Expanding Ethical & Compliance Management | 2025-26 Hanmi Science ESG Report

Material Issue 3

Expanding Ethical and Compliance Management

Ⅰ. Corporate Governance

Decision-Making Structure

Hanmi Science operates under a board-centric responsible management system, ensuring independent and transparent decision-making on key management issues by establishing an Audit Committee under the Board of Directors. The Audit Committee specifically receives quarterly reports from the Compliance Management Office on CP activities, risk assessment and improvement status, internal accounting control results, and training performance, and has the authority to demand immediate corrective action and reporting to management when necessary. In addition, the Human Resources Committee is held to investigate and sanction employees in case of violations of laws, regulations, or compliance policies, and to reward employees with outstanding contributions and performance. Crucially, important decisions are submitted to the Board of Directors after preliminary review by relevant departments and risk consultation by the Compliance Management Office. During this process, agenda items that have not undergone legal and ethical suitability review are restricted from being submitted. These continuous monitoring and reporting procedures strengthen the effectiveness of compliance management and establish a structural foundation for management to proactively respond to risks.

Committee

Category	Frequency	Roles
HR Committee	Upon Occurrence	ㆍInvestigation and sanction of employees in case of violations of laws, regulations, or compliance policies ㆍReward employees with outstanding contributions and performance

Roles and Responsibilities

Category	Roles
Board of Directors (Audit Committee)	ㆍAccounting and operational audits ㆍManagement of compliance-related tasks ㆍAppointment of a Compliance Officer
Compliance Officer	ㆍReporting of major compliance-related status to the CEO and Board of Directors (Audit Committee) (at least once per quarter) ㆍOverall management of domestic and international legal affairs ㆍOverall management of compliance-related tasks ㆍConduct internal audits and whistleblowing audits
Compliance Management Office	ㆍPre-work consultation (CP monitoring) ㆍReview of legal risks related to business and marketing, support for risk reduction measures and strategies ㆍContract review and legal consultation ㆍOperation of compliance education programs ㆍIdentification and sharing of changes and trends in compliance-related laws and regulations
Domestic Legal Group	ㆍConsultation on domestic business strategy and contract review ㆍManagement and response to domestic legal risks for group companies ㆍLitigation execution and disposition, dispute resolution
Global Legal Group	ㆍReview of overseas and English contracts for affiliates ㆍMonitoring of overseas laws and regulations ㆍResponse to overseas disputes
Compliance Group	ㆍCP monitoring and identification of changes in relevant laws and regulations, policy application ㆍOperation of compliance education programs ㆍImposition of CP sanctions and incentives ㆍDesign and operation of internal accounting control system

Ⅱ. Strategy_Risk and Opportunity Identification

Hanmi Science identifies key risks and opportunities that may significantly impact stakeholders and sustainability related to the expansion of ethical management and compliance management, based on IRO analysis results, and continuously strives to develop effective countermeasures.

RISK
Occurrence of compliance risks such as unfair practices throughout subcontracting transactions
Characteristics of Impact	Potential Impact
Affected Stakeholders	Employees, partners, shareholders, and investors
Severity of Impact on Society and Environment	Scale ■■■□□ Scope ■■■□□ Recoverability ■■□□□
Expected Financial Impact	Likelihood ■■■□□ Scale ■■□□□
Impact on the Company	ㆍOccurrence of legal risks due to violations of the Fair Trade Act, etc. ㆍDegradation of corporate trustworthiness due to human rights and ethical violations by external partners
Company's Response	ㆍConstant monitoring of medical device sales and marketing organizations ㆍFor employees compliance training ㆍReporting and handling of internal and external violations

OPPORTUNITY
Establishment and advancement of a dedicated organization for responding to compliance issues optimized for healthcare business characteristics and stakeholders
Characteristics of Impact	Actual Impact
Affected Stakeholders	Employees, partners, shareholders, and investors
Severity of Impact on Society and Environment	Scale ■■■■□ Scope ■■■■□
Expected Financial Impact	Likelihood ■■■■□ Scale ■■■□□
Impact on the Company	ㆍEnhancement of corporate trustworthiness and establishment of an ethical management foundation ㆍReduction of potential costs such as disciplinary actions, lawsuits, and sanctions through the establishment of an ethical management system and enhancement of employee ethical awareness ㆍEnsuring continuity of transactions with supply chain and external partners
Company's Response	ㆍEstablishment of risk identification and continuous improvement system through ISO 37301 & ISO 37001 certification ㆍFunctional supplementation and new development promotion of the compliance management system ㆍSystematic support for transparent audit committee activities

Ⅱ. Strategy_Risk and Opportunity Response Plan

Constant monitoring of medical device sales and marketing organizations

Considering the characteristics of its medical device business division, Hanmi Science operates a constant monitoring system for sales and marketing organizations to ensure transparent sales activities and compliance with fair trade practices. As the medical device business division involves contact with various stakeholders, including medical professionals and distributors, the practical implementation of ethical management is a crucial area. Accordingly, Hanmi Science has established a risk prevention
-focused internal control system and manages to ensure compliance standards are met throughout the entire sales process.

3-stage monitoring process for sales and marketing departments

Pre-review	ㆍProactive risk management through reviewing major sales activities such as promotional activities, academic event support, and transaction contracts for compliance with relevant laws (Medical Device Act, Fair Trade Act, etc.) and internal ethical regulations ㆍLegal group review if necessary
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In Progress	ㆍRegister and manage all activities, including economic benefits, academic support, and sample provision, offered during sales activities in the system ㆍStrengthen internal controls to ensure expenses are executed only within approved limits
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Post-verification	ㆍRegular inspection of sales activity records and expenditure details ㆍIdentification and correction of potentially violating activities through sample audits and internal monitoring

Areas and Results of Ongoing Monitoring

<Monitoring Areas>

Expense Report Review	Analysis of economic benefit provision details to confirm compliance with legal regulations
Prior Consultation for Healthcare Professional Support Activities	Prior consultation and approval for the appropriateness of healthcare professional support activities through a pre-work consultation system
Corporate Card Usage Review	Review of sales activity expenses such as food and beverage provision after product presentations, promotional material purchases, and dealer entertainment

<2025 Monitoring Results>

Category	Q1	Q2	Q3	Q4
Number of Reviews	8,618 cases	10,162 cases	9,677 cases	8,539 cases
Number of Corrective Actions for Special Items	108 cases	88 cases	73 cases	112 cases

Compliance Training for Employees

Hanmi Science operates regular and ongoing compliance training programs for all employees, including those in sales and marketing. Specifically, for the Medical Device Division, which has a high potential for risk, regular training is conducted bi-monthly (6 times a year). This training focuses on risks that may be encountered in sales operations, such as standards for providing economic benefits, medical device laws, monitoring results, and key case studies. Ongoing training is provided at key times, such as for new hires, employees transitioning roles, and by job function (marketing, development), and is case-study-based to help practical workers apply compliance standards in their work situations.
Hanmi Science will continue to regularly reassess risks in the medical device sales and marketing sectors, and include these departments within the scope of ISO 37301 and ISO 37001 implementation, thereby completing a company-wide ethical and compliance management system. Furthermore, we will continuously enhance customized ethics and compliance manuals tailored to the specific characteristics of the medical device industry to strengthen field-oriented execution, and support all employees in practicing a voluntary compliance culture.

Hanmi Science Compliance Training Photo 

2025 Employee Training Status

Internal Training
Target Audience		Frequency	Content
All Employees		Twice a year	Internal Accounting Management / Capital Markets Act / Non-public Information Management and Regulations on Specific Securities Transactions
Medical Device Division (All)		6 times /year	Compliance-related Laws and Regulations / Status of Expenditure Reports / CP Monitoring Results and Key Cases
Medical Device Sales	Managers	Twice a year	Expenditure Report Management / Key CP Issues and Trends / Corporate Card Usage Guide
	New Hires	3 times /year	CP Overview and Importance / Compliance-related Laws and Regulations / Internal Whistleblowing
Medical Device Planning	Marketing	4 times annually	Compliance-related laws and regulations / Fair Competition Code Guidelines / Key CP issues and precautions
	Development
CSO companies and representatives		Twice a year	CSO compliance requirements / Expense Report Guidelines / Key CP issues and trends
Medical Devices (CP Test)		Twice a year	Compliance-related laws and regulations / Internal Process / Awards for excellent performers

2025 Compliance Group training attendance status

External Training
Organizer	Frequency	Content
Korea Medical Devices Industry Association	7 times	Key issues related to medical devices and Ethics Management Workshop
Korea Medical Devices Industry Association / Law firm	1 time	Medical Device CSO (Promotional Sales Agent) Briefing Session
Korea Pharmaceutical and Bio-Pharma Manufacturers Association	4 times	Pharmaceuticals CSO (Promotional Sales Agent) Training and Ethics Management Workshop
Health Insurance Review & Assessment Service	1 time	Explanation Session for Fact-finding Survey on Expenditure Reports
Korea Fair Trade Mediation Agency	1 time	CP Rating System and Best Practices
Korea Compliance Promotion Institute	2 times	ISO 37301 & ISO 37001 Internal Auditor Training and Integrated Compliance Workshop
Korea Compliance Certification Institute	1 time	Organizational Response Strategy Following ISO 37001 Revision

Reporting and Handling of Internal and External Violations

Hanmi Science operates an internal reporting system through K-Whistle, which is accessible without restriction by all stakeholders, including executives and employees. This system enables the early detection of violations of fair competition rules, fair trade laws, and internal CP operating standards. Furthermore, Hanmi Science, through continuous education and promotional activities, actively guides reporting channels such as CES (internal intranet) Report (K-Whistle), the K-Whistle website, and QR codes (employee ID cards, posters, quarterly newsletters) among others, and to protect the confidentiality of internal whistleblowers, separate regulations and guidelines have been established, ensuring fair and independent processing of reports.

Category	2025
Reports (cases)	2
Disciplinary actions, etc. (cases)	4
Individuals sanctioned (persons)	4

Internal Reporting Channels

Category	Report (K-Whistle) (CES)	Internal Messenger Teams	Clean Management Newsletter Ethical Management Newsletter	K-Whistle Homepage	Mail/FAX/E-mail
Internal/External	Internal		Internal·External
Target Audience	Employees		Employees, suppliers, customers (healthcare professionals), etc.
Accessibility at all times	ㆍAlways accessible ㆍPromotion of internal reporting through Clean Management·Ethical Management Newsletter and access to K-Whistle via QR scan ㆍAccess to K-Whistle by attaching QR code stickers to employee IDs
Anonymity	ㆍAnonymous reporting possible (reporter's choice) ㆍInformation related to internal reporting is disclosed only to the Compliance Officer ㆍReports made through K-Whistle are processed by K-Whistle, a third party; therefore, unless it is a real-name report, the identity of the reporter cannot be verified.
Reporting Requirements	ㆍNo restrictions

Internal Reporting Process

Internal Reporting Process Flow
1. Receiving reports through various channels	4. Conducting an audit (e.g., reported parties)	7. Submission to the HR Committee
2. Reporting to the CEO	5. Reporting investigation results	8. Decision on sanctions
3. Directing the Compliance Group to investigate	6. Reporting to the CEO	9. Issuance of Sanction Notices and Notification of Results

Establishing a Risk Identification and Continuous Improvement System through ISO 37301 & ISO 37001 Certification

Hanmi Science Internal Compliance System - ISO Gap Analysis	Identification of Department-Specific Risk Items
A strategic diagnostic process to systematize the organization's compliance system to international standard levels ㆍComparison and analysis of ISO's common structure, including organizational context, leadership, risk-based planning, operational control, performance evaluation,and continuous improvement, with the internal compliance system ㆍVerification of documentation levels and consistency with the actual operating system ㆍUtilization for establishing a priority-based improvement roadmap	A procedure for identifying legal violations, corruption, conflicts of interest, and internal control deficiencies arising in each department ㆍUtilization for building a risk map, strengthening control systems focusing on high-risk areas, and establishing an improvement roadmap
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Acquisition of ISO 37301 and ISO 37001 and establishment of the operating system by 2026
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Regularization and activation of internal audits, regular training, and risk improvement activities

Hanmi Science has established ethical management and compliance management as core management values for the sustainable growth of the company, and is striving to create an environment where all executives and employees can perform their duties based on compliance and transparency. Accordingly, Hanmi Science has selected the introduction of international standards ISO 37301 (Compliance Management System) and ISO 37001 (Anti-Bribery Management System) as key strategic tasks and is gradually expanding systematic risk management and improvement activities. Hanmi Pharmaceutical, a core group company of Hanmi Science, has already obtained and is operating certifications for both standards, thereby playing a leading role in establishing group-wide ethical management and compliance management systems. Management departments such as legal affairs, information strategy, accounting, finance, general affairs, and asset management, which support this, periodically identify and evaluate risks such as potential corruption and legal violations, derive improvement plans, and operate post-verification processes to strengthen internal controls and prevent recurrence. Through these activities, we are strengthening a system that can proactively identify and prevent corruption and compliance risks.
Furthermore, we plan to strengthen ethical management and compliance education programs for all executives and employees, and enhance ethical awareness and responsibility through practical training tailored to job characteristics. By actively promoting the internal reporting process, we will establish a transparent and fair corporate culture.
These efforts will not merely be limited to regulatory responses but will serve as a foundation for Hanmi Science to grow further into a trusted company with international-level compliance and ethical management systems. Hanmi Science will continue to improve its risk management level based on data and experience accumulated through the operation of ISO 37301 & ISO 37001 certification, and by strengthening company-wide governance centered on the ethical and compliance management council within the group, we will establish a sustainable corporate culture that practices transparent and responsible management.

Compliance Management System

Hanmi Science is establishing a compliance management system by digitizing its operations to strengthen the effectiveness of ethical and compliance management. In particular, we are meticulously improving internal control processes and enhancing data-driven risk identification and pre-emptive prevention functions, primarily centered on the integrated expenditure report management system and the pre-work consultation operating system established at the group level.

Hanmi Science Integrated Expenditure Report Management System

Expenditure Report Registration System Advancement	Expenditure Details Registration and Verification	Pre-registration and post-verification of all expenditure details related to economic benefits provided by executives and employees (e.g., product presentations, sample provision, academic activity support)
	Accumulation and Review of Data by Amount	Data by vendor, item, and amount is automatically accumulated to check for fraudulent expenditures, duplicate payments, and exceeding legal limits
	Compliance Group Review	established a structure where the Compliance Group conducts further review after system inspection.
	Law-based continuous improvement	Continuous system enhancement and improvement in line with revisions to the Medical Device Act and Fair Competition Code.

Establishment and Operation of Pre-operational Consultation System	Prior Consultation for Stakeholder Engagement Activities	Before proceeding with activities such as providing food and beverages after product briefings, clinical trial support, academic sponsorships, and sample provision, relevant content must be registered in the pre-operational consultation system, followed by mandatory review by the Compliance Group.
	Prior Contract Review	Prior review and approval by the Legal Group is mandatory for contracts, legal-related agreements, and consultations.
	Utilization of Supporting Data	Approval results and history are automatically recorded in the system, to be utilized as supporting data during future audits and internal inspections.

System data-based strengthening risk management	Platform Utilization	Compliance-related platforms, such as the expense report registration system, will be actively utilized in the future operation of ISO 37301 & ISO 37001.
	Real-time risk recognition and response infrastructure establishment	By minimizing data duplication and visualizing various information such as transactions, approvals, and expenditures into a single risk monitoring dashboard, a foundation for real-time risk recognition and response is established.
	Risk Analysis and Application	By analyzing risk occurrence patterns based on data accumulated within the system, and continuously supplementing prevention-oriented internal control policies that reflect these patterns.

Systematic Committee Support for Transparent Audit Committee Activities

To support the effective supervision of the Audit Committee, the Compliance Group within Hanmi Science's Compliance Management Office reports the status of overall compliance operations to the Audit Committee every quarter. The quarterly report is structured around the following items to enable the Audit Committee to make substantive decisions.

1	Summary of CP operating activities performed during the quarter	ㆍPolicy changes implemented during the quarter ㆍRevision of internal regulations ㆍEmployee training ㆍStatus of whistleblower reports/submissions received and processed
2	Key initiatives planned for the next quarter	ㆍPresentation of priority-based action plans for key management items
3	Ongoing monitoring and the results of internal and external audits and the status of improvement measure implementation	ㆍDetailed information on quarterly compliance and audit activities ㆍReporting of processing results and future improvement measures, and verification of the appropriateness of improvement measures and the possibility of recurrence
4	Status of internal accounting control system operations	ㆍResults of internal accounting control reviews in the latest quarter ㆍIdentified control deficiencies and corrective actions ㆍReporting on the implementation status of additional controls to ensure accuracy of financial reporting
5	Training and competency-building activities for the Audit Committee	ㆍEnhanced understanding of legal responsibilities and the latest regulatory trends to effectively oversee the company's reliability, internal control, risk management, and compliance systems ㆍRegular training and continuous communication with external auditors for the effective operation of the Audit Committee

Also, in addition to quarterly reports, if significant risk matters arise, additional reports are provided to the audit committee members. This quarterly reporting system goes beyond simple information delivery; it substantially assists the Audit Committee's oversight role, provides a basis for decision-making that allows management and the Audit Committee to jointly set risk management priorities, and swiftly implement corrective actions. Through this, Hanmi Science will continuously enhance the effectiveness of internal controls and strengthen transparent and responsible corporate governance.

III. Risk Management

Risk and Opportunity Monitoring	Period	Target Audience	Method	Oversight
Department-specific risk assessment	Once a year	Support Departments (e.g., Legal, IT Strategy, General Affairs Group)	∙ Identification of all potential risks arising from operations and confirmation of management plans ∙ Designated internal auditors conduct interviews with each department	Compliance Group
Prior Business Consultation	Ongoing	All Departments	∙ Prior consultation with the Compliance Group regarding illegal risks before performing duties ∙ Wired consultation at sales/marketing sites and review of draft documents ∙ Legal review when proceeding with contracts and consultations (Legal Group - Legal Management System)
Analysis of internal and external CP environment		-	∙ Monitoring of relevant laws and regulations such as the Medical Device Act, Fair Trade Act, and Fair Competition Rules ∙ Associations such as the Korea Medical Devices Industry Association, Korea Pharmaceutical and Bio-Pharma Manufacturers Association, and Korea Fair Trade Mediation Agency seminar attendance ∙ Disclosure of compliance strategies and activities through ESG reports
Internal Whistleblower Center K-Whistle Voluntary reporting of receipt of money, gifts, and entertainment		Hanmi Group employees	∙ Linked Hanmi Group intranet (CES) with the reporting channel (K-Whistle) ∙ Protection of whistleblower anonymity and identity ∙ Measures according to internal regulations such as employment rules

Ⅳ. Indicators and Goals

Key Indicators	2025 Target	2025 Performance	Achievement	2026 Target	Mid-to-Long-Term Plan (2030)
Global-level compliance and anti-corruption management system introduction and operation	Developing management measures through risk assessment and training internal auditors	∙ Identified 105 risks and derived 289 management measures through risk assessment for 13 departments ∙ Completed training for 5 internal auditors	Achieved	∙ Through external professional certification bodies, ISO 37301 and ISO 37001 certifications were obtained	∙ Global-level based on ISO compliance and anti-corruption management system through which zero serious violations are achieved