Future Company's Three-Year Development Strategy Plan

To better adapt to market changes and accurately position the enterprise. Going public Realistically plan the enterprise's construction and development prospects, fully leverage the company's existing resource advantages and potential, and continuously enhance the incentive system. And Management innovation, Reduce expenses and increase revenue, Enhance corporate cohesion, boost employee morale, and comprehensively drive the company’s scalable and rapid growth. In line with the company’s current development trends, Held on November 10 Three-Year Strategic Planning Workshop 。

First, General Manager Xie shared his insightful thoughts on the company’s strategic plan for the next three years, outlining both the strategic goals and the overall direction. This further clarified “Strategy” has three key dimensions: First, it refers to strategic thinking, representing overall planning, comprehensive layout, and guiding principles. Second, it emphasizes brevity—capturing the essence of the strategy in a concise and clear manner. Third, it underscores the importance of defining clear boundaries: knowing exactly what we should—and must—do, while firmly committing to what we absolutely cannot compromise on. General Manager Xie emphasized that the core development strategy revolves around six main objectives: 1. Strive to become a listed company on the Beijing Stock Exchange within 3 to 5 years; 2. Establish ourselves as a technology-driven, specialized, and innovative pharmaceutical enterprise with strong competitive advantages; 3. Ensure our core business is clearly defined, with well-identified niche markets, a distinct corporate positioning, and transparent growth prospects within the industry; 4. Demonstrate impressive current performance, with promising future growth potential and a robust financial position; 5. Build a highly motivated and capable team ready to deliver results; 6. Adopt a long-term perspective—looking ahead at least a decade or even beyond—to steadfastly pursue our strategic goals.

Each system will separately report its three-year development plan for the coming years:

1. R&D System: Focus closely on three key areas—R&D strategy, revenue targets, and incentive measures—to carry out specific initiatives. Targeting global orphan drugs, pediatric medicines, and treatments for rare diseases, we aim to overcome technical barriers in the synthesis of generic drug active pharmaceutical ingredients (APIs), identify high-value-added pharmaceutical intermediates that address critical industry pain points, and leverage cutting-edge technologies to achieve breakthrough growth.

2. Marketing Department I: Focused on the "Three New, Two Increases" strategic approach—new markets, new channels, new models—and the core principles of maintaining traffic, preserving existing customers, and sustaining habits.

3. Finance Department: Focus on maximizing revenue while minimizing expenses, strengthening cash inflows and tightly controlling outflows, ensuring rational resource allocation, and maintaining timely and accurate budget management and financial analysis.

4. Production Base: With the goal of launching products within 3 to 5 years, we will continuously optimize the departmental structure of the base, adjust staffing roles, and provide a stronger platform for key positions and personnel to excel. We’ll set efficient targets for production capacity and output value, streamline our organizational structure, and ensure rational allocation of staff. At the same time, we’ll constantly explore advanced manufacturing processes, refine strategies to boost efficiency while cutting costs, and maximize the potential of our internal workforce. This includes strengthening human resource management—focusing on training programs, nurturing critical talent, and developing core business leaders—to enhance the team’s overall capabilities and make the most of our human resources. Additionally, we’ll reinforce safety and environmental management practices, striving for zero-accident safe production and ensuring timely, effective responses to the environmental challenges posed by product diversification. Collaboration between workshop operations and environmental protection efforts will be essential, with clear emission targets established to guide our actions. Finally, we’ll establish a robust performance evaluation system and continually refine it to drive sustained improvement across the board.

5. Production Technology Division: Focusing on the three-year development strategy, production will primarily emphasize cost reduction and efficiency improvement, while deepening efforts in safety and environmental protection. Centered around GMP, the raw material workshop must closely focus on chemical synthesis combined with chemical pharmaceuticals and specialty APIs as its key drivers. At the same time, we aim to reduce workshop expenses and operational costs while systematically enhancing production capacity in a phased manner. To achieve this, we will establish clear and well-defined strategic objectives, foster effective knowledge transfer, mentorship, and hands-on guidance among team members. Additionally, we’ll strengthen employees' professional skills, improve their proficiency in accurately completing production records, and encourage them to diligently explore and unlock untapped technical potential. Ultimately, manufacturing remains the core competency driving our company’s growth. By strategically planning and optimizing production capacity—while ensuring its timely release—we lay a solid foundation for the company’s future development. Furthermore, we must fully leverage the role of our laboratory by refining our approach and proactively engaging in the pilot-scale testing phase at an early stage.

6. Quality Management Division: Enhance managerial competence, improve record-keeping practices, strengthen equipment management, bolster personnel and inspection capabilities, elevate the inspection skills of inspection staff, refine management practices, and clearly define roles and responsibilities.

Chairman's instructions:

The company has already gone through its entrepreneurial journey. After 12 years of weathering ups and downs and overcoming numerous challenges, the company navigated the tough times before 2019 while strategically positioning itself for growth after 2019—aiming for an IPO on the Beijing Stock Exchange. General Secretary Xi Jinping emphasized that the establishment of the Beijing Stock Exchange marks a new milestone in the reform of the New Third Board, underscoring its mission to serve and empower SMEs driving innovation and development. This move reflects the nation’s unwavering commitment to providing stronger support for specialized, niche, and innovative enterprises. In response to this pivotal policy, the company has proactively prepared for an IPO by laying out clear plans and maintaining steadfast confidence, thereby unlocking vital financing opportunities and expanding access to critical capital channels.

The future strategy revolves around going public, with the company primarily benchmarking against established standards for IPOs. 1. Standard 3: Based on business strategy goals, corporate management objectives, R&D strategy targets, and production & technology management goals—each from a distinct perspective—we must align ourselves with the market listing criteria in a clear, precise, and goal-oriented manner. This is crucial. While clearly defining these elements, it’s essential to establish a well-defined strategic roadmap. Specifically, once R&D strategies are clarified, our future product development will focus on identifying blockbuster drugs with a 3- to 5-year horizon. Leveraging our strong R&D capabilities, we’ll take a proactive approach by prioritizing "first-mover advantage" in areas like "orphan drugs" and treatments for rare diseases. Additionally, we’ll tackle challenging high-tech intermediates or specialized APIs that feature significant technological barriers. Meanwhile, our marketing initiatives will be designed to ensure sustainable and healthy growth, with projections indicating that centralized procurement efforts could help us reach annual sales volumes ranging from 30 million to 50 million boxes by 2025.

After defining the strategic objectives, develop a practical and actionable implementation plan. Avoid the situation where, once strategic goals are clearly outlined, there’s no concrete action taken—this would inevitably turn them into mere empty rhetoric. Instead, emphasize that all systems must closely align with the established execution plan and adopt every possible measure to ensure the goals are achieved. Implement a corresponding performance evaluation mechanism tied directly to these strategic objectives, rewarding diligence while penalizing laziness. Introduce both incentive and constraint mechanisms to motivate everyone to realize their own value by working toward the overarching goals. This closed-loop process must be firmly established—so don’t let it falter. Moreover, even at the R&D stage, foster a strong sense of cost awareness and industrialization mindset. Similarly, production bases must prioritize cost control. By reducing expenses and maximizing revenue streams, we can achieve sustainable growth while maintaining operational efficiency.