of Tianfu.
Emergency Drill for Environmental Pollution
Incidents at Xindu Base
Awards and Honors for Environmental Protection in Subsidiaries of KELUN PHARMA (Example)
Emergency Drill for Flood Prevention at the SewageStation of Hunan Kelun Yueyang Branch
Water Discharge, AirEmissions, Solid Waste,Soil Pollution, NoisePollution, Energy andResource Consumption,Others
Control Methodsfor ImportantEnvironmental FactorsControl Methods forGeneral EnvironmentalFactors
Principles of Updatingand ReassessmentTrue-false JudgmentMethod, ScoringMethod
Identication ofEnvironmental
Factors
Assessment ofEnvironmental
Factors
Update andReassessment ofEnvironmental Factors
Control ofEnvironmental
Factors
Strengthen emergencymanagement capabilities
Increase investment inenvironmental protectionand application of newtechnologies
Promote environmentalmanagement exchangeactivities
Regularly conductenvironmental monitoring
Persist in Green Development, Advocate Low Carbon
117118
Company
Name
Project TypeProject Implementation Details and Effects
KunmingNanjiang
Technicaland processimprovement
Kunming Nanjiang regularly cleans the gas boilers, replaces filters, and adjusts thecombustion parameters of the gas boilers according to the actual conditions to achieveoptimal combustion efficiency. In 2024, it achieved a 15% reduction in particulate matteremissions per output of RMB 10,000.
Xindu Base
Equipmentupgrade andtransformation
Xindu Base underwent technical upgrades andoptimizations for organized waste gas treatment facilities.Temperature and airspeed sensors were installed in allfacilities to monitor real-time emissions parameters.PLC devices were added to all waste gas treatment andproduction equipment to view historical operating records.After the transformation, the uncontrolled volatile organiccompound (VOC) emissions from the entire factory werevirtually reduced to 0.Hunan Kelun
YueyangBranch
Technical
and processimprovement
To effectively manage the dichloromethane waste gasgenerated in the workshop, Yueyang Branch implementedprocess improvements in January 2024. Pre-treatment wasadopted to cool the waste gas, ensuring optimal adsorptionefficiency. During the collection phase, a mixture ofindustrial steam and dichloromethane was condensed andcollected, significantly improving the treatment efficiencyand ensuring the effective management of the waste gasand the rational utilization of resources.Henan Kelun
Equipmentupgrade andtransformation
Henan Kelun conducted technological transformations for the production line and carriedout upgrades to the waste gas equipment in the project construction workshop and existingworkshops. The equipment was replaced with catalytic combustion equipment that hashigher treatment efficiency. After the upgrade and transformation, the organic wastetreatment efciency will be improved by approximately 60%.Guangxi
Kelun
Equipmentupgrade andtransformation
Guangxi Kelun has improved its existing VOCs condensationand recovery system. Throughout the year, a total of 242.29tons of vehicle equivalents were recovered, including 231.28tons that could be directly reused as ethanol, acetone,and ethyl acetate. The VOCs emission concentration atthe discharge outlet was reduced by 40%, and the VOCsemissions were reduced by 90%.
Environmental Training and Education Activities
The Company develops an EHS (Environmental, Health, and Safety) training plan at the beginning of each year toprovide relevant training for environmental protection directors and EHS personnel in each subsidiary (branch). TheCompany establishes EHS education and training records. Training topics include2024 Carbon Inventory Training,GreenTransformation Path Training,Key Points in Environmental Daily Management Work,Comprehensive Training on BasicKnowledge, Construction, Acceptance, and Operation Management of Wastewater Treatment, and more.In addition, each subsidiary (branch) continues to promote a green culture through various means, such as activelyorganizing environmental-themed promotional events, environmental campaigns in schools, playing environmentalvideos, creating environmental awareness posters and display boards. This aims to encourage employees to adopt theconcept of green production and green living, promote transparency of environmental information, and encourage publicparticipation in ecological environmental protection.
Toxic Emissions and Waste
Exhaust gas treatment
The Company strictly complies with theLaw of the People's Republic of China on the Prevention and Control ofAtmospheric Pollution. For the toxic emissions generated during the production process, the Company has developedtheRegulations for Air Emission Control SystemsandGuidelines for Developing Volatile Organic Compound (VOCs)Management Ledgers. These regulations comprehensively guide the Company's waste gas treatment during theproduction process. Technologies such as cryogenic recovery, activated carbon adsorption, molecular sieve adsorptionconcentration, and high-temperature oxidation combustion are utilized to achieve standard emissions of process wastegases and reduce the discharge of uncontrolled waste gases.To reduce pollutant emissions during the production process, KELUN PHARMA conducts annual waste gas treatmentprojects within the Group. These include upgrading and transforming waste gas treatment processes, replacing advancedtreatment equipment, conducting comprehensive VOCs governance, centralized collection and treatment of uncontrolledwaste gases, and improving production processes. These measures aim to continuously reduce the emissions of carbondioxide, nitrogen oxides, particulate matter, VOCs, and other waste gases. Additionally, the Company continuouslymonitors the operation and effectiveness of the treatment projects to ensure effective emission reduction and treatmentmeasures are implemented.
Waste Gas Treatment
Equipment at Xindu
Base Workshop
Dichloromethane Waste
Gas Treatment Facility
of Yueyang Branch
Key Waste Gas Treatment Projects of KELUN PHARMA in 2024
Environmental Training Site at Henan Kelun
Environmental Protection Publicity Video for 6.5Environment Day of Yueyang Branch
6.5 Environment Day Campus Event at CHUANNING BIOTECH
VOCs Condensationand Recovery System
of Guangxi Kelun
Persist in Green Development, Advocate Low Carbon
Wastewater treatment
Waste Management and Circular Economy
The Company strictly adheres to theWater Pollution Prevention and Control Law of the People's Republic of Chinaandhas formulated management documents such as theWastewater Treatment System Management Regulationsand
Wastewater Treatment Management Manualas the overall guidelines for wastewater management within the Group.The Company also requires its subsidiary production-based enterprises to develop internal management systemsin compliance with regulations, taking into account their specific production operations. This is done to ensure thatwastewater is discharged in compliance with standards and to continuously improve the quality of wastewater efuentand the proportion of wastewater reuse.
The Company strictly complies with relevant laws and regulations such as the Law of the People's Republic of China onthe Prevention and Control of Environmental Pollution by Solid Waste. It has formulated regulations such as the SolidWaste Management Regulations to regulate and require subsidiaries (branches) to control solid waste treatment facilitiesand implement full life cycle management of solid waste.To continuously promote the reduction, resource utilization and harmlessness of waste generated during production andoperations, the Company carries out waste management enhancement projects within the Group. Through effectivemeasures such as improving production processes, optimizing product structures, and implementing clean production, theCompany ensures the efcient execution of waste reduction efforts.
Key Wastewater Treatment Projects of KELUN PHARMA in 2024Company Name
Company Name
CHUANNINGBIOTECH
Guang'anBranch
Qionglai Base
JINHE BIOTECH
Qionglai Base
ShandongKelun
Project Type
Project Type
Technicaland processimprovement
Technicaland processimprovement
Technicaland processimprovement
Technicaland processimprovement
Technicaland processimprovement
Technicaland processimprovement
Project Implementation Details and Effects
Project Implementation Details and Effects
CHUANNING BIOTECH employs multiple technologies such as "MVRevaporation" and "special membrane + advanced treatment" to treat over80% of wastewater for reuse in circulating cooling water, water for pre-production processes, and water for thermal power boilers. This achieves thecircular utilization of wastewater resources.
Guang'an Branch has implemented a carbonless process and eliminatedthe addition of activated charcoal in the preparation process of someproducts, resulting in a year-on-year reduction of approximately 15% in theproduction of waste activated carbon.
Qionglai Base strengthens control measures such as wastewater segregationand diversion and internal drainage permits. By keeping the inlet valves of thesewage stations closed and opening them only after passing the inspection,unauthorized discharge by operators is eliminated. Through production control,high-salt wastewater is reduced, ensuring that the water inow remains withinthe processing capacity. In 2024, the emission of wastewater per output ofRMB 10,000 decreased by 35%. At the same time, the sewage stations fullyutilize the homogenization function of the regulating tank. The concentrationof pollutants in the discharged wastewater has been signicantly improved,with chemical oxygen demand per output of RMB 10,000 reduced by 70%.JINHE BIOTECH has optimized its processes and carried out technologicaltransformations. It has added a wastewater reuse system in the existingworkshop, achieving a wastewater reuse rate of over 80% through operations.The remaining wastewater is directed to soapberry fruit processing, and thecollected residues are sold externally, ensuring no wastewater dischargethroughout the year.
Qionglai Base intensified source control measures by conducting dailyinspections to remind responsible personnel in relevant areas. This helpsprevent the mixing of valuable waste with general solid waste andhazardous waste, as well as the improper disposal of general solid wasteas hazardous waste. Additionally, internal communication was conductedwithin the production process to raise awareness, and ne-grained controlmeasures were implemented in the workshops. These efforts aim to reducethe waste-to-output ratio, identify the major waste stream of organicsolvents, and strengthen the recycling of waste solvents.Shandong Kelun actively pursued source control and promoted carbonlessprocess improvements. They have completed the carbonless processverification for some products. In 2024, the production of activated carbondecreased by approximately 37% compared to 2023.
Key Waste Management Projects of KELUN PHARMA in 2024
Noise managementWe have formulated theEnvironmental Noise Management Measuresin accordance with the requirements of theLaw ofthe People 's Republic of China on the Prevention and Control of Environmental Noise Pollutionand other regulations toguide the base in equipment selection and installation and noise control during the production process. All our productionenterprises of conduct factory boundary noise testing in accordance with national regulations to ensure that daytime/nighttime noise meets the requirements of theEnvironmental Noise Emission Standard for Industrial Enterprises atFactory Boundaries.When purchasing equipment, the Company ensures that the equipment meets the functional requirements of normalproduction while selecting low-noise equipment whenever possible. Noise reduction measures such as vibration reduction,sound absorption, and sound insulation are implemented during equipment installation. Moreover, comprehensivemeasures are taken, including proper layout of noise facilities within the plant area, to reduce the impact of noisegenerated during production processes.
Persist in Green Development, Advocate Low Carbon
121122
Company NameProject TypeProject Implementation Details and EffectsKey Energy Conservation and Consumption Reduction Projects of KELUN PHARMA in 2024
Efcient Resource Utilization
Energy managementThe Company strictly complies with relevant laws and regulations such as theLaw of the People's Republic of Chinaon Conserving Energyand theRenewable Energy Law of the People's Republic of China. It has established internalmanagement regulations such as theEnergy Management Measuresand theEnergy Conservation and EmissionReduction Management Trial Measuresto clarify the work responsibilities and requirements of energy managementdepartments. Dedicated personnel are appointed to oversee energy conservation and consumption reductionmanagement activities to ensure the implementation of resource allocation, comprehensive planning, execution tracking,statistical analysis, and other tasks in energy management. This ensures the scientic and rational utilization of energyresources.Additionally, the Company actively promotes energy-saving improvement projects and the development of photovoltaicpower generation projects. It aims to improve the energy consumption structure and continuously increase the proportionof renewable energy use, thereby enhancing energy utilization efciency.
Water Resource Management
KELUN PHARMA is aware of the signicance of water resources protection and takes concrete actions to promote thescientic utilization of water resources. We strictly abide by the Water Law of the People's Republic of China and otherrelevant laws and regulations, and comprehensively implement measures such as water conservation and wastewaterreuse across our research and development, production, and supply chain operations, to progressively reduce waterconsumption and maximize the efcient utilization of water resources.Each subsidiary (branch), according to its own production characteristics, has established water conservationmanagement measures and formed an organization responsible for supervision and implementation of water-savingwork. Water resource managers and specialists are appointed to track and report water usage, continually strengtheningwater resource management efforts. Furthermore, the Company's production-based enterprises enhance water resourcemanagement and process innovations. They actively undertake projects such as upgrading water-saving equipment andrecycling wastewater and recycled water to improve water utilization efciency. Here are some highlighted examples:
New Kaiyuan: The wastewater from the sand lter cleaning at the pure water station is directed to the
cooling water collection pool for use by the vacuum pumps in the workshop, thereby improving waterresource utilization efciency.Kunming Nanjiang: It implements measures for reusing steam condensate water, recycling treatedwastewater, and reusing cooling water. In 2024, the total water consumption decreased by 14% comparedto the previous year.
Hunan Kelun: It has added a primary reverse osmosis unitto recycle and reuse the concentrated water, increasing thewater utilization rate to up to 90%.
CHUANNING BIOTECH: It optimized water resource reuse processes in the cephalosporin extraction
workshop and increased the utilization of recycled water. As of the end of 2024, the wastewater dischargehad been reduced by 158,789m?.Qingshan Likang: It has conducted energy-saving transformation projects for boiler blowdown cooling
systems, saving 6,000m? of water per year. By implementing energy-saving projects for the cooling waternetwork system in the eye drops production workshop, 8,016m? of water can be saved annually; Optimizingthe ushing frequency process of the water production system can save 5,000m? of water per year.
Jiangxi Kelun: During operation, the Company extensively utilizes condensate water and sterilization
circulating water in its boilers, resulting in a signicant reduction in wastewater discharge and fresh waterintake. Compared to previous years, the wastewater discharge has decreased by approximately 14491.46m?, and the fresh water intake has decreased by approximately 8%.
Reverse Osmosis Concentrated Water
Filtration Unit of Hunan Kelun
Xinkaiyuan
Equipmentoptimization andupgrades
It implemented an energy management system that records real-time data on water,electricity, gas, and other energy consumption. The system allows for the comparisonand analysis of data within set timeframes, providing deviation warnings. Thissystem provides data support for energy conservation efforts.
Shandong Kelun
Transformationof energy-saving
technology
It added a first-grade energy-efficient variable-frequency centrifugal chiller unit,completing the energy-saving technological transformation project for the airconditioning system's chiller unit;It added two first-grade energy-efficient two-stage screw air compressors,completing the energy-saving technological transformation project for thecompressed air system.
Hunan Kelun
Equipmentoptimization and
upgrades
It replaced 2 sets of high-water consumption pumps with high-energy efficiencypumps, resulting in a reduction of 28 kW in energy consumption per hour and a 30%energy-saving rate;It replaced 3 sets of high-energy consumption transformers with new high-energyefciency transformers, resulting in reduced electricity consumption;It introduced and implemented domestically-produced thermal compressiondistillation water machines, which achieve 40-50% energy savings compared totraditional multiple-effect water machines.CHUANNINGBIOTECH
Transformationof energy-saving
technology
Following the energy policy of "Energy Conservation, Continuous Improvement",CHUANNING BIOTECH implemented a total of 14 energy-saving measures in variousworkshops, building upon the energy conservation measures implemented last year.In 2024, the comprehensive energy consumption per unit of product decreased by
4.89% compared to the same period last year.
Hunan KelunYueyang Branch
Equipmentoptimization andupgrades
Yueyang Branch carried out improvements on 13 pulsating sterilization cabinetsacross 7 production lines. This included the addition of pressure reducing valves andadjustments to the sterilization balance time. Additionally, steam-water separatorswere installed at the end of steam mains in some workshops, enhancing qualityassurance capabilities while reducing steam consumption.Guangxi Kelun
Equipmentoptimization and
upgrades
Guangxi Kelun replaced screw-type chiller units with magnetic levitation ice storageunits, resulting in signicant energy savings and a substantial improvement in energyutilization efciency.
Persist in Green Development, Advocate Low Carbon
123124
Fighting Climate Change
Climate Governance Strategy
KELUN PHARMA deeply recognizes the profound impacts of climate change, both in terms of risks and opportunities, onits business and value chain. The Company integrates the concept of green development into its core business strategy.The Company is committed not only to promoting the transformation of its production and operations towards clean andlow-carbon sources of energy but also to systematically analyzing the risks and opportunities brought about by climatechange. It formulates effective and science-based strategies to address climate change, thereby enhancing its overallcapacity for climate change management.
During the reporting period, our Company and subsidiaries (branches) referenced recommendations and frameworksprovided by TCFD to comprehensively assess the climate risks and opportunities we face and formulated and deployedspecic plans to address climate change and reduce greenhouse gas emissions.
Governance
Strategies
The ESG Committee serves as the representativebody for addressing climate change issues, and theBoard of Directors oversees the implementationof related initiatives. The ESG Working Group actsas the executing body of the ESG Committee andis responsible for coordinating the comprehensiveimplementation of climate change managementacross various departments, units, and subsidiaries(branches) of the Company.
Each subsidiary (branch) has established agreenhouse gas inventory team. The EHSDepartment appoints a team leader, and otherdepartments assign team members. The Companydesignates a representative as the managementrepresentative to promote and supervise theimplementation of climate-related activities intheir respective companies. This ensures effectivecommunication and action at the execution level.
The Company incorporates climate change and itsassociated risks into its governance and decision-making processes for sustainable development.It analyzes the risks and opportunities presentedby climate change and, based on the directionof Group's business development, formulatestargeted strategies to proactively manage climatechange, reduce greenhouse gas emissions, andenhance climate change resilience.
Guangxi Kelun: All organic solventsused in production are recycled, withan average recycling rate of 95%. TheCompany also uses recyclable packagingmaterials, with an average recycling rateof 95%.Kelun-Biotech: Where possible,the Company prioritizes purchasingproducts with larger packaging orpackaging that can be recycled andreused, such as using recycled drumsto store other waste materials.Yueyang Branch: For large quantities ofpenicillin bottles used in the factory, theCompany adopts tray packaging, andthe trays are returned to the penicillinbottle manufacturers for reuse after use,reducing the use of cardboard boxes.
Raw Materials and PackagingManagement
On the path of sustainable development, the Companyconsistently integrates green concepts into everyproduction process. During the product developmentstage, priority is given to the selection of non-toxic orlow-toxic solvents and reagents to minimize potentialharm to the environment at the source. Additionally,through continuous optimization of productionprocesses and the use of advanced technologiesand equipment, the Company strives to minimize theusage of solvents and reagents while ensuring productquality. This effectively reduces resource consumptionand environmental pollution during the productionprocess.When selecting packaging materials such as paperdrums, cartons, and plastics, the Company requiresits subsidiaries (branches) to prioritize the use ofrecyclable materials. This facilitates proper recyclingafter use, reducing landll and incineration volumes ofwaste. The materials can also be transformed throughfurther processing into new resources, promotingthe circular utilization of resources. Here are somehighlighted examples:
Persist in Green Development, Advocate Low Carbon
125126
The Company and its subsidiaries (branches) continue to conduct greenhouse gas emission inspections at the Companylevel. In accordance with theGuidelines on Accounting Methods and Reporting of Greenhouse Gas Emissions ofEnterprises in Other Sectors of Industry (Trial)for all facilities within the production area, the emissions from fossil fuelcombustion, CH
emissions from anaerobic wastewater treatment, and emissions from purchased electricity and heatwere veried. This helps to identify key emission categories, and develop effective mitigation measures to jointly promotethe achievement of the Company's sustainable development strategy.
Climate Risk Identication and Response Status of KELUN PHARMA
Greenhouse Gas Emissions of KELUN PHARMA in 2023-2024
Risk typeRisk Description and ImpactResponse Strategy
Physical
Risks
Acute Risks
Typhoons, heavy rain, and oods:
Extreme weather events cause disruptions in logisticsand transportation, impacting product production andtimely delivery, leading to increased operating costs;Damage to production equipment and operationalinterruptions resulting from the destructive force ofextreme weather events, leads to increased equipmentrepair costs;Potential risks are posed to employees' personal safetyand occupational health, with work-related accidentsleading to reduced production efciency.
Plan for various transportation methods, allocatelogistics transportation time based on weatherwarnings to ensure material inventory reserves;Continuously improve emergency responsemechanisms for natural disasters, stockpileemergency supplies, and strengthen safetyinspections;Implement emergency plans for extremeweather events and conduct regular drills toprepare for such events;
Chronicrisks
Sea level rise:
Operational entities in coastal areas may need torelocate inland, resulting in damage or prematurescrapping of xed assets leading to increased productioncosts;Temperature rise:
Employees may experience heat exhaustion, heat stroke,or other health issues due to extreme heat, resulting inincreased operating costs. Production machinery mayface overheating issues, leading to reduced lifespan andincreased capital expenditures.
Avoid locating new facilities in low-lying areas;Develop suppliers in multiple regions withinthe same category to ensure a continuousand sufcient supply of materials withoutdependence on a single source;Install refrigeration facilities to addresstemperature increases;Equip facilities with comprehensive re safetysystems;Conduct emergency drills and re safetytraining to enhance employee awareness andcapabilities in re prevention and response.
Transitionrisks
Policy risks
Tightening carbon emission management policiesand regulations:
The national deployment of "peak carbon dioxideemissions and carbon neutrality" initiatives, including theintroduction of energy-saving and emission-reductionpolicies and standards, may increase compliance costsfor carbon emissions;Potential production reductions caused by localgovernment power restrictions, may lead to incomelosses.
Closely monitor carbon emission policies andregulatory updates in its operational regions torespond appropriately;Properly arrange production plans, such asstaggering production schedules;Optimize process ows to reduce electricityconsumption;Regularly share domestic and internationalpolicy trends and distribute them to subsidiaries(branches) for learning and implementation.Technicalrisks
Transition to low carbon emission technologies:
Early retirement of high-energy-consuming equipmentleads to increased operating costs;Research and development and application of cleanenergy or innovative low-carbon technologies result inincreased R&D expenses.
Select low-energy-consuming productionequipment, optimize production processes,explore and implement energy-saving andemission reduction projects to reduce energyconsumption;Strengthen carbon emission reduction across theentire process, including production operationsand logistics transportation.Marketrisks
Rising raw material costs:
Chemical raw materials, auxiliary materials, packagingmaterials, and other raw materials have been affectedby various factors such as macro economy, monetarypolicy, environmental protection management, andnatural disasters. This may lead to supply constraintsor signicant price uctuations, which will affect theCompany's protability to some extent.
The Company will better monitor and analyzethe market and arrange inventory andprocurement cycles reasonably to reduce risks;The Company will actively organize producttechnology research to effectively reduceproduct costs.
Reputationrisks
Company's performance in responding to climatechange based on social concerns:
As global awareness and concern for climate changeand environmental protection increase, stakeholdersexpect companies to take on more emission reductionresponsibilities. Failure to initiate early low-carbontransition plans may result in reputational damage.
Proactively disclose climate-related risks,opportunities, and corresponding responsemeasures;Establish energy-saving and emission reductiongoals and regularly monitor the progress of goalattainment;Proactively respond to inquiries fromstakeholders;Enhance overall awareness of energy-savingmanagement within the Group and provideclimate-related training for employees.
Greenhouse Gas Emission ManagementThe Company attaches great importance to the monitoring and analysis of greenhouse gases. It actively promotes aseries of measures to reduce greenhouse gas emission intensity and strives to achieve carbon peaking between 2028and 2030. At present, our direct carbon emissions (Scope 1) mainly come from xed emission sources (such as naturalgas, coal, etc.), mobile emission sources (such as Company-owned vehicles, etc.), and emissions from other productionauxiliary facilities. Indirect carbon emissions (Scope 2) mainly come from purchased electricity, steam, etc.
The data covers the Company's headquarters and its subsidiaries (branches).
The CO
emission factor for electricity is based on the average national carbon emission factor of the power grid published by the Ministry ofEcology and Environment for the year 2022, which is 0.5366 tCO
/MWh.
Product carbon footprint assessment
During the reporting period, Xindu Base, HubeiKelun, Guang'an Branch and New Kaiyuanhired third-party verification organizations toconduct product carbon footprint assessmentsfor products such as amino acid injections,metronidazole injections and zinc acetate. Theassessments followed relevant standards such as
Greenhouse Gases - Carbon Footprint of Products- Requirements and Guidelines for Quantication
(GB/T 24067-2024). andGreenhouse Gases -Carbon Footprint of Products - Requirements andGuidelines for Quantication(ISO 14067:2018). Theassessments covered resource extraction, rawmaterial production, raw material transportation,energy production, and the production of theproducts from cradle to gate. The Companyobtained relevant carbon labeling certicates.
KELUN PHARMA's Product Carbon Footprint Certicate (Example)
Indicator2023Unit2024
Total GHG emissionsDirect (Scope 1) GHG emissionsDirect (Scope 2) GHG emissions
GHG emissions intensity
2,659,459.922,845,549.252,190,590.172,361,763.17468,869.75483,786.08
1.241.30
tCO
etCO
etCO
etCO
e/ RMB 10,000 revenue
Persist in Green Development, Advocate Low Carbon
127128
Participation in Green Power Trading Projects
Trading Voucher of GreenPower Certicate ofKunming Nanjiang
Trading Voucher of GreenPower Certicate of Kelun-
Biotech
Clean energy utilizationThe Company continuously strengthens energy-saving management and explores multiple energy-saving pathways.By exploring nuclear, solar, wind, and biomass energy, it optimizes its energy mix, signicantly increasing the share ofrenewable energy to achieve source-level carbon reduction. Currently, solar photovoltaic (PV) power is the primary cleanenergy source of the Company.
The carbon trading market is an effective mechanism to achieve carbon emission reduction targets. It optimizes theallocation of carbon emission rights through market-based approaches, incentivizing companies to reduce their carbonemissions. Subsidiaries of the Company has taken the lead in participating in green electricity trading. Through market-based procurement of renewable energy sources such as wind and solar power, the Company effectively reduces thecarbon emission intensity in its production processes. This initiative also sets an example for the green transformation ofthe entire industry chain.
●Xindu Base has participated in the "CarbonBenefiting Tianfu" mechanism in Chengdu,implementing a series of energy-saving measuresand accumulating significant experience in carbonemission reduction, achieving remarkable results.As of now, Xindu Base holds a certain amount ofChengdu "Carbon Benefiting Tianfu" mechanism'scertied emission reduction (CDCER), reecting thesolid achievements of the Company in pursuing its"carbon peaking and carbon neutrality" goals.
●On January 24, 2024, Kunming Nanjiang obtainedthe trading voucher of Green Power Certificate,corresponding to the purchase of 1,050 MWh ofelectricity, further promoting the Company's greenand low-carbon transformation.
●In 2024, Kelun-Biotech purchased 4,900 megawatt-hours of domestically sourced renewable energygreen electricity.
Phase I Photovoltaic Project of Yueyang BranchPhotovoltaic Project of Shandong Kelun
Biodiversity Protection
The Company attaches great importance to the impact of new, upgraded, and expanded projects on biodiversity. Itstrictly complies with relevant laws and regulations such as theSoil Pollution Prevention and Control Law of the People'sRepublic of China, the Forest Law of the People's Republic of China, theWildlife Protection Law of the People's Republicof China, and the Opinions on Further Strengthening Biodiversity Conservation. It actively fullls the obligations of theUnited Nations'Convention on Biological Diversity and takes various measures to protect biodiversity.
During the reporting period, all new, upgraded, and expanded projects of KELUN PHARMA's production companies werenot located in ecologically protected areas or areas of high biodiversity value. These projects did not have signicantadverse impacts on biodiversity.
Guangxi Kelun: Hunan Kelun Yueyang
Branch:
Jiangxi Kelun:Shandong Kelun:
Installed capacity
3.84
MW,electricity generation
3,246.06
MWh in 2024
Installed capacity
4.35
MW,electricity generation4,040.70
MWh in 2024
Installed capacity
3.15
MW,electricity generation2,935.29
MWh in 2024
Installed capacity
1.123
MW,electricity generation1047.56
MWh in 2024
Photovoltaic Power Generation of Subsidiaries (Branches) of KELUNPHARMA in 2024:
Project evaluationEnvironmental risk
identication
Assessment ofbiodiversityStrict evaluation is conducted todetermine if projects comply withecological protection redlines, ifthey exceed environmental qualitylimits, if they surpass resourceutilization limits, and if they meetthe control requirements outlined inthe ecological environment accesslist;
Project construction is avoided inareas with high biodiversity value,such as near designated ecologicalprotection zones, to ensure that theimplementation of projects doesnot have any negative impacts onbiological habitats.
Encouragement is given toproduction companies toactively carry out biodiversityassessments related to theirbusiness activities. This enablesa deeper understanding of thepotential impacts on biodiversityand the development of targetedprotective measures to supportthe conservation of endangeredspecies and promote ecosystembalance and stability.
Appendices
129130
Economic Performance
IndicatorUnit20232024
Gross revenueRMB 10,0002,145,3932,181,241Net prot attributable to shareholders of the listed companyRMB 10,000245,611293,589
Governance PerformanceDirectors, Supervisors, and Senior Management
IndicatorUnit20232024Total members of board directorsPersons 89Including: Number of executive directorsPersons 11Including: Number of independent directorsPersons 33Proportion of independent directors%3833Number of board meetings convenedTimes119Attendance rate of board members%100100Number of general meetings of shareholders heldTimes43Number of Board of Supervisors meetings convenedTimes66Business EthicsIndicatorUnit20232024
Number of anti-commercial bribery and anti-corruptiontraining sessions
Times1211Percentage of employees covered by anti-commercial briberyand anti-corruption training
%100100Percentage of major subsidiaries (branches) covered bybusiness ethics audits
%/100Percentage of core suppliers engaging in business with theCompany that have signed Sunshine Agreement
%100100
Investor Communication
IndicatorUnit20232024
Number of disclosure announcementsCopy142144Number of earnings briengs heldTimes11Number of online targeted research sessionsTimes/3Number of responses to questions on the Interactive PlatformTimes/73Number of investor hotline calls answeredTimes/718Ensuring Information SecurityIndicatorUnit20232024
Number of information security incidents or breaches of clientprivacy
Times00Specic amount involved in data security incidentsRMB’0,00000Conrmed customer privacy breach incidentTimes00Specic amount involved in breaches of client privacyRMB’0,00000Number of cybersecurity training sessions conductedTimes13Number of cybersecurity awareness campaigns conductedTimes/4Number of cybersecurity emergency drills conductedTimes11Environmental Performance
Environmental ManagementIndicatorUnit20232024
Total investment in environmental protectionRMB 10,00060,535.5166,139.57Total hours of environmental protection trainingHours39,94946,786Number of violations of environmental laws and regulationsItem00Number of incidents punished for violating environmental protectionlaws and regulations
Times00
AppendicesAppendix I: Data List of Key Performance Indicators
Due to changes in the method of environmental data collection for some subsidiaries (branches) in 2024, we have conducted retrospectiveadjustments to the environmental data for the year 2023.
Appendices
131132
Energy Usage
IndicatorUnit20232024
Total energy consumptionTons of standard coal/978,600.17Direct energy consumptionTons of standard coal/844,877.61Including: CoalTons1,349,678.371,376,176.22GasolineLiter232,401.13219,057.97DieselLiter224,719.02230,079.95Natural gasCubic meter44,933,325.0043,741,984.60LPGCubic meter301.00 240.00Indirect energy consumptionTons of standard coal/133,722.56Including: ElectricityMegawatt-hour671,943.05728,069.32SteamTons492,423.04609,171.11Renewable energy usage (Photovoltaicpower generation)
Megawatt-hour68,851.3669,671.14Greenhouse Gas EmissionsIndicatorUnit20232024
Total GHG emissionstCO
e2,659,459.922,845,549.25GHG emissions (Scope 1)tCO
e2,190,590.172,361,763.17GHG emissions (Scope 2)tCO
e468,869.75483,786.08GHG emissions intensity
tCO
e/ RMB 10,000revenue
1.241.30
Exhaust EmissionIndicatorUnit20232024
Total exhaust emissionTons2,637,085.722,947,721.69Particulate matter (PM) emissionTons23.7957.54Nitrogen oxides (NOx) emissionTons368.50466.01Sulfur oxides (SOx) emissionTons82.84126.77Volatile organic compounds (VOCs)emission
Tons183.43270.36
Wastewater DischargeIndicatorUnit20232024
Total wastewater dischargedTons4,775,858.885,108,191.20Chemical oxygen demand (COD)Tons304.51348.57Five-day biochemical oxygen demand (BOD5)Tons81.3494.35Suspended solidsTons65.9154.28Ammonia nitrogenTons14.6420.31Waste DischargeIndicatorUnit20232024
Hazardous waste (generated)Tons217,767.81251,112.33Hazardous waste (recycled)Tons197.961,115.63Hazardous waste (disposed)Tons217,748.41250,601.02Non-hazardous waste (generated)Tons219,500.53236,909.06Non-hazardous waste (recycled)Tons7,341.107,298.64Non-hazardous waste (disposed)Tons212,243.11229,599.68Municipal solid waste (generated)Tons16,809.8117,657.54Municipal solid waste (recycled)Tons15.1039.60Municipal solid waste (disposed)Tons16,791.7117,617.94Utilization of Water ResourcesIndicatorUnit20232024
Total water consumptionTons28,559,448.92 31,388,028.53Including: Fresh water consumption (=A+B+C)Tons16,109,743.4816,397,458.45Urban (or other water supply agencies) watersupply consumption (A)
Tons5,948,036.156,187,481.25Surface water consumption (B)Tons9,832,299.63 9,744,798.00Groundwater consumption (C)Tons329,407.70465,179.20Reclaimed water reuseTons12,586,330.4315,049,294.08
Appendices
133134
Product Performance
Product Responsibility and Service
IndicatorUnit20232024Percentage of production enterprises withISO9001 certication
%/40.63Number of products recalledItem00Percentage of products recalled%00Number of product regulatory warningincidents received
Times00Number of internal quality training sessionsTimes27,45728,898Coverage of internal quality training%99.2899.32Total number of participants in internal qualitytraining
Person-time498,777587,962Internal quality training hoursHours821,934725,186Number of product quality tests conducted10,000 times7560Number of pilot tests conducted for products10,000 times1315Number of existing product quality/safetytests conducted
10,000 times6050Coverage of pharmacovigilance training%/100Number of pharmacovigilance trainingsessions
Times/273Total number of participants inpharmacovigilance training
Persons/10,672Total pharmacovigilance training hoursHours /825Number of employees participating inresponsible marketing training
Person-time/8,800Duration of responsible marketing training10,000 hours/11.78Average duration of responsible marketingtraining per person
Hours/40Number of responsible marketing auditsconducted
Times/35Number of employees covered by responsiblemarketing audits
Persons /2,956Amount involved in signicant safety andquality responsibility accidents related toannual products and services
RMB10,000
Supplier ManagementIndicatorUnit20232024
Number of supplier trainingsessions
Nr300320Coverage rate of high-risk suppliertraining
%100100Supplier training hoursHours400400Number of supplier participatingin supplier training
Persons 2,0002,000Number of supplier auditsNr383420Coverage rate of high-risk supplieraudits
%100100Research and Development (R&D) and Intellectual Property ManagementIndicatorUnit20232024R&D investmentRMB 100 million19.5321.71Cumulative number of authorizedpatents held
Item2,1531,997Including: Invention patentsItem707735Utility model patentItem1,2371,069Design patentItem209193Number of newly applied patentsItem409438Number of newly granted patentsItem184231Employee PerformanceEmploymentIndicatorUnit20232024
Total number of employeesPersons19,79821,864Employees by gender
MalePersons10,72312,086
FemalePersons9,0759,778Employees by type ofemployment
Labor contract system Persons/21,410
Labor dispatch systemPersons/158
Other regionsPersons/296
Appendices
135136
IndicatorUnit20232024
Employees by age
Employees aged 30 andbelow
Persons /7,326Employees aged 31 to 40Persons /8,733Employees aged 41 to 50Persons /4,399Employees aged 51 andabove
Persons /1,406
Number of employees by rank
Senior ManagementPersons 1412Female employees in thesenior management
Persons 33Middle managementPersons 4423,671Female employees in themiddle management
Persons 1,6121,792Grassroots employeesPersons /18,181Number of employees by region
Mainland China, Hong Kong,Macau, and Taiwan
Persons 19,44521,470Overseas countries orregions
Persons 353394Employee tenure
Average tenure of femaleemployees in the Company
Year6.16.0Average tenure of maleemployees in the Company
Year7.16.8
Number of new employees
Number of newly hiredemployees
Persons 3,5983,598Number of newly hired full-time employees
Persons /3,304Number of newly hiredfemale employees
Persons 1,6061,371Number of employees from ethnic minoritiesPersons 1,8832,197Number of part-time, outsourced, or temporary employeesPersons /158Number of executive management personnelPersons /3,671Number of female executive management employeesPersons /1,792Coverage rate of employee social security%100100
Employee Turnover Rate
IndicatorUnit20232024Overall employee turnover rate
%16.0815.73Employee turnover rate by gender
Male%17.3618.12Female%14.5213.20
Employee turnover rate by agegroup
Employees aged 30and below
%24.2324.65Employees aged 31to 40
%/12.95Employees aged 41to 50
%/7.47Employees aged 51and above
%/7.38Employee Training and DevelopmentIndicatorUnit20232024
Employee traininghours
Total training hours10,000 hours170.95176.18Average training hours peremployee
Hours86.3580.58Total training hours for femaleemployees
10,000 hours76.0776.63Per capita training time for femaleemployees
Hours83.8378.60Total training hours for maleemployees
10,000 hours94.8799.55Per capita training time for maleemployees
Hours88.4782.18Total training hours for seniormanagement
Hours1,032.16977.67Average training hours per seniormanagement
Hours73.7381.47
Employee trainingassessment
Total number of training sessionsper year
10,000 times6.326.16Annual training expenditureRMB 10,000428.05487.80Number of employees trainedPersons 19,79821,864Employee training coverage rate%100100
Overall employee turnover rate = Number of employees who left / (Number of employees at the end of the year + Number of employees who left)
Appendices
137138
Occupational Health & Safety
IndicatorUnit20232024Health and safety trainingand drills
Times of safety drills conducted (re, toxicgas leaks, etc.)
Times772851
Investment in work safety
Investment in occupational health andsafety management
RMB 10,0002,977.792,886.24Investment in employee work injuryinsurance
RMB 10,000644.30830.61Investment in employee safety productionliability insurance
RMB 10,00024.7330.92Employee work injury insurance coveragerate
%100100Coverage rate of employee productionliability insurance
%100100Coverage rate of occupational health checkups%100100Work-related injury
Lost days due to work injuryDay904.51,582.5Incidence of occupational disease%00
KELUN PHARMA referenced the Shenzhen Stock Exchange’s Sustainability Reporting Guidelines and GRI standards to report thereferenced information in the content index for the period from January 1 to December 31, 2024.
Sustainability Reporting GuidelinesGRI Content Index
Report Locationsand Descriptions
Environmental information disclosureSection I Response to Climate ChangeResponse toclimate change
Articles 20, 21, 22, 23, 24, 25, 26, 27and 28
GRI 201: Economic Performance2016; GRI 302: Energy 2016; GRI 305:
Emissions 2016
Response to climatechangeAppendix I: KeyPerformanceIndicators (KPIs)Section II Pollution Prevention and Ecological ConservationPollutant emissionArticles 29 and 30
GRI 2: General Disclosures 2021; GRI303: Water and Efuents 2018
Toxic Emissions andWaste; AppendixI: Key PerformanceIndicators (KPIs)Waste disposalArticles 29 and 31GRI 306: Waste 2020
Toxic Emissions andWaste; AppendixI: Key PerformanceIndicators (KPIs)Ecosystem andbiodiversityconservation
Article 32GRI 304: Biodiversity 2016
BiodiversityProtectionEnvironmentalcompliancemanagement
Articles 29 and 33
GRI 302: Energy 2016; GRI 303: Waterand Efuents 2018; GRI 306: Waste2020
EnvironmentalmanagementSection III Resource Utilization and Circular EconomyEnergy utilization Articles 34 and 35GRI 302: Energy 2016
EnergyManagement;Appendix I: KeyPerformanceIndicators (KPIs)Utilization ofwater resources
Articles 34 and 36GRI 303: Water and Efuents 2018
Water ResourceManagement;WastewaterTreatment; AppendixI: Key PerformanceIndicators (KPIs)Circular economyArticles 34 and 37GRI 306: Waste 2020
Waste Managementand CircularEconomy; AppendixI: Key PerformanceIndicators (KPIs)Social Information DisclosureSection I Rural Revitalization and Social ContributionsRural revitalizationArticles 38 and 39GRI 203: Indirect Economic Impacts 2016
Pooling Strength forRural Revitalization
Appendix II: Report Standard Index
Appendices
139140
Sustainability Reporting GuidelinesGRI Content Index
Report Locationsand DescriptionsSocial contributionArticles 38 and 40GRI 203: Indirect Economic Impacts 2016
Practicing PublicWelfare and CharitySection II Innovation-driven Development and Technology EthicsInnovation-drivendevelopment
Articles 41 and 42/
Innovation-drivenTransformation;Appendix I: KeyPerformanceIndicators (KPIs)Technology ethics
Not involved. The core business of the Company does not involve scientic research and technologydevelopment in sensitive elds such as life science and articial intelligence ethics.
Section III Suppliers and CustomersSupply chainsecurity
Articles 44 and 45
GRI 308: Supplier EnvironmentalAssessment 2016; GRI 414: SupplierSocial Assessment 2016
Building aSustainable SupplyChainEqual treatment ofSMEs
Article 46/
Equal treatment ofSMEsProduct andservice safety andquality
Articles 44 and 47
GRI 416: Customer Health and Safety2016; GRI 417: Marketing and Labeling2016
Product Safety andQuality; CustomerService; AppendixI: Key PerformanceIndicators (KPIs)Data security andcustomer privacyprotection
Articles 44 and 48GRI 418: Customer Privacy 2016
Ensuring InformationSecuritySection IV Employee
Employee Articles 49 and 50
GRI 401: Employment 2016; GRI 403:
Occupational Health and Safety 2018;GRI 404: Training and Education 2016;GRI 405: Diversity and Equal Opportunity2016; GRI 406: Non-discrimination 2016;GRI 409: Forced or Compulsory Labor2016
Talent DevelopmentStrategy; TalentRetention; EmployeeTraining andDevelopment;OccupationalHealth and Safety;Appendix I: KeyPerformanceIndicators (KPIs)Sustainable Development Governance Information DisclosureSection I Sustainable Development Governance MechanismsDue diligenceArticle 52/
SystematicSupervisionMechanisms;Business EthicsAuditStakeholdercommunication
Article 53
GRI 2: General Disclosures 2021; GRI 3:
Material Topics 2021
StakeholderCommunicationSection II Business ConductAnti-commercialbribery and anti-corruption
Articles 54 and 55GRI 205: Anti-corruption 2016
Business Ethics;Appendix I: KeyPerformanceIndicators (KPIs)Anti-unfaircompetition
Article 54
GRI 206: Anti-competitive Behaviors2016
Fair competition
Appendix III: Reader’s FeedbackDear Readers,Hello!We sincerely appreciate your time in reading our 2024 Environmental, Social, and Governance (ESG) Report. To provideyou and other stakeholders with more comprehensive, professional, and valuable ESG information, and to continuouslyimprove our ESG efforts and enhance our ESG management capabilities, we sincerely invite you to assist in completingthe relevant questions in the feedback form. Please do not hesitate to give us your comments.
1. Are you satised with this report in general?
Yes □ Fair □ No □
2. Do you think this report reects the signicant impact of KELUN PHARMA on ESG?
Yes □ Fair □ No □
3. Do you think the analysis of the stakeholders identied in this report and their relationship with KELUN PHARMA is
accurate and comprehensive?Yes □ Fair □ No □
4. Do you think the information provided in this report is comprehensive?
Yes □ Fair □ No □
5. Do you think the information provided in this report is readable?
Yes □ Fair □ No □
6. Is the overall design of this report satisfactory?
Yes □ Fair □ No □
7. Your other comments and recommendations on the
2024 Environmental, Social and Governance Report of KELUNPHARMA are welcome.
For any questions, suggestions, or feedback regarding this report, please feel free to contact us through the followingchannels:
Address: 36 Baihua West Road, Qingyang District, ChengduPostcode: 610071Telephone: 4006860333 (Monday to Friday, 08:00-17:30,
excluding statutory holidays)E-mail: kelun@kelun.com