DHG Pharmaceutical Joint Stock : Sustainable Development Report 2021

THEME: BRAVE WARRIORS - THOUSANDS THANKS

The year 2021 witnessed a period of unprecedented difficulties and challenges for the global economy, including Vietnam. The world economy fell into recession due to the massive impact of the epidemic, which promted a holistic change in customers' needs and business operation.

It can be said that Covid 19 has turned the picture of life into a dark gray color. The supply chain was almost completely broken and all activities came to a stagnation. Never before had people felt such a strong need for each other like in this stage, and similarly had the community needed such a close-knit consolidation to overcome challenges. As a general message of life, DHG Pharma chose the theme: "BRAVE WARRIORS - THOUSANDS THANKS" for the 2021 Sustainability Report as a way to convey the story of a positive outlook and a positive attitude towards life - the key for community union and joint efforts to strive for the best. In particular, through this message, DHG Pharma would like to express its gratitude to the frontline medical team - those who sacrificed silently like brave warriors.

LIST OF ABBREVIATIONS

ABBREVIATED	INTERPRETATION	ABBREVIATED	INTERPRETATION
AGM	Annual General Meeting	PPE	Personal Protective Equipment
BOD	Board of Directors	QC	Quality Control
BOM	Board of Management	QCVN	Vietnamese standards
CIT	Corporate income tax	QM	Quality Management
Cont.	Continued	RM	Risk management
COSO	The Committee of Sponsoring Organizations of	ROA	Return on Assets
the Treadway Commission
DHG Pharma	DHG Pharmaceutical Joint Stock Company/	ROE	Return on Equity
Parent Company
DHG PP1	DHG Packaging and Printing 1 One Member	ROS	Return on Sales
Limited Company
GMP	Good Manufacturing Practice	SDGs	Sustainable Development Goals
GRI	Global Reporting Initiative	SDR	Sustainable development report

4 Message of the sustainable development report

OVERVIEW OF DHG PHARMA

1. Overview of the Sustainable Development report

1. DHG Pharma at a glance

1. Sustainable development strategies

1. Corporate governance

36 Ethics and integrity

40 Code of conducts with stakeholders

44 Stakeholder engagement

52 Identifying material aspects

Results in implementing 17 sustainable

56 development goals of the United Nations

SUSTAINABLE DEVELOPMENT REPORT 2021

GRI 300 - ENVIRONMENTAL

90 Energy

94 Water and effluents

110 Waste

114 Environmental compliance

GRI 400 - SOCIAL

120 Employment

128 Occupational health and safety

140 Training and education

HOSE	Ho Chi Minh Stock Exchange	VND	Vietnamese Dong
IR	Investor Relations	WHO	World Health Organization
IT	Information technology

GRI 200 - ECONOMIC

66 Economic performance

144

Diversity and equal opportunity Non-discrimination

Labor/management relations Freedom of association and collective

JSC	Joint Stock Company
KPH	undetected
KPI	Key Performance Indicators
PIC/s - GMP	Pharmaceutical Inspection Co-operation Scheme
in the field of Good Manufacturing Practice

78 Market presence

1. Indirect economic impacts
2. Procurement practices

83 Anti-corruption

148 bargaining Child labor

Forced and compulsory labor

150 Local communities

160 Customer health and safety

86 Anti-competitive behavior

166

Marketing and labeling Customer privacy

66 Tax

170 Reference table according to GRI standards

MESSAGE OF

THE SUSTAINABLE DEVELOPMENT REPORT

Dear shareholders, partners, customers and all employees!

Therewillstillbemanydifficulties and challenges, but with the government's determination and health policies, I believe the pandemic will soon be repelled. All employees and the Board of Management of DHG Pharma will make great efforts with all their heart - mind - determination to fulfill the targets in 2022, bringing sustainable value to shareholders.

PROFIT BEFORE TAX in 2022 is projected to reach

853

VND BILLION

Ladies and gentlemen!

Like many other pharmaceutical enterprises, DHG Pharma encountered sigificant challenges of the market last year when raw material prices increased, sales from the Hospital channel dropped sharply, and the supply chain faced difficulties due to prolonged social distancing. However, DHG Pharma firmly overcome those obstacles when it skilfully managed to stabilize production and business activities while ensuring growth targets, in the condition of complying with regulations on pandemic prevention and control.

Thanks to the strength of its distribution system, DHG Pharma flexibly coordinated production plans, ensuring the supply of goods to consumers nationwide even during a strong outbreak. DHG Pharma's market share has expanded in both value and output while ensuring safe and efficient production conditions for all employees. It was also thanks to the efforts and consensus of all employees, along with the continuous improvement of software applications in corporate governance, that DHG Pharma experienced a year of going upstream and reaping its high business results within its last 47 years of establishment and development.

Sales: VND 4,003 billion, reaching 100.8% of the yearly plan, up 6.6% over the same period.

Profit: VND 864 billiom, reaching105.3% of the yearly plan, up 5.2% over the same period.

It can be said that Covid-19 has completely changed the way the world works. In response to the social problems facing the world today, the Sustainable Development Goals (SDGs) were proposed, which urged all sectors to change their directions and revise their previous business models. Accordingly, many of DHG Pharma's activities were immediately transformed to adapt to the new changes: organizing 3-onsite production amid prolonged social distancing; all training - recruitment activities as well as Back-Officer Sector's activities promptly switched from face-to-face to online. Contributions to the community were also redirected, focusing on activities related to Covid-19 treatment and vaccine.

Being a production and business enterprise, DHG Pharma has always been well aware of its mission to make contributions to the environment for a sustainable future for future generations. We always strictly comply with

environmental regulations; apply monitoring measures in energy consumption, discharge and reuse during operation. All of these contribute to minimizing negative impacts on the general environment.

Besides, corporate governance is highly effective according to the best standards in the region. In particular, by taking sustainable growth and development based on transparency criteria as a strong foundation for all of its activities, DHG Pharma is successful in managing risks and controlling compliance, which in turn ensures the interests and fairness of its shareholders.

At DHG Pharma, we are fully aware that sustainable development lies not only in the direction of the Board of Directors, but also in the close direction of the Board of Management and all of its employees' thorough implementation. Therefore, DHG Pharma's issues and sustainable development goals are closely linked with its business development plan.

Entering 2022, although many unfavorable factors such as a prolonged pandemic with new variants, the Russia- Ukraine war, etc persit., DHG Pharma continues to maintain

its orientation by promoting sustainable production and consumption by developing new products and upgrading existing products to improve customer satisfaction. We will constantly improve the quality of management, aiming to stabilize production and business, while ensuring environmental and social responsibility. In addition, we will continue to optimize corporate value by prioritizing investment in digital technology throughout the Group, creating a driving force for fast and sustainable corporate economic development in the new period.

Looking back on the past journey and continuing with our efforts for the upcoming goals on the journey of sustainable development, DHG Pharma hopes to continue to receive your wholehearted companionship and trust.

Wishing you health and success.

Best regards,

MASASHI NAKAURA

General Director

4		SUSTAINABLE DEVELOPMENT REPORT 2021	www. dhgpharma.com.vn		5

OVERVIEW OF DHG PHARMA

8 Overview of the Sustainable Development report

10 DHG Pharma at a glance

24 Sustainable development strategies

28 Corporate governance

36 Ethics and integrity

40 Code of conducts with stakeholders

44 Stakeholder engagement

52 Identifying material aspects

56 Results in implementing 17 sustainable development goals of the United Nations

OVERVIEW OF

THE SUSTAINABLE DEVELOPMENT REPORT

Sustainable development report (SDR) is prepared as a bridge between DHG Pharmaceutical JSC (DHG Pharma) and its stakeholders to provide an overall picture representing the announcements, reviews and re-evaluation of DHG Pharma's sustainable development activities in line with the Company's sustainable strategic orientation in the year.

The content of the report demonstrates DHG Pharma's approach to sustainable development issues such as commitments to stakeholders, medium and long-term sustainable development strategies, product commitment, etc. All are prerequisites to the Company's sustainable strategy with the desire to bring a life not only healthy but also sustainable.

ECONOMY

ENVIRONMENT

SOCIETY

METHOD OF DEFINING REPORTING CONTENTS

PRINCIPLES FOR DEFINING REPORT QUALITY

Accurate

Comparable

Balanced

Reliable

Clear

Timely

SCOPE OF THE REPORT

The SDR 2021 is prepared in accordance with the accounting year, starting from 01 Jan 2021 to 31 Dec 2021. The SDR is separate from the Annual Report and has the same reporting period with the 2021 Annual Report.

Latest report: 31 Dec 2020

Reporting cycle: Every year

Scope of the report: This report was prepared within the scope of operation of DHG Pharma in Vietnam's territory in the field of pharmaceutical production and trading. It is made up of DHG Pharma's Plant under the parent company, DHG Pharmaceutical Plant Branch in Hau Giang, and branches in provinces and cities across the country (personnel,

PRINCIPLES

Stakeholder FOR DEFINING

engagementREPORT

CONTENTS

The context of

sustainable development

Materiality level

Sufficiency level

Based on the monitoring and measurement management systems, as well as the reports made in 2021, DHG Pharma develops the sustainable development report based on the latest standard - GRI Sustainability Reporting Standards of Global Report Initiative (GRI). This is the latest and broadly recognized reporting standard for the Sustainable Development Report, which is aimed to increase transparency and accountability.

Simultaneously, we further refer to the Guidebook for Environmental and Social Information Disclosure conducted by the State Securities Commission (SSC) in collaboration with IFC (International Finance Corporation).

Additionally, the Company's development strategy is also triangulated with the National Action Plan in the Agenda 2030 adopted by the United Nations General Assembly in Sept 2015 with 17 sustainable development goals.

salary and bonus figures). The financial figures in this Report are referenced from the 2021 audited consolidated financial statements.

CONTACT INFORMATION

DHG Pharma is making efforts to satisfy the expectations of stakeholders in terms of information transparency and sustainable growth in business, and demonstrating corporate responsibilities to the community. Therefore, we look forward to receiving your sincere comments. All suggestions, questions about sustainable development issues,

please send to the address below:

www.dhgpharma.com.vn (Contact section)

02923 891 433 (Ext: 242), Finance Department

Ms. Le Thi Hong Nhung ([e-mail]) - Finance Director