Wanbangde Pharmaceutical Group Co., Ltd. 2016 Annual Social Responsibility Report

Wanbande Pharmaceutical Group Co., Ltd.

2016 Annual Social Responsibility Report

Wanbangde Pharmaceutical Group Co., Ltd. (hereinafter referred to as "Wanbangde Pharmaceutical") has always been committed to enhancing human health and improving quality of life. Upholding the corporate mission of "Pioneering Innovation, Caring for Life," the company embraces its overarching goal of "Using Technology to Benefit Humanity." Wanbangde Pharmaceutical is dedicated to translating pharmaceutical research achievements into practical applications, driving the pharmaceutical industry toward deeper, broader, and higher levels of advancement. At the same time, Wanbangde Pharmaceutical is implementing a sustainable development strategy, striving for both economic success and harmonious coexistence with all stakeholders as well as the surrounding social and environmental context.

The "Wanbangde Pharmaceutical Group Co., Ltd. Corporate Social Responsibility Report" was prepared in accordance with the "China Enterprise Social Responsibility Reporting Guidelines." It reviews the opportunities and challenges Wanbangde Pharmaceutical encountered during its past year of development, while also disclosing the company’s social responsibility practices and performance related to its stakeholders.

I. About Wanbangde Pharmaceutical

(1) Company Overview

In July 2002, Wanbangde Pharmaceutical was restructured from the state-owned Wenling Pharmaceutical Factory. After more than a decade of growth, it has now evolved into a high-tech enterprise specializing in the research, development, manufacturing, and sales of modern Chinese medicines, as well as active pharmaceutical ingredients and finished dosage forms. The company boasts a registered capital of 360 million yuan and holds 198 approved drug production licenses, covering 18 different dosage forms. It also has five subsidiaries under its umbrella.

Wanbangde Pharmaceutical firmly adheres to a technology-driven approach and has established a provincial-level academician expert workstation, the "Provincial High-Tech Enterprise Research and Development Center for Cardiovascular and Cerebrovascular Drugs," as well as a "Provincial Enterprise Technology Center." The company has secured 20 authorized patents (including 15 invention patents), with an additional 8 invention patent applications currently under review. Moreover, the "Wanbangde Pharmaceutical" trademark has been recognized as a China Well-Known Trademark.

Currently, Wanbangde Pharmaceutical has established a product portfolio characterized by natural herbal medicines, with a primary focus on cardiovascular, cerebrovascular, and nervous system medications, complemented by drugs targeting respiratory and other therapeutic areas. Its product line spans multiple treatment fields, including cardiovascular and cerebrovascular diseases, neurological disorders, respiratory conditions, and digestive ailments. Today, the Wanbangde Pharmaceutical Group boasts 62 drug varieties and 78 specific formulations that are included in the 2012 edition of the *National Essential Medicines List*, as well as 69 varieties listed in the *National Low-Cost Drug Catalog*.

(2) Company Core Values

Wanbangde Pharmaceutical is committed to its business goals: "Innovating modern Chinese medicine to enhance public health; building a century-old brand and establishing a world-class enterprise; ensuring shareholder value while continuously giving back to society." Rooted in integrity as the company’s core principle, Wanbangde remains dedicated to driving corporate transformation and evolution—progressing steadily toward becoming a global leader. At the same time, the company firmly embraces social responsibility, demonstrating unwavering accountability to all stakeholders, including shareholders, employees, partners, and the environment. By consistently delivering maximum value, Wanbangde strives to contribute meaningfully to the advancement of human health and well-being.

2. Basic Overview of Wanbangde Pharmaceutical's Corporate Social Responsibility Efforts

(1) Overall Status of Wanbangde Pharmaceutical's Social Responsibility Implementation and Public Recognition in 2016

In 2016, Wanbangde Pharmaceutical marked the beginning of its "13th Five-Year" development plan and also served as a pivotal year for the comprehensive implementation of the "1-5-5" project—aiming to develop one product exceeding 1 billion yuan in revenue, five products worth over 100 million yuan each, and another five surpassing 50 million yuan. Against the backdrop of favorable policies such as the Belt and Road Initiative and China's Healthy China 2030 Blueprint, which are fostering robust growth in the pharmaceutical industry, Wanbangde Pharmaceutical has remained committed to aligning industrial restructuring with technological innovation. The company has intensified its efforts across multiple fronts, including marketing strategies, R&D breakthroughs, talent acquisition, commercialization of scientific achievements, cost management, environmental protection, and energy conservation initiatives. Moreover, Wanbangde Pharmaceutical has actively prepared for and participated in the establishment of the "Wenling Medical and Healthcare Town," achieving notable progress in the process. Beyond these accomplishments, the company has consistently prioritized sustainable business growth while safeguarding the interests of all stakeholders. By proactively fulfilling its social responsibilities and collaborating with communities to build a harmonious and thriving society, Wanbangde Pharmaceutical has earned widespread recognition and praise from various sectors of society.

The main honorary titles awarded to Wanbangde Pharmaceutical are:

● National Torch Program Key High-Tech Enterprise

● Zhejiang Province High-Tech Enterprises

● Outstanding Contribution Enterprises of Zhejiang Province

● Zhejiang Province Recognizes Harmonious Labor Relations and Advanced "Double Love" Enterprises

● Zhejiang Province Civilized Unit

● Zhejiang Province's Enterprises Achieving Milestone Results in Cleaner Production

● Zhejiang Province AA-rated "Contract-abiding and Creditworthy" Enterprise

● Zhejiang Provincial Environmental Monitoring Association Membership Certificate and Standing Director Unit of the Zhejiang Provincial Environmental Monitoring Association

● Top 20 Growing Enterprises in Taizhou City

● Taizhou City Advanced Grassroots Party Organization

● Top 10 Industrial Enterprises in Wenling City

● Wenling City's Top Taxpayers for 2015

(II) Protection of Investor and Creditor Rights

Since its shareholding reform, Wanbangde Pharmaceutical has operated strictly in compliance with the requirements of laws and regulations such as the Company Law and the Securities Law, ensuring standardized operations and continuously enhancing its corporate governance structure. The company treats all investors fairly, guaranteeing that they fully enjoy the rights and interests stipulated by relevant laws, regulations, and rules. To this end, the company has formulated and progressively refined a comprehensive set of internal rules and regulations, including the Articles of Association, Rules of Procedure for the Shareholders' Meeting, Rules of Procedure for the Board of Directors, Rules of Procedure for the Supervisory Board, Detailed Rules of Operation for the General Manager, Investor Relations Management System, Information Disclosure Management System, and Regulations on the Administration of Fundraising Proceeds. Moreover, the company’s shareholders’ meeting, board of directors, and supervisory board have all conducted their activities in a well-organized and efficient manner, effectively safeguarding both investor and corporate interests. Adhering to the principles of fairness, transparency, and impartiality in information disclosure, the company has diligently fulfilled its obligations, ensuring that all disclosed information is truthful, accurate, complete, timely, and equitable.

The company facilitates convenient and efficient communication with investors through dedicated hotline consultations, its company website, and by welcoming investor visits—fostering positive interaction between investors and the company while enhancing its strong market image.

The company aims to maximize shareholder value while striving for exceptional operational performance, ensuring investors fully benefit from the company’s strong business results. In its decision-making processes, the company carefully considers the legitimate rights and interests of creditors, promptly informing them of any significant updates related to their debt-related rights. Since its establishment, the company has consistently honored contractual obligations and maintained a reputation for trustworthiness, fostering robust partnerships with banks and earning high levels of recognition for its solid creditworthiness across the banking sector.

(III) Protection of Employee Rights and Benefits

1. Strictly comply with labor protection laws and regulations, fostering harmonious and stable labor relations.

Wanbangde Pharmaceutical strictly adheres to the *Labor Law* and the *Labor Contract Law*, maintaining a robust labor contract system and ensuring that all registered employees have signed employment contracts. The company has also established a comprehensive social insurance management framework, providing all staff with the "Five Social Insurances and One Housing Fund" benefits. To motivate employees effectively, the company implements a performance evaluation system, upholding the principles of "equal pay for equal work, distribution according to contribution, and rewarding more for greater effort." Salaries and performance bonuses are disbursed promptly and in full, with no instances of wage delays or deductions. Additionally, the company fully leverages the role of its trade union by setting up a labor dispute mediation mechanism. Through initiatives like establishing employee service centers, organizing regular employee forums, and maintaining suggestion boxes, the company actively gathers employee feedback, safeguarding workers' rights and interests.

2. Implement a talent-driven corporate strategy and broaden pathways for employee growth.

Wanbangde Pharmaceutical has consistently adhered to its "Talent-Driven Enterprise" strategy, focusing on enhancing both the management skills of executives and the fundamental competencies of employees. The company actively conducts training programs tailored to employees at various levels, while also encouraging working professionals to pursue further education—such as upgrading from associate’s to bachelor’s degrees or advancing from bachelor’s to master’s programs—to boost their professional capabilities and career development. Since 2016, Wanbangde Pharmaceutical has organized a wide range of training sessions for all staff members, covering topics like GMP knowledge, 5S site management, skill-enhancement workshops, and job-specific training. Additionally, the company has established a provincial-level academician expert workstation and forged strategic partnerships with prestigious universities, including China Pharmaceutical University, Zhejiang University, and the School of Pharmacy at Zhejiang Industrial University, fostering collaboration to attract top-tier talent. Beyond technical expertise, the company also prioritizes employees' spiritual and cultural needs by setting up an in-house "Employee Reading Room," inspiring staff to continuously learn, acquire new skills, and achieve outstanding results.

3. Strengthen labor protection and prioritize safe production.

Wanbangde Pharmaceutical strictly adheres to laws and regulations such as the Labor Law and the Occupational Disease Prevention and Control Law, actively engaging all employees in ensuring occupational health, safety, and secure production. The company proactively addresses employee concerns related to workplace safety, labor protection, and workers' compensation benefits, diligently coordinating solutions to safeguard employees' lives, health, and legitimate rights. The company places great emphasis on safety management, establishing a robust, long-term mechanism for occupational safety. It has conducted multi-level safety training programs—including three-tiered safety education and specialized safety knowledge sessions—and regularly organizes emergency response drills to enhance employees' ability to handle crises effectively. In 2016, the company further strengthened its safety accountability system, integrating safety practices into every stage of production and operations. Comprehensive self-inspection activities were carried out across the entire factory, with specific responsibilities assigned to each workshop and team. Daily self-checks were mandated at the team level, weekly inspections at the workshop level, and monthly reviews at the factory-wide level. Inspection areas covered critical aspects such as personal protective equipment usage, workplace health and environmental compliance, safety supervision of labor protections, production environments, and equipment maintenance—ensuring continuous improvement through proactive identification and corrective actions. As a result, Wanbangde Pharmaceutical’s outstanding safety management practices have earned high praise from the provincial safety inspection team.

4. Strengthen employees' ideological and political education, build bridges for communication, and enhance collective cohesion.

In 2016, Wanbangde Pharmaceutical took the opportunity of the 95th anniversary of the founding of the Communist Party to launch a special study session on "The Important Speeches of General Secretary Xi Jinping" and implement the "Study the Party Constitution, Study Series of Speeches, and Be a Model Worker" educational initiative. These efforts continuously enhanced employees' ideological and political awareness, helping them cultivate a correct worldview. The company also organized various employee-focused activities, including a Mid-Autumn Festival cultural performance, essay contests, and a Women's Day tea gathering, all aimed at strengthening team spirit and cohesion among staff. Moreover, the company’s Party and Labor Office established a direct communication channel—known as the "Employee Express Train"—to facilitate dialogue between employees and senior management. This mechanism ensures that employee concerns are heard, challenges are addressed promptly, and their legitimate rights and interests are safeguarded. In recent years, the company has shown deep care for employees’ daily work and personal lives by launching the "Caring for Employees, Bringing Warmth" campaign. Through this initiative, the company has generously provided essential items such as down jackets and cotton quilts to employees facing financial hardship and their families. Additionally, the company has prioritized offering heartfelt support to employees battling serious illnesses and extended thoughtful holiday greetings to all staff members.

(IV) Consumer Rights Protection

1. Providing consumers with products that are consistently high-quality and reliable

Drug safety is a critical public health issue that affects countless families and directly impacts the physical and mental well-being of people nationwide. As a socially responsible pharmaceutical company and a leading enterprise in China’s pharmaceutical industry, Wanbangde Pharmaceutical has always been committed to providing customers with products that are consistently reliable in quality. The company has established a robust quality management system in accordance with the *Drug Administration Law of the People’s Republic of China*, its *Implementation Regulations*, and the *Good Manufacturing Practice for Pharmaceuticals*, ensuring that every step—from raw material sourcing to the final product release—adheres strictly to regulatory standards. Additionally, Wanbangde has implemented a comprehensive system for reporting and monitoring adverse drug reactions, while also conducting annual mock drug recall drills to enhance employees' emergency response capabilities. This ensures that, if necessary, the company can swiftly withdraw from the market any batch of products identified as potentially hazardous.

2. Establish and improve the after-sales service system

Any brand-conscious and dynamic enterprise possesses the capability to establish and refine a robust after-sales service system. As a company that has earned the prestigious "China Famous Trademark" title, Wanbande Pharmaceutical places exceptional emphasis on delivering high-quality, flawless customer service as a cornerstone of its business operations. The company has set up a dedicated quality-service hotline and established a specialized Information Management Center, where trained professionals meticulously track and coordinate feedback from customers, clinical partners, users, and other stakeholders regarding medication usage. This ensures timely communication and effective problem-solving, empowering clients to overcome any challenges they may face.

(5) Taking on the social responsibility for scientific research and innovation

1. Actively engage in scientific research to broaden the potential applications of our products.

Since its establishment, Wanbangde Pharmaceutical has been dedicated to the research and development of traditional Chinese medicine, as well as the development of chemical APIs and pharmaceutical formulations, having created a portfolio of innovative drugs backed by independent intellectual property rights. In 1985, Wanbangde Pharmaceutical’s predecessor, Wenling Pharmaceutical Factory, pioneered a groundbreaking achievement both domestically and internationally by successfully extracting huperzine A—a potent active ingredient from the herbal plant Huperzia serrata—into a treatment for Alzheimer’s disease. This breakthrough earned the company a domestic invention patent and led to the product’s commercialization. In recent years, Wanbangde Pharmaceutical has formulated a medium- to long-term development plan focused on advancing the huperzine A product line. In 2015, the company achieved another global milestone by developing fully synthetic huperzine A through advanced total synthesis technology—making it the world’s first such innovation—and securing a corresponding domestic invention patent. Additionally, in 2016, the company filed patent applications for this innovative compound in key international markets, including the U.S., Japan, and the European Union. Beyond the fully synthetic huperzine A, the company has also invested significant resources into the in-depth development of various dosage forms, such as huperzine A tablets, huperzine A injections, and controlled-release huperzine A tablets.

Back in 2010, the company’s other core product—Ginkgo Biloba Dropping Pills, an exclusive national variety—was already listed by the Ministry of Science and Technology as part of the National Torch Program. Moreover, this product is also recognized as a nationally protected medicinal variety, included in both the National Medical Insurance Catalogue and the National Essential Medicines List. Notably, Wanbande Pharmaceutical serves as the drafting unit for the national pharmacopoeia standard of Ginkgo Biloba Dropping Pills. Ginkgo Biloba Dropping Pills are a first-line medication widely prescribed for the prevention and treatment of cardiovascular and cerebrovascular diseases. As an upgraded, modernized oral formulation derived from traditional Chinese medicine, Wanbande Pharmaceutical initiated a second-phase development of these pills in 2015, unlocking new therapeutic potentials beyond their original use. The company has been diligently exploring the active ingredients, employing advanced techniques such as fingerprint analysis to precisely quantify key components. Simultaneously, they’ve continuously monitored clinical adverse reactions, refined manufacturing processes, and delved deeper into uncovering additional applications and synergistic uses of Ginkgo Biloba Dropping Pills in combination with other therapies.

Integrating environmental protection into every stage of the company’s economic development is Wanbande Pharmaceutical’s proactive choice to adapt to, lead, and capitalize on the new normal of economic growth—it also represents the moral底线 for a conscientious pharmaceutical enterprise. Wanbande Pharmaceutical has vigorously promoted energy conservation and emission reduction across its headquarters and all subsidiaries, embracing low-carbon production and adopting a green, circular development model focused on environmental sustainability. The company has comprehensively launched clean production initiatives while actively fulfilling its environmental stewardship responsibilities. In recent years, the company has invested significant human, material, and financial resources into upgrading environmental protection systems at its facilities—such as transitioning from coal to gas, implementing condensate recovery systems, and reducing wastewater discharge. In 2016 alone, by retrofitting its existing water treatment infrastructure, Wanbande achieved full-scale recycling of water resources, saving 10,000 tons of water annually. To accelerate the transition toward comprehensive clean production and enhance resource efficiency through circular practices, the company has allocated a total of 15 million yuan toward constructing and maintaining advanced wastewater treatment systems. These systems effectively control major pollutants, ensuring compliance with both national emission standards and stringent total-quantity regulations.Moreover, the company adopts an environmentally conscious approach by carefully selecting packaging materials, designing innovative products, and sourcing raw materials—prioritizing eco-friendly options to minimize environmental impact and reduce pollution across its operations.

In 2017, the company will continue to earnestly fulfill its corporate social responsibility and actively foster social harmony. We will further enhance our corporate governance, strengthen our corporate culture, drive innovation in human resource management, and firmly safeguard employees' rights and benefits, providing them with even greater opportunities for professional growth. Additionally, the company will vigorously promote environmental awareness, reduce energy consumption, and contribute to the advancement of sustainable environmental initiatives. Moreover, we remain committed to actively participating in social公益 activities, demonstrating our dedication to giving back to society through tangible actions.

(6) Actively engage in environmental protection and promote green, circular development.

Integrating environmental protection into every stage of the company’s economic development is Wanbande Pharmaceutical’s proactive choice to adapt to, lead, and capitalize on the new normal of economic growth—it also represents the moral底线 for a conscientious pharmaceutical enterprise. Wanbande Pharmaceutical has vigorously promoted energy conservation and emission reduction across its headquarters and all subsidiaries, embracing low-carbon production and adopting a green, circular development model focused on environmental sustainability. The company has comprehensively launched clean production initiatives while actively fulfilling its environmental stewardship responsibilities. In recent years, the company has invested significant human, material, and financial resources into upgrading environmental protection systems at its facilities—such as transitioning from coal to gas, implementing condensate recovery systems, and reducing wastewater discharge. In 2016 alone, by retrofitting its existing water treatment infrastructure, Wanbande achieved full-scale recycling of water resources, saving 10,000 tons of water annually. To accelerate the transition toward comprehensive clean production and enhance resource efficiency through circular practices, the company has allocated a total of 15 million yuan toward constructing and maintaining advanced wastewater treatment systems. These systems effectively control major pollutants, ensuring compliance with both national emission standards and stringent total-quantity regulations. Moreover, the company takes an environmentally conscious approach in selecting packaging materials, designing innovative products, and procuring raw materials, prioritizing eco-friendly options to minimize environmental impact and reduce pollution across its operations.

(7) Benefit our hometown and give back to society

For years, Wanbangde Pharmaceutical has actively participated in various disaster relief and public welfare activities organized by the Red Cross Society and the Charity Federation, donating both funds and medicines to communities in need. The company has consistently contributed its modest efforts toward building harmonious enterprises, fostering social stability, and supporting economic development. Following the devastating earthquake in Ya'an, Wanbangde Pharmaceutical immediately mobilized its employees to raise donations and promptly donated medicines worth 2.21 million yuan. In 2015, to help local vocational school students from Wenling secure employment, Wanbangde Pharmaceutical established a strategic partnership with Wenling Secondary Vocational and Technical School, creating multiple job opportunities for these young graduates. In 2016, the company showed its commitment to supporting Wenling’s sanitation workers by gifting 3,000 boxes of honeysuckle-infused cooling drinks. Additionally, Wanbangde Pharmaceutical donated 410,000 yuan through the Wenling Red Cross Society and encouraged its employees to join Wenling’s sixth "One Pair of Brooms Walk" city-wide charity event. Beyond these initiatives, the company annually invites select employees to participate in the "Concentric Forest" tree-planting activity organized by the Wenling Environmental Protection Association, further reinforcing its dedication to environmental conservation. Through its unwavering support for public welfare causes, Wanbangde Pharmaceutical has not only strengthened its corporate image but also infused the organization with a profound sense of compassion and community spirit.

III. Future Outlook

In 2017, the company will continue to earnestly fulfill its corporate social responsibility and actively foster social harmony. We will further enhance our corporate governance, strengthen our corporate culture, drive innovation in human resource management, and firmly safeguard employees' rights and benefits, providing them with even greater opportunities for professional growth. Additionally, the company will vigorously promote environmental awareness, reduce energy consumption, and contribute to the advancement of sustainable environmental initiatives. Moreover, we remain committed to actively participating in social公益 activities, demonstrating our dedication to giving back to society through tangible actions.

For our supportive shareholders, in 2017 we will continue to accelerate product innovation, enhance customer satisfaction, and diligently work to create greater value for you.

Wanbande Pharmaceutical Group Co., Ltd.

November 20, 2017