Summary of the 2025 Annual Report of Jiangsu Kangyuan Pharmaceutical Co., Ltd.

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (Stock Code: 600557) 2025 Annual Report Summary Company Code: 600557 Company Abbreviation: Kangyuan Pharmaceutical Jiangsu Kangyuan Pharmaceutical Co., Ltd.

2025 Annual Report Summary

April 2026

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

Section 1 Important Tips

1. The summary of this annual report comes from the full text of the annual report. In order to fully understand the company's operating results, financial status and future development plans, investors should go to www.sse.com.cn to read the full text of the annual report carefully.

2. The company’s board of directors, directors and senior managers guarantee the authenticity, accuracy and completeness of the contents of the annual report and that there are no false records, misleading statements or major omissions, and bear individual and joint legal liability.

3. All directors of the company attend the board meeting.

4. Lixin Accounting Firm (Special General Partnership) issued a standard unqualified audit report for the company.

5. The profit distribution plan for the reporting period or the plan for converting public reserve funds into share capital approved by the board of directors

After deliberation at the 25th meeting of the company's eighth board of directors, the company plans not to distribute cash dividends, issue bonus shares, or convert capital reserve funds into share capital in 2025.

In recent years, the company has focused on the advantageous areas of traditional Chinese medicine and the core pipeline of biopharmaceuticals and chemical drugs with significant clinical value, pushing multiple varieties into clinical Phase II and Phase III stages. It is expected that the demand for funds required for the continued advancement of the R&D pipeline will increase. At the same time, based on confidence in the company's future development prospects and fundamental judgments, combined with the company's operating conditions, financial status, and future profitability and development prospects, in order to enhance investor confidence, the company is planning to repurchase shares with its own funds and will cancel them all after the repurchase is completed to give back to investors.

The 2025 profit distribution plan and the company's share repurchase plan still need to be submitted to the shareholders' meeting for review.

As of the end of the reporting period, the parent company had unrecovered losses and its impact on the company’s dividends and other matters

□Applicable √Not applicable

Section 2 Basic Information of the Company

1. Company Profile

Company Stock Profile

Stock type Stock listing exchange Stock abbreviation Stock code Stock abbreviation before change

A shares Shanghai Stock Exchange Kangyuan Pharmaceutical 600557 —

Contact and Contact Information Board Secretary Securities Affairs Representative

Name Pan Peng —

Contact address Jiangning Industrial City, Economic and Technological Development Zone, Lianyungang City, Jiangsu Province

Phone 0518-85521990

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

Fax 0518-85521990

Email [email protected]

2. Introduction to the company’s main business during the reporting period

(1) Industry situation description and relevant policies and regulations

As my country's unique health resources, economic resources with huge potential, scientific and technological resources with original advantages, excellent cultural resources and important ecological resources, traditional Chinese medicine plays a more important role in economic and social development by virtue of its unique advantages in the field of treating chronic diseases. Traditional Chinese medicine has thousands of years of cultural heritage, a profound social and cultural foundation, and a wide audience. Under the top-level design and scientific guidance of national policies, my country's traditional Chinese medicine industry will enter a new stage of high-quality development, from improving the quality and efficiency of new drug research and development to medical insurance focusing on clinical value, building a quality traceability system for traditional Chinese medicine to AI-enabled industrial transformation, from continuous improvement of the regulatory system to iterative upgrades of foreign trade models, and comprehensively deepening multi-dimensional changes.

1. The state issued a major document to empower the high-quality development of the traditional Chinese medicine industry

On February 10, 2023, the State Food and Drug Administration issued the "Special Regulations on the Registration and Management of Traditional Chinese Medicines". There is less than half a year left until July 1, 2026. Article 75 of the regulations "From July 1, 2023, it will be 3 years since it was implemented. If any of the instructions [taboos], [adverse reactions], [precautions] are still marked as 'unclear', the re-registration application of proprietary Chinese medicines will not be approved in accordance with the law" has entered the final window period. The core purpose of the promulgation of this regulation is to fill in the shortcomings of safety information in Chinese medicine inserts. It is essentially an inevitable choice for the Chinese medicine industry to transform from "quantity expansion" to "quality first" and promote the high-quality development of the Chinese medicine industry.

On March 20, 2025, the General Office of the State Council issued the "Opinions on Improving the Quality of Traditional Chinese Medicine and Promoting the High-Quality Development of the Traditional Chinese Medicine Industry" (referred to as the "Opinions"), which requires the improvement of a regulatory system that is in line with the characteristics of traditional Chinese medicine, and a series of tasks such as strengthening the protection of traditional Chinese medicine resources, accelerating the transformation and upgrading of the traditional Chinese medicine industry, and strengthening the quality supervision of traditional Chinese medicine, so as to promote the improvement of the quality of traditional Chinese medicine. The construction of a quality traceability system for traditional Chinese medicine is a key measure to ensure the quality and safety of traditional Chinese medicine and enhance the transparency of the industry. The "Opinions" clearly stated that it is necessary to strengthen the construction of the circulation and reserve system of traditional Chinese medicinal materials, guide the construction of origin processing bases, and promote the construction of traditional Chinese medicine resource databases to provide institutional support for the traceability system. The optimization of the approval system for classic famous prescriptions is an important part of my country’s traditional Chinese medicine inheritance and innovation strategy. The "Opinions" propose that the reform of the system and mechanism should be used as a guarantee, the clinical value assessment should be strengthened, and a comprehensive clinical evaluation index system of Chinese patent medicines should be constructed to provide scientific basis for the research and development and review of classic famous prescriptions.

On October 9, 2025, the General Affairs Department of the State Food and Drug Administration publicly solicited opinions on the "Announcement of the State Food and Drug Administration, National Health Commission, and State Administration of Traditional Chinese Medicine on Further Promoting Drug Marketing Authorization Holders to Accelerate the Post-marketing Research and Evaluation of Traditional Chinese Medicine Injections (Draft for Comment)". This policy will legally promote drug marketing authorization holders to actively accelerate the post-market research and evaluation of traditional Chinese medicine injections, further clarify work procedures, paths, requirements, etc., adopt regulatory measures according to different situations, and steadily advance the work through a combination of proactive implementation and ordered implementation, so as to proactively evaluate a batch, order a batch to be evaluated, and eliminate a batch in accordance with the law. The holder shall give priority to carrying out post-market research and evaluation work on the traditional Chinese medicine injection varieties in the Essential Drug List and the Medical Insurance Drug List.

On February 5, 2026, eight departments including the Ministry of Industry and Information Technology released the "Implementation Plan for the High-Quality Development of the Traditional Chinese Medicine Industry (2026-2030)" to set standards, guide and empower the high-quality development of the traditional Chinese medicine industry during the "15th Five-Year Plan" period. By 2030, a coordinated development system for the entire industry chain of the traditional Chinese medicine industry will be initially formed, the ability to sustain and stabilize the supply of key traditional Chinese medicine raw materials will be further enhanced, the level of digital intelligence and greening will be significantly improved, a number of key technologies will achieve breakthroughs, and the level of industrial collaborative innovation will be significantly improved. Cultivate a group of leading enterprises in the traditional Chinese medicine industry with outstanding leadership capabilities, and cultivate 60 high-standard traditional Chinese medicine raw material production bases. The collaborative system will be more complete, and upstream and downstream links such as Chinese herbal medicine planting and processing, Chinese medicine R&D and production, and distribution services will be more closely coordinated, and five traditional Chinese medicine industry integrity innovation centers will be built. Innovative products continue to emerge, promoting the approval of a number of innovative traditional Chinese medicine drugs for marketing, cultivating 10 new varieties of proprietary Chinese medicines, and promoting the transformation of a number of medical institutions' traditional Chinese medicine preparations into innovative traditional Chinese medicine drugs. Breakthroughs in digital intelligence and green transformation and upgrading have been achieved. 10 industry standards related to digital intelligence technology for the traditional Chinese medicine industry have been formulated and revised, promoting the construction of a number of digital intelligence innovation carriers and public service platforms, supporting enterprises in digital transformation and upgrading, releasing 20 typical cases of digital intelligence transformation and upgrading, building 20 smart factories, cultivating 10 green factories, and comprehensively promoting the traditional Chinese medicine industry.

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

high-quality development of the industry.

On February 11, 2026, 11 departments including the National Health Commission jointly issued the "Measures for the Management of the National Essential Drug List" (referred to as the "Measures"), which were revised and adjusted around six aspects including legal policy basis, catalog structure, and management mechanism. The Essential Drug List is expected to usher in a new round of adjustments. According to the requirements of relevant documents issued by the State Council in 2019, in principle, the number of essential drug varieties in government-run primary medical and health institutions, secondary public hospitals, and tertiary public hospitals should not be less than 90%, 80%, and 60% respectively; however, the number of essential drug varieties in most level hospitals does not meet the requirements. After the release of the new version of the essential drug catalog, it is expected that the essential drug catalog will be further expanded. Looking back at the 2018 Essential Medicines Catalog, a total of 685 varieties were included, including 268 proprietary Chinese medicines (65 new ones compared with the 2012 version). Entering the essential medicine catalog is beneficial to promoting the admission promotion of traditional Chinese medicine varieties and increasing market share. Data from Minai.com shows that some exclusive Chinese patent medicines achieved increased sales after adjustments in 2018. In the context of the country's vigorous promotion of the inheritance, innovation and development of traditional Chinese medicine, innovative traditional Chinese medicines and exclusive varieties of traditional Chinese medicines with significant clinical value and solid product foundation in the treatment fields of pediatrics, chronic diseases, major diseases and other fields are expected to take this opportunity to be included in the new version of the essential medicine catalog.

2. AI technology empowers the innovative development of traditional Chinese medicine, and artificial intelligence opens up diverse application scenarios

On November 4, 2025, the National Health Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology and five other departments, issued the "Implementation Opinions on Promoting and Standardizing the Development of "Artificial Intelligence + Medical and Health" Applications. The document proposed to strengthen the full-cycle intelligent management of traditional Chinese medicine and encourage traditional Chinese medicine research and development institutions and varieties. Planting and production enterprises build a full-process traceability system for Chinese herbal medicines, explore a digital twin system for authentic herbal medicine planting, realize monitoring, guidance and traceability of the entire growth process, promote digital collection and intelligent analysis of information in the processing of Chinese herbal medicine pieces, and realize full-process intelligent management of Chinese medicine planting, processing and use. During the "14th Five-Year Plan" period, AI has made substantial progress in the field of traditional Chinese medicine research and development. AI technology can efficiently integrate massive data in traditional Chinese medicine research, covering medicinal ingredients, genomic information, clinical data, etc., and conduct rapid analysis through machine learning algorithms to help researchers discover potential functional substances and mechanisms of action, thus greatly improving the efficiency of new traditional Chinese medicine research and development.

3. In 2025, 26 new domestic traditional Chinese medicine drugs will be approved for marketing, and multi-dimensional changes will drive the high-quality development of the traditional Chinese medicine industry.

In 2025, a total of 26 new traditional Chinese medicines were approved for marketing in China (see Table 1 for details), setting a record high. Among them, there are 6 innovative traditional Chinese medicines in Category 1.1, accounting for 23%, and 17 ancient classic prescriptions in Category 3.1, accounting for 65%. These two categories constitute the main body of new traditional Chinese medicines in 2025, reflecting the two mainstream paths of current Chinese medicine research and development. One is the research and development of original Chinese medicines based on clinical value, and the other is the modernization and standardized development of classic famous prescriptions. It also reflects the country’s continued increase in support for traditional Chinese medicine innovation at the policy level. The 26 newly approved new Chinese medicines cover multiple treatment categories such as pediatric medicines, gynecological medicines, respiratory diseases, neurological diseases, digestive system diseases, cardiovascular and cerebrovascular diseases, and facial features medicines. Overall, they have achieved full coverage in multiple fields and made breakthroughs in multiple types, fully demonstrating the remarkable results of the innovative development of new traditional Chinese medicines in my country.

Table 1: New traditional Chinese medicines approved for marketing in China in 2025

Approval number Drug name Registration category Treatment category Z20250007 Shenpu granules New drug category 1.1 Gynecological drugs Z20250006 Yangxue Qufeng Zhitong granules New drug category 1.1 Nervous system disease drugs National drug approval number Z20250004 Pediatric bezoar antipyretic patch New drug category 1.1 Pediatric medicine approved by the Chinese government Z20250003 Compound Binafuxi granules New drug category 1.1 Respiratory disease drug approved by the Chinese medicine No. Z20250002 Qifangbitong tablets New drug category 1.1 Otology drug approved by the Chinese national drug No. Z20250001 Pediatric gold cough granules New drug category 1.1 Pediatric drug approved by the Chinese medicine No. Z20250005 Qinghouyan Lozenges New Drug Category 2.1 National Drug Approval Number for Otolaryngology Drugs Z20250008 Changma Xifeng Granules New Drug Category 2.2 Pediatric Drug Approval Number C20250018 Banxia Atractylodes Gastrodia Granules New Drug Category 3.1 Neurological Disease Drugs National Drug Approval Number C20250017 Banxia Xiexin Tang Granules New Drug Category 3.1 Drugs for Digestive System Diseases

National Drug Approval No. C20250016 Xiebaisan Granules New Drug Category 3.1 Pediatric Drug Jiangsu Kangyuan Pharmaceutical Co., Ltd. (Stock Code: 600557) 2025 Annual Report Summary

National drug approval number C20250004 Linggui Zhugan granules, new drug category 3.1. Linggui Zhugan granules, new drug category 3.1. Linggui Zhugan granules, new drug category C20250010. Linggui Zhugan granules, new drug category 3.1. Linggui Zhugan granules, new drug category 3.1. Drugs for cardiovascular and cerebrovascular diseases are approved by the Chinese Medicine No. C20250012 Shengzhentang Granules. New Drug Category 3.1 Drugs for respiratory diseases are approved by the Chinese Drug No. C20250014 Shengxietang Granules. New Drug Category 3.1 Drugs for respiratory diseases are approved by the Chinese Drug No. C20250007 Wenjingtang Granules. New Drug Category 3.1 Gynecological drugs are approved by the Chinese Drug No. C20250013 Wenjingtang Granules. New Drug Category 3.1 Gynecological Drugs with National Drug Approval No. C20250009 Loquat Qingfei Yin Granules New Drug Category 3.1 Dermatological Drugs with National Drug Approval No. C20250011 Loquat Qingfei Yin Granules New Drug Category 3.1 Dermatological Drugs with National Drug Approval No. C20250008 Taohong Siwu Tang Granules New Drug Category 3.1 Gynecological medicine, approved Chinese medicine No. C20250006 Yunvjian granules, new drug category 3.1. Drugs used in facial features, approved Chinese medicine No. C20250005. Erdongtang granules, new drug category 3.1. Drugs for digestive system diseases, Chinese national approved drug No. C20250003. Yiguanjian granules, new drug category 3.1. Drugs for digestive system diseases, national approved drug No. C20250001. Shaoyao Licorice Granules, Category 3.1 New Drug, National Drug Approval for Nervous System Diseases C20250002 Yiqi Qingfei Granules, Category 3.2 New Drug, Drug Use for Respiratory System Diseases Data source: Minenet China Application Progress Database

4. The National Medical Insurance Administration has increased its support for innovative drugs, and 7 exclusive Chinese patent medicines have been newly added to the medical insurance

On December 7, 2025, the National Medical Insurance Administration announced the "National Basic Medical Insurance, Maternity Insurance and Work Injury Insurance Drug Catalogue". This adjustment to the medical insurance catalog added 114 new drugs, 50 of which are Category 1 innovative drugs, accounting for 44%, the highest in history. The newly added catalog has improved the level of protection in key areas such as tumors, chronic diseases, mental diseases, rare diseases, and children's medication. The adjustment of the new version of the National Medical Insurance Drug Catalog is not only a dynamic expansion with incomings and outgoings, but also a core practice for the development of my country's medical insurance system towards refined management and high quality. The seven newly added exclusive Chinese patent medicines (see Table 2 for details) are all innovative drugs approved in the past three years. These varieties focus on multiple treatment areas and have greatly improved the accessibility of clinical drugs.

Table 2: Exclusive Chinese patent medicines newly added to the 2025 version of the National Medical Insurance Drug Catalog

Drug Name Registration Application Treatment Category

Shenyu Ningshen Tablets New Drug Category 1.1 Drug for Nervous System Diseases

Compound Binafuxi Granules New Drug Category 1.1 Drug for Respiratory System Diseases

Qifangbitong Tablets New Drug Category 1.1 Otolaryngology Drug

Wenyang Jiedu Granules New Drug Category 3.2 Drug for Respiratory System Diseases

Yangxue Qufeng Zhitong Granules New Drug Category 1.1 Drug for Nervous System Diseases

Yiqi Qingfei Granules New Drug Class 3.2 Drug for Respiratory System Diseases

Yunujian Granules New Drug Category 3.1 Otolaryngology Drug

Data source: Minenet database

5. Comprehensive strengthening of the innovative drug support system

On January 3, 2025, the General Office of the State Council issued the "Opinions on Comprehensively Deepening the Reform of Drug and Medical Device Supervision and Promoting High-Quality Development of the Pharmaceutical Industry", clearly optimizing the clinical trial review and approval mechanism, launching pilot work, and shortening the review and approval time limit for innovative drug clinical trials from 60 working days to 30 working days.

On July 1, 2025, the National Medical Insurance Administration and the National Health Commission jointly issued "Several Measures to Support the High-Quality Development of Innovative Drugs", proposing 16 measures in five aspects, including strengthening support for the research and development of innovative drugs, supporting the entry of innovative drugs into the medical insurance catalog and commercial health insurance innovative drug catalog, encouraging the clinical application of innovative drugs, improving the multiple payment capabilities of innovative drugs, and strengthening organizational guarantees. In order to support the high-quality development of innovative drugs,

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

Provide positive support for quality development.

As the pace of innovation in traditional Chinese medicine continues to accelerate, my country's traditional Chinese medicine standard system is being steadily constructed and continuously improved along a scientific and standardized path. It is believed that during the "15th Five-Year Plan" period, my country will transform from a "pharmaceutical power" to a "pharmaceutical power", and the medical system will gradually form a new situation of equal emphasis on traditional Chinese and Western medicine and coordinated development. Traditional Chinese medicine products will also contribute more "Chinese wisdom" and "Chinese solutions" to patients around the world.

(2) The company’s industry status

As a national key high-tech enterprise and a national technological innovation demonstration enterprise committed to the standardization, digitization, and intelligence of traditional Chinese medicine, the company actively implements an innovation-driven development strategy, continues to increase investment in research and development, and has established an internationally advanced innovative drug research and development system. It is at the leading level in the industry in terms of new drug research and development, valid invention patents, and the number of major national science and technology projects undertaken.

Against the background of high-quality development of the traditional Chinese medicine industry, the company has demonstrated strong R&D and transformation capabilities. In 2025, Shenpu Granules, Yunüjian Granules and Xiebaisan Granules were approved. Guided by unmet clinical needs, the company continues to expand the depth and breadth of new traditional Chinese medicine drugs, further consolidating the company's industry position. Only 7 new Chinese patent medicines will be added to the medical insurance catalog in 2025. The company's exclusive traditional Chinese medicine varieties, Wenyang Jiedu Granules and Yunüjian Granules, have been included in the "National Basic Medical Insurance, Maternity Insurance and Work Injury Insurance Drug Catalog (2025)" for the first time through negotiation. The clinical value of the company's products has been recognized, and the exclusive competitiveness of the company's drugs has continued to increase. The company currently has a total of 43 varieties included in the National Essential Drugs List. The company will rely on its solid clinical research foundation and is committed to promoting more of the company's products to enter the National Essential Drugs List to better meet clinical needs.

Traditional Chinese medicine manufacturing is in a critical period of transformation from automation to digitalization and intelligence. The company takes "intelligent transformation and digital transformation" as the starting point to build an intelligent management and control system covering the entire production chain to achieve digital and precise process control. Relying on the National Key Laboratory of Traditional Chinese Medicine Pharmaceutical Process Control and Intelligent Manufacturing Technology and the National and Local Joint Engineering Research Center for Intelligent Manufacturing Technology of Chinese Patent Medicines, the company upgrades and promotes the "intelligent manufacturing technology system based on traditional Chinese medicine functional substances" and provides the market with high-quality traditional Chinese medicine products and production capacity guarantees by continuously improving the whole-process quality control and intelligent manufacturing levels.

In terms of AI empowering the research and development of traditional Chinese medicine, in 2025, the company focused on the two core links of drug research and development and production process control, implemented a number of AI technology applications, and achieved remarkable results, effectively solving outstanding problems such as low efficiency and data dispersion under the traditional model. Deepening the "artificial intelligence + traditional Chinese medicine" innovation action, the company has integrated AI technology into the entire process of drug research and development and production and manufacturing, providing strong support for the company's high-quality development.

During the reporting period, the company received the following major honors:

In January 2025, the company won the 2024 Most Socially Responsible Award from Xinhua Daily.

In February 2025, the company was invited to attend the "One Center, One Base and One Hub" construction promotion meeting in Jiangsu Province, and was awarded the title of "Excellent Level" smart factory by the Ministry of Industry and Information Technology.

In June 2025, the "2025 PDI Pharmaceutical Research and Development·Innovation Conference and China's Top 100 Pharmaceutical Research and Development Press Conference" jointly sponsored by Yaozhi.com and "China Pharmaceutical Industry" magazine announced the "2025 China's Traditional Chinese Medicine Research and Development Strength Ranking TOP50", and the company topped the list for the eighth time.

In July 2025, the 2025 42nd National Pharmaceutical Industry Information Annual Conference organized by the China Pharmaceutical Industry Information Center announced the list of "Top 100 Main Business Enterprises in China's Pharmaceutical Industry in 2024", and the company was successfully shortlisted.

In September 2025, at the Yangtze River Delta Digital Transformation Conference and the Jiangsu Enterprise Information Association Annual Conference, the company successfully won the title of "2025 Outstanding Benchmark Enterprise for Digital Transformation".

In October 2025, at the 2025 Academic Annual Meeting and Drug Quality Development Conference of the China Pharmaceutical Quality Association, the company's "Advanced Manufacturing and Quality Control Traceability Results of Traditional Chinese Medicine Extraction Process" project won the Quality Management Ingenuity Achievement Award.

In October 2025, at the 46th Pharmaceutical Industry Quality Management (QC) Group Results Presentation and Exchange Meeting, the company won the title of "Excellent Enterprise at the 46th National Pharmaceutical Industry Quality Management (QC) Group Results Presentation and Exchange Conference".

(3) The company’s main business

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

The company is in the pharmaceutical manufacturing industry, and its main business involves the research and development, production and sales of pharmaceuticals. The company has always adhered to the good vision of "Modern Chinese Medicine, Kangyuan Intelligent Manufacturing", adhered to the drive of scientific and technological innovation, mainly promoted the high-quality development of Chinese medicine, and actively deployed in chemical drugs, biological drugs and other fields. The company is a national technological innovation demonstration enterprise, a national key high-tech enterprise, a national innovative pilot enterprise, a national intellectual property demonstration enterprise, and one of the top 100 enterprises in the national pharmaceutical industry.

As of the end of the reporting period, the company had 60 new traditional Chinese medicines (including 49 exclusive varieties), and had undertaken more than 50 major projects at or above the provincial level such as the 973 Plan, the 863 Plan, and major new drug creation. It had won 1 second prize of the National Technology Invention Award, 3 second prizes of the National Science and Technology Progress Award, and 2 China Patent Gold Awards. In 2025, the company topped the "TOP50 Ranking of China's Traditional Chinese Medicine R&D Strength" for the eighth time, and its scientific and technological innovation capabilities are firmly at the forefront of the traditional Chinese medicine industry.

The company's current main product lines focus on the advantageous fields of traditional Chinese medicine such as respiratory and infection, cardiovascular and cerebrovascular diseases, gynecology, orthopedics and traumatology diseases. Representative varieties of the respiratory and infectious disease product line include Jinzhen Oral Liquid, Reduning Injection, Xingbei Zhike Granules, Yinqiao Qingre Tablets, Sanhan Huashi Granules, etc.; representative varieties of the cardiovascular and cerebrovascular product line include Tianshu Capsules, Ginkgo Diterpene Lactone Meglumine Injection, Longxue Tongluo Capsules, Tongsaimai Tablets, Dazhu Rhodiola Rosea Capsules, Sumatriptan Naproxen Sodium Tablets, etc.; representative varieties of the gynecology product line include Guizhi Fuling Capsules, Sanjie Analgesic Capsules, Shenpu Granules, etc.; representative varieties of the orthopedics product line include Compound Nanxing Analgesic Cream, Yaobitong Capsules, Muscles and Bones Analgesic Gel, Qiwei Tongbi Oral Liquid, etc.

In 2025, the company will adhere to innovation-led development, deepen the "one body, two wings" research and development pattern, and achieve the implementation of research and development results in the three major fields of traditional Chinese medicine, chemical medicine, and biological medicine. Three new traditional Chinese medicines have been approved for marketing, including Category 1.1 innovative traditional Chinese medicines Shenpu Granules, Category 3.1 new traditional Chinese medicines Yunvjian Granules and Xiebaisan Granules. Five new traditional Chinese medicines have been approved for clinical use, including Category 1.1 innovative traditional Chinese medicines Guben Xiaorash Granules, Lianshen Gengnian Granules and Jianpi Shugan Guben Granules, and Category 2.3 improved new drugs Jinzhen Oral Liquid and Epimedium Total Flavonoids Capsules.

In terms of innovative chemical drugs, DC20 tablets (for the treatment of Alzheimer's disease) have entered Phase III clinical research, SIPI-2011 tablets (for the treatment of ventricular arrhythmia), DC042 tablets (for the treatment of benign prostatic hyperplasia), and WXSH0493 tablets (for the treatment of hyperuricemia) are in the Phase II clinical research stage, and AAPB for injection (for the treatment of acute ischemic stroke) has completed Phase I during the reporting period. Phase II clinical research is currently underway. KYHY2302 cream (for the treatment of mild to moderate plaque psoriasis) and KYHY2303 tablets (for the treatment of hematological tumors) are in the Phase I clinical research stage. KYS2301 gel (for atopic dermatitis) has been approved for clinical use. In terms of generic drugs, sumatriptan and naproxen sodium tablets (the first domestic migraine compound preparation) and other varieties have been approved for marketing.

In terms of innovative biopharmaceuticals, ZX1305 injection (for the treatment of optic nerve damage), ZX1305E eye drops (for the treatment of neurotrophic keratitis), ZX2021 injection (for the treatment of overweight or obesity), and ZX2010 injection (for the treatment of type II diabetes) are in the phase II clinical research stage, KYS202004 A injection (for the treatment of psoriasis) and KYS202002A injection (for adult systemic lupus erythematosus, relapsed and refractory multiple myeloma) are in the phase I clinical research stage. ZX2021 injection has been approved for clinical use for the new indication of treating fatty liver disease related to metabolic dysfunction, laying the foundation for the output of innovative results.

The company's various R&D pipelines are advancing steadily. For the company's main R&D projects, please refer to "V. Main Business Situations During the Reporting Period" in "Section 3 Management Discussion and Analysis" of the company's "2025 Annual Report" for the company's drug (product) R&D status.

(4) Company business model

The company's business model is comprehensive in R&D, production and sales.

1. R&D model

The company has built a clinically-oriented innovative drug research and development system, adheres to the strategic layout of "research and development, planning for one generation", focuses on unmet clinical needs, and creates innovative traditional Chinese medicine, chemical drugs and biopharmaceutical product pipelines with differentiated advantages. The company implements the "one body and two wings" development model, with traditional Chinese medicine as the core, chemical drugs and biological drugs developing collaboratively, covering the entire chain of research and development from new drug discovery to post-market research, and ensuring the continuity of innovation through continuous investment in research and development.

Relying on national-level platforms such as the "National Key Laboratory of Traditional Chinese Medicine Pharmaceutical Process Control and Intelligent Manufacturing Technology", integrating multi-disciplinary technologies such as AI algorithms, strengthening intelligent manufacturing and full-process quality control, and promoting research on the material basis and mechanism of action of marketed varieties. At the same time, through industry-university-research cooperation and talent mechanism innovation, technology transformation is accelerated, and a "clinical-basic" research evidence chain is built using evidence-based medicine.

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

Support the improvement of the academic status of products and promote the marketization of innovative results.

2. Procurement model

The company has set up a special procurement center, implemented a unified bidding and procurement management model, and is fully responsible for the procurement of materials required for research and development, production and operation. Procurement work strictly follows the principle of "plan orientation, system constraints, and efficient collaboration", formulates procurement plans based on R&D, production, and business plans, strictly implements full-process systems such as supplier management and bidding management, and reasonably controls material purchase prices and inventory levels, effectively reducing capital occupation costs. The company conducts in-depth research on the bulk material supply chain and industrial chain pattern, regularly conducts market research, raw material price analysis and trend forecasting, continuously iteratively optimizes the procurement bidding model and supplier team structure, builds a standardized, professional and efficient bidding and procurement management system, avoids the risk of material quality fluctuations and supply delays, and lays the foundation for quality control in the production process.

3. Production mode

The company and its pharmaceutical manufacturing subsidiaries strictly follow GMP to organize production, and integrate the enterprise resource planning system throughout the entire production process to achieve deep integration, optimized allocation and information sharing of internal resources, and improve production control efficiency. The production plan is formulated based on the principle of "determining production based on sales and dynamic adjustment". Based on the annual sales forecast and monthly sales plan, combined with actual sales data and real-time inventory conditions in the past three months, the production master plan is scientifically formulated to clarify product variety, quantity, specifications and schedule requirements. Each production sub-workshop strictly prepares workshop-level production plans based on the production master plan, accurately checks the matching of material inventory, production capacity and plans, allocates materials according to task priorities, and issues production instructions. Through refined workshop scheduling management, full closed-loop control is achieved from plan preparation and execution to process control and results review. At the same time, the Quality Control Department is involved in the entire process and strictly implements the full-process inspection of incoming material quality control, intermediate quality control, and finished product quality control; the Quality Management Department focuses on key production links to implement strict quality control, forming a complete production management system of "planning-execution-quality control-review" to ensure that the production process is compliant and product quality is controllable.

4. Sales model

The company's sales model mainly adopts a professional academic promotion model.

Academic promotion is the main feature of the company's pharmaceutical sales. The company insists on building its own sales team and relies on professional academic promotion teams. Through academic leaders in the professional medical field and academic promotion activities at various levels and in various forms, the results of product clinical application research are delivered to target doctors and practitioners in medical institutions at all levels, thereby increasing the visibility of the company's pharmaceutical products and the recognition of doctors. At the same time, terminal drug usage can also be fed back from the sales team to the production system and R&D system, which plays a positive role in promoting the company's quality management, R&D innovation, and inventory control.

The company's main customers are pharmaceutical commercial companies. It sells its products to various pharmaceutical terminals through pharmaceutical commercial companies across the country, and sales staff carry out terminal academic promotion work. The terminal market pricing principle of the company's main products is: fully implement national negotiations and provincial drug centralized procurement prices.

(5) Discussion and analysis of operating conditions

1.Overview

In 2025, the national economy will move forward under pressure. On the one hand, it will face the challenges of a complex and changing external environment and in-depth changes in the industry. On the other hand, the pharmaceutical industry will continue to transform, and the value of innovative pharmaceutical companies will become more prominent. The company adheres to technological innovation and deepens the "one body, two wings" R&D pattern. The R&D pipeline has both depth and breadth, and innovative R&D results are continuously produced. At the same time, the company deepens production operation management, continues to strengthen the construction of a comprehensive quality system, promotes smart factories and digital transformation, and ensures drug supply based on sales and production. Now the production and operation efficiency and quality have been improved; the strategy focuses on customer development, innovating the out-of-hospital marketing model, while deepening the hospital market, actively developing the grassroots market, carrying out refined investment management, developing new retail models, increasing the share and brand influence on O2O and B2C platforms, and deepening offline channels. Although performance is under periodic pressure, the company's endogenous power and innovation vitality continue to accumulate in the continuous reform and innovation, laying a solid foundation for long-term development.

2.Main operating results during the reporting period

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

(1) R&D innovation results accelerate output and system strengthening, empowering coordinated development of marketing

(1.1) Main pipeline layout

For details on the layout of the company's main pipelines, please refer to "3. Discussion and Analysis of Operating Situations" in "Section 3 Management Discussion and Analysis" of the company's "2025 Annual Report".

(1.2) Empower marketing development

During the reporting period, the company continued to strengthen the supporting role of R&D in marketing, and provided product support, academic evidence, quality assurance and policy access support for market expansion through systematic work in innovative product reserves, academic research, full-process quality control and intelligent manufacturing system construction, product life cycle management, etc., forming a coordinated development mechanism for R&D and marketing.

Innovative product empowerment: The company continues to deepen the "one body and two wings" R&D layout and build a multi-level product matrix. During the reporting period, the company's 3 new traditional Chinese medicine drugs were approved for marketing, 5 projects were in the production application stage, and more than 20 projects were in the clinical research stage. Steadily promote clinical research on innovative chemical and biological drugs, actively expand and extend the industrial chain, and cultivate new growth points, thereby empowering marketing growth.

Academic research empowerment: The company continues to explore the clinical value of its products and strengthen academic evidence support. During the reporting period, we further promoted clinical research on Longxue Tongluo Capsules, Tongsemai Tablets, Reduning Injection, Ginkgo Diterpene Lactone Meglumine Injection, RWS, Guizhi Fuling Capsules, and Shenwu Yishen Tablets. Conduct basic research on marketed varieties such as Sui Liquid, Tongsemai Tablets, Yaobitong Capsules, Longxue Tongluo Capsules, Sanjie Analgesic Capsules, Xingbei Zhike Granules, Qiwei Tongbi Oral Liquid, Jingu Analgesic Gel, etc., and deepen the new scientific connotation of the products through basic research; carry out post-market re-research and evaluation of traditional Chinese medicine injections such as Reduning Injection and Ginkgo Diterpene Lactone Meglumine Injection.

Product life cycle management empowerment: The company extends the product life cycle, strengthens market competitiveness, and provides access support for marketing and promotion through traditional Chinese medicine variety protection declaration, medical insurance catalog access, OTC variety layout and other means. As of the end of the reporting period, four protected traditional Chinese medicine varieties have been approved: Jiuwei Xifeng Granules, Epimedium Total Flavonoids Capsules, Shenwu Yishen Tablets, and Qiwei Tongbi Oral Liquid. In 2025, three products, Wenyang Jiedu Granules, Yunujian Granules, and Sumatriptan Naproxen Sodium Tablets, were included in the national medical insurance directory. Among them, Yunujian Granules and Sumatriptan Naproxen Sodium Tablets were approved and included in the same year. Currently, it has OTC varieties such as Jinzhen oral liquid and Tianshu capsules, and continues to promote the transformation of superior prescription drugs into the OTC market and build a coordinated development pattern of prescription drugs and OTC.

(2) Deepen quality management and smart factory construction to promote high-quality development

The company continues to deepen the construction of a comprehensive quality management system, focusing on process optimization and supply chain collaboration to achieve both quality control and production efficiency improvements. The construction of the traditional Chinese medicine granules intelligent chemical plant project has been completed, the SAP system has been successfully launched, MES/LIMS has realized the control of the entire production and inspection process, 5G innovative applications and the results of "intelligent transformation to digital transformation to network connection" have continued to be implemented, and the level of digitalization and refinement of production operations has been significantly improved, injecting strong impetus into high-quality development.

Determine production based on sales, and make every effort to ensure the production and supply of pharmaceuticals. Deepen the flexible manufacturing model of “production determined by sales” and build a full-chain supply and demand coordination system. Adhere to market demand orientation, rely on digital platforms to capture market dynamics in real time, and dynamically adjust production schedules and inventory strategies. Strictly control the inventory ratio, effectively build a strong defense line for drug supply, and improve the resilience of the supply chain.

Improve quality and efficiency, and comprehensively promote the upgrading of the quality management system. The quality management system has been continuously improved, and during the reporting period, it passed 14 GMP inspections at all levels. We implemented quality and safety responsibilities, benchmarked against the "Quality and Safety Subject Responsibility Guidance Manual" and EU GMP, and completed 65 business management improvement projects throughout the year to facilitate efficient compliance management of production quality. It has successfully passed the GMP compliance inspection, registration verification, special and flight inspection organized by the national, provincial and municipal drug regulatory authorities, and the quality management system has been continuously improved. We work with core suppliers to carry out quality control, and the quality qualification rate of pharmaceutical packaging materials continues to improve, practicing the quality-oriented development concept. Promote research on process quality issues, and 24 QC topics won the first prize for the national pharmaceutical industry QC group results publication.

Focus on technological transformation and upgrading, and promote the implementation of high-quality projects with high standards. During the reporting period, by promoting the implementation of 6 key technical transformation projects such as the construction of traditional Chinese medicine intelligent granule factory, we further standardized the entire process of project construction and improved the project management with the "project system" as the core.

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

management system, promote business departments to be deeply involved in the full cycle of project planning, construction, and acceptance, and effectively ensure the quality of project construction. During the project implementation process, a professional technical transformation team with excellent professional capabilities and outstanding execution efficiency was simultaneously forged.

(3) Marketing system reform and market expansion

(3.1) Clinical business continues to deepen the construction of a professional marketing system

Focus on improving the capabilities of marketing personnel and team building: The company focuses on customer development and pays close attention to improving the capabilities of marketing personnel. By continuously optimizing and improving the marketing personnel promotion system, the level of marketing personnel will be significantly improved in 2025. In addition, the company also proactively adjusts sales managers who do not meet the requirements to inject new energy into management and ensure that the team always operates efficiently.

Large-scale development layout in the grassroots market: In response to the problem of insufficient coverage of grassroots terminal varieties, the company took advantage of policy opportunities such as the county medical community and launched a multi-unit development strategy of "three varieties as one unit" in the second half of 2025 to strengthen the development layout of the grassroots market and effectively improve the coverage of grassroots terminal varieties.

Academic activities enhance professional image: More than 1,600 regional academic activities were held throughout the year, covering product lines in respiratory and infection, cardiovascular and cerebrovascular, orthopedics, gynecology, nephrology and other fields, successfully conveying the core value of the product and continuing to create a professional academic image. This not only enhances doctors’ trust in the product, but also improves patients’ treatment compliance.

(3.2) Support the simultaneous development of multiple business formats and continue to expand sales channels

Optimized management of investment cooperation: The company continues to optimize the management of the business model, switches unqualified agents, accelerates informatization construction, and empowers investment management.

Orderly maintenance of channel sales: Based on the customer-centered principle, the company strictly controls the order of channel sales, clinics, and private markets, continues to expand its customer base, and creates more benchmark terminals through the introduction of multiple varieties to further consolidate its market position.

Development of new retail models: The company actively explores and develops new retail models, and gradually establishes a global marketing system covering products, new media, and promotion. With the help of new media platforms such as Xiaohongshu, Douyin, and public accounts, we have established C-end brand recognition, and proposed the market strategy of "starting with gold and moving with bones", as well as the "all the way to C" strategy of Jinzhen Oral Liquid and the product strategy of offline orthopedic sales. We sorted out the academic materials and positioning of core products, transformed professional clinical language into language suitable for OTC clerks and consumers, and improved the market acceptance of the product.

(4) Two-wheel drive of academics and compliance

With the construction of a compliance system as the core, the company deeply integrates the application of digital and intelligent management and control tools, continues to improve the compliance guarantee mechanism, and builds a solid compliance defense line for the company's high-quality development.

(4.1) Improve the marketing compliance model and enable scenario-based standardized operations

Focusing on the prevention and control of compliance risks in the marketing field, we will continue to optimize the marketing compliance management model with a "customer-centric" approach, and strive to solve problems such as diverse marketing scenarios and difficult management and control. Expand the functions of the compliance toolbox, clarify compliance standards and operating specifications for each link, and achieve traceability and controllability of the entire process. Open up the entire chain of online application, review, and management of marketing activities, and embed compliance review nodes in key links to achieve "application with standards, review with basis, execution with control, and review afterward." Through scenario-based compliance embedding, it not only meets the diverse needs of various marketing scenarios, but also effectively prevents compliance risks in marketing activities, ensuring that marketing behaviors are legal, compliant, standardized and orderly.

(4.2) Upgrade compliance digital management and build an integrated management and control system

Relying on the opportunity of digital and intelligent transformation, with the goal of improving compliance management efficiency, we will promote iterative upgrades of compliance management and control tools, break down system barriers, and achieve digital and integrated transformation of compliance management. Integrate the core functions of multiple platforms such as the SFE system and the expense reporting system, focus on the core pain points of compliance management, and build an integrated platform for compliance management and control. Through system integration, real-time data synchronization and information interconnection in all aspects can be achieved, reducing manual intervention and reducing human compliance risks; at the same time, with the help of the system's data analysis capabilities, accurate early warning of compliance risks and timely investigation of violations can be achieved, greatly improving the efficiency and accuracy of compliance management, promoting the transformation of compliance management from "manual control" to "digital intelligence empowerment", and the overall effectiveness of compliance management has been significantly improved.

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

(4.3) Regularly carry out compliance training and empowerment to cultivate a proactive compliance culture for all employees

Adhering to the concept of "compliance first, all employees participating", compliance training is used as an important starting point to build a strong compliance awareness of all employees, cultivate a compliance culture, and promote the compliance concept to be deeply rooted in the hearts of the people. An exclusive online college compliance class has been launched, integrating various compliance training resources, supporting and improving learning progress tracking, learning effect assessment and other functions, so that employees’ learning process can be monitored and learning results can be tested, and employees can be urged to actively learn compliance knowledge and improve their compliance literacy. Through regular and systematic training, we will create a cultural atmosphere in which all employees are proactive, conscious, and committed to compliance, making compliance a behavioral habit and professional bottom line for employees, and providing a solid human resource guarantee for the efficient implementation of the compliance system.

(5) Coordinated development of organizational effectiveness and corporate culture

(5.1) Deepen the intensive management of human resources. The talent structure is further optimized to lay a solid intellectual foundation for innovation and development. The company develops systematic learning plans for management cadres and employees of all series, and comprehensively uses professional training, internal case teaching, professional qualification certification and other methods to comprehensively improve personnel's ability to perform their duties. Focus on implementing projects such as the "Marketing Elite Project", "Spark Plan for Fresh Graduates" and "Special Promotion Training for Cadres" to achieve precise empowerment. A total of more than 150 training sessions of various types were carried out throughout the year, covering approximately 15,000 people. The company has built a high-quality teacher network that combines internal and external resources. Internally, we select business backbones as internal trainers and improve their teaching and course development capabilities through professional training to promote organizational experience accumulation. Externally, we have long-term cooperation with well-known universities and institutions, and introduce industry experts to teach cutting-edge technologies and concepts. For example, the "Enterprise Management Innovation Laboratory" jointly built with Nanjing Normal University focuses on practical business problems to carry out research and transforms the results into special training for middle-level, senior-level and reserve cadres, effectively empowering high-quality development of enterprises. Continue to build a learning organization and carry out learning on new AI tools, independent learning on total quality management and training for all employees.

(5.2) Build a solid foundation for corporate culture construction. In-depth implementation of the study and education of the spirit of the Eight-Point Provisions of the Central Committee, as well as the spirit of the Fourth Plenary Session of the 20th Central Committee of the Party, the "15th Five-Year Plan", etc., through expert lectures, learning exchanges, themed party days and other activities, to enhance the ideological and political awareness and theoretical literacy of the majority of party members and cadres. Actively carry out theme activities to commemorate the 80th anniversary of the Anti-Japanese War, and deeply embed spiritual relay and mission inheritance into the blood of corporate culture through themed movie watching, knowledge competitions, themed party days, watching the 93 military parade, etc. We continue to organize and carry out the "Hopu Flower" innovative team building, "Book Fragrance and Happiness·Reading Monthly Enjoyment" activities, festival activities, etc., and vigorously promote the "Double Hundred" health campaign, promote Ba Duanjin in the form of work-time exercises, and carry out a series of cultural and sports activities in which employees widely participate, such as employee basketball leagues, National Day "cloud" performances, and fun sports games, to continuously enrich the connotation of corporate culture.

(6) Analysis of core competitiveness during the reporting period

During the reporting period, under the new normal of my country's pharmaceutical industry shifting from rapid growth to high-quality development, the company adhered to the general tone of progress while maintaining stability, adhered to the innovation-driven development strategy unswervingly, consolidated and strengthened its advantages in core businesses, steadily promoted R&D innovation and production technology innovation, actively expanded and extended the industrial chain, sought new growth points, and continuously improved the company's core competitiveness. The company's core competitiveness is mainly reflected in the following aspects:

1. Deeply explore the advantages of product clusters in the field of major diseases

As of the end of this reporting period, the company has obtained a total of 220 drug production approvals, 52 of which are exclusive varieties of traditional Chinese medicines, and a total of 4 protected varieties of traditional Chinese medicines (Jiuwei Xifeng Granules, Epimedium Total Flavonoids Capsules, Shenwu Yishen Tablets, and Qiwei Tongbi Oral Liquid). A total of 123 varieties of the company's products are included in the 2025 version of the National Medical Insurance Catalog, including 48 Category A, 75 Category B, and 27 exclusive varieties; a total of 43 varieties are included in the National Essential Drugs Catalog, of which 6 are exclusive varieties. The company has formed a product portfolio with multiple products and dosage forms covering different disease courses or patient groups in the fields of respiratory and infection, cardiovascular and cerebrovascular, orthopedics, gynecology and other fields. It can provide integrated solutions and build a deep market moat.

2. Differentiated R&D capabilities oriented by clinical value

Forward-looking pipeline layout: The traditional Chinese medicine segment focuses on the advantageous areas of traditional Chinese medicine such as respiratory and infection, gynecology, cardiovascular and cerebrovascular, digestion and metabolism, and continues to promote the research and development of innovative drugs in multiple stages. Chemical drugs focus on differentiated targets and clinical needs, focusing on the nervous system, cardiovascular and cerebrovascular, urinary system and skin diseases, and promote multiple innovative drugs into the clinical stage. Biological drugs focus on metabolic diseases, neurological diseases, autoimmunity and other directions.

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

"Innovation + iteration" two-wheel drive: On the one hand, the company insists on focusing on the research and development of innovative drugs and has formed a reserve of innovative varieties under development for multiple pipelines of traditional Chinese medicines, chemical drugs, and biological drugs. On the other hand, the company continues to promote post-market research and secondary development of traditional Chinese medicine products and continuously explores the clinical value of the products. For injection varieties such as Reduning Injection and Ginkgo diterpene lactone meglumine injection, we will continue to carry out post-market research and evaluation, and jointly promote the development of improved new drugs such as Reduning Granules and Ginkgolide Dropping Pills to further expand administration routes and expand product coverage. At the same time, we will actively carry out research on new indications for products such as Ginkgo diterpene lactone meglumine injection, Jinzhen Oral Liquid, Xingbei Zhike Granules, Epimedium Total Flavonoids Capsules, etc. to enrich clinical application scenarios and enhance the core competitiveness of our products.

Interdisciplinary collaborative R&D platform: The company has built a R&D system that operates collaboratively with national key laboratories, Jiangsu Provincial key laboratories, academician workstations and multi-disciplinary support platforms. Relying on the National Key Laboratory of Traditional Chinese Medicine Pharmaceutical Process Control and Intelligent Manufacturing Technology, we will continue to carry out technical research on the functional substances of traditional Chinese medicine and intelligent manufacturing technology, and promote the transformation of research results into full-process quality control applications of traditional Chinese medicine. Facing the technological frontier, we will build a multi-disciplinary basic research and new drug development support platform for artificial intelligence new traditional Chinese medicine screening, multi-omics and other interdisciplinary basic research and new drug development support platforms, and continue to empower research and development innovation.

Research and development of ancient classic Chinese medicine formulas and traditional Chinese medicine compound preparations: The company deeply implements the concept of "awakening classics and renewing classics" and develops new drugs based on the inheritance and innovation of ancient classic Chinese medicine formulas. After years of R&D accumulation, the company has successfully transformed six ancient classic prescriptions into modern Chinese medicines, including Linggui Zhugan Decoction Granules, Sanhan Huashi Granules, Jichuan Jian Granules, Wenyang Jiedu Granules, Yunujian Granules and Xiebai San Granules, covering the fields of respiratory and infection, digestion and metabolism, etc., forming a unique industrialization advantage of classic famous prescriptions.

3. Industry-leading intelligent manufacturing and full-process quality control system

The company is deeply involved in the field of intelligent manufacturing of traditional Chinese medicine, and has always promoted innovation in traditional Chinese medicine production with new modern pharmaceutical technologies, transforming process advantages into core capabilities in quality control, providing solid technical support for preventing quality risks in the production process and achieving precision manufacturing, helping the company consolidate its core competitiveness under the new normal of high-quality development in the pharmaceutical industry.

The company took the lead in deeply integrating modern pharmaceutical new technologies with traditional Chinese medicine production, and maturely applied membrane separation, macroporous resin adsorption, continuous countercurrent extraction and other core processes and supporting new equipment to achieve three key breakthroughs: First, it greatly improved the purity and yield of effective ingredient extraction, solving the problem of loss of active ingredients and impurities in traditional processes. The second is to achieve standardized management and control of the production process to avoid the risk of quality fluctuations between batches caused by traditional manual operations; the third is to promote the large-scale implementation of high-tech products, form a virtuous cycle of "process innovation-quality improvement-capacity release", and establish a benchmark for modern production of traditional Chinese medicine.

The company takes "intelligent transformation and digital transformation" as the starting point to create an intelligent management and control system covering the entire production chain. The digital transformation of core production units such as the intelligent extraction and refining factory of traditional Chinese medicine, injection workshop, and solid preparation factory has been completed. At the same time, the construction of an intelligent traditional Chinese medicine granule factory will be completed in 2025 to comprehensively improve the level of production automation. By building an intelligent production line process database and batch data collection and analysis system, integrating SCADA system data, and building an Internet of Things, data and business middle platform to achieve equipment interconnection and data interoperability. As a national pilot unit for smart supervision of traditional Chinese medicine injections, the company uses Reduning Injection as a pilot to promote full-process smart supervision, optimize automatic data collection, and simultaneously build GAP and LIMS systems to lay a solid foundation for accurate process control and full quality traceability.

Relying on high-end platforms such as national key laboratories and national and local joint engineering research centers, the company pioneered the "whole-process quality control system for traditional Chinese medicine" and deeply applied near-infrared spectroscopy technology to the entire production process, realizing a fundamental transformation of quality control from "end-point testing" to "process control." Through the iteration of near-infrared online detection technology, real-time monitoring of some intermediates and key production links can be implemented to accurately capture fluctuations in process parameters and make timely corrections and adjustments, ultimately achieving the precise manufacturing goal of "consistent point-to-point, consistent section-to-section, and consistent batch-to-batch" production of proprietary Chinese medicines, ensuring stable and uniform drug quality from the process level, and completely avoiding the risk of quality deviations in the production process.

The company's process innovation achievements have repeatedly won national and industry-level authoritative certifications, confirming its leadership in the field of intelligent manufacturing of traditional Chinese medicine: "Digital Extraction and Refining Factory" was selected into the first batch of intelligent manufacturing pilot demonstration projects by the Ministry of Industry and Information Technology, becoming an industry benchmark; "Modern based on 5G + digital twin "TCM Smart Factory" won the title of the first batch of "Excellent Smart Factories" from the Ministry of Industry and Information Technology, leading the intelligent upgrading of the traditional Chinese medicine industry; multiple honors not only affirm the company's technological strength, but also reflect the powerful empowerment of technological advantages in quality risk prevention and control, and continue to consolidate the company's core competitiveness.

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

3. The company’s main accounting data and financial indicators

3.1 Main accounting data and financial indicators in the past three years

Unit: Yuan Currency: RMB This year compared with 2023

2025 2024 year

After adjustment Before adjustment

Increase or decrease(%)

Total assets 6,862,595,765.51 6,906,762,381.38 -0.64 7,189,158,609.91 7,117,321,667.52 shares of listed companies

4,818,506,632.42 4,514,575,814.65 6.73 4,940,181,461.88 5,192,797,030.75 Dong’s net assets

Operating income 3,292,900,188.28 3,897,668,541.61 -15.52 4,863,817,397.25 4,867,806,702.40 Total profit 356,566,100.69 384,763,977.70 -7.33 447,989,360.38 550,982,603.37 Attributable to shares of listed companies

303,930,817.77 391,862,071.18 -22.44 464,156,157.81 536,732,878.37 Dong’s net profit

Attributable to listed company shares

Net profit after deducting non-recurring items 217,261,934.69 363,186,857.20 -40.18 499,482,943.88 499,482,943.88 profit and loss

Cash generated from business activities

610,592,171.76 702,488,204.31 -13.08 972,315,207.52 1,041,003,849.89 Net cash flow

Weighted average net asset income decreased by 1.46

6.51 7.97 9.72 10.75 Profit rate (%) percentage points

Basic earnings per share (yuan

0.54 0.68 -20.59 0.81 0.93/share)

Diluted earnings per share (yuan

0.54 0.68 -20.59 0.80 0.93/share)

3.2 Main accounting data by quarter during the reporting period

Unit: Yuan Currency: RMB First quarter Second quarter Third quarter Fourth quarter (January to March) (April to June) (July to September) (October to December) Operating income 877,554,089.34 764,023,839.22 701,110,452.02 950,211,807.70 Attributable to shares of listed companies

83,412,980.21 58,956,373.45 57,272,393.11 104,289,071.00 Dong’s net profit

Attributable to listed company shares

Net profit after deducting non-recurring gains and losses 81,998,942.57 37,996,731.22 40,128,946.95 57,137,313.95

Cash generated from business activities

76,936,099.28 67,412,048.57 201,776,758.53 264,467,265.38 Net cash flow

Explanation of differences between quarterly data and disclosed periodic report data

□Applicable √Not applicable

4. Shareholder situation

4.1 At the end of the reporting period and at the end of the month before the annual report is disclosed, the total number of ordinary shareholders, the total number of preferred shareholders with restored voting rights and the number of special shareholders holding special shares

The total number of shareholders with specific voting rights and the top 10 shareholders

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

Unit: Total number of ordinary shareholders (households) as of the end of the reporting period 42,742 Total number of common shareholders (households) as of the end of the previous month before the date of disclosure of the annual report 42,174 Total number of preference shareholders (households) with voting rights restored as of the end of the reporting period 0 Total number of preference shareholders (households) with restored voting rights as of the end of the previous month before the date of disclosure of the annual report 0 Shareholding status of the top ten shareholders (excluding shares lent through refinancing)

Hold Pledge, Mark or Freeze

limited situation

Name of shareholder Number of shares held at the end of the reporting period Proportion of shares Shareholder (full name) Increase or decrease Amount (%) Number of shares Nature

Share Status

Quantity

Jiangsu Kangyuan Group Co., Ltd. Domestic non-state

176,173,467 31.12 None

Ren Company has a legal person, Lianyungang Kangbell Medical Devices, which is not a national territory.

31,870,567 5.63 Pledge 7,000,000

Machinery Co., Ltd. has the legal person Central Huijin Asset Management Co., Ltd.

17,886,480 3.16 None Other limited liability companies

Domestic natural Xiaowei 20,000 17,023,232 3.01 None

Hong Kong Securities Clearing Company Limited

1,120,310 14,999,839 2.65 None Other divisions

Shanghai Silver Leaf Investment Co., Ltd.

Division-Yinye Gongyu No. 10 11,945,196 2.11 None Other private securities investment funds

Domestic natural Liu Yanxiang 6,070,000 1.07 None

people

Natural mines and seals within the territory Note 1 4,680,000 0.83 None

people

Domestic natural mine park 3,782,700 0.67 None

China Merchants Bank Co., Ltd.

Division - Southern China Securities 1000

241,300 3,120,793 0.55 None Other trading open-ended index certificates

securities investment funds

Among the top ten shareholders with related relationships or concerted actions among the above-mentioned shareholders, Jiangsu Kangyuan Group Co., Ltd., Shanghai Yinye Investment Co., Ltd.-Yinye Gongyu No. 10 Private Securities Investment Fund and Mr. Xiao Wei are persons acting in concert, and Lianyungang Kangbell Medical Equipment Co., Ltd. is a related party of Kangyuan Group. The company does not know whether there is an associated relationship or a concerted action relationship between other shareholders or between other shareholders and the top ten shareholders; the company does not know whether there is a relationship among the other top ten shareholders.

Whether there is an association relationship or a relationship between persons acting in concert.

Preference shareholders with restored voting rights and shareholdings

None

Description of quantity

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

4.2 Block diagram of the property rights and control relationship between the company and its controlling shareholder √ Applicable □ Not applicable

4.3 Block diagram of the property rights and control relationship between the company and the actual controller √ Applicable □ Not applicable

4.4 The total number of preferred shareholders of the company and the top 10 shareholders at the end of the reporting period □Applicable √Not applicable

5. Corporate Bonds

□Applicable √Not applicable

Jiangsu Kangyuan Pharmaceutical Co., Ltd. (stock code: 600557) 2025 Annual Report Summary

Section 3 Important Matters

1. The company shall, in accordance with the principle of materiality, disclose major changes in the company's operating conditions during the reporting period, as well as events that occurred during the reporting period that have a significant impact on the company's operating conditions and are expected to have a significant impact in the future.

During the reporting period, the company's consolidated statement achieved operating income of 3.292902 billion yuan, a year-on-year decrease of 15.52%; net profit attributable to shareholders of the listed company was 303.9308 million yuan, a year-on-year decrease of 22.44%.

2. If there is a delisting risk warning or listing termination after the company's annual report is disclosed, the reasons that led to the delisting risk warning or listing termination should be disclosed.

□Applicable √Not applicable