2017 - scinopharm taiwan | scinopharm taiwan

2017Corporate Social

Responsibility Report

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About this Report2017 ScinoPharm Taiwan Corporate Social Responsibility Report 2018.06.22

ScinoPharm Taiwan, Ltd.2017 Corporate Social Responsibility Report

ContentsAbout This Report

Letter from Executive Management

2017 CSR Performance Highlights

Chapter 1 Corporate Governance

1.1 Company Overview

1.2 Shareholding Structure and Main Shareholders

1.3 Overview of Operations

1.4 Scope of Business

1.5 Corporate Governance

1.6 Ethical Management

1.7 Promotion of Corporate Social Responsibility

1.8 Risk Management

1.9 Awards & Recognitions

1.10 Communications and Negotiations with Stakeholders

1.11 Identification of Important Stakeholder Issues

Chapter 2 Product Responsibility and Patents

2.1 Product Laws and Regulations

2.2 Product Safety and Consumer Satisfaction

2.3 Supplier and ContractorManagement

2.4 Patent Issues

Chapter 3 Environmental Protection

3.1 Health, Safety, and Environmental Protection Policy

3.2 Management and Use of Energy and Resources

3.3 Management of Greenhouse Gases

3.4 Pollution Prevention

Chapter 4 Friendly Work Environment

4.1 Personnel Overview

4.2 Employee Benefits and Care

4.3 Health Promotion and Activities

4.4 Safe Working Environment

Chapter 5 Social Responsibility

5.1 Social Contribution

5.2 Social Participation

Appendix

Global Reporting Initiative (GRI) Comparison Sheet

Assurance Engagement Items

Auditor's limited Assuranu Report

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About this ReportEditorial PolicyScinoPharm Taiwan (hereinafter referred to as ScinoPharm) was founded in 1997 and is committed to the development and manufacturing of high-potency and high-quality generic drugs. Our technical team supplies clients with high-value and high-quality active pharmaceutical ingredients (APIs) for development of generic drugs and new drugs; we also provide competitive commercial production services to innovator drug companies. ScinoPharm upholds corporate citizenship philosophies of giving back to the community, maintaining that pharmaceutical manufacturing can be an industry with a conscience. This Corporate Social Responsibility Report is a full disclosure of all the significant issues we have faced and the actions we have taken on our path to sustainable management and serves as a response to all the issues of concern to our stakeholders.

Scope of this ReportThis report focuses on ScinoPharm’s economic, environmental, human rights, product, and social policies, activities, and relevant performance from January 1, 2017 to December 31, 2017.

Material Aspects and BoundariesDisclosed performance indicators and material aspects and boundaries of this report are limited to ScinoPharm Taiwan Ltd. Internal corporate meetings were held to identify the viewpoints of all stakeholders and major CSR issues of concern; these were then used to determine the issues to be disclosed in this CSR report. The contents of this report cannot be extended to ScinoPharm (Changshu) Pharmaceuticals, Ltd., ScinoPharm Shanghai Biochemical Technology, Ltd., ScinoPharm (Kunshan) Biomedical Technology Ltd., SPT International, Ltd., or ScinoPharm Singapore Pte Ltd. No major changes were made in company size, structure, or ownership during the period covered by this report. Please refer to the 2017 Annual Report for more information regarding the corporate structure of ScinoPharm and its subsidiaries.

Report GuidelinesInformation on corporate social responsibility and relating operating strategies, goals, and specific measures provided within this report were identified, implemented, and disclosed in accordance with the “Core” level of the GRI (Global Reporting Initiative) G4 guidelines. Surveys and systemic data analysis were used to identify issues of concern to our stakeholders, with the results serving as the basis for this CSR report. A comparison of relevant sections is listed in the appendix for ease of search and retrieval.

ScinoPharm’s Corporate Social Responsibility Report is published in accordance with the provisions set out in Rules Governing the Preparation and Filing of Corporate Social Responsibility Reports by TWSE Listed Companies of the Taiwan Stock Exchange Corporation.

The statistical data disclosed in this report were collected and analyzed by ScinoPharm. Financial data (shown in NTD) was taken from financial statements signed off by PricewaterhouseCoopers (PwC). Limited assurance engagement was conducted by PwC in accordance with SAE1 (Assurance Engagements Other than Audits or Reviews of Historical Financial Information) principles set out by the Accounting Research and Development Foundation, and the results of said assurance engagement can be found in the appendix of this report.

PublicationOur Corporate Social Responsibility Reports are published annually, and electronic versions of this report can be downloaded via our website. Publication date of last report: July, 2017; Current issue: Published July, 2018

Contact: Department of Corporate Communications

Address: Southern Taiwan Science Park, No. 1, Nan-Ke 8th Road, Shan-Hua District, Tainan 74144, Taiwan

Tel: + 886-6-5052888

Fax: + 886-6-5052898

E-mail: [email protected]

Website: www.scinopharm.com

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2017 ScinoPharm Taiwan Corporate Social Responsibility Report Letter from executive management

Letter from Executive Management

Implementing Sustainable Development and Establishing A Mutually Harmonious Society

2017 marks ScinoPharm's 20th anniversary. Over the past two decades, we have upheld our initial principle of “promoting human medicine and well-being to build a better life” as we navigate an industry that requires high levels of expertise. We are constantly strengthening our core capabilities to provide high-quality products and enhanced technical services. We prosper in harmony with our stakeholders by realizing our corporate social responsibilities through social participation, promotion of sustainable environments, and stabil ization of corporate governance.

Thanks to the efforts expended by our colleagues, our corporate governance, operating system, environmental activism, and investor relations have received a number of accolades. Last year, the ' 'CommonWealth CSR Citizenship Award'' acknowledged our per formance in corporate commitment, social participation, environmental protection, and corporate governance. In the same year, we were designated an Excellent Exports/Imports Company by the MOEA Bureau of Foreign Trade for the fourth year running. We participated in the TWSE Corporate Governance Evaluation and was rated a top 5% company, an acknowledgement of our contribution and commitment to corporate governance. At the end of 2017, we were also awarded second place in IR Magazine’s “Greater China in Health Care Sector”. All of these awards showcased our efforts in corporate social responsibility.

Implementation of corporate social responsibility is

closely related to company operations. ScinoPharm maintains a passion for excellence despite rapid and ongoing changes in the global pharmaceutical industry. We not only continue to expand our contribution to the global supply chain through optimization of manufacturing processes and enhancement of our professional expertise, but also actively incorporate concepts of sustainability within all operational decisions and actions.

In terms of social contribution, ScinoPharm has long been active in the local community through participation in local activities, local revitalization, provision of aid to underprivileged families, provision of care to vulnerable schoolchildren, support of local arts, and sponsorship of academic activities. We uphold our principles of giving back to society, allowing our community to strengthen alongside us. We also work with our stakeholders to build a better society and sustainable environments through community and social care as well as environmental protection actions.

Our well-established and robust corporate structure is maintained through an external passion for sustainable operations and internal implementat ion of corporate governance. We advocate equal employment and career opportunities for our employees and strive to realize equality in our work environment. We pay especial care to worker relations by protecting the labor rights of our employees, conducting annual Environment, Health & Safety (EHS) policy

promotions and training, providing steady and competitive salaries, establishing full training systems to enhance the professional expertise of our employees, and working to maintain a safe work environment and a comprehensive benefits package so that our employees may grow with us in a high-quality work environment.

Looking to the future, ScinoPharm puts the rights and benefits of its stockholders, customers, and employees first and foremost. We focus on core businesses as we continue to enhance our technical expertise and product differentiation. We have a good handle on market trends and strive to live up to the expectations of our stakeholders; our corporate goal is to maintain our competitiveness and build capabilities through constant innovation while fostering key factors for sustainable development. ScinoPharm plays a significant role in the pharmaceutical industry, and we hope to apply active, concrete, and in-depth targets and measures to the three aspects of corporate operations, environmental protection, and social care as we work together with our stakeholders to build a reputation as a trusted corporate ally.

Chairman

Chief Executive Officer

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2017 ScinoPharm Taiwan Corporate Social Responsibility Report

◎4

◎3

◎2

◎1

Based on information relating to insured employees submitted to the Bureau of

Labor Insurance at the Ministry of Labor at the end of December 2017 and list

of disabled persons receiving government subsidized disability labor insurance

issued by the Bureau of Labor Insurance at the Ministry of Labor for December

2017.


Increased waste stripper

capacity to 1,148 tons.

Number of disabled workers

hired exceeded regulatory

requirements by 50%Holds 15 European Pharmacopoeia (EP)

Applicability Documents (CEP or COS) for

API products available in the EU.

Generated 36,780 kWh of electricity through

solar panels.

The green electricity produced brought

236,091 NTD of direct economic benefit to the

company,

equivalent to indirect benefits of 19,457 kgCO2ein greenhouse gas emissions.

*

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CH2 Product Responsibility and Patents

CH1Corporate Governance

CH3 Environmental Protection

CH4Friendly Work Environment

CH5 Social Responsibility



Chapter 1 Corporate Governance

1.1 Company OverviewScinoPharm (ScinoPharm Taiwan) was founded in 1997 and is an international pharmaceutical company that provides a comprehensive array of development and manufacturing services for Active Pharmaceutical Ingredients (APIs) and intermediates. Our professional technical team supplies high-value, high-quality products to developers of generic and new drugs, and provides competitive commercial production services for innovator drug companies. Our one-stop-shop service not only fulfills market demand for diversified solutions, but also meets customer demands for timeliness and convenience. Additionally, as part of our operational strategy, we have branched out into injectable formulations for oncology and peptide drugs, vertically integrating services to provide one-stop-shop solutions for our clients.

ScinoPharm targets several market segments in the global pharmaceutical industry:

Custom Synthesis for early phase pharmaceutical activities, including supply of gram quantities for use as building blocks, drug screening, purity standards, etc. ScinoPharm has the ability to supply CGMP materials beginning at the IND stage and continuing through clinical needs as well as launch and post-launch supply requirements. Generic API manufacturing with products provided years before originator/brand patents expire. Processes are guaranteed to be non-infringing, and products are supplied at price-competitive levels. Exclusive or semi-exclusive supply arrangements can be provided.

Brand company outsourcing services are available and utilize ScinoPharm's complete spectrum of CGMP-qualified equipment, built and operated to Western API standards.

1.2 Shareholding Structure and Main Shareholders

As of April 30, 2018, ScinoPharm has issued 790,739,222 shares, and has a total of 32,224 shareholders, of which the majorities are corporate institutions; our shareholder structure and top ten shareholders are shown below:

April 30, 2018; Unit: people; stocks; %ScinoPharm shareholder structure

Shareholder structure Shareholding ratio

Other corporations 60.311%

Individuals 21.764%

Governmental institutions 13.853%

Foreign institutions and foreign investors 3.506%

Financial institutions 0.566%

Total 100.00%

Top 10 shareholdersApril 30, 2018; Unit: people; stocks; %

Note: the table above denotes the names, number of shares held, and shareholding ratios of the top ten shareholders as determined by equity proportion.

Major shareholders Shareholding ratio

Uni-President Enterprises Corporation 37.94%

National Development Fund, Executive Yuan 13.85%

Taiwan Sugar Corporation 4.12%

President International Development Corporation 3.63%

Tainan Spinning Co., Ltd. 2.99%

Prince Housing and Development Corporation 2.99%

Tung Yu Investment Co., Ltd. 1.94%

Kao Chyuan Investment Co., Ltd. 1.88%

Kai Yu Investment Co., Ltd. 1.87%

Kai Nan Investment Co., Ltd. 1.76%

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CH5 Social Responsibility2017 ScinoPharm Taiwan Corporate Social Responsibility Report

Milestones in ScinoPharm History

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2005

2002

2001

1999

1997

Feb.

Feb.

Dec.

Dec.

Dec.

Jul.

Oct.

Aug.

Sep.

Nov.

Nov.

Nov.

Aug.

Aug.

Jun.

Jun.

Oct.

Oct.

Oct.

Aug.

Aug.

Oct.

Oct.

Successfully passed sixth US FDA plant inspection.

Awarded Authorized Economic Operator (AEO) certification by the Customs Administration of the Ministry of Finance for the third time

Changshu site. successfully passed FDA plant inspection.

Successfully passed fifth US FDA plant inspection.

Changshu site. successfully passed Comisión Federal para la Protección contra Riesgos Sanitarios (COFEPRIS, the Mexican health authority) plant inspection.

Successfully passed European Medicines Agency (EMA) plant inspection.

Successfully passed second US FDA plant inspection.

Official inauguration of Changshu site. facility after Phase II construction was completed.

Inauguration of main manufacturing building on Taiwan site.

Successfully passed fourth US FDA plant inspection.

Taiwan plant successfully passed first US FDA plant inspection

Investment and establishment of subsidiary Kunshan site .

Successfully went public on the Taiwan Stock Exchange Corporation (TWSE), stock code 1789.

Became the first biotechnology pharmaceutical company to be certified as an Authorized Economic Operator (AEO) by the Taiwanese Ministry of Finance.

ScinoPharm moved into the laboratories and offices of its current location in Southern Taiwan Science Park.

ScinoPharm Taiwan, Ltd. was established with initial capital of 675 million NTD.

Successfully listed as an Emerging Stock on the Taipei Exchange, stock code 1789.

Groundbreaking ceremony for new sterile injectable plant facility, constructed as part of ScinoPharm’s vertical integration strategy.

Successfully passed National Institute of Pharmacy (NIP) plant inspection.

New and larger quality laboratory building commenced operations.

Successfully passed third US FDA plant inspection.

Successfully passed European Directorate for the Quality of Medicines (EDQM) plant inspection.

Investment and establishment of subsidiary in Changshu,Jiangsu Province,China

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1.3 Overview of Operations

◎ Operating Strategy

ScinoPharm offers a wide array of process R&D services and API manufacturing capabilities designed to satisfy detailed customer requirements and facilitate rapid market introduction of products.

Through utilization of our large and cost-effective R&D infrastructure and global regulatory capabilities, ScinoPharm delivers integrated solutions in synthesizing complex molecules, including highly potent and cytotoxic compounds, ensuring fast time-to-market.

Since our inception in 1997, we have successfully delivered numerous full-scale research and manufacturing projects for our multi-national customers involving the development of non-infringing process patents and related analytical R&D, regulatory compliance, quality and environmental management services.

In accordance with our long-term business strategy, we continue to pursue strategic alliances to enhance our position as a developer and manufacturer of innovative products with high added value. Combined with our proficient API production and injectables capacity, ScinoPharm can successfully create a niche for generic sterile formulations.

To maximize profits for the company and our shareholders and employees while maintaining short- and long-term profits, we have implemented the following strategies to fulfill market needs:

● Short-term: In order to maximize future profits, generic drug products are carefully chosento fulfill the needs of generic drug companies: in terms of CMO work for innovator pharmaceutical companies, drugs with clinical potential are carefully chosen based on drug mechanisms. Production capacity at our Tainan plant is supplemented by the expanded capacity of our Changshu plant in China, allowing us to provide high-quality customized services. Our strategic alliances allow us to collaborate with downstream drug preparation manufacturers when developing products from our existing generic drugs. We also maximize benefits by working with said manufacturers to develop new derivatives for existing generic drugs.

● Mid-term:To increase the value of ScinoPharm's generic oncology drugs, we utilized ourinjectables plant in Tainan to satisfy the one-stop-shop needs of many of ourcustomers. We formed partnerships and strategic alliances with channel providers to expand our markets, thus creating joint profits and increasing our gross margins. Our fully functioning production lines in China allow us to increase our global product supply. We have also formed strategic collaborations in accordance with Chinese laws and regulations to speed the development of drug product stargeted to the Chinese market, thus increase output values. We further collaborated with Japanese clients to expand into Japanese generic drug markets and work with distributors to expand into other developing markets.

● Long-term:Expansion into new drug markets following integration of all R&D and manufacturing capabilities developed for generic drugs to injectable products. We also plan to expand into ANDA and 505(b)(2) markets by combining our internal generic drug R&D and manufacturing capabilities with those of external companies that are developing specialty formulations.

Note: All of the figures above represent individual financial information and were reported in accordance with International Financial Reporting Standards (IFRS).

Note: (1) All of the figures above were taken from parent company only financial statements and were compiled in accordance with International Financial Reporting Standards (IFRS). (2) Includes corporation tax, stamp duty, and housing tax

◎ Financial Performance

In recent years, low pricing and mergers have been prevalent in the global pharmaceutical industry, with merged US pharmaceutical retailers combining to lower procurement prices. Oncology drugs are now a part of the personalized medicine sector and bestselling drugs that can be prescribed for multiple types of cancer are virtually non-existent. Additionally, NTD rose aggressively against USD in 2017, dealing a double blow to our export-oriented company in terms of revenues and profits. Though external environments have become more challenging, ScinoPharm, along with all our employees, continues to optimize manufacturing processes, manage costs, and enhance management efficiency while simultaneously expanding our product portfolio, building upon our generic drug product lines as we develop drug preparations and establish a presence in the generic drug preparation sector. In 2017, our operating income totaled NTD 3.449 billion and our after-tax profits totaled NTD 422 million. Our post-tax earnings per share was NTD 0.53. For more information on our corporate finances, please refer to our annual report or our website.

Direct compensation provided to company stakeholders is shown in the table below:

Year 2015 2016 2017

Operating costs 2,231,449 2,040,535 1,777,982

Employee benefits 655,195 697,485 683,873

Financial contribution to the government (2) 97,398 193,745 201,794

Cash dividends219,325 228,098 379,555

0.3(NTD/share) 0.3(NTD/share) 0.48(NTD/share)

Stock dividends292,433 304,130 0

0.4(NTD/share) 0.4(NTD/share) 0(NTD/share)

Unit: thousand NTD

Year 2015 2016 2017Total Assets 10,425,631 10,962,274 10,984,813

Total Debt 568,638 734,481 567,588

Shareholder Equity 9,856,993 10,227,793 10,417,225

Paid-In Capital 7,310,829 7,603,262 7,907,392

Operating Income 3,897,137 3,888,611 3,449,175

Gross Profit 1,665,688 1,848,076 1,671,193

Operating Profit 920,731 1,066,196 801,318

Net Profit Before Tax 770,109 821,806 488,776

Net Profit After Tax 634,965 658,693 422,367

Earnings per share

(NTD)0.87 0.87 0.53

Unit: thousand NTD

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1.4 Scope of Business

◎ Scope of business

(1) Our scope of business includes the following:

西藥製造業其他化學

材料製造業

智慧財產

權業國際貿易業

生物技術

服務業

We research, develop, produce, manufacture, and sell the following products, as well as provide relevant advisory, consultancy, and technical services while handling international trade matters associated with these products:

1. APIs, 2. Protein drugs, 3. Oligonucleotides, 4. Peptides, 5. Injectable products, 6. Small molecule

drugs

(2) Product proportions for main products in 2017

Drug development technologies

At the screening stage for new drugs or the molecular optimization stage for drug candidates, we can utilize our current (or developing) chemical synthesis capabilities and platform technologies as a basis for identifying active metabolites, helping clients design and synthesize chemical compounds for new experimental drugs and related derivatives. Our drug development capabilities can aid our clients in improving upon the chemical composition, solubility, and effectiveness of existing market drugs. We also provide extended development services for new drug candidates that were unsuccessful in Phase II and III of clinical trials. Our experimental drug compounds can be used to build relevant databases, which on the one hand can expand the scope of patents, and on the other hand can enhance R&D or current processes.

Chemical process development

Our chemical process development services include development of synthetic routes and scale-ups of experimental drug compounds. Some compounds may prove unsuitable for large-scale production as their production processes are too expensive, environmentally damaging, or present safety concerns. ScinoPharm’s R&D personnel can design or improve production methods and processes to make them suitable for medium- or large-scale production. Services we provide to clients include process development, improvement of existing processes, development of new methods and processes, production of APIs, process development, production of single-isomer molecules, and also development of purification techniques associated with the above products.

CGMP manufacturing services

ScinoPharm provides chemical synthesis and production services for APIs and intermediates in accordance with US and internationally recognized CGMP standards. Products sold or used in clinical trials in the United States must be produced using facilities and processes that comply with CGMP regulations established by the US FDA. Located in the Southern Taiwan Science Park, ScinoPharm has sufficient production capacity and isolated controlled-access storage areas that allow us to manufacture products according to international CGMP regulations. We provide batch production services for initial clinical trials (10kg or less), Phase II and III clinical trials (10 to 100 kg), and commercial batches (kilogram to ton level quantities). Our clients include brand-name pharmaceutical companies, generic drug manufacturers, and drug development companies, and we also provide small molecule and peptide APIs for any stage of clinical trials.

Unit: thousand NTD; %

Unit: thousand NTD

Note 1: Tax credits for 2017 have not yet been approved by the National Taxation Bureau.Note 2: Grant amounts received for each year.

Our investment tax credits and government grants are as shown in the table below:

Decree Item 2015 2016 2017

Tax Credit(Note 1)

Article 10 of the Statute for Industrial Innovation

R&D expenditure 1,643.89 1,742.69 432.60

Article 6 of the Statute for Upgrading Industry

R&D and personnel training expenditur

0 0 0

Article 9 of the Statute for Upgrading Industry

Five-year tax exemption 0 0 0

Government Grants(Note 2)

Child care allowance, lactation room subsidies, import and export exhibition subsidies, solar photovoltaic subsidies

225.29 260.69 201.08

Main Products2017

Revenue Product proportion

Manufacturing and sales of APIs 3,211,832 91%

Revenue from technical services 164,596 5%

Other 140,053 4%

Consolidated revenues 3,516,481 100%

Active Pharmaceutical Ingredients (API) manufacturing

Intellectual property

International trade

Manufacturing of other chemical materials

Biotechnology services

(3) Current services

When we were first established, ScinoPharm’s main services consisted of providing APIs for global generic pharmaceutical companies. However, as our technical analysis and organic synthesis capabilities matured, we have developed specific synthesis technologies for different medical treatments, and therefore we can now provide a full range of customized R&D and outsourcing services for the synthesis, process development, and commercial production of simple molecules, complex natural molecules, derivatives, and other important chemical compounds such as peptides or nucleic acids. Additionally, we have also added injectable-related services to our roster for further business development opportunities. A summary of our services are as follows:

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Analytical services

Analytical chemical techniques are necessary for quality inspections after compound manufacturing. Therefore, analytical chemical techniques play a decisive role in the pharmaceutical industry. Our analytical services not only include purity testing, development and validation of analytical methods, and stability testing, but also cover regulatory services encompassing applications to health authorities, chemical manufacturing control documentation, and writing of technical reports. ScinoPharm’s analytical services are geared toward helping clients comply with US FDA CGMP regulations, which state that both new drugs and drugs made available on the market must be supported by thorough analytical information. Our services include:

• Development and validation of analytical methods

• Physical properties tests, including polymorphs and particle size distribution

• High-performance liquid and gaseous chromatography to analyze product purity and contentof related isomers

• High-performance liquid- or gas-chromatography mass spectrometry and nuclear magnetic resonance (NMR) spectrometry to identify structures in impurities.

• Stability testing for generic drugs and formulations

• Collection of documents for ANDA, NDA, DMF, and other regulatory applications and organization of analysis information require

Development and manufacturing of

injectable products

ScinoPharm is a global leading provider of APIs for oncology drugs, with both our product ranges and customer bases standing at the forefront of the industry. In recent years, we have observed strong market demand for sterile injectable products and thus accordingly formulated a vertical integration strategy, constructing an injectable facility at our Tainan site to serve as a one-stop-shop for all API R&D and manufacturing services needed for sterile injectable products.

(4)Products under development

Planned products Application

SPT1312 Osteoporosis preparation

SPC1357 Hepatitis drug

SPC1361 Anticoagulant

SPT1388 Oncology drug

SPT1418 Anesthesia drug

SPT1419 Oncology drug

SPT1422 Psychiatric drug

SPT1428 Eye drug

SPT1434 Psychiatric drug

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The global pharmaceutical industry is faced with severe price pressures, and market concentrations have risen as major companies continue to merge, increasing the intensity of competition. ScinoPharm's business revenues mainly stem from development, production, and sales of generic APIs, which accounted for 69% of revenues in 2017. Our CRO and CMO services for new drugs accounted for 26% of revenues.

A breakdown of product categories shows that generic oncology APIs account for the highest proportion of our overall revenues at more than 66%. Our new antibiotic products for infectious diseases accounted for 12% of revenues, mainly due to US FDA passing approval of a client's new antibiotic drugs at the end of 2017, as well as CMO for another antibiotic product with cyclical demand, which also contributed significantly to our revenues. Additionally, our other drug products, namely cardiovascular drugs, hormonal drugs, gastrointestinal drugs, muscular drugs, antiviral drugs, respiratory drugs, and peptide drugs, accounted for 12% of revenues, and central nervous system (CNS) drugs accounted for 10% of revenues.

2017

2016

2015

2017

2016

癌症

2015

Generic APIs 69%

Generic APIs 86%

Generic APIs 85%

Antibiotics 12%

CMO 18%

Oncology drugs 66%

Oncology drugs 76%

Oncology drugs 76%

CMO 2%

CMO 8%

CRO 8%

CNS drugs 10%

CNS drugs 12%

CNS drugs 17%

CRO 12%

CRO 5%

Business Development and others

5%

Business Development and others

Other 12%

Other 12%

Other 7%

<1%

2%Business Development

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1.5 Corporate Governance

ScinoPharm upholds principles of integrity in business management, actively promoting operational transparency to safeguard the interests of our stakeholders. In addition to establishing a sound and efficient Board of Directors, we also established the Compensation Committee and the Audit Committee in 2011 and 2012 to strengthen corporate governance. Our current governance structure includes a Board of Shareholders, Board of Directors, the Audit Committee, the Compensation Committee, and the Internal Audit Office, which are respectively governed by our “Corporate Governance Best Practice Principles” , “Rules Governing Shareholders’ Meetings”, “Rules Governing Meetings of the Board of Directors” , “Audit Committee Charter”, “Compensation Committee Charter”, and “Rules Governing the Scope of Powers of Independent Directors”, as well as by our internal control and audit policies.

The Board of Directors is the decision-making authority for the company, with the Chairman leading the shareholders and the Board of Directors. The CEO is responsible for the implementation of Board decisions, management of company operations, and supervision of senior managers and relevant business units. The organizational structure of the company is as shown in the figure below; for more details on our management team, please refer to our annual reports or our website.

Organization Chart

In terms of global business development and distribution, North America and Europe are our primary markets for generic drugs. India is our door to the American and European markets, accounting for 11% of our business. Japan, where the aging population is gradually increasing, is another potential market, and its share of revenues is growing year over year.

2017

2016

2015

Europe 29%

Europe 20%

Europe 23%

India 11%

India 10%

India 18%

Japan 9%

Australia & New Zealand 2%

Australia &New Zealand 5%

Japan 8%

Rest of Asia 12%

China 3%

China 4%

US & Canada 41%

US & Canada 49%

US & Canada 42%

Rest of the World 7%



Board of Shareholders

Board of DirectorsChairman

Audit Committee

Compensation CommitteeInternal Audit Office

Workplace H

ealth and Safety and Environm

ental Protection

Quality M

anagement

Marketing and Sales

R&D

Operations

Finance

Administration

Legal Affairs

CEO

Injectable Products

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◎ Board of DirectorsThe Board of Directors is composed of 15 directors (including 3 independent directors) elected for a three-year term. On June 13, 2012, the Board voted to replace the Board of Supervisors with an Audit Committee. Candidates for directors are presented through nomination and chosen by the Board from the list of nominees. To provide sustainable management and corporate management functions, Board directors are chosen for their integrity as well as their expertise, prominence, and experience in business, legal affairs, finance, accounting, banking, management, and R&D matters.

ScinoPharm’s current directors were elected on June 23, 2015; there are currently 12 male directors and 3 female directors. The average age of our directors is 61 years old, and 20% of the Board of Directors is composed of female directors. Board directors are listed in the table below; academic credentials and background information on our Board directors are disclosed in our annual reports, and important decisions of the Board are disclosed in our annual reports and our website.

◎ Audit CommitteeOn October 7, 2009, the Board of Directors approved a motion to establish a “Nominating Committee for Independent Directors”. The “Rules Governing the Scope of Powers of Independent Directors” were established on April 27, 2011 to guide independent directors in their scope of responsibilities. The “Audit Committee Charter” was established on April 26, 2012 to provide a code of conduct for the Audit Committee which was later formed. On June 13, 2012, a motion was approved by the Shareholders’ Meeting to replace our Board of Supervisors with an Audit Committee.

In accordance with the “Audit Committee Charter”, the Audit Committee is composed of all the independent directors; following the election of directors by the Shareholders’ Meeting in 2015, the current members of the Audit Committee are Wei-Te Ho, Wei-Cheng Tian, and Ih-Jen Su, the three independent directors; their average age is 64. All independent directors possess high levels of business, legal, financial, or accounting knowhow, such that they are qualified to lecture in the relevant departments of public or private colleges and universities.

The Audit Committee convenes at least once every quarter and is responsible for implementing fair presentation of financial statements, approving election or dismissal of accountants and auditing their independence status or performance, implementing internal controls, overseeing company adherence to relevant laws and regulations, and managing potential corporate risk. The Audit Committee convened a total of 5 times in 2017; the average attendance rate was 100.00%.

Our Board of Directors Meeting convenes at least once every quarter. Our directors are independent from corporate management; possess the professional knowhow, abilities, and qualities necessary for their position; and act in accordance with laws and regulations, company bylaws, and shareholder meeting resolutions to advise and counsel on operational guidelines, financial planning, and technical development. A total of seven Board meetings were held in 2017, with average attendance rates being 85.71%. Please refer to our annual reports for relevant attendance records.

In accordance with our “Rules Governing Meetings of the Board of Directors”, when matters brought up in Board Meetings conflict with the interests of individual directors or with the corporations they represent, the directors involved are not allowed to join the discussion or to vote on relevant issues; they are required to avoid discussions and voting processes, and are not allowed to exercise their right to vote on behalf of other directors. No conflicts of interest occurred in 2017 or have ever occurred in the company’s history.

Director remuneration is determined by the provisions of the Company Act. Following evaluation by the Compensation Committee, the Board of Directors are granted authority to set remuneration rates according to company profitability as well as participation and contribution levels of directors to company affairs in comparison to other companies in the same industry.

Additionally, to protect directors from personal liability and property damage caused by third party litigation resulting from implementation of company affairs, ScinoPharm provides liability insurance for all its directors.

ScinoPharm encourages its directors and independent directors to continue learning new information on corporate governance; training undertaken by all directors and independent directors in 2017 were in accordance with the “Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies”. Furthermore, to enhance managers’ knowledge of corporate governance, ScinoPharm has continued to arrange manager participation in corporate governance training courses organized by external organizations so as to fully implement the spirit of corporate governance. For details on the training courses attended by directors and managers and hours of participation, please refer to our 2017 Annual Report.

Job Title Name

ChairmanUni-President Enterprises Corp.

(Representative: Chih-Hsien Lo)

DirectorUni-President Enterprises Corp.

(Representative: Tsung-Ming Su)


(Representative: Kun-Shun Tsai)


(Representative: Tsung-Pin Wu)


(Representative: Yung-Fa Chen)


(Representative: Jia-Horng Guo)

Director

National Development Fund,

Executive Yuan

(Representative: Po-Wu Gean)

Job Title Name

Director

National Development Fund,

Executive Yuan

(Representative: Ming-Shi Chang)

DirectorKao Chyuan Investment Co., Ltd.

(Representative: Shiow-Ling Kao)

Director

President International

Development Corporation

(Representative: Chiou-Ru Shih)

DirectorTainan Spinning Co., Ltd.

(Representative: Po-Ming Hou)

DirectorTaiwan Sugar Corporation

(Representative: Kuo-Hsi Wang)

Independent

DirectorWei-Cheng Tian

Independent

DirectorIh-Jen Su

Independent

DirectorWei-Te Ho

23 24






◎ Compensation CommitteeOur “Compensation Committee Charter” was established on April 27, 2011, and the decision was made to establish a Compensation Committee composed of all the independent directors; following the election of directors by the Shareholders’ Meeting in 2015, the current members of the Audit Committee are Wei-Cheng Tian, Ih-Jen Su, and Wei-Te Ho, the three independent directors; their average age is 64.

The Compensation Committee acts with due care to exercise the following duties, and also submits relevant recommendations in good faith to the Board of Directors for discussion :

(1)Establishment and periodic review of compensation policies, systems, standards, and structures, and performance evaluations for directors and executive managers.

(2)Periodic assessment and establishment of compensation for directors and executive managers.

In exercising the above duties, the Compensation Committee is required to act in accordance with the following principles:

(1)The performance of directors and executive managers should be evaluated and remunerated according to industry standards, taking into consideration individual performance, company performance, and connection to future risks.

(2)Directors and executive managers should not be advised to engage in acts beyond the company’s risk tolerance for the sake of compensation.

(3)The ratio of dividends paid to directors and executive mangers for short-term performance and the payment time of performance pay should take into consideration the characteristics of the industry and the nature of the business involved.

The Compensation Committee convened a total of 3 times in 2017; the average attendance rate was 100.00%.

◎ Internal Audit OfficeThe internal audit office, which reports to the Board of Directors, was established to handle internal audit matters. Taking into consideration company scale, business conditions, management needs, and related laws and regulations, we have established an internal audit manager and auditors. Internal auditors are independent from management and exercises audit duties from a position of objectivity and fairness. In addition to attending Board Meetings and reporting to the Board of Directors, internal auditors are also required to make regular reports to the Audit Committee.

In order to assess the effectiveness of internal control policies, the internal audit office uses the results of risk evaluations to prepare annual audit plans that determine audit items for each month/quarter. Audit working papers and related information are included in the audit report. In addition to periodic audits, departments within the company and company subsidiaries are required to self-assess the effectiveness of their internal control policies; these self-assessments are then reviewed by the internal audit office, which provides timely recommendations for improvement. This assists the Board of Directors and managers in assessing and reviewing the effectiveness of internal control policies, and in measuring operational performance and efficiency to prevent

1.6 Ethical Management

◎ Code of Conduct and RegulationsIntegrity is ScinoPharm’s core business principle, and our goal is to establish a diverse, equal, and mutually respecting workplace environment. In order to realize the operation and promotion of corporate governance, ScinoPharm has established the “Corperate Governance Best Practice Principles“, “Rules Governing Shareholders’ Meetings”, “Rules Governing the Meeting of the Board of Directors”, “Audit Committee Charter”, “Compensation Committee Charter”, and “Rules Governing the Scope of Powers of Independent Directors”, as well as internal control and audit policies. To help executive managers and all ScinoPharm employees understand the laws and regulations they should comply with in the workplace, the moral obligations they should fulfill, and the company’s expectations of how employees should interact with business partners and suppliers, ScinoPharm has established the “Ethical Corporate Management Best Practice Principles”, “Procedures for Ethical Management and Guidelines for Conduct”, “Codes of Ethics Conduct”, and “ScinoPharm Code of Conduct” to provide guidance for the actions of all managers and employees, enhance the morality of managers and employees, and to ensure sustainable management and development of the company.

Additionally, to increase employee understanding of corporate governance and to prevent potential insider trading, ScinoPharm established the “Procedures for Handling Material Internal Information” and “Procedures for Prevention of Insider Trading”, arranged for managers and directors to participate in external corporate governance training programs, and also invited personnel from relevant authorities to host seminars regarding related topics. Furthermore, in order to ensure that publicly disclosed financial and business information comply with all necessary requirements, and to help our employees better understand related laws and regulations, we also established the “Regulations for Processing and Declaring Publicly Disclosed Information”. Emails were sent to all ScinoPharm employees when the above regulations were promulgated and when subsequent amendments were made to the regulations. These regulations are also posted to our company website.

potential risks and ensure stability of business operations.

The Internal Audit Office is aware that the establishment, implementation, and maintenance of internal management policies is the responsibility of the Board of Directors and the managers of the company, and thus have established an internal auditing system. In order to implement internal management and auditing practices, the objective of this system is to ensure that reports of business performance and efficiency (including profitability, performance, and security of assets) are reliable, timely, transparent, and comply with relevant laws and regulations.

25 26






◎ Appropriate Communication Channels and MechanismsAppropriate communication channels and mechanisms have been established between ScinoPharm’s internal employees and external shareholders and investors. ScinoPharm encourages its management team and employees to maintain open communication: the management team can initiate dialogues with employees through labor-management meetings and quarterly meetings with employees. We have also established an employee communication mailbox with relevant protection measures. For details please refer to our website www.scinopharm.com.tw → Investor Relations → Corporate Governance → “ScinoPharm Code of Conduct” and “Code of Ethics and Conduct” in our Regulations for Moral Conduct.

Since going public, we have commissioned a transfer agent to handle related affairs, and have also appointed a spokesman, set up an investor relations department, and hired personnel dedicated to dealing with matters relating to shareholders. Additionally, we communicate with our shareholders through our annual general meetings, periodically host investor conferences, and on occasion are invited to participate in investment forums organized by external investment institutions to update the investing public on current business operations. Relevant annual reports and investor conference presentations are uploaded to the Market Observation Post System (MOPS) as per regulations and can also be found on the Investor Relations section of our website.

ScinoPharm is committed to its pursuit of sustainable management, and we strive to establish open, transparent, and effective communication channels with all our stakeholders so as to understand each other’s needs. We use this principle as a foundation when establishing CSR policies or planning relevant activities. We have placed a “Stakeholders” page on our website and also established a “whistleblowing system” that provides a way for stakeholders to report wrongdoing. All reports are handled by designated personnel and are used to strengthen and improve our corporate governance.

◎ Principles for Participation in Public AffairsScinoPharm has always maintained a neutral stance on public policy and has never taken part in any lobbying activities or provided political contributions. Charitable contributions are made to charities rather than used as surreptitious bribery attempts, and sponsorships are not made to commercial transaction partners or persons having conflicting interests with company personnel. Relevant regulations are set forth in the “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Management and Guidelines for Conduct”.

For purposes of sustainable management and to fulfill our corporate social responsibilities, our Board of Directors approved a “Corporate Social Responsibility Best Practice Principles” on June 18, 2014 to provide guidance for realizing corporate social responsibilities. Revisions were made to the “Corporate Social Responsibility Best Practice Principles” on March 25, 2015 and December 20, 2016.

ScinoPharm’s implementation of corporate social responsibilities is supervised by the CEO under authority granted by the Board of Directors. The CEO is responsible for reporting back to the Board of Directors. In the December 2017 Board meeting, the CEO reported on policy implementations and areas of focus for the next year.The implementation of corporate social responsibilities is undertaken by two departments: compliance with labor laws, employee benefits, social participation, public welfare contributions, and disclosure of corporate social responsibility information is planned and implemented by the Administration and Human Resources Department, while EHS affairs are managed by the Workplace Health and Safety and Environmental Protection, which is responsible for the planning, supervision, and management of production risk, EHSmaintenance, and health enhancement within the company.

ScinoPharm has also established an “Occupational Health and Safety Committee” and a “Sustainable Management Committee”. The former committee, established in accordance with Procedures for Management of Occupational Safety and Health, is the highest decision-making authority on HSE matters; the CEO coordinates all sales personnel, senior plant managers, department managers, and employee representatives to review EHS affairs every quarter and propose plans for improvement. The latter committee is responsible for integrat ing and promoting company affairs relating to environmental protection, health and safety, energy-saving and water-saving measures, management of greenhouse gases, and the enhancement of sustainable competitiveness; the Vice President of Production serves as the coordinator of

the committee and oversees six teams: Distribution, Health, Safety, Hygiene, Waste Reduction, and Energy Saving. Every year, the committee proposes sustainable management programs and reviews implementation performance for internal audit purposes. Ensuring employee health, establishing a safe and friendly work environment, and protecting the environment are all corporate goals for ScinoPharm, and we hope that these can build a strong foundation for the company.

Additionally, ScinoPharm has also established a “Staff Benefits Committee” and “Labor Conferences” to review, promote, and supervise employee benefits, as well as coordinate labor relations and enhance labor-management cooperation.

1.7 Promotion of Corporate Social Responsibility

27 28






1.8 Risk Management

1.9 Awards & Recognitions

Time Award

December 2017 Ranked second place at IR Magazine Awards-Greater China in Health Care Sector

December 2017 Designated an Excellent Exports/Imports Company by the Bureau of Foreign Trade, MOEA

August 2017 Received Common Wealth Magazine's Citizenship Award

ScinoPharm ensures and enhances stakeholder value through management of operational, financial, regulatory, and other risks, striving to control and minimize the level of loss or damage from all possible risks. Our risk management mechanisms include evaluations and formulation of appropriate strategies by relevant departments. Projects that impact significantly on business operations, investment plans, financing projects, acquisitions or dispositions of assets, endorsements, and major loans are all implemented only after they have been approved by the Board of Directors. The internal audit office uses the results of risk assessments to prepare audit plans and implements audits accordingly to manage and control risk.

The following is a description of our currently identifiable risks and the relevant departments responsible for the implementation of risk management:

Risk Type Department Assessment and implementation

Strategic and market risk

Marketing, sales, and relevant units

Conduction of risk assessment based on changes in laws, policies, and market trends prior to strategy implementation and post-implementation performance tracking; strategies are amended in accordance with market changes when necessary to ensure that they are aligned with future corporate developmental and operational goals.

Procurement risk

Procurement, sales, and relevant units

1. Track price trends of key raw materials and adjust safety stock and sale prices as needed.

2. Active development of multiple key raw material supply channels and maintenance of supplier relations to avoid material shortages.

Financial risk

Financial and accounting units

1. Timely analysis and strategy establishment and implementation based on financial market, capital planning, and management factors.

2. As most of our products are exported, 90% of our revenue is paid for with foreign currency; exchange rate risks are met with a set ratio of forward exchange contracts paired with natural hedging of revenues and expenses. We do not arbitrage or invest in risky assets.

3. We prepare for potential interest rate risks by establishing credit through appropriate financial planning measures and maintaining close relationships with financial institutions

4. Integration and planning of funding requirements for the corporate group, paired with overall consideration of the impact of changing interest and exchange rates and laws and regulations, as well as utilization of suitable financial channels to enhance the efficiency of funds.

Risk Type Department Assessment and implementation

Litigation and legal risk

Legal, compliance, and relevant units

1 . T i m e l y a n a l y s i s , e v a l u a t i o n , a n d i m p l e m e n t a t i o n o f appropriate response measures to meet litigation needs and changes in laws, policies, and markets faced by us and our clients.

2. Ensure that production processes, production quality, and external audits meet the requirements of law through training programs and internal GMP audits.

Environmental risk Industrial safety

and environmental protection,

manufacturing, and production units

1. In view of gradually worsening climate change and the growing impact of environmental change on human survival, environmental protec t ion issues have been added to ScinoPharm’s risk assessment items.

2. Promote information on reduction of carbon emissions in accordance with laws and regulations, actively establish and implement carbon-reducing measures to do what we can for environmental protection.

Industrial safety risk Industrial safety

and environmental protection,

manufacturing, and production units

1. Ensure that the treatment of waste gases, sewage, waste liquids and solids and environmental maintenance equipment follow all proper procedures; monitor relevant data changes constantly in order to respond accordingly.

2. Strengthen staff understanding of industrial safety and environmental protection through training and regular drills.

3. Analyze and evaluate constantly according to changes made in laws and policies and prepare appropriate response actions.

29 30







ScinoPharm is committed to pursuit of sustainable management and strives to establish open, transparent, and effective communication channels with all our stakeholders so as to understand each other’s needs. In order to understand the economic, environmental, and social issues of concern to our stakeholders, we conducted surveys to collect suggestions from communication channels inside and outside the company for future reference when planning information disclosure initiatives.

In accordance with TWSE’s “Procedures on Preparation and Announcement of 2017 Corporate Social Responsibility Reports”, ScinoPharm’s 2017 CSR report continues to apply the GRI G4 main material aspects, and AA1000 Stakeholder Engagement Standard (SES) was used as a reference for the five main principles of stakeholder engagement meetings: Dependence, Responsibility, Influence, Multiple Viewpoints, and Tensions. To identify our major stakeholders, we evaluated correlation and impact levels of stakeholders on our company, including shareholders/investors, employees, clients, governmental institutions, community members, trade associations, suppliers/contractors, and the media. As ScinoPharm is a company with a business-to-business (B2B) business model, we do not count end consumers among our stakeholders.

We provide a variety of communication channels and disclose relevant information to maintain an open dialogue with our stakeholders. We place high emphasis on issues of concern to our stakeholders and include them within our corporate social responsibility management programs, which we then convert into concrete commitments and action initiatives, thus enhancing and improving our CSR performance.

Category Main responsibilities Issues of concern Communication channels

and frequencies

Shareholders/investors

Information transparency

● Patents● Compliance with environmental regulations● Economic performance● Labor relations● Compliance with product regulations

● Annual shareholders’ meetings● Important information disclosed according to authority regulations● Periodic financial reports and annual reports● Quarterly investor conferences● Information disclosed on the company website

EmployeesHealth and equality in

the workplaceRespect for human rights

● Compliance with environmental regulations

● Occupational health and safety

● Education and training● Economic performance● Client privacy

● Periodic labor-management communication meetings● Quarterly staff meetings● Internal website & publications● Department safety meetings and CGMP training● Internal recruitment/ employee rotation

ClientsSafe and high-quality

products

● Product labeling and customer satisfaction● Anti-trust behavior● Evaluation of supplier impact on the community● Marketing communication● Compliance with social laws and regulations

● Phone calls, e-mails,● Non-periodic client visits or plant audits● CPhI Exhibition Trade Shows ● Information disclosed on the company website

Governmental organizations

Compliance with regulations

● Child labor●Compliance with environmental

regulations● Occupational health and safety● Labor relations● Employer relations

● Periodic review of regulations● Assisting in the development of related regulations● Promotion of regulations● Response to social welfare activities

CommunitySocial participation and support of neighboring

communities

● Compliance with social laws and regulations●Compliance with environmental regulations●Wastewater and waste products ● Emissions● Equal pay for all genders

● Participation in charity events● ScinoPharm art seminars● Publication of CSR report

Suppliers/Contractors

Fair procurement

●Wastewater and waste products●Compliance with environmental

regulations● Procurement practices● Client privacy● Compliance with product regulations

● Non-periodic inspections of supplier plants● Periodic safety meetings with contractors● Phone calls, e-mails

Designated an Excellent Exports/Imports Company by the Bureau of Foreign Trade, MOEA

Received CommonWealth Magazine's Citizenship Award

Ranked second place at IR Magazine Awards-Greater China

in Health Care Sector

Communication channels and issues of concern for stakeholders

31 32






1.11 Identification of Important Stakeholders Issues

We use systemic analysis as a means of identifying the issues of concern to our stakeholders; these are then used as a reference for information disclosure purposes, allowing us to effectively communicate with our stakeholders and continue to improve our operational performance. Definitions for material aspects disclosed in this report were determined after internal discussion. Our stakeholders and major issues are similar to those of previous years as there were no major changes to our external and internal environments in 2017. As such, we have based our resolutions and scope of major considerations for 2017 on the results of a survey conducted in 2015 and assessment results of material aspects and boundaries carried out in 2016. We have also redefined our material aspects and boundaries following internal reviews by departmental units relating to various stakeholders. We distributed concern level surveys on the major issues of concern to stakeholders such as investors, employees, clients, suppliers/contractors, and governmental institutions and received 135 responses; we also distributed impact level surveys on the major issues of impact to our managers and received 10 responses.

These surveys were used to determine ScinoPharm’s major CSR issues for 2017. In order to ensure that information disclosed in our sustainable management report complies with stakeholder needs, we adhered to the following four steps when determining our major issues: “Identification of issues”, “Sequencing of issues”, “Confirmation of content”, and “Review and audits”.

Impact level survey

Company managers Actual survey responses

Department heads 5

CEOs, VPs and above 5

Total 10

Category Main responsibilities Issues of concern Communication channels

and frequencies

News mediaInformation

transparency

● Compliance with social laws and regulations

●Compliance with environmental regulations

● Corporate development planning

● Compliance with product regulations

● Patents● Marketing communications

● Press releases● Non-periodic press conferences● Non-periodic factory visits and networking dinners● Quarterly investor conferences

Trade associations Community

maintenance and community participation

●Wastewater and waste products● Biodiversity● Emissions● Water● Products and services

● Non-periodic networking activities● Periodic publications● Periodic meetings with other companies within the industry

Concern level survey

Stakeholders Actual survey responses

News media 4

Stockholders/investor 18

Governmental organizations 3

Suppliers/contractors 17

Employees 71

Community members 12

Trade associations 7

Clients 3

Total 135

STEP1 STEP2 STEP3 STEP4

Identification of issues

Sequencing of issues

Confirmation of content

Review and audits

33 34






CSR Substantive analysis graph

High

High

Low

Low

Moderate

Moderate

Aver

age

conc

ern

leve

l

Average impact levelMajor issues

Internal ExternalRelated sections

ScinoPharm Suppliers ClientsCompliance with

environmental regulations

◎3.1 Health, Safety, and Environmental Protection Policy

Economic performance ◎ 1.3 Overview of Operations

Compliance with social laws and regulations

◎ 1.6 Ethical Management

Waste water and waste product

◎ 3.4 Pollution Prevention

Customer health and safety (product quality)

◎ ◎2.2 Product Safety and Consumer Satisfaction

Compliance with product regulations

◎ 2.1 Product Laws and Regulations

Patents ◎ 2.4 Patent Issues

Occupational health and safety

◎4.3 Health Promotion and Activities4.4 Safe Working Environment

Emissions ◎3.2 Management and Use of Energy and Resources

Energy ◎ 3.4 Pollution Prevention

1

35710

11

89

64

2

13

1415

1617

18

19

20

21

2223

2527

28

2930

3133

3537

3638

40

4243 44

45

4647

41

39

34

32

26

24

12

高

低

低高中

衝擊度

中關注度

No. Material aspects Topic

1 Compliance with environmental regulations Environmental

2 Compliance with social laws and regulations Social (Society)

3 Economic performance Economical

4 Customer health and safety Social (Product responsibility)


5 Compliance with product regulations

Social (Product responsibility)

6 Waste water and waste product Environmental

7 Patents Social (Product responsibility)

8 Occupational health and safety Social (Labor behaviors and appropriate labor)

9 Labor relations Social (Labor behaviors and appropriate labor)

10 Client privacy Social (Product responsibility)

11 Product and service labeling Social (Product responsibility)

12 Emissions Environmental

13 Transportation Environmental

14 Water Environmental

15 Education and training Social (Labor behaviors and appropriate labor)

16 Marketing communication Social (Product responsibility)


17 Overall circumstance Environmental

18 Labor-management relations Social (Labor behaviors and appropriate labor)

19 Energy Environmental

20 Biodiversity Environmental

21 Anti-bribery Social (Society)

22 Local community Social (Society)

23 Appeal mechanisms for environmental issues Environmental

24 Indirect economic impact Economical


25 Appeal mechanisms for labor practice issues

Social (Labor behaviors and appropriate labor)

26 Market situations Economical

27 Evaluation of supplier environments Environmental

28 Products and services Environmental

29 Diverse and equal opportunities for employees


30 Equal pay for all genders Social (Labor behaviors and appropriate labor)

31 Evaluation of supplier impact on communities Social (Society)

32 Appeal mechanisms for community impact issues


33 Evaluation of supplier labor practices


34 Child labor Social (Human rights)


35 Coerced labor Social (Human rights)

36 Investment Social (Human rights)

37 Anti-trust behavior Social (Society)

38 Non-discrimination Social (Human rights)

39 Evaluation of supplier human rights Social (Human rights)

40 Freedom of association and collective negotiation Social (Human rights)

41 Procurement Economical


42 Appeal mechanisms for human rights issues Social (Human rights)

43 Raw materials Environmental

44 Security Social (Human rights)

45 Evaluation Social (Human rights)

46 Aborigine rights Social (Human rights)

47 Public policy Social (Society)

Major issues of concern to stakeholders:

35 36


CH2Product Responsibility and Patents

CH3Environmental Protection

CH4 Friendly Work Environment



2.3 Supplier and Contractor Management

Chapter 2 Product Responsibility and Patents

2.2 Product Safety and Consumer Satisfaction “ Pro d u c t q u a l i t y ” a n d “e m p l oye e s a fe t y ” a re ScinoPharm’s core principles. As the end products of the pharmaceutical industry are used directly on humans, it is necessary for drug products to undergo a lengthy R&D process, and the safety and efficacy of APIs are also subject to strict scrutiny by governmental health authorities. Only final products that have been certified can be sold on the market. All ScinoPharm

plants comply with the most rigorous international CGMP standards: all equipment and manufacturing processes comply with US FDA regulations and are capable of producing kilogram- to ton-level batches. Our production lines have the capability to produce high-potency generic drugs for injectable products, and our production facilities are equipped with negative-pressure rooms and advanced glove boxes to

More than 95% of ScinoPharm’s products are sold in foreign countries. Drug safety and efficacy are directly related to user safety, and thus are subject to scrutiny from governmental institutes of all countries. As an internationally acclaimed API supplier, compliance with regulations in each country is one of the most important prerequisites: any violation of drug laws and regulations in any country would result in significant operational risk.

On December 29, 2017, the Legislative Yuan passed amendments to the Pharmaceutical Affairs Act to include the "Patent Linkage" system, causing concern for many domestic generic drug companies. These amendments were based on the patent linkage system of the US Hatch-Waxman Act. As the patent linkage system in Taiwan does not require review of patent listings, there was a possibility that this could result in a flurry of patent registrations. If generic drug companies submit a drug application prior to patent expiration, innovator drug companies can trigger a suspension of drug permits by filing a patent infringement complaint within 12 months, thereby delaying the sale of generic products and increasing monopolic market sales. However, this amendment has minimal effect on ScinoPharm as our main markets are located overseas.

ScinoPharm’s APIs have been exported to Europe, the US, and other regulated markets for many years. We have extensive experience in laws and regulations related to the compilation of product information, drug registration (DMF registration for API drugs), communication with regulator y agencies and responses to official documents, and are able to offer drug registration services for clients worldwide. As a result, regulatory technical services have become one of our strengths. When clients choose to work with API manufacturers, they hope to find a firm that has extensive experience and can respond to regulatory agencies at the first instance, thereby speeding review times and time-to-market. ScinoPharm did not violate any relevant drug authority regulations in exporting countries in 2017.

In terms of drug applications filed for the purposes of entr y to Europe, the US, and other h ighly regulated markets, ScinoPharm has registered 56 drug master files (DMFs) with the Food and Drug Administration (FDA) as of December 31, 2017; of these, 15 generic drug products have been granted Certificates of Suitability (CEP or COS) by the European Pharmacopoeia (EP) and are available throughout the EU. Additionally, we have registered 22 European DMFs (EDMFs) with drug regulatory authorities in Europe.

ScinoPharm’s main suppliers include raw material suppliers and non-raw-material suppliers (including logistics companies and contractors that implement re l e va nt t a s k s ) . I n te r m s o f m a n a g e m e nt , ScinoPharm Procedures for Supplier Review are applied to audits of suppliers and contracted providers of key raw materials. Supplier audits, auditors, and auditing sequences are scheduled by the Production and Material Management Office and the head of the Compliance Department according to production and project schedules. Contractors are required to fill out a verification for m with qual i f icat ions or cer t i f icates of competency relevant to the tasks at hand. Approval of supplier verification from the quality assurance department is valid for a three-year period.

completely isolate contact between raw materials and operating personnel, thus ensuring product quality and personnel safety.

Our products adhere to strict CGMP standards. All employees must undergo formal CGMP training upon hiring and continue to undergo periodic CGMP training. ScinoPharm uses ICH Q7 (Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients) as a basis for CGMP guidance. These CGMP standards have integrated the expertise of pharmaceutical professionals and governmental regulatory agencies to establish system procedures for production of high-quality and high-potency APIs. All ScinoPharm equipment complies with international standards and all products are manufactured by well-trained employees in adherence with prescribed procedures and specifications.

Ad d i t i o n a l l y, S c i n o P h a r m h a s e s t a b l i s h e d a pharmaceutical regulatory department responsible for preparing relevant documents required by health authorities in importing or exporting countries to obtain product licenses necessary for product sales. ScinoPharm conducts periodic internal audits to ensure that business operations and internal procedures are in compliance with CGMP standards, and a quality assurance department is responsible for assistance with regulatory audits and client audits, employee CGMP training, stability testing programs,

and annual product reviews. The quality assurance department is responsible for testing of all products and samples, including raw materials, starting materials, process samples, and final products, to ensure that they meet all necessary specifications. As our main products are highly potent cancer injectable generic drugs, monitoring of water supply systems and manufacturing environments help to control the amount of particulate matter and microbes in production equipment, preventing impurities from forming in medical grade water, which may cause it to fall short of standard specifications. Furthermore, the quality control department conducts stability testing of samples to ensure that our inventory is not degraded by external environmental factors such as humidity and temperature conditions. Being well-prepared for strict pharmaceutical regulations is one of our competitive advantages that deserve to be highlighted.

ScinoPharm has passed official CGMP inspections from several different countries and more than 300 client inspections; we strictly enforce workplace health and safety measures and protection measures for intellectual property rights, resulting in consistent reliabil ity and endorsements from our clients. Our customer service email also displayed on our company website is ([email protected]). Our sales department responds to all product related emails within 24 hours in order to protect customer rights and improve customer satisfaction

Suppliers and procurement ratios in 2017

Domestic: 80

Foreign: 79

37 38






Procurement costs of critical and non-critical raw materials

2017 Raw materials suppliers and procurement ratios

Procurement ratios for critical and non-critical raw materials

Unit: thousand NTD

Unit: tons

◎ Logistics Companies

All suppliers selected to provide logistics services hold international ISO9001 and OHSAS18001 certifications, as well as AEO Excellence Awards from the Customs Administrations (Ministry of Finance) for customs/warehousing companies.

◎ Legal Management of Suppliers and Contractors

ScinoPharm requires suppliers to provide guarantees for raw materials. We also analyze the materials to ensure that the quality adheres to our standards and also to confirm that said materials do not infringe on the rights of our clients or patients. Formal contracts specifying rights and obligations of parties concerned as well as requirements for material and service quality are signed with relevant suppliers and contractors for all large-scale procurement and contracting projects. In the event of disputes regarding raw materials, service quality, or other related matters, the legal department will provide assistance in dispute clarification and aid relevant departments, suppliers, contractors, or external legal teams in resolution of disputes or damage control.

Source Total weight Weight ratio

Critical 44 1%

Non-critical 4,615 99%

Unit: thousand NTD

Suppliers and procurement ratios (includes triangular trade and outsourcing)

SuppliersAmounts

purchasedRatio of total costs

Domestic suppliers 80 216,936 25%

Foreign suppliers 79 649,535 75%

◎ Raw material suppliers

ScinoPharm’s policy is to purchase raw materials from reliable suppliers, and our evaluations are mainly focused on quality, price, and delivery dates. In accordance with our procedures for materials procurement, suppliers must undergo reviews and appropriate audits. Material samples must be tested at our labs. Long-term supply capabilities are also a factor of consideration. ScinoPharm is a professional manufacturer of APIs. The quality of APIs supplied must be strictly observed in order to maintain consistent product quality. Once API suppliers have been selected, we require them to adhere to production requirements. As a result, our suppliers have formed long-term dependent relationships with ScinoPharm that cannot be easily changed. To ensure that there is no shortage in the long-term supply of raw materials, we continue to seek out emergency replacement suppliers to assist us in times of need.

Source Total amount (NTD) Total weight (Tons)

Critical 487,551 44

Non-critical 378,919 4,615

Total 866,471 4,659

Type Unit Responsible Relevant procedures

Key raw material suppliers

Quality Assurance Department Periodic reviews

New raw material suppliers

Quality Assurance Department, Procurement Department, Production and Material Management Department

Approval for trial collaboration Price negotiations

Stage I: Supplier selection and database establishment

Stage II: Supplier management

Stage III: Auditing of business partners

Collection of information and selection of suppliers

Supplier safety self-assessments

Supplier review

On-site review Written review

Supplier qualification approval

Establishment of supplier database

Filing of basic supplier information

Addition of suppliers to supply team

39 40






2.4 Patent IssuesScinoPharm has established an internal system for patent proposals, patent applications, and analysis of patent infringements to ensure that company innovations can receive appropriate evaluation from the patent management team. To enhance the quality of patent applications, patent specifications, and patent infringement analysis reports, as well as maximize profits for the company, strategies relating to patent application and patent infringement analysis are determined according to technical and market characteristics.

◎ Internal mechanisms

The patent management team holds two types of decision-making meetings: 1) Technology Evaluation Meetings and 2) Patent Function Meetings; the team also a main coordinator responsible for compiling meeting conclusions. Each patent application or patent infringement analysis case is assigned to a patent engineer who coordinates relevant personnel and departments depending on case characteristics. All parties they work together to implement relevant patent applications and analysis reports, a process which can take several years.

◎ External mechanisms

Following the aforementioned internal discussions, the patent management team has to determine the country or region appropriate for the patent application; applying for foreign patents usually takes 3 to 5 years. In terms of intellectual property, excepting patents irrelevant to our long-term development that are no longer maintained, ScinoPharm holds 58 invention patents as of year-end 2017, as well as 395 patents worldwide.

As an acclaimed Taiwanese bulk drug company, ScinoPharm has to ensure that products provided to clients do not infringe upon the patents of others. For this reason, we have established the following Procedures for Patent Infringement Analysis:

If clients request to see patent infringement analysis reports for products during the sales

process, ScinoPharm is required to provide legal proof that said product does not infringe upon any patents. To confirm the patent status of said products, the Legal Affairs Department will research patents and update analysis reports according to the needs of the Marketing and Sales Department.After completing patent research and updating analysis reports as described above, the Legal Affairs Department and the Marketing and Sales Department will discuss the country or region for application of said legal proof.After confirming the country or region for application, external law firms in said areas will be contacted for consultation on conflicts of interest and estimated legal fees. External law firms are chosen for their area of expertise, lack of conflicts of interest, estimated fees, time needed to complete reports, and other factors.

Additionally, ScinoPharm also works closely with generic drug manufacturers to analyze possible new drug patent terms for the purposes of patent litigation and to select a production model that can avoid disputes. Mutually approved API products with high potential are chosen and R&D and manufacturing services tailored to client needs are provided through various types of strategies.

ScinoPharm’s Procedures for Business Partner and Supply Chain Safety Management regulate planning, negotiation, operations, management, and optimization of our supply chain, the goal being to ensure that our clients can receive the products they need at the right time and right place, in the correct amounts, qualities, and statuses. To decrease risks associated with our supply chain, ScinoPharm takes all necessary actions against events that threaten the safety of the supply chain, and strives for continual improvement through policy, procedure, and technology utilization.

Patent documents of various countries

◎ Contractor Implementation of Relevant Tasks

ScinoPharm is committed to the safety and health of plant employees and all our corporate responsibilities. Working together with our business partners, ScinoPharm seeks to establish higher environmental, safety, and health standards for the entire industry. We require all collaborating companies to familiarize themselves with our "Contractor Health and Safety Management Procedures" and "Contractor EHS Management Handbook" before entering our plants. ScinoPharm has also designed a strict appraisal and monitoring regime that is in place prior to, during, and after all contractor operations, as illustrated by the figure below:

Contractors - Prior to Plant Entry

Prior to Processing

Construction Phase

Construction Completion

Undergo plant training seminar (video) to receive Green Training Seminar Certificate, register plant entry information

Accept hazard identification from Environmental Health and Safety Department, sign safety and health workshop affidavit, and undergo safety and health testing to receive Orange Training Seminar Certificate.

Requisite application for Vehicle Entry/Exit Permit.

Security office contacts relevant operating unit to confirm and guide contractors to designated work areas.

On-site alert and isolation + safety operations permit.Contractor must designate safety and health personnel for on-site supervision.

Accept on-the-spot critique by environmental safety and health personnel, and provide prompt corrections of any deficiencies.

Environmental cleanup and remediation, return of construction consent order and safety operations permit slip, preliminary inspection by relevant administrative unit.A fire watch must be carried out one hour after the completion of hot work.Requisite verification and submission of documents to security personnel upon plant entry or exit.

Compliance with environmental safety and health regulations.Accept management and critique by operating and relevant administrative units.

Relevant operating unit applies for Safety and Health Operations Permit.Accept hazard identification from area administrative unit and on-site supervision.Requisite exchange of Blue Card on-site security identification in plant areas.

1.

2.

3.

41 42




CH5 Social Responsibility

CH3EnvironmentalProtection2017 ScinoPharm Taiwan Corporate Social Responsibility Report

3.1

3.2 Chapter 3 Environmental Protection

Health, Safety, and Environmental Protection Policy

Management and Use of Energy and Resources

In order to achieve our corporate mission of “Utilizing happy and high-performance employees to establish a world-class pharmaceutical company with sound business ethics that provides customers with high-quality, low-cost products”, ScinoPharm lists safety, health, and environmental protection as our three core values, insisting on a safe, hygienic, and healthy work environment and appropriate disposal of waste materials. We comply with environmental, health, and safety protection (EHS) related laws and regulations, and are committed to continuous improvements that can help us avoid hazardous environments, behaviors, and equipment; our responsibilities extend to preventive measures for workplace disasters that ensure employee safety, and our EHS commitments are as follows:

◎ Compliance with nat ional EHS laws and regulations as well as advanced international EHS standards.

◎ Enhanced interactions with stakeholders to establish a channel for communicating policy and relevant announcements and to provide appropriate responses.

◎ Incorporation of EHS concepts into daily work assignments and business affairs.

◎ Strengthening of EHS promotion and training t o e n h a n c e e m p l o y e e u n d e r s t a n d i n g ,

implementation, and participation in EHS policies.

◎ Implementation of a Responsible Care System to ensure that a l l chemical produc ts and manufacturing processes from R&D to production are appropriately handled, stored, transported, and disposed of.

◎ Implementation of appropriate preventive measures and process management systems to minimize impact from hazardous processes or materials.

◎ Continuous improvement of EHS performance through risk identification, risk assessment, and improvement programs.

◎ Sharing and contribution of EHS experiences.

No major pol lut ion leak ages or v io lat ions of environmental protection laws resulting in penalties f ro m re l e va nt i n s t i t u t i o n s o cc u r re d i n 2 0 1 7 . Aforementioned major events were defined in accordance with Paragraph 1, Clause 26 (3) of Article 4 in the Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities, namely, events “where the administrative fines for one single event have accumulated to one million NTD or more”.

Water Resources

The water used at ScinoPharm’s Southern Taiwan Science Park plant is sourced from the Nanhua Reservoir, the Zengwun Reservoir, and the Wusanto Reservoir, and is routed through Taiwan Water Corporation. ScinoPharm’s water usage has no major impact on its water sources.

Overview of Annual Water Usage at ScinoPharm

Year Water usage(m3)

Waste water(m3)

Revenue(million NTD)

Water usage per million NTD of output

value (m3/million NTD)

Waste water per million NTD of output

value (m3/million NTD)

2015 125,991 55,136 3,897 32.33 14.15

2016 131,817 69,474 3,889 33.89 17.86

2017 136,945 66,199 3,449 39.71 19.19

ScinoPharm’s waste water is run through a biological treatment where highly concentrated, suspended-solid activated sludge decomposes organic matter with the waste water; the water is then filtered through a membrane bioreactor. The organic sludge is separated, dehydrated, and sent to the Southern Taiwan Science Park Resource Recycling Center for incineration, while the processed waste water is sent to the Park’s sewage treatment plant along with domestic sewage.

Water usage and waste water chart

2015 2016 20170 0.00

2.00

4.00

6.00

8.00

10.00

12.00

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Water Usage (m3)

Waste water (m3)

Water usage per million NTD of output value (m3/million NTD)

Waste water per million NTD of output value (m3/million NTD)

43 44






◎ Nitrogen usage

Year Nitrogen (km3) Revenue(million NTD)

Nitrogen usage per million NTD of output value (km3/

million NTD)

2015 3,452 3,897 0.89

2016 3,583 3,889 0.92

2017 3,814 3,449 1.11

◎ Power Usage

Year Power usage (kWh) Output volume (kg)

Revenue(million NTD)

Power usage per million NTD of output value

(million joules)

2015 104,139,058 16,785 3,897 6,204

2016 112,334,400 19,954 3,889 5,630

2017 110,080,800 30,127 3,449 3,654

Total power usage and power usage per million NTD of output value

Total power usage and power usage per kilogram of output

Total nitrogen usage and nitrogen usage per kilogram of output

Natural gas usage and natural gas usage per kilogram of output

◎ Water-Saving Measures

We are a chemical pharmaceutical company; all waste water generated during the production process is treated and disposed of in compliance with governing regulations and laws relating to on-site waste water treatment facilities. ScinoPharm’s water is sourced from the Nanhua Reservoir and routed through Taiwan Water Corporation. ScinoPharm’s water usage has no major impact on its water sources. ScinoPharm is committed to the recovery of air-conditioning condensate, recycling of reverse osmosis (RO) concentrate wastewater, and the use of air-conditioning cooling towers. Specific water-saving measures taken are shown as follows:

◎ Natural gas usage

Direct energy

Output (kg) Natural gas usage per kilogram of output (million

joules /kg)Year Natural gas

usage(m3)Natural gas*

(million joules)

2015 631,038 23,762 16,785 1.42

2016 845,578 31,841 19,954 1.60

2017 880,705 33,164 30,127 1.10

2015 2016 201705 .00

6.00

7.00

8.00

9.00

10.00

5000

10000

15000

20000

25000

30000

35000

40000

2015 2016 2017100,000,000

102,000,000

104,000,000

106,000,000

108,000,000

110,000,000

112,000,000

114,000,000

2,500

2,000

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

2015 2016 20170.00

0.05

0.10

0.15

0.20

0.30

0.25

3,200

3,400

3,300

3,500

3,600

3,700

3,800

3,900

2015 2016 20170 0.00

1.00

2.00

3.00

4.00

5.00

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Power usage (kWh) Power usage (million joules)

Natural gas usage(m3)

Nitrogen usage (km3)

Power usage per million NTD of output value (kWh/million NTD)

Power usage per kilogram of output (million joules)

Natural gas usage per kilogram of output (million joules/kg)

Nitrogen usage per kilogram of output

45 46






1.In accordance with investigations carried out by the Southern Taiwan Science Park Administration regarding overall water recycling rates, ScinoPharm filled out an annual survey relating to water recycling and this was then used to calculate the recycling rates for wastewater.

2. Purified air-conditioning condensate and recycling discharge is sent to cooling towers to save water

3. The concentration of water in the cooling tower is increased to reduce the amount of cooling water discharge.

4. The cooling tower is fitted with a drift eliminator, reducing dispersion and evaporation loss.

5. Company bathrooms are fitted with water-saving faucets.

6. Sludge dewatering equipment sends washing water through a system filter for re-use, which also helps to save water resources each year.

ScinoPharm’s energy conservation team, formed under the “Sustainable Management Committee”, is responsible for monitoring greenhouse gas emissions and formulating corporate strategies for energy conservation and carbon reduction to reduce carbon emissions. Every quarter, the “Sustainable Management Committee” conducts internal reviews of implementation performance. Strategies currently in place include: cooling tower recycling of waste water from reverse-osmosis water coolers and air conditioning condensate water, use of water-saving faucets, conservation of daily water usage, replacing oil boilers with steam boilers for steam production, enhancement of air conditioner energy usage, utilization of water-saving equipment, usage of low-energy-consumption electric heating devices, employee carpool subsidies, provision of employee shuttles to reduce gasoline consumption etc. Further details are as follows:

1. Compressor control changed to frequency converters

2. Temperature of central air-conditioning in the office and other non-processing areas was increased from 22oC to 25oC.

3.Dissolved oxygen controllers were installed for the waste water treatment facility (ventilators changed to frequency inverter control).

Dissolved Oxygen Meters Inverter Blowers

=

PIT

◎ Power-Saving Measures

Recycling rates (R2)

RO Concentrate Recovery

Air-Conditioning Condensate Recovery

Recovery Sump Water Cooling Tower

*100% (Total water circulated + Total water recycled – Total cooling water circulated)

(Total water circulated - Total cooling water circulated)

Air

Air Air

Inlet Valve

Blowers

Inverter

Bioreactor Tank

Dissolved Oxygen Meter

Activated Sludge

Circulation Pump

Compressor

Inverter

Outlet Valve

Outlet Valve

Pressure Transmitter

Air TankAir Air Air Air Usage Points

47 48






4. Low-efficiency cooling towers were overhauled: in the first half of 2014, we paired heat dissipation fans with wet-bulb temperature controls for efficiency optimization.

5. Low-efficiency chillers were overhauled: we replaced our 15-year-old, low-efficiency, 750-ton chiller with a new 800-ton chiller starting from June 2014.

7. Adjusted ventilation rates of process areas to reasonable ranges to decrease air conditioning loading, reducing 1-2% of electricity consumption annually.

8. Time controls initiated in injectables plant, reducing energy consumption from 497-512 kwh to 451-487 kwh (average reductions of 40 kwh).

9. Monitored steam supply and reduced 5% of natural gas usage.

Old cooling tower

Old chiller New chiller

New cooling tower Increased heat dissipation efficiency

6. In 2015, we linked our air-conditioning ventilators to a control platform which allowed the plant to notify the air-conditioning system management department to start or stop specific air-conditioning ventilators, reducing unnecessary power usage from operating equipment.

Plant Facility No. Area Notice Time Action

Bay5 AC-3741Bay5 Room#405

air conditioningON

2016/6/15

08:15ON

Bay5 EF-3741Bay5 Room#405

air extractionON

2016/6/15

08:15ON

Bay5 SF-3742Bay5 Room#405-5

cleanroom air supplyOFF

2015/9/10

17:00OFF

Bay5 EF3742Bay5 Room#405-5

cleanroom air supplyOFF

2015/9/10

17:00OFF

49 50






Item 2015 2016 2017

Total Emissions 21,836 21,666 22,116

Direct Emissions (Category I) 1,974 2,569 2,291

Indirect Emissions (Category II) 19,863 19,097 19,825

Output Value (million NTD)

3,897 3,889 3,516

tCO2e/million NTD of output value 5.6 5.6 6.3

The ever- increasing greenhouse ef fec t has a major effect on the ecosystem. As part of our efforts in environmental protection, ScinoPharm has been active in establishing a systemic record of greenhouse gas emissions (GHG) since 2012, examining sources of greenhouse gas emissions within the plant and calculating equivalent CO2 emission amounts. We understand the impact global warming can have on our operat ional activities and are committed to energy-saving measures. Through efficient management of all greenhouse gas outputs, we have decreased our CO 2 emissions to lower our impact on global warming. In 2017, the solar panels placed on the rooftop of our Administration Building generated 36,780 kWh of electricity, and green electricity

g e n e r a t e d p r o v i d e d 2 3 6 , 0 9 1 N T D o f d i r e c t economic benefit for the company, equivalent to 19,457kg CO2e of indirect benefits in greenhouse gas emissions. The electr icity emission factor used here is in accordance with the Greenhouse Gas Emissions Factor Management Chart (version 6.0.2) published by the Environmental Protection Administration; the electricity emission factor for 2016 was set as 0.529 kg CO2e/ kWh.

A d d i t i o n a l l y , m e a s u r e s p r o m o t e d b y ScinoPharmand our subsidiaries (for example, e m p l o y e e c a r p o o l s u b s i d i e s a n d e m p l o y e e shuttle buses) reduce fuel consumption and help us achieve our goals of energy conservation and carbon reduction.

◎ Waste Treatment

ScinoPharm is able to treat or clean all waste materials generated within the plant, including biodegradable waste water, waste solvents, solid waste, and air pollutants. Both hazardous and general solid waste materials are transported to the Southern Taiwan Science Park’s Resource Recycling Center for incineration, and no waste materials have ever been sent overseas for processing. All air pollutants emitted by lab or plant facilities, such as particulate pollutants, acidic gases, alkaline pollutants, and organic vapors, undergo scrubber removal techniques. In recent years, ScinoPharm has striven to enhance the processing efficiency of our air strippers, which separate liquid and solid matter from high-water-content waste solvents. Liquid matter can be sent to the waste water plant for processing, reducing the volume of waste matter. Our solvent recovery rates have increased year over year due to the use of air strippers. In 2015, our waste solvent volume was 3389 tons, and 105 tons were processed by the air strippers. In 2016, our waste solvent volume was 2746 tons, and 352 tons were processed by the air strippers. In 2017, our waste solvent volume was 3066 tons. We invested almost 10 million NTD to construct three air stripper basins, allowing us to expand our volume of processed waste to 1148 tons.

3.4 Pollution Prevention

Air pollution monitored by a control room Actual monitoring of air pollution

Greenhouse gas emissions records

Unit: tCO2e/year

(tCO2e refers to carbon dioxide equivalent in tons)

● 2015: 21,836 tCO2e (1,974 tCO2e direct, 19,863 tCO2e indirect)



ScinoPharm plant greenhouse gas emissions have not yet reached the Environmental Protection Administration standards where it is necessary to disclose emission amounts, and therefore we keeps our own records of relevant

emissions information in accordance with current laws and regulations.

3.3 Management of Greenhouse Gases

Total emissions

tCO2e /million NTD of output value

2015 2016 20173

3.5

4

4.5

5

5.5

6

6.5

7

20,000

20,500

21,000

21,500

22,000

22,500

23,000

23,500

24,000

25,000

24,500

51 52






◎ Air-Stripper

Due to the r ise in production capacity, the amount of waste solvents produced during the manufacturing process has risen also. ScinoPharm has constructed air strippers to process high-water-content waste. After processing, the concentrated sludge is disposed of by the Southern Taiwan Science Park or certified companies, while the processed water is sent to a waste water plant for processing.

◎ Recovery Rates of Sold Products and Packaging Materials

ScinoPharm products are highly reactive APIs that are mostly exported overseas; all processes from production to sales are required to be in compliance with CGMP drug regulations. In order to prevent cross-contamination once products have come into contact with packaging materials, we have deemed it inappropriate to recycle packaging materials.

◎ Toxic Chemical Substance ManagementIn addition to identifying dedicated personnel i n a cco rd a n ce w i t h l aws a n d re g u l at i o n s , ScinoPharm’s toxic substance management control system involves the establishment of specialized management personnel for each department. All personnel adhere to stipulated rules for the documenting of amounts used, and storage locations for all substances are clearly labeled. These storage areas are locked during non-work hours.

Air-Stripper

All toxic snbstances are labeled and stored appropriately

YearCategory

2015 2016 2017

Waste Acid 0.36 1.07 0

Hazardous Waste Solvents 3,389.43 2,746.24 3,066.41

Solid Wastes 125.47 94.16 78.63

General Waste Compounds 11.58 9.09 10.92

Sludge 124.73 141.01 212.57

Reported Toxic Chemical Waste 4.38 0 0.50

Waste generation

Amount of high-water-content waste processed by air stripper

General high-water-content waste

Specific high-water-content waste

Unit: tons

(Unit: tons)

0 100 200 300 400 600500 700 800 900

2015 2016 2017

105

223

802

346

1290

53 54






Chapter 4 Friendly Work Environment

4.1 Personnel Overview

Employees are the intangible assets that aid a corporation’s path to sustainable operations and are also the most important allies a corporation can have. ScinoPharm maintains a friendly, open, and fair attitude in establishing a safe workplace environment that respects diversity and gender equality. Providing our employees with better work environments and work conditions is how we ensure sustainable management.

ScinoPharm is a globally acclaimed generic drug company which is knowledge-intensive, technology-intensive, and has high-quality human resources. As of year-end 2017, ScinoPharm has a total of 623 employees, with more than 90% of our employees holding university degrees (or higher) and 40% holding a graduate or Ph.D. degree, showing that our team is made up of top-grade professionals. More than 60% of our employees are registered Tainan locals, and 73.5% of employees hail from southern counties (Tainan, Kaohsiung, Pingtung). Our management team is completely made up of Taiwanese nationals, mostly promoted from within the company, showing that ScinoPharm has recruited many talented Taiwanese employees and has strong roots within the community. In 2017, 90 employees were promoted in accordance with sales and business development needs. Our turnover rate is around 8%, lower than that of the industry average (12%), and average turnovers are down compared with 2016.

As an international pharmaceuticals company with clients all over the globe, ScinoPharm not only recruits locally but also recruits employees from overseas. We have striven to establish a diverse, equal, and international work environment for our employees since the very beginning. We offer our employees fair opportunities in recruitment, job placement, and career development; we recruit employees based on required qualifications for job responsibilities. We do not discriminate on the basis of gender, age, race, religion, nationality, or other factors. The fact that 27.1% of our managers are female, on par with the gender ratio of all employees, shows that ScinoPharm is a company t h a t p ro v i d e s e q u a l o p p o r t u n i t i e s i n c a re e r advancement.

Our corporate family of employees hai l f rom different backgrounds. We not only have Taiwanese employees, but also 36 employees from 5 other co u nt r i e s , n a m e l y, H o n g K o n g, J a p a n , I n d i a , Malaysia, and Indonesia; foreign employees make up 5.7% of all employees.

Addit ional ly, as par t of our cor porate soc ia l responsibilities, as of year-end 2017, we employ 9 full-time employees who are disabled, exceeding the requirements set out in Article 38 of the People with Disabilities Rights Protection Act, and we provide appropriate work based on their different characteristics.

Diverse Hiring A Friendly work environment

ScinoPharm’s staff remuneration policy is based on industry conditions, overall remuneration standards, demands of the labor market, and our operational performance. ScinoPharm is a knowledge- and technology-intensive company; in order to recruit and retain talent as well as fulfill our goal of providing our staff with competitive remuneration and benefits, our remuneration policy has to satisfy stockholder interests and offer reasonable compensation to our employees.

ScinoPharm determines salary rates based on job duties, relevant qualifications, and market standards. We uphold the principle of equal pay for equal work and do not discriminate on the basis of location, race, religion, gender, marital status, political beliefs, or union associations. Our overseas operations comply with local labor laws and we conduct periodic assessments of salary standards within the industry to ensure that our salaries are competitive within the market and can help us to recruit high-quality talent.

ScinoPharm provides varied and competitive remuneration and upholds principles of profit sharing with our employees. In accordance with our Articles of Incorporation, if we are profitable in any given year, no less than 2% of profits will be set as employee remuneration. Our performance management system links the company's overall operating profits with individual performance, thus incentivizing outstanding employees. Establishment and implementation of organizational and individual goals help to develop individual and team capabilities, further improving overall work performance.

◎ Competitive Salaries Linked to Performance

Male:443

Female:180

Employee breakdown by gender in terms of age, contract type, job category, and education level for 2017

Temporary contractors

Long-term contractors

Nationality

Local workers

Foreign workers

Age Place of registered residence

Tainan Otherthan

Tainan

Contract type

2616

308

67

109 97

71%

29%

248

15

128126

59

228 17

412

178

31

2

409

178

34

2

20-29 30-50 >50

4627 38

5

359

148

300

93

143

87

Employee breakdown by gender

Technicians

Job category Education level

Managers Ph.D. Graduate UniversityOR below

Administrationstaff

Professionalworkers

55 56






◎ Maintaining Equality and Human Rights

ScinoPharm’s workplace culture shows respect for every employee. We provide a platform of equal opportunity that allows our employees to play to their strengths, gain experience, and grow, thus integrating their personal career development with our corporate goals and creating a win-win outcome. We are committed to establishing a corporate culture that is diverse, equal, and filled with mutual respect and trust.

In addition to our focus on mutual respect and equality, our policies ensure that our daily operations comply with basic human rights and gender equality in the workplace. We prohibit the use of child labor as well as any form of inequality in terms of recruitment, review, or promotion due to discrimination based on gender, race, marital status, religion, political affinity, sexual orientation, rank, nationality, age, or other factors. In order to promote harmony within the workplace and to prevent workplace violence, we have established prevention measures for damages suffered during the implementation of work duties. We have also established prevention measures and procedures for sexual harassment incidents. Employee complaints are investigated and handled according to these procedures and complainants are protected from retaliation or any other unfavourable treatment.

ScinoPharm lays especial emphasis on the continued development of our employees. We provide our employees with a variety of work skills and experiences, including on-site training and work rotation. If our employees need to adjust their place of work or job duties, we not only abide by the five principles of job transfers as stipulated by the Labor Standards Act and the authority for labor affairs, but also fully communicate with employees in advance to protect employee rights and show our sincere intentions regarding the nurturing of talent.

The importance we place on human rights is also reflected in our supplier management policies; all of our collaborating suppliers comply with domestic and foreign human rights agreements and regulations. To date, under this policy, there have been no incidences of human rights violations impacting upon our operations. Our corporate culture of mutual respect, humane management style, and multiple channels for communication have minimized the risks of discrimination and labor disputes and allow us to maintain harmonious labor relations.

At ScinoPharm, we are deeply aware that our current success is the outcome of the joint efforts of all our employees, and therefore we spare no effort in establishing and maintaining labor relations. The use of various internal channels for communication increases opportunities for our team members to participate in discussions relating to company operations and other corporate affairs.

ScinoPharm utilizes email, an internal website, and internal corporate publications to deliver information and conduct surveys. We have also set up a suggestion box in the staff lounge. We conduct quarterly staff meetings with all of our employees to promote understanding of recent corporate events and business developments, and also to provide a channel for our employees to participate in corporate affairs and voice suggestions.

Additionally, all members of the management team play an important role in bridging gaps for internal communication. We exchange information and facilitate communication through regular or occasional communication with executives of each department and reports from managers. During this process, the management team also has an opportunity to clarify related company measures that have been implemented, which can be helpful in promoting mutual trust between managers and employees, and in expanding a foundation for consensus.

We are concerned not only with internal communication, but also with external opinions, for which we have established a dedicated email address. All persons inside or outside the company who have suggestions on corporate governance or who wish to report on relevant corporate affairs can get in contact using the dedicated “whistleblowing system” email address on our publicly accessible company website. Cases are reviewed, investigated, and processed in accordance with our regulations and procedures relating to ethical management, corporate social responsibility, and our “Code of Ethics and Conduct”. This ensures that our personnel have guidelines for handling these matters, and also safeguards the interests of the company and our shareholders.

Internal corporate publication 《ScinoPharm News》

Quarterly employee meeting

4.2 Employee Benefits and Care

To c re a t e a p l e a s a n t a n d c h a l l e n g i n g wo r k environment, we strove to satisfy principles of both legality and competitiveness when establishing our employee benefits policies for recruiting and retaining talent, enhancing employee satisfaction, and increasing work efficiency.

◎ Maintaining a Work-Life Balance

In consideration of employee needs to care for their families, we allow flexible work hours. Employees may arrive at work between 8:00-9:00 and leave work between 17:00-18:00. As long as they work for a full 8 hours each day, employees can adjust their work arrival and departure times as needed. Apart from flexible work hours, we believe that improving work efficiency is the only way to help

our employees achieve a good work-life balance. We not only encourage our employees to learn how to plan their time and implement tasks wisely, but also enhance efficiency through innovation and improvement of work processes to promote balance between work and family life. When staff members are unable to complete assigned tasks within a reasonable amount of time, we not only reach out to said employees and their managers, but also assist managers in reallocating assignments according to individual capacity and in providing addit ional training. We hope that enhancing individual efficiency makes it easier for employees to balance work and family l ife. I f overtime is necessary due to seasonal factors, preparation for shift changes, or complementary work, working hours may only be extended following approval from a labor-management meeting, and related issues such as calculation of overtime pay and handling of calculation of over time pay and

◎ Multiple Channels for Communication

57 58






ScinoPharm’s Employee Welfare Committee was established in accordance with relevant laws and regulations. The Employee Welfare Fund is fully funded by ScinoPharm and monthly funds are provided for employee use. Our retirement policy is implemented in the following manner: employees who joined the company prior to June 30, 2005 (inclusive) can choose to adhere to our previous policy where the company places monthly payments into a pension fund (under this policy, 2% of monthly salaries for employees are paid into a pension reserve account), which is managed and operated by a Pension Reserve Supervisory Committee in accordance with relevant regulations. The pension reserve fund is able to fully fund the pensions of all employees who fulfill retirement requirements as of 2017. For employees who joined ScinoPharm after July 1, 2005, current laws and regulations state that companies should place payments of no less than 6% of monthly salaries into individual pension funds, and employees can further choose to pay 0%-6% of their monthly salaries into their own pension funds.

2017 Male Female Total

Number of applications for childcare leave without pay

4 6 10

Number of employees scheduled to return from childcare leave without pay

4 6 10

Number of actual employees returning from childcare leave without pay

4 3 7

Return ratio 100% 50.00% 70.00%

◎Friendly Work Environment

◎ Retirement Funds Comply with Legal Requirements

We pay labor insurance and national health insurance for all employees in accordance with regulatory requirements, and also pay for accident insurance, life insurance, medical insurance, and business travel insurance. We allow our employees to increase insurance coverage at lower premiums. Employees can also choose to add their spouses or children to their insurance plan to extend coverage to the whole family.

We provide annual health checks for employees and regularly host activities and programs that promote health care. Employees have access to on-site massage services and medical resources which help them to maintain physical health. ScinoPharm has also integrated resources for the promotion of employee support programs that provide professional counseling and other consultant services that assist our employees in dealing with the issues and stress arising from work and daily life. Additionally, we subsidize employee club activities so that our employees can enjoy leisure and fitness activities after work as well as develop social networks and enrich their lives outside of work.

◎ Insurance Protection and Health Promotion

Employee bowling tournament

Health seminars

Hiring of disabled employees-exceeds regulatory requirements by 50%

0 labor disputes-We have established channels of communication and actively work to promote harmonious labor relations. There were 0 labor disputes in 2017.

Gender equality-The ratio of female managers (27.1%) is on par with the gender ratio of all employees.

Return ratio of employees on childcare leave-70% of employees who had applied for childcare leave returned to work in 2017

handling of layoffs are conducted in accordance with governmental labor regulations. No major labor grievances or regulation violations were reported in 2017.

Additionally, in terms of other measures for promoting a work-life balance, employee vacation regulations at ScinoPharm exceed regulatory levels, and new employees are entitled to annual leave during the first year of their employment, allowing them time to improve their mental and physical health. Furthermore, our injury and sick leave standards also exceed regulatory levels, and employees are entitled to other legal types of paid leave, including marriage leave, maternity check leave, maternity leave, paternity leave, menstrual leave, personal leave, family care leave, bereavement leave, official leave, etc.

Our childcare leave without pay policy allows our employees to fulfill both family and work responsibilities. In 2017, 10 employees applied for childcare leave. Ten employees were scheduled to return from childcare leave at year-end 2017. The actual number of employees that returned from childcare leave was 7, making for a return ratio of 70%, showing that our employees approve of our overall work environments.

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Badminton Club

Employee Shuttle Camping Club

Employee Mini-vacations

Annual family day

Board Game Club

Parent-child yoga classes

Library

Bonuses Annual bonuses; performance bonuses; bonuses for Chinese New Year, Dragon Boat Festival, and Lunar Festival; and birthday bonuses

Meals Employee canteen, snack bar, automatic vending machines, automatic coffee machines

Transportation Free employee parking, commute shuttle buses, HSR shuttles

Leisure activities

Employee trips, family day activities, Happiness Month, social activities (see note), staff lounge, KTV room, library

Grants and subsidies

Subsidies for employee trips, grants for further education, childcare support, maternity allowance, carpool subsidies, marriage grants, funeral grants, injury benefits, scholarships for employee offspring, senior staff bonuses

Employee discounts

ScinoPharm has contracts with many stores to provide discounts and offer high-quality and favorably priced goods and services to our employees; contract stores can be divided into the following seven categories: 69 dining venues, 1 clothing store, 215 lodging venues, 49 daycare facilities, 28 medical facilities, 24 entertainment venues, and 15 transportation companies

Resident factory services Banking, insurance, travel agencies, and many other on-site services

◎ Other Employee Benefits

Note: there are a variety of subsidized clubs, including the table tennis club, basketball club, badminton club, camping club, hiking club, cycling club, board game club, yoga club, softball club and others

To do our part for the environment, ScinoPharm provides employee shuttles to make commuting more convenient. We also subsidize employees who carpool, working together to decrease energy consumption and air pollution that comes from driving to work.

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ScinoPharm respects every staff member and firmly believes that our employees are our most important asset. We provide our staff with a comprehensive training program so that employees at any stage in their career can be trained in the skills that they require for their job duties. At the same time, our corporate culture is one that encourages innovation and inspires maximized potential in our employees, allowing them to progress alongside the company.

ScinoPharm upholds the talent management principle of “Full responsibility, transparent communications, appropriate util ization of talent”, and believes

that “performance, work behavior, and employee development” are all equally important. We conduct regular performance appraisals of all employees annually, and even new employees have to undergo performance appraisals and are entitled to receive employee remuneration benefits. To help staff of all levels enhance work efficiency and behave in accordance with corporate cultural values, we use the results of our evaluations to provide professional counseling, education, and training opportunities necessary for individual career development needs. We also provide varied channels and resources for learning, including extended training, training courses, online GMP and regulatory lessons, and work guidance.

Furthermore, ScinoPharm has established a comprehensive remuneration benefits and career development system that inspires employees to better themselves and seek out diverse opportunities. For example, in 2017, more than 50 employees from the R&D, production, quality control, business development, and logistical support departments were promoted or transferred. As of 2017, more than 80% of management personnel (managers and above) were promoted internally. ScinoPharm's cultivation of internal talent is clear for all to see, and employee advancement provides significant momentum for sustainable development.

Based on employee work skills and results of performance appraisals, ScinoPharm tailors Individual Development Plans for all employees, providing on-the-job training, staff counseling, interactive learning, and comprehensive training programs, helping employees to evolve and to obtain professional achievements.

We have always placed emphasis on an international perspective when nurturing talent. In order to comply with the developmental needs of our human resources, we established a Professional Management Training (PMT) program when ScinoPharm was founded to improve organizational operations and the leadership skills of all managers; at the same time, we used these training programs as a foundation to develop a training map encompassing the core skills required of our employees. This improves the work skills and performance of employees and helps them to expand their job abilities and open up career development opportunities.

ScinoPharm’s Principles for Talent

ScinoPharm Employee Job Capabilities Model

◎ Comprehensive Training Program and Policies

Generate Impact

Principles for Talent

Suitable Assignments

Take Action

Principled Interactions

Generate performance results that have impact

Provide corresponding job duties and incentives according to overall

performance and potential

Display work behaviors aligned with our corporate culture

Engage in respectful, mutually trusting, open, transparent, and effective communication

ScinoPharm manages, assesses, and develops talent by using

competencies as our core principle

Abilities

Professional Competency

Behavioral Competency

Fundamental Principle

Ethics

Work safety

GMP

Talent cultivation

Organizational performance

Corporate operations

Skills

Knowledge

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Additionally, in line with our human resource management strategies, long-term organizational development, and our focus on the enhancement of individual efficiency, we also provide a series of workshops and coaching sessions customized for individual learning. Other training programs include those geared towards professional skills, regulatory compliance, and self-efficacy:

At ScinoPharm, all of our employees participate in training activities according to the needs of their job responsibilities, individual skills, career development, and areas of interest. Our records show that for 2017, 14,287 of our employees participated in a total of 20,579 hours of training.


◎ Health Promotion

Healthy employees are the most important cornerstone for the sustainable development of any company. ScinoPharm only exists because of the efforts of our employees, and happy employees bring the vibrancy needed for sustainable corporate development. In order to create a healthy and friendly workplace that addresses the concerns of employees, managers, and investors, we work hard to promote activities that bring health to our employees’ bodies, minds, and spirits. Our activities all comply with the Occupational Safety and Health Act and Procedures for Protection of Occupational Health. ScinoPharm has also established internal regulations for the management of employee health (Procedures for Health Management and Employee Health Management Practices) to set reasonable parameters for management of employee health; establish a vibrant, healthy, and friendly workplace; and create a better future with our employees.

Category Courses

Professional Management Training

Basic concepts and techniques of leadership, basic concepts and techniques of management, labor-related laws for managers, stress management, organizational management, performance management, problem analysis and problem solving, negotiation techniques, conflict management, time management, basic concepts of financial statements, presentation techniques…and so on.

GMP training Annual GMP quality training

Health, safety and environmental training

Industrial health and safety and environmental protection training, fire-fighting training, CPR training, annual industrial safety meeting

Professional and technical training

Prevention of asphyxiation in the workplace, forklift operator training, specified high-pressure equipment, Six Sigma analysis, chemical engineering operations training and operations training for all types of testing and analysis equipment

Human rights policies relating to business operations

Code of conduct, financial and corporate governance, sexual harassment prevention, labor-related laws

Languages and other training

Training of new employees, international etiquette, language courses, communication techniques, target goal setting, health-related lectures, compliance with government regulations, and industry-related lectures

2015 2016 201701 0

20

30

40

50

60

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2015 2016 2017

54.78

33.64 33.03

200

100

0

300

400

500

600

700

2015 2016 2017

602596

623

Rank CategoryNumber

of people trained

Total training

hoursAverage

training hours

Managers and trainee managers

Professional Management Training

368 2868 7.79

Production personnel/Process Engineers/Analysts and researchers

Professional and technical training

5644 8466 1.5

Employees of all ranks

GMP training 4069 4476 1.10

Health, safety and environmental training

3564 3813 1.07

Human rights policies relating to business operations

119 166 1.40

Language and other training

523 790 1.51

Total training hours (B)

20,57920,052

32,975

Average training hours per employee (C=B/A)

Total employees (A)

Comprehensive training program

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In order to protect employee health and prevent risk exposures and occupational diseases, ScinoPharm not only provides protective equipment and performs regular six-month testing of operational environments, but also plans regular health checks, health clinics, delivery of health information, and lactation rooms for all managers and employees. We also provide massage services to help strength the stress resistance and work efficiency of our employees. Additionally, we established a health team under our Sustainable Management Committee in accordance with our Responsible Care Framework. Team members occasionally host health-promotional activities, providing organizational encouragement and engagement and cultivating regular exercise habits in our employees to help them maintain health and vitality of the body and mind. We also focus on improving employee awareness of health management, and our on-site clinic hosts various talks and activities to promote health.

Planning process of annual health promotion activities

◎ Annual Health Checks

ScinoPharm hosts a 3-day employee health check every year during August or September. The health check items are as stipulated by the Labor Safety and Health Act, and our evaluations of employee health risks are based on our pharmaceutical processes; these are collectively known as “general health checks”. In 2017, 479 employees underwent health checks. According to our analyses of health check results, most abnormalities were found in BMI, LDL, CHOL, TG, and uric acid results. Obesity was the biggest abnormality item. According to the WHO, obesity is a major risk factor for chronic diseases such as diabetes, cardiovascular disease, and malignant tumors.

For specific employees with abnormal health check results, our occupational health counselors will first assess their working environments and health conditions, then arrange medical consultations and establish health programs that encompass lifestyle adjustments, dietary balance (more fruits and vegetables and fewer fried foods), appropriate exercise, and weight loss, and also temporarily adjust work duties if necessary. Follow-up is conducted according to this program and employees are given regular care and undergo re-evaluations, following which another examination is conducted to assess results.

Additionally, production line operators are required by law to undergo specific health checks (the health checks for this year were for DMF, hexane, and noise). The health promotion program for each year is developed based on health check irregularities and risk factors found in the health checks of the previous year. We encourage our employees to practice self-management of their own health, and we also provide

Plan Do

CheckAction

relevant information, host activities related to health and disease education, invite professional doctors to provide on-site services, and provide protective equipment for our employees. In terms of preventive health management, provision of information is part of initial prevention while annual health checks are part of secondary prevention. We hope that annual health checks can help our employees in early detection and early treatment of illness. Occupational health counselors help case management and follow-up of chronic diseases and draw up personalized health promotion programs to prevent the development of comorbidities or secondary diseases.

◎ Workplace Health Promotion Activity Plan

We consider our employees to be our most valuable assets and have accordingly planned a series of activities for the promotion of employee health. ScinoPharm conducts case management of employees with chronic diseases or risk factors for chronic diseases. We also cooperate with the Tainan Municipal Government Health Bureau to provide remote health care as part of their smart broadband urban planning project, setting up blood pressure machines in the cloud to encourage our employees to self-manage their health by regularly recording their blood pressure. We are also committed to supporting our employees in controlling their body fat and weight, building good exercise and dietary habits, maintaining the best body shape, and decreasing risk factors for diabetes, hypertension, dyslipidemia, metabolic syndrome, heart disease, and so on. We hope to improve the overall physical and mental fitness of our staff, increase interactions between co-workers, enhance corporate spirit, and create a pleasant workplace.

Annual employee health checks

Blood tests for employees

Note: the actual number of employees who underwent health checks in 2017 was 479 (including 3 employees stationed in China). Additionally, 3 employees who were eligible for health checks did not participate due to injury rehabilitation or personal factors.

Consultation with on-site doctor during health checks

On-site X-ray truck

Employee health check results for 2017

Date of health checkAttending employees

Health Check 11 DMF

Health Check 12 Hexane

Health Check 02Noise

Employees checked 479 150 150 9

In accordance with EHS policiesSustainable management committee policies

In accordance with occupational safety regulations Quantifiable

ComparableBudget planning

Fulfills needsTimelinessQuarterly reviews

Target achievement ratesAnalysis of results

In accordance with governmental health policiesIn accordance with employee health needs

In accordance with results of health check analyses

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◎ Maternity Protection Health Management

In accordance with the maternity health protection provisions of the Occupational Health and Safety Act, ScinoPharm evaluates the risk of pregnant and post-childbirth employees using an internal “Maternity Health Management Record Chart”, and also arranges for medical counseling and assessments with an occupational physician. If the job duties of a department require the handling of cytotoxic chemical substances, employees can put forward a “personnel special health needs processing form” and a “staff job distribution configuration form” for professional evaluation by an occupational physician who will provide suggestions to department managers about appropriate reassignments during pregnancy and first year of breastfeeding. The HSE department tracks the conditions of employees up until one year after childbirth and performs risk assessments before closing each case. Additionally, ScinoPharm also hosts irregular health promotion activities for maternity health protection, for example Pap smears and lectures on pregnancy health.

Power walking activity

Lactation room for employees who are nursing mothers

Health promotion activities in 2017 included:

Items Frequency

Gymnastics Non-periodic

Smoking Cessation Promotion Non-periodic

Lectures on nutrition and diet Non-periodic

Lectures on health promotion Non-periodic

On-site doctor consultations Monthly

Provision of light meals Weekly

◎ Employee First Aid Training (CPR + AED Training)

In recent years, cardiovascular diseases have become an increasing threat to national health. To enhance the quality of emergency medical care, ScinoPharm purchased and installed an “Automated External Defibrillator (AED)” in front of the Production Building and all employees have to undergo annual CPR+AED training. If the security office receives notification of emergency injuries during nighttime, EHS personnel are immediately notified, and relevant units then determine the extent of the injuries and contact 119 for ambulances to collect injured personnel at the injury site. Employees who have undergone CPR+AED Training will commence first-aid procedures before ambulances arrive. AED placed in front of the Production

Building

Note: A total of 4 traffic accidents occurred between 2015 and 2017

◎ 2015 to 2017 Occupational Injury Statistics

Number of people, number of events, number of deaths, lost work days, and frequency and severity rates of disabling injuries.

Statistical data from the HSE Department

Year 2015 2016 2017

Disabling injuries (number of people)

2 1 1

Disabling injuries (number of events)

2 1 2

Number of deaths 0 0 0

Total work hours 1,533,805 1,440,807 1,520,994

Disabling injuries (lost work days)

82 211 233

Frequency of disabling injuries (FR)

1.30 0.69 1.3

Severity of disabling injuries (SR)

53 146 153

◎ Factory On-Site Medical Services

Factory on-site medical services are provided once each month. In addition to employee health-abnormality testing, case management, pregnancy assessment, etc., plant inspections and work-site observations are also conducted.

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4.4 Safe Working Environment

ScinoPharm is located within the Southern Taiwan Science Park. One of the reasons this location was chosen was because the Southern Taiwan Science Park is an important national developmental area; authorities had already conducted overall assessments of grounds and neighboring areas before founding the Park. ScinoPharm is committed to the establishment of comprehensive guidelines for environmental and occupational health and safety management; we are also committed to the development of a code of conduct and working principles for our environmental and occupational health and safety management. ScinoPharm’s occupational health and safety management system has been designed in accordance with TOSHMS (Taiwan Occupational Safety and Health Management System) and we continue to apply PDCA (Plan-Do-Check-Action) principles to our EHS policies. The principles and responsibilities of all standard operating procedures are stipulated in our safety management systems. A stringent regime of norms and responsibilities have been established to ensure adherence with CGMP regulations, applicable environmental, health, and safety practices, and the Taiwan Responsible Care Association (TRCA) program.

The Responsible Care System is a voluntary and concrete commitment with ever-changing performance criteria that chemical industries worldwide adhere to; the responsible care system focuses on environmental, health, and safety (EHS) issues. Signing the Statement of Commitment (a necessary condition for admission), establishing Codes of Management Practices, implementing Self-Evaluation measures, promoting Management System Verification (MSV), preparing EHS Performance Indicator reports, and promoting experience sharing relating to the Responsible Care System helps companies establish a comprehensive EHS policy.

ScinoPharm has been a member of the Taiwan Responsible Care Association since the company's inception, and we are active in promoting EHS management systems, abiding by the laws and regulations of official authorities, and hosting of public events relating to environment management to enhance effective utilization of resources and decrease waste; this is done as a response to public concern and to increase public safety, health, and environmental protection. We continue to decrease the amount of pollutants we discharge into the atmosphere, water system, and soil, thus enhancing efficiency and economic benefits of pollution prevention. ScinoPharm has also implemented system verification of TRCA management principles; management principles related to environmental management include process safety management, waste management, reduction management, and product management.

Specific measures include:

◎ Avoidance of domestically or internationally controlled substances (such as toxicants, drug precursors, chemical warfare materials, ozone depleting substances, and so on) when developing production processes, replacing them with comparatively non-toxic or non-hazardous materials.

◎ Assessments are carried out when developing production processes to reduce the use of solvents and hazardous substances, decrease environmental impacts, and lessen the risks of personnel exposure to harmful chemicals and potent substances.

◎ Before commencing new production processes, a production process hazard analysis meeting is called to discuss and improve upon prevention measures for safety, health, and environmental issues.

◎ Waste (including biodegradable waste water, waste solvents, solid waste, and air pollutants) is disposed of in accordance with laws and regulations.

◎ Biodegradable waste water is run through activated sludge and ultra-thin film filters; the resulting organic sludge is separated and sent to the Southern Taiwan Science Park resource recycling center for incineration, while the processed wastewater is sent to the Park's sewage plant along with other sewage waste. Organic sludge produced by related enterprises is separated and incinerated by Jiangsu Kangbo Industrial Solid Waste Disposal Co., Ltd., while the processed wastewater is sent to the Binjiang sewage plant along with domestic sewage.

◎ Hazardous or solid waste is transported to the Park's resource recycling center or other qualified processing plants for incineration. Air pollutants from the production plant, for example particulate contaminants, acidic gases, alkaline contaminants, or organic vapors, is filtered through a two-stage condenser and an air scrubber. Recyclable solvents from related enterprises are transported to Kunshan Deyuan Environmental Protection Development Co., Ltd. for purification and recovery.

ScinoPharm does not adopt the ISO14001 certification as, in addition to our aforementioned well-established environment management system that conforms to biotechnology pharmaceutical industry requirements, we have also passed more than 10 factory inspections from pharmaceutical authorities in the US, Europe, and Japan (for example, the FDA, EMA, EDQM, and PMDA), as well as EHS audits from international pharmaceutical companies such as Pfizer, GSK, and Aventis. Despite not holding ISO14001 certification, none of these authorities considered our environment management system to be inadequate. Additionally, ISO14001 certification was originally established to provide a common environment management system that allowed domestic companies to gain market recognition, but as ScinoPharm already has a comprehensive work safety, hygiene, and environment system in place, is known to the international market, and continues to undergo factory inspections, it is not necessary for us to adopt ISO14001 standards. However, we still operate to the highest standards and strive to achieve sustainable management as we continue to strengthen our environment management system and focus on work safety, hygiene, and environment issues so that we may comply with international regulations and fulfill our corporate social responsibilities.

ERT personnel trainingFirefighters participating in ERT training

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ScinoPharm Safety and Health Committee Organizational Structure and Operating Mechanism

Matters for Deliberation by Corporate Safety Committee (required by law)

◎ Rules pertaining to safety and health

◎ Safety and health education implementation plans

◎ Prevention of damage to machinery, equipment, raw materials, and other materials

◎ Measures to be implemented based on workplace environment monitoring results

◎ Health management affairs.

Satellite Safety Committee Task Description (administration/support/laboratory/production departments)◎ Intensive meetings (once per month) for immediate response and resolution on aforementioned

deliberative matters pertaining to relevant departments

◎ Communication of safety committee safety policy/Deliberation of departmental safety meeting resolutions

◎ Discussion of safety inspections, accidental incidences, safety improvement proposals, and other matters

◎ Emergency Response

In 2005, in order to enhance employees’ emergency response capabilities in the face of critical incidents, ScinoPharm set up an emergency response center tasked with first-instance handling of crises within plant facilities and with reducing crisis injuries and subsequent impact. The emergency center is fitted with all necessary response equipment: SCBA, fire-fighting clothing, A-grade fire-protection clothing, and other emergency equipment, such that in the first moments after an incident occurs relevant personnel are fully apprised of the situation, outfitted in appropriate safety equipment, and able to take immediate action to address said incident.

ScinoPharm has an Emergency Response Team (ERT) in place which undergoes specialist fire-fighting training each month. We also periodically commission outside fire experts to lecture at the plant facilities. Emergency response drills adhering to specified themes are carried out regularly to strengthen personnel emergency response experience. The entire plant is required to

participate in periodic guidance drills to ensure that all personnel are familiar with assembly points and routines.

In accordance with internal Emergency Response Procedures, after the security office notifies ERT commanders of an incident, the commander should respond in accordance with regular training and recommendations of the Emergency Response Handbook, depending on the nature of the situation (fire, earthquake, flood, leakage and so on). Each plant has a team of 4 Emergency Response professionals who work in 4- or 3-shift rotations to ensure that there is always at least one person on-site, and it is estimated that at least 10 certified personnel will always be on hand to lead other non-ERT personnel in managing crises at the first instance. In emergency situations, ERT personnel can be immediately gathered and the commander can then allocate assignments for rescue operations.

Corporate Safety Committee Task Description Review

◎ Recommendations on safety and health policy planning (proposed by HSE department or safety committee)

◎ Recommendations on compliance with safety and health laws and regulations (proposed by HSE department or safety committee)

◎ Review of annual company safety and health implementation program (proposed annually by HSE department at the beginning of the year)

◎ Recommendations and appraisals of significant positive safety behaviors (proposed by HSE department)

◎ Deliberations on subsidiary center safety resolutions (explanation given by subsidiary meeting delegates)

Monthly ERT personnel training

Chief Executive Officer

Administrative Affairs Meetings

Satellite Safety Committee

Distribution Team Health Team Safety Team Waste Reduction

TeamEnergy Saving

TeamHygiene

Team

Convenes once every month

Review of distribution issues

Review of health issues

Review of safety issues

Review of waste issues

Review of energy saving issues

Review of Hygiene issues

Proposal of energy saving programs

Proposal of promation programs

Review of implementation performance


Proposal of waste reduction programsReview of waste reduction performance

Proposal of promotion programs

Proposal of improvement programs



Proposal of improvement programsReview of implementation performance

Proposal of sustainable management programs at the beginning of the yearConvenes to review progress when necessaryReview of implementation performance at the end of the yearApproval and audit of relevant application documents

Convenes once every year

Administration/Production/Laboratory/Support departments

Biosafety Committee

Occupational Health and Safety Committee (Safety Committee)

Functional Meetings

Sustainable Management

Committee

Policy/Systemic Reviews (Self-Assessment/Continued Improvement)

Discussion of daily affairs (Employee participation)

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Course Contents

1

Introduction of ScinoPharm response system● Response systems for fires, leakages, earthquakes, typhoons ● Time to activate each response system● Role of commander

2

Introduction of ScinoPharm ERT resources● Internal resources-Response personnel, response equipment and placement● External resources-Response center, response team, and fire department

3

Scenario simulation● Simulations for different disaster scenarios● Review of risks for each plant

4

Training with ERT members● Disaster analysis and scenario simulation● Practical drills-Personnel allocation by commander following notification of disaster

situation

5

Participation in practical drills involving entire plant● Biannual external drills for entire plant● Biannual internal drills for entire plant ● Annual nighttime drills● Annual unannounced drills for emergency escape flow

消防火警

每日當班指揮官

Activation process of Emergency Response Team

ScinoPharm requires all personnel and long-term on-site resident contractors to undergo fire extinguisher training annually, ensuring familiarity with initial-phase emergency response techniques.

In accordance with chemical assessment procedures laid out by national laws and regulations, we assess risk levels according to “Health hazard”, “Distribution”, and “Amount used”; different management procedures are used for different risk levels.

To ensure the health and safety of personnel, ScinoPharm further uses the “Saturation Vapor Pressure Model” to simulate dispersion of gas or steam within the work environment and to estimate the concentration of chemicals in the air, thus determining whether personnel exposure is below the allowable exposure limits. Our understanding of chemical concentrations in the workplace was improved by the use of accurate quantitative models.

ScinoPharm has collected long-term data from monitoring workplace environments. Historical data is kept on file and monitoring results are used as a reference for assessing personnel exposure to chemicals in the workplace.

API risk management strategy utilizes common management models used by drug companies worldwide, including establishment of API exposure limits and hazard classification, implementation of prevention plans for different hazard levels needed for various processes, definitions of usage, and management of prevention facilities. Parameters of effectiveness in prevention and workplace environment are used to assess and review whether prevention measures for different hazard levels are adequate or if there is a need for improvement and enhancement.

In order to identify hazard levels and exposure limits of APIs, an assessment group invited internal and external experts in pharmacy, toxicology, chemistry, and industrial safety to conduct joint audits.

Simultaneously, in order to ensure that engineering protection facilities achieved the desired amount of isolation, air sampling analyses methods were developed and samples were collected in accordance with the ISPE practice guide for assessment of functional efficiency.

In future, we plan to establish a digital information database of the aforementioned hazards and exposures for chemicals and APIs. This database can be integrated with production schedules so that exposure risks for all chemicals and APIs can be assessed prior to production and appropriate protection equipment can be provided. We will also explain these risks to our employees prior to production to ensure that their health and safety is protected.

◎ Hazard Management of Chemicals and APIs

Rapid developments in the industry worldwide and the sharp increase in the number and variety of chemicals used in various industries represent a rising risk of exposure to chemical hazards in the workplace. ScinoPharm has a wide range of products which in turn utilize a wide range of chemical raw materials. To ensure the safety of our personnel, ScinoPharm lays especial emphasis on the prevention of chemical hazards.

◎ Workplace Monitoring

Workplace monitoring is undertaken in all areas within ScinoPharm plants every six months to determine whether workplace measurement regimes are being properly executed, thus ensuring the validity of test results. Before monitoring, the HSE department works with testing personnel on a joint assessment of optimal workplace sampling strategy and planning.

To ensure good working environments, we strictly control the distribution of hazardous substances and keep abreast of possible exposures so that we can assess and improve on workplace environments as needed.

In terms of measurement methodology, representative measurement factors and sampling points are chosen for workplace sampling. Data results are then analyzed and evaluated to gain an understanding of dosage impacts and long-term cumulative effects, heightening recognition of risk factors present in the work environment. Data results are systematically used as our framework of reference when assessing environmental impact assessments, production process protection measures, and selection of personal protective equipment.

ERT commander & vice commander training courses

Fire

Flood

Earthquake

Major leakage of solvents

Leakage of toxic chemicals

Daily notification from security office to on-duty commander

Commander responds according to regular training and recommendations of the Emergency Response Handbook

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The manufacturing of APIs primarily involves batch production, and therefore chemicals used and chemical reactions in each project can vary widely. According to the Regulation on Measurement of Labor Working Environment currently in place, specified operations conducted within short time spans require no assessment of working environments. However, due to considerable variations in production scheduling and our conservative stance regarding the protection of our employees, workplace monitoring is conducted regardless, with annual measurement items determined by the chemicals used in product manufacturing at the time.

Measurement items encompass physical and chemical agents. Physical agents include noise, and chemical agents include isopropanol, acetone, ethyl acetate, methanol, toluene, acetonitrile, dimethyl formamide, dichloromethane, and so on.

To ensure that employees carry out tasks in a safe work environment, we implemented effective administrative management and hardware improvements for items that did not comply with regulations.

Apart from the maintenance operational procedures listed above, personnel are required to adhere to locking/tagging procedures when parking equipment to ensure the safety of maintenance crew; safety operational permits must be signed to ensure that personnel are familiar with these regulations.

Production areas are required to be explosion-proof and comply with CNS3376 and IEC60097 regulations for explosion-proof area separation; all equipment used follows certified safety standards for mechanical equipment. When using non-explosion-proof equipment, users are required to comply with regulations for use of non-explosion-proof equipment in electrical-explosion-proof areas and regulations for hot work hazards.

Hot work, limited space operations, elevated operations, and other high-risk operations conducted within the plant must all apply for safety operational permits and be supervised throughout to ensure operational safety.

◎ Procedures for Handling Complaints from Members of the Public on Factory Perimeters

In line with our spirit of responsible care, to ensure that our products are appropriately handled during the entire production cycle, and to avoid exposing or polluting our personnel and environment, we have established procedures in accordance with our HSE Management Manual for handling complaints from members of the public on factory perimeters. These procedures are applicable for any appeal, complaint, or suggestion from neighboring members of the public regarding odors, black smoke, or other environmental or safety issues that may be related to ScinoPharm production processes. These appeals, complaints, or suggestions are handled by the HSE department in tandem with the Human Resources and Administration Office and other relevant departments.

◎ Safety Management of Production Processes

In order to reduce unacceptable risks stemming from production process hazards during developmental and mass production processes, we adopt a four-stage production process hazard analysis procedure: analysis of hazards in the lab (Lab PHA), analysis of core material hazards (PHA1), analysis of reaction hazards (PHA2), and analysis of operational hazards (PHA3). Additionally, to assess safety issues related to heat hazards resulting from chemical reactions, we used lab equipment such as differential scanning calorimeters, reaction calorimeters, and adiabatic calorimeters to conduct safety analyses; hazard levels of chemicals with insufficient data was predicted using the drug toxicity prediction software Derek for Windows.

Hazards resulting from changes to production processes or operations were assessed using change management procedures, thus decreasing potential risks. In terms of operational safety management, we already have procedures in place for hazardous operations, locking/tagging operational procedures, and management of limited space operations.

Procedures concerning safety stock and packaging for chemicals are used within the plant, and a complete set of personal safety gear has been prepared for operators to ensure the safety of chemical storage and usage.

◎ Hazardous Machinery and Equipment/Apparatus Management

Hazardous machinery and equipment must be inspected by contractors approved by our occupational safety and health administrators prior to application for examination and certification by a labor inspection agency. These machinery and equipment can only be placed into operation after appropriate certification has been issued.

We require employees who handle hazardous machinery and equipment to pass relevant training and have also included “Safety Regulations for Handling Heavy Machinery” and “Safety Regulations for Handling Boilers” in our Employee Health and Safety Regulation Manual to regulate operational procedures for our employees.

Our inspection protocol for hazardous machinery and equipment complies with the Taiwan Occupational Safety and Health Act and related laws and regulations as well as our “Automatic Inspection Operating Procedures”. These procedures were designed in accordance with actual on-site conditions and serve as a guideline for the inspection and maintenance of hazardous machinery and equipment. If maintenance is required, all maintenance and repairs adhere strictly to the maintenance manuals for each type of machinery or equipment.

Type Amount

First Class Pressure Vessels 82

Specific Equipment for High Pressure Gases 116

The number of hazardous equipment for 2017 is as follows: Statistics for Hazardous Equipment and Licenses

Type Number of Licenses

First Class Pressure Vessels Personnel 67

Operating Specific Equipment for High Pressure Gases

82

Operator qualifications

ScinoPharm Safety Training

77 78





CH5CH5 Social Responsibility2017 ScinoPharm Taiwan Corporate Social Responsibility Report

Chapter 5 Social Contribution


Through participation in college recruitment activities and job fairs, we do our part to cultivate talent, actively collaborating with national colleges and universities and providing internship opportunities. We do this to allow students to experience workplace culture from an early age, develop industry-related skills, and establish a network between students from different schools majoring in the same subjects, thus bringing together the different abilities of students.

In 2017, our interns hailed from 6 different universities and graduate schools around the world, including McGill University, Fooyin University, China Medical University, Chang Jung Christian University, Southern Taiwan University of Science and Technology, Chia Nan University of Pharmacy & Science, and others. Students were assigned to different departments based on their areas of study, and special instructors provided support and counseling, assisting students in learning and adapting to the workplace. Students who performed outstandingly were given priority for relevant job vacancies.

ScinoPharm collaborates with the Chemical Society Located in Taipei to provide “ScinoPharm Thesis Scholarships” and we are also active in sponsoring biotechnology and chemistry related seminars hosted by national colleges and universities. We provide more than NTD 100 thousand every year in sponsorships. In order to cultivate talent and promote students’ understanding of the industry, ScinoPharm invited students from the National Cheng-Kung University (biochemistry department), the National Sun Yat-sen University (chemistry department), and the Kaohsiung University of Science and Technology (biotechnology department) on a tour of our facilities. We introduced current industrial trends and also established communication channels with the academic world. We hosted more than 160 guests.

Additionally, ScinoPharm initiates social welfare activities every year, combining the strengths of our company and our employees to host charity activities for the physically and mentally disabled and disadvantaged children on behalf of local social welfare groups. In 2017, ScinoPharm hosted the “Happy Food Welfare Activity”. Our CEO provided the first donation and encouraged all employees to donate towards the procurement of food parcels. These food parcels were sent by the Andrew Charity Association Food Bank to impoverished children from the ages of 0-15, fulfilling the basic needs of children who are still unable to fend for themselves. Our employees learned to cherish the importance of food through participation in this activity and enhanced their willingness to contribute to the community. Additionally, ScinoPharm purchased donor gifts from the Garden of Hope Foundation bakery, providing assistance and caring to vulnerable women and others as we did our part to better society.

In 2017, we hosted our first summer camp for three consecutive days during the summer vacation. Our employees and their children participated in this activity and we also invited the Taiwan Olive Garden Care Association and the Yellow Ribbon Network Association to participate. Our employees and their children not only participated in interesting chemical courses, but also made ecosystem bottles to get closer to nature as they enjoyed the fun of learning. The Taiwan Olive Garden Care Association and Yellow Ribbon Network Association mainly cater to children of disadvantaged families, providing after-school study assistance and care for children from fractured families or families in poor living conditions, giving concrete assistance and hope to these children during their formative years. ScinoPharm understands that these children may rely on social resources during their upbringing. This camp only lasted for three days, but it created unforgettable experiences for the children.

Blood drive initiated in collaboration with the Tainan Center

List of Social Welfare Activity Participation in 2017

Activity Resources Invested Achievements Social Impact

Second “STSP Share Love Month”

Donated close to NTD 10,000

Helped locals with need for medical assistance in Tainan Shanhua District, New City, and Anding District

As a member of the pharmaceutical industry, ScinoPharm and other companies within the science park came together to care for community locals who were unable to receive medical care due to poverty

ScinoPharm blood drive

1. More than 20,000 ml of blood donated.

2. Gave out nutritious donor gifts to our donating employees.

1. Blood was donated by more than 60 employees

2. Blood was also donated by members of the general public

ScinoPharm initiated fundraising activities to display our spirit of empathy and also to do our part for those in need. We also hosted a number of blood drives, encouraging our employees to donate blood and help relieve blood shortages at hospitals.

ScinoPharm Happy Food Welfare Activity

1. Collected NTD 200 thousand (200 food parcels)

2. Gave out donor gifts to participants (154 gifts)

3. Provided work opportunities for women at the Garden of Hope Foundation bakery

1. Assisted 200 impoverished families with children under the age of 15.

2. 154 employees and their families participated in the activities.

The Andrew Charity Association Food Bank helps fulfill basic needs of children aged 0-15 from impoverished families through donation of food parcels.

The Garden of Hope Foundation bakery provides work opportunities for abused women. By purchasing their products, we provide them with income, support, and hope, so that they can live without fear and poverty.

ScinoPharm art seminars

Half a million (NTD) in activity budgets

Hosted for 8 consecutive years. Invited lecturers Tom Wang, A-KEN, Shiying Chu, and Tammy Darshana Lai to speak in 2017. To date, more than 8,000 people have attended ScinoPharm art seminars.

ScinoPharm has long sponsored arts events. ScinoPharm art seminars enhance the life aesthetics and humanistic spirit of those working at the Southern Taiwan Science Park, and is a major annual event at the Southern Taiwan Science Park.

ScinoPharm summer camp

NTD 170 thousand in activity budgets

Directly impacted 50 schoolchildren and employees

The Taiwan Olive Garden Care Association and Yellow Ribbon Network Association mainly cater to children of disadvantaged families, providing after-school study assistance and care for children from fractured families or families in poor living conditions, giving concrete assistance and hope to these children during their formative years.

Provided assistance to impoverished locals through participation in the STSP Share Love Month

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CH5CH5 Social Responsibility2017 ScinoPharm Taiwan Corporate Social Responsibility Report

In terms of arts events, we supported local art by sponsoring exhibitions hosted by the AAEON Foundation to promote public art. Additionally, to enhance the life aesthetics and humanistic spirit of those working at the Southern Taiwan Science Park, we hosted the ScinoPharm art seminars for the eighth consecutive year, inviting great lecturers to provide rich life experiences and food for the soul. To date, more than 8,000 people have participated in the seminars, which are a major annual event at the Southern Taiwan Science Park. In 2017, the theme for the art seminars was “At the turn of the tide”, and speakers including Tom Wang, A-KEN, Shiying Chu, and Tammy Darshana Lai were invited to share their unique life experiences with our audiences. Even in the midst of their busy lives, these talks allowed our listeners to calm themselves and rethink their lives, ensuring that they were busying themselves with meaningful tasks, and also helped our audience to rediscover their passion towards life and find new meaning in their lives. In 2017, we allowed participants to register online and a total of 1,200 people attended the art seminars.

ScinoPharm initiated fundraising activities to display our spirit of empathy and also to do our part for those in need. We also hosted a number of blood drives, encouraging our employees to donate blood and help relieve blood shortages at hospitals. In 2017, our employees donated almost 20,000 cc of blood. Additionally, as one of the earliest companies to come to STSP, ScinoPharm has participated in the “Love starts from STSP” activity for two consecutive years, encouraging employees to help local impoverished families. In 2017, we initiated an activity to purchase food parcels and worked with the Andrew Charity Association Food Bank to provide care for impoverished children, relieving hunger in 200 families. We purchased homemade cookies from the Garden of Hope Foundation to serve as donation gifts for this event, thus also providing aid to abused women.

Group Membership

The Allied Association for Science Park Industries Taiwan Pharmaceutical Manufacturers Association

Academia-Industry Consortium for Southern Taiwan Science Park

Taiwan Bio Industry Organization

Chinese Pharmaceutical Manufacture and Development Association

Chemical Society Located in Taipei

Taiwan Generic Pharmaceutical Association Taiwan Biotechnology Industrial Alliance

Taiwan Parenteral Drug Association Small Molecular Drug Development Industry Alliance

Institute for Biotechnology and Medicine Industry Cross-Strait CEO Summit

The Pharmaceutical Society of Taiwan Trans Regional Biotechnology Association

Taipei Biotech Association

ScinoPharm art seminar and participants from the Southern Taiwan Science Park

Public art promotion in our plants

Donating food to impoverished children


◎ Active Social ParticipationScinoPharm is an active participant in the activities of industry associations. Our employees have taken on supervisory roles in these associations, participated and sponsored association activities, and helped to promote industrial development and communication. Our managers also serve as supervisors for the Taiwan Generic Pharmaceutical Association.

Happy kids at ScinoPharm summer camp

Appendix

81 82


AppendixGlobal Reporting Initiative (GRI G4) Comparison Chart

Aspect Number G4 Indicator Description Corresponding Section Page Number Note

1.Strategy and Analysis

Core G4-1

A statement from the most senior decision-maker of the organization about the relevance of sustainability to the organization and the organization's strategy for addressing sustainability

Letter from our executive management

3

Overall G4-2 Provide a description of key impacts, risks, and opportunities 1.8 Risk Management 27

2.Organizational Profile

Core G4-3 The name of the organization About This Report 2

Core G4-4 Primary brands, products, and services 1.4 Scope of Business 13

Core G4-5 Location of the organization's headquarters 1.1 Company Overview 7

Core G4-6Number of and names of countries where the organization operates

About This Report1.1 Company Overview

27

Core G4-7 The nature of ownership and legal form1.2 Shareholding Structure and Main Shareholders

8

Core G4-8 Markets served 1.4 Scope of Business 13

Core G4-9 Report the scale of the organization 1.1 Company Overview 7

Core G4-10 Description of employee composition 4.1 Personnel Overview 53

Core G4-11The percentage of total employees covered by collective bargaining agreements

4.1 Personnel Overview 53

Core G4-12 Describe the organization's supply chain2.3 Supplier and Contractor Management

36

Core G4-13Report any significant changes during the reporting period regarding the organization's size, structure, ownership, or its supply chain

1.1 Company Overview 7

Core G4-14Report whether and how the precautionary approach or principle is addressed by the organization

1.5 Corporate Governance 20

Core G4-15List externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses

3.1 Health,Safety,and Environment Portection Policy

41

Core G4-16List memberships of associations (such as industry associations) and national or international advocacy organizations

5.2 Social Participation 80

3.Identified Material Aspects and Boundaries

Core G4-17List all entities included in the organization's consolidated financial statements or equivalent documents

1.3 Overview of Operations 11

Core G4-18Explain the process for defining the report content and the Aspect Boundaries


31

Core G4-19List all the material Aspects identified in the process for defining report content


31

Core G4-20For each material Aspect, report the Aspect Boundary within the organization


31

Core G4-21For each material Aspect, report the Aspect Boundary outside the organization


31

Core G4-22Report the effect of any restatements of information provided in previous reports, and the reasons for such restatements

About This Report 2

Core G4-23Report significant changes from previous reporting periods in the Scope and Aspect Boundaries

About This Report 2

4.Stakeholder Engagement

Core G4-24 List stakeholder groups engaged by the organization1.10 Communications and Negotiations with Stakeholders

29

Core G4-25Report the basis for identification and selection of stakeholders with whom to engage


29

Aspect Number G4 Indicator Description Corresponding Section Page Number Note

Core G4-26 Report the organization's approach to stakeholder engagement1.10 Communications and Negotiations with Stakeholders

29

Core G4-27Report key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns


29

5.Report Profile

Core G4-28 Reporting period About This Report 2

Core G4-29 Date of most recent previous report About This Report 2

Core G4-30 Reporting cycle About This Report 2

Core G4-31The contact point for questions regarding the report or its contents

About This Report 2

Core G4-32 Report "in accordance" option chosen and external assurance About This Report 2

Core G4-33The organization's policy and current practice with regard to seeking external assurance for the report

About This Report 2

6.Corporate Governance

Core G4-34

The governance structure of the organization, including committees of the highest governance body. Identify any committees responsible for decision-making on economic, environmental and social impacts

1.5 Corporate Governance 20

7.Ethics and Integrity

Core G4-56The organization's values, principles, standards and norms of behavior such as codes of conduct and codes of ethics

1.6 Ethical Management 24

Economic performance indicators

* Economic performance

G4-DMA Management Approach 1.3 Overview of Operations 11

G4-EC1 Direct economic value generated and distributed 1.3 Overview of Operations 11

G4-EC3 Coverage of the organization’s defined benefit plan obligations 4.2 Employee Benefits and Care 56

G4-EC4 Financial assistance received from government 1.3 Overview of Operations 11

G4-EC6Proportion of senior management hired from the local community at significant locations of operation


Procurement Policy

G4-EC9Proportion of spending on local suppliers at significant locations of operation

2.3 Supplier and Contractor Management

36

Environmental Performance Indicators

*Energy

G4-DMA Management Approach3.2 Management and Use of Energy and Resources4.4 Safe Working Environment

4269

G4-EN3 Energy consumption within the organization3.2 Management and Use of Energy and Resources

42

G4-EN5 Energy intensity3.2 Management and Use of Energy and Resources

42

Water Resources

G4-EN8 Total water withdrawal by source3.2 Management and Use of Energy and Resources

42

G4-EN9 Water sources significantly affected by withdrawal of water3.2 Management and Use of Energy and Resources

42

*Emissions

G4-DMA Management Approach3.3 Management of Greenhouse gas

49

G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1)3.3 Management of Greenhouse gas

49

G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2)3.3 Management of Greenhouse gas

49

G4-EN18 Greenhouse gas (GHG) emissions intensity3.3 Management of Greenhouse gas

49

*Effluents and Waste

G4-DMA Management Approach 3.4 Pollution Prevention 50

G4-EN24 Total number and volume of significant spills3.1 Health,Safety,and Environment Portection Policy

41

*indicates material aspects

Appendix

83 84


No. Target information Page Standard used

1

ScinoPharm has registered 56 drug master files (DMFs) with the Food and Drug Administration (FDA) as of December 31, 2017; of these, 15 bulk drug products have been granted Certificates of Suitability (CEP or COS) by the European Pharmacopoeia (EP) and can be used throughout the EU.

21

The number of drug master files registered with the Food and Drug Administration (FDA) as of December 31, 2017 and the API Certificates of Suitability granted by the European Pharmacopoeia.

2

In 2017, the solar panels placed on the rooftop of our Administration Building generated 36,780 kWh, and green electricity generated provided 236,091 NTD of direct economic benefit for the company, equivalent to 19,457kg CO2e of indirect benefits in greenhouse gas emissions.

34

Based on the amount of so lar-panel -generated electricity and income received from selling power to Taiwan Power Company. Greenhouse gas emissions were calculated as equivalents of electricity generated. The electricity emission factor used was in accordance with the 2016 electricity emission factor set by the Environmental Protection Administration (0.529 kg CO2e/ kWh).

3

As of year-end 2017, we employ 9 full-time employees who are disabled, exceeding the requirements set out in Article 38 of the People with Disabilities Rights Protection Act.

37

Based on the number of insured employees submitted to the Labor Insurance Bureau of the Ministry of Labor at the end of December 2017 and the list of disabled employees receiving insurance subsidies as issued by the Labor Insurance Bureau of the Ministry of Labor in December 2017.

4

No major pollution leakages or violations of environmental protection laws resulting in penalties from relevant institutions occurred in 2017. Aforementioned major events are defined in accordance with Paragraph 1, Clause 26 (3) of Article 4 in the Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities, namely, events “where the administrative fines for one single event have accumulated to one million NTD or more”.

27

We reviewed major pollution leakages, violations of environmental protection laws, and penalties from relevant institutions based on five environmental laws (the Waste Disposal Act, the Air Pollution Control Act, the Water Pollution Control Act, the Soil and Groundwater Pollution Remediation Act, and the Toxic Chemical Substances Control Act). Major events are defined in accordance with Paragraph 1, Clause 26 (3) of Article 4 in the Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities, namely, events “where the administrative fines for one single event have accumulated to one million NTD or more”.

5

In 2017, 10 employees applied for childcare leave. Ten employees were scheduled to return from childcare leave at year-end 2017. The actual number of employees that returned from childcare leave was 7, making for a return ratio of 70%

40

The number of employees applying for childcare leave was based on the number of applications received for 2017. The return ratio was calculated as actual number of returned employees/number of employees scheduled to return in 2017.

Assurance engagement itemsAspect Number G4 Indicator Description Corresponding Section Page

Number Note

*Compliance with

Environmental Laws

G4-DMA Management Approach3.1 Health, Safety, and Environmental Protection Policy

41

G4-EN29Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations

3.1 Safety and Health Management System

41

Environmental Grievance

MechanismsG4-EN34

Number of grievances about environmental impacts filed, addressed, and resolved through formal grievance mechanisms

4.4 Safe Working Environment 69

Labor Practices and Work Performance Indicators

Employment G4-LA2Benefits provided to full-time employees at significant locations of operation

4.2 Employee Benefits and Care 56

Labor relations G4-LA4Minimum notice periods regarding operational changes, including whether these are specified in collective agreements


*Occupational Health and

Safety

G4-DMA Management Approach4.4 Safe Working Environment4.3 Health Promotion and Activities

6964

G4-LA7Workers with high incidence or high risk of diseases related to their occupation


64

Training and Education

G4-LA9Average hours of training per year per employee by gender, and by employee category


Diversity and Equal

OpportunityG4-LA12

Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group and other indicators of diversity


Human Rights Performance IndicatorsNon-

discriminationG4-HR3

Total number of incidents of discrimination and corrective actions taken


Social Performance Indicators

Local Communities

G4-SO1Percentage of operations with implemented local community engagement, impact assessments, and development programs

4.4 Safe Working Environment5.1 Social Contribution

6977

Public policy G4-SO6Total value of political contributions by country and recipient/beneficiary


*Compliance with General

Laws and Regulations

G4-DMA Management Approach 1.5 Corporate Governance 20

G4-SO8Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations


Product liability performance indicators

*Customer Health and

Safety

G4-DMA Management Approach2.1 Product Laws and Regulations

35

G4-PR2

Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcome


35

* Compliance with Product

Laws and Regulations

G4-DMA Management Approach1.5 Corporate Governance2.1 Product Laws and Regulations

2035

G4-PR9Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services


35

Self-Determined Indicators

*PatentG4-DMA Management Approach 2.4 Patent Issues 40

PT1Types and numbers of patent applications and approved patents at the time of the report

2.4 Patent Issues 40

TEL：886-6-505-2888 FAX：886-6-505-2898

No.1, Nan-Ke 8th Road, Southern Taiwan Science Park,Shan-Hua, Tainan, 74144, Taiwan

http://www.scinopharm.com.tw/