ESG Report 2023

8.1 Sustainable Supply Chain Management Superior supply chain management is the basis for production enterprises to maintain stable and efficient production. The United Laboratories is of the view that sustainable operation of the supply chain as a prerequisite for securing business operations, and it is also taken as a great opportunity to boost productivity. The Group has been persistent in optimizing the supply chain system, procurement process, and supplier development, supervision, evaluation, and management. Through the implementation of material supplier management procedures, the Group maintains a healthy and sustainable supply chain system. In terms of contract management, the Group's procurement contracts will enumerate items such as quality requirements of goods, delivery standards, delivery terms, intellectual property rights, and integrity clauses to guarantee the quality of suppliers' supply and lower the legal and social risks of the supply chain. Standards for Quality Control of Pharmaceutical Production Measures for the Supervision and Administration of Drug Production Contract Law of the People’s Republic of China Measures for the Supervision and Administration of Circulation of Pharmaceuticals Relevant Laws and Regulations Supply Chain Aspects Internal Policies Sustainable Procurement Policy Supplier Code of Conduct Supplier Management and Review Process Anti-corruption Agreement Procurement Process Management Document 8.1.1 Production and Operation Model The Group has established a vertical integration of production and operation model of “pharmaceutical intermediates - bulk medicines - finished products”. Inner Mongolia Company purchases major raw materials for the production of pharmaceutical intermediates and active pharmaceutical ingredients, and then delivers them to the Group's other production sites for the production of bulk medicines and finished products, which are finally sold to end users through various channels. This production and operation model helps the Group to reduce the external demand for major raw materials used in the production process, lower the risk of unstable supply and market price fluctuations on the supply chain, so that we can effectively control production costs and ensure product quality. In addition, full control of the supply chain also helps the Group to retroactively manage the production process, so as to find the root cause of potential problems, continue to explore room for improvement, and enhance the sustainability of the supply chain. In addition, as a raw material supplier for many antibiotic companies, the Group has been giving the highest priority to quality that the pharmaceutical intermediates and bulk medicine produced by the Group have attained many authoritative certifications such as Chinese GMP, EU CEP, and US FDA. 49 Users Raw Materials Pharmaceutical Intermediates Bulk Medicines Finished Products Environmental, Social and Governance Report 2023 The United Laboratories International Holdings Limited