Yunnan Baiyao Group Co., Ltd.

Interim Report 2026

August 2026

Section I Important Notes, Contents, and Definitions

The Board of Directors (the “Board”), the directors, and the senior management of the Company confirm the truthfulness, accuracy and completeness of the contents of this Interim Report and there are no misrepresentation, misleading statement or material omission from this Interim Report, and they accept joint and several responsibilities for the truthfulness, accuracy and completeness of the contents herein.

Mr. Zhang Wenxue, the person in charge of the Company, Mr. Ma Jia, the accounting officer, and Ms. Xu Jing, the head of accounting center (accounting supervisor), hereby declare that they warrant the truthfulness, accuracy, and completeness of the financial statements in this Interim Report.

All directors of the Company attended the Board meeting in respect of considering and approving this Interim Report.

The Company kindly requests investors to read through this Interim Report and pay special attention to “X. Risks and Countermeasures” in the “Section III Management Discussion and Analysis.” Investors are advised to pay attention to investment risks.

The profit distribution plan considered and approved by the Board of Directors is as follows: Based on a total of 1,784,262,603 shares, a cash dividend of RMB 10.38 (tax inclusive) for every 10 shares will be paid to all shareholders, with no bonus shares issued (tax inclusive), and no capital reserve to increase the share capital.

This report has been prepared in Chinese and translated into English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail.

Contents

• Section I Important Notes, Contents, and Definitions .............................................................1
• Section II Company Profile and Key Financial Indicators .......................................................5
• Section III Management Discussion and Analysis ......................................................................9
• Section IV Corporate Governance, Environment and Society ................................................48
• Section V Significant Events .....................................................................................................55
• Section VI Changes in Shareholdings and Particulars about Shareholders ..........................74
• Section VII Bonds ..........................................................................................................................80
• Section VIII Financial Statements ................................................................................................81

Documents Available for Inspection

• (I) Financial statements affixed with the signatures and stamps of the person in

charge of the Company, the accounting officer, and the general manager of Financial Management Department;

• (II) Originals of all the Company’s documents and announcements publicly

disclosed on the Securities Times, Shanghai Securities News, China Securities Journal, and www.cninfo.com.cn during the reporting period;

• (III) Other related materials.

Definitions

Section II Company Profile and Key Financial Indicators

I. Company Profile

II. Contact Person and Contact Information

III. Other Information

1. Contact information of the Company

Whether the Company’s registered address, office address, postal code, website, and e-mail address have changed during the reporting period

□ Applicable  Not applicable There was no change in the Company’s registered address, office address, postal code, website, or e-mail address during the reporting period. For more information, please refer to the 2025 Annual Report.

2. Information disclosure and location

Whether the information disclosure and location have changed during the reporting period

□ Applicable  Not applicable There was no change in the stock exchange website, media outlets, and their websites where the Company disclosed the Interim Report, or the location where the Interim Report was prepared and placed during the reporting period. For more information, please refer to the 2025 Annual Report.

3. Other information

Whether other information has changed during the reporting period

□ Applicable  Not applicable

IV. Key Accounting Data and Financial Indicators

Whether the Company needs retroactive adjustment or restatement of accounting data in prior years or not

□Yes  No

The lower of the Company’s net profits before and after deducting non-recurring profits and losses in the latest three accounting years are all negative, and the Company’s audit report for the previous year shows uncertainties in the Company’s ability to continue as a going concern

□Yes  No During the reporting period, the lower of the Company’s audited total profit, net profit, and net profit after deducting non-recurring

gains and losses was negative

□Yes  No Total share capital of the Company as of the trading day preceding disclosure:

Fully diluted earnings per share calculated based on the latest share capital:

V. Differences in Accounting Data under Chinese Accounting Standards (CAS) and Overseas Accounting Standards

• 1. Differences in the net profits and net assets in financial statements disclosed respectively under International Financial Reporting Standards (IFRS) and CAS

□Applicable Not applicable During the reporting period, there was no difference in net profits and net assets in financial statements disclosed respectively under IFRS and CAS.

• 2. Differences in the net profit and net assets in financial statements disclosed respectively under overseas accounting standards and CAS

□Applicable Not applicable During the reporting period, there was no difference in the net profits and assets in financial statements disclosed respectively under overseas accounting standards and CAS.

VI. Non-recurring Profits and Losses and their Amounts

Applicable □Not applicable

Unit: RMB

Other profits and losses satisfying the definition of non-recurring profits and losses: Applicable □Not applicable Other non-recurring profits and losses that meet the definition of non-recurring profits and losses mainly include other non-recurring

profits and losses such as interest on fixed deposits and value added tax credit.

Note for the definition of non-recurring profits and losses set out in the No.1 Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public - Non-recurring Profits and Losses, as recurring profits and losses

□Applicable Not applicable

The Company does not define any non-recurring profits and losses set out in the No.1 Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public - Non-recurring Profits and Losses as recurring profits and losses.

Section III Management Discussion and Analysis

I. Principal business of the Company during the Reporting Period

• (I) Overview

1. Industry landscape and development trends

(1) Steady growth in health-related demand: synergy between population aging and health-consumption upgrade

In recent years, population aging progression, upgraded health awareness and lifestyle shifts constitute the key drivers of sustained demand growth in the pharmaceutical and healthcare sector. First, accelerated population aging unlocks rigid health-related demand. In 2026, the share of China’s population aged 60 and above in the total population maintains its upward trend. The elderly group sees rigid growth in demand for chronic‑disease management and health‑preserving wellness services. Second, the concept of proactive health is reshaping consumption patterns. As of 2025, 69.1% of the residents aged 7 and above in China exercised at least once a week (Source: Bulletin on National Fitness Activity Survey). As of early April 2025, the number of people participating in outdoor sports in China had surpassed 400 million (Source: The China Outdoor Sports Industry Development Report (2024-2025)). The growing demand for sports has also driven up demand for related pharmaceutical and healthcare products, such as sports injury prevention and rehabilitation, and pain management. Collectively, these factors have expanded market potential and created favorable conditions for the traditional Chinese medicine (TCM) industry to leverage its inherent strengths.

(2) New cycle of TCM high-quality development: TCM industry restructuring amid closed‑loop policies In 2026, driven by policies, the TCM industry continues to deepen its transition toward high‑quality

development. Nevertheless, an adjustment cycle marked by intertwined multiple pressures is still underway.

On the one hand, top-level policies have formed a closed-loop system for high-quality development. On January 16, 2026, the State Council promulgated the revised the Implementation Regulations of the Drug Administration Law. As for the administrative regulations, it formally establishes four accelerated review‑and‑approval pathways for innovative drugs: breakthrough therapy procedure, conditional approval, priority review and approval, and special approval procedure, which comprehensively removes institutional bottlenecks hindering new drugs from clinical trials to marketing launch. On March 1, 2026, the Special Provisions for the Supervision and Administration of TCM Manufacturing officially took effect. These provisions place strong

emphasis on quality control across the supply chain, at every stage, and throughout the production process of TCM materials; encourage the acceleration of modernization and upgrading in TCM production; and promote digital and intelligent transformation to ensure the quality and safety of TCM from the source. On July 10, 2026, the State Council approved the 15th Five-Year Plan for the Revitalization and Development of TCM, which serves as the overarching blueprint for the development, healthcare application, scientific research, and internationalization of TCM industry over the next five years. It calls for multi-departmental collaboration to establish supporting policies to ensure implementation, charting a new course for the TCM industry chain, including TCM materials, Chinese patent medicine, TCM services, and TCM innovation.

On the other hand, under the combined influence of multiple policies, the TCM industry is shifting away from the traditional path of scale‑driven expansion toward a new stage of high‑quality development centered on “quality‑oriented and efficacy‑driven.” Amid an adjustment cycle for the transformation of growth drivers, the industry faces mounting pressure on revenue growth and profit realization, leading to an overall slowdown in growth rates. Meanwhile, the industry is transitioning from fragmented competition toward centralized collaboration. Approvals and production capacities characterized by weak clinical evidence, untraceable quality and low‑level duplication will be phased out at an accelerated pace, and the trend of structural optimization and adjustment will continue to deepen.

(3) The consumer market is characterized by “aggregate‑volume pressure, structural differentiation and a return to rationality”

In the consumer goods market, total retail sales of consumer goods reached RMB 24.87 trillion in the first half of 2026, up 1.3% year on year. The growth rate retreated from that for the full‑year 2025. Household consumption willingness remains subdued, and the consumer confidence index is yet to improve. (Sources: The National Bureau of Statistics)

Competition intensifies in the oral-care track, with three major growth drivers in full swing: “rapid online growth, enhanced product efficacy, and channel restructuring.” First, online channels register rapid growth. In the first quarter of 2026, sales of oral care products on mainstream e-commerce platforms reached RMB 5.813 billion, representing a year-on-year increase of 13.8%. Second, profound structural differentiation has emerged among online channels. In the first quarter, sales through Douyin accounted for 55% of the total e-commerce sales in the oral care category, with a year-on-year increase of 30.73%, leading the growth rate. Growth in traditional shelf‑based e-commerce platforms posted slower growth, with JD.com’s sales up 13.76% year-on-year and Tmall’s sales down

• 2.31% year-on-year. (Source: Moojing Market Intelligence) Third, offline channels are undergoing shifts in sales

structure. The share of traditional hypermarkets and convenience stores is shrinking, while emerging channels such as warehouse membership stores, snack specialty stores, and discount stores are bucking the trend and growing, becoming new growth engines of offline sales. Fourth, the demand for oral care is shifting toward precision and functionality. Functional demands such as whitening, gum care and anti‑sensitivity stand out, while functional‑oriented, premium and children’s segments have become key drivers of growth.

2. Industry position

The Central Committee of the Communist Party of China (“CPC” or the “Party”) and the State Council attach great importance to the development of TCM, positioning the inheritance and innovation of TCM as an important aspect of the socialist cause with Chinese characteristics in the new era. The report to the 20th CPC National Congress has explicitly stated that we should “promote the inheritance and innovation of TCM.” The Yunnan Provincial Committee of the CPC and the provincial government place great emphasis on the development of the TCM materials industry, positioning this industry as the key focus for developing agriculture of Yunnan plateau characteristics and an important part of the growth of “resource-driven economy.” The Three-year Action Work Plan for the High-quality Development of the TCM Industry in Yunnan Province (2025-2027) outlines the goal of building industrial clusters with Yunnan Baiyao Group serving as the “chain leader” to expand and strengthen the TCM materials industry.

Yunnan Baiyao has always been committed to the inheritance and innovation of TCM, continuously exploring the intrinsic potential of traditional medicinal products, and promoting the integration of TCM into modern life. The Company continuously injects new vitality into its brand and products, forming a product matrix with 40 categories and 416 varieties. In the pharmaceutical products domain, Yunnan Baiyao holds 567 drug approvals and 316 product varieties, including 222 types of Chinese patent medicines, 43 of which are exclusive varieties. The Company started with the century-old Yunnan Baiyao powder as its foundation and has gradually created a series of core pharmaceutical products in the field of musculoskeletal and minor wound care, covering all kinds of product forms such as aerosols, plasters, tinctures and woundplast, and has formed a competitive matrix of branded TCM in the areas of cold and anti-inflammatory, gastrointestinal digestion, cardiovascular medicines, and gynecological and pediatric medicines. In the field of health products, combining traditional Yunnan Baiyao products with oral care products, we have successfully created a group of oral care products, with the flagship product of Yunnan Baiyao Toothpaste, and continuously researched, developed and launched other functional oral‑care products such as whitening and anti‑sensitive items. Based on the pharmaceutical science and technology, and drawing on the essence of natural plants, we have successfully created the scalp health care brand “Yangyuanqing.” Leveraging its

successful development in pharmaceutical and health product sectors, the Company has expanded its business footprint into various domains, including natural medicine, TCM decoction pieces, special medicines, medical devices, personal care products, and health supplements. This move enables the Company’s evolution from a TCM manufacturing enterprise to a modern, holistic wellness-oriented entity.

Yunnan Baiyao’s full‑industrial‑chain layout, strengths in authentic medicinal materials, investment in technological innovation, and established brand reputation are highly aligned with the policy-guided market trends in the current pharmaceutical and healthcare industry. First, market demand closely matches the Company’s product matrix. The demand for chronic‑disease treatment and rehabilitation brought by population aging, as well as the rapidly‑growing demand in the sports health sector, directly resonates with Yunnan Baiyao’s core medicines, branded TCM and tonic products. Rising sports‑related demand for injury repair and functional healthcare is highly aligned with the Company’s Baiyao Aerosol and sports‑protection product lines. Second, we will advance our fullindustrial-chain layout, extend upstream into high-quality TCM materials, implement a “flagship product” strategy in the midstream to deepen our focus on the pharmaceutical and health products industries, and expand downstream into retail pharmacies and online sales channels, build an integrated “raw materials–production–sales” system and further enhance the core competitiveness of our principal businesses. Third, we will strengthen technological innovation, promote the redevelopment of traditional products, and scientifically formulate short-, medium-, and long-term innovation and R&D plans to ensure the sustainable commercialization of innovative achievements. At the same time, we will continuously explore innovations in distribution channels, business models, and application scenarios to better meet the health management needs of various demographics and expand our market reach.

In the first half of 2026, Yunnan Baiyao continued to maintain its market leadership in multiple business sectors.

The Company’s core product, Yunnan Baiyao Aerosol, ranked first in retail market share among topical aerosols of Chinese patent medicine used for joint and muscle pain in the musculoskeletal system. Yunnan Baiyao Woundplast ranked first in retail market share in the topical hemostatic category. Yunnan Baiyao (Powder) ranked first in retail market share among the full-body Chinese patent medicines for bone injuries in the musculoskeletal system (Source: Sinohealth CHIS). Yunnan Baiyao Toothpaste continues to maintain the No.1 market share in the Chinese fullchannel market in the first half of 2026 (Source: Nielsen Retail Research Data). In 2026, Yunnan Baiyao was listed on the Fortune China 500 List published by Fortune China for the 17th year, ranking 366th; and was ranked 33rd in the List of Top 50 Global Pharmaceutical Companies by Pharmaceutical Executive in US.

3. Product and business

The Company has four business groups, namely Pharmaceutical Business Group, Health Products Business Group, TCM Resources Business Group and Yunnan Pharmaceutical Co., Ltd (“Yunnan Pharma”). These business groups serve as the foundation for the Company’s production and operations.

Pharmaceutical Business Group focuses on the products of Yunnan Baiyao series (for example, Yunnan Baiyao Aerosol, Yunnan Baiyao Plaster, Yunnan Baiyao Woundplast, etc), which are mainly used for hemostasis, pain relief, swelling reduction, and blood stasis elimination. The BG extends its offerings to include other branded TCMs with natural characteristics, covering areas such as tonifying Qi and blood, treating colds and flu, cardiovascular health, gynecology, pediatrics, and more. The BG is also actively involved in the development of Panax notoginseng-based botanical supplements.

Health Products Business Group, with its core focus on the toothpaste category, relies on its robust brand infrastructure encompassing consumers, products, and scenarios. Embracing a user-centric approach, the BG actively explores new consumer scenarios and introduces innovative product categories, particularly in the realms of oral care and Yangyuanqing anti-hair loss solutions, aiming to become the benchmark of the new concept of Chinese healthy lifestyle.

By making full use of the characteristic medicinal plant resources of Yunnan Province, TCM Resources Business Group, while ensuring high quality, high efficiency and low cost supply of raw materials for TCM, has built a digitalized industrial chain ecosystem for TCM materials with the model of “1+1+N,” which consists of “1 TCM production, research and marketing integrated digital intelligence platform + 1 new specialized market for TCM materials at the origin + multi-dimensional synergies,” so as to support “excellent TCM products” by “excellent Yunnan TCM resources.”

Yunnan Pharma remains steadfast in pursuit of maintaining its leading market share among pharmaceutical distribution companies in Yunnan Province. It has achieved full coverage in all 16 prefectures and cities of Yunnan Province, with its channels radiating across major retail chain pharmacies. It also assists governments and medical institutions in building better management and service systems, providing high-quality and modern pharmaceutical supply chain service solutions for upstream and downstream customers.

4. Business model

(1) Transformation from a Chinese leading TCM enterprise to a “Chinese leading, world-class” modern pharmaceutical industry group

As a “chain leader,” the Company is committed to promoting coordinated development across the industrial chain, intensively cultivating its core business segments, expanding the leadership of advantageous products, and

accelerating the construction of the industrial system. Centered on the principles of “strengthening principal businesses, stabilizing growth, and ensuring sustainability,” we aim to create a comprehensive industrial chain for Yunnan-branded TCM materials. We will focus on expanding the long-term potential of pharmaceuticals, health products, TCM resources, and pharmaceutical commerce, thus achieving self-driven leapfrog development. In addition, based on the development strategy, the Company will fully leverage the synergy and promotion between Chinese and international markets and resources, focusing on expanding the global footprint of TCM products, creating new growth drivers for health products, and integrating international resources for the development of innovative medicines, so as to continuously drive our high-quality development, and support the transformation of Yunnan Baiyao from a Chinese leading TCM enterprise to a “Chinese leading, world-class” modern pharmaceutical industry group.

(2) Transformation from a development model centered on “endogenous growth” to “intensive and extensive growth” in parallel

The Company’s primary growth model is to pursue the internal efficiency improvement (“intensive growth”) and the external market expansion (“extensive growth”) in parallel, continuously optimizing its business portfolio. “Intensive growth” focuses on tapping potential and increasing efficiency to stabilize the fundamental base. It concentrates on the development foundations of the pharmaceutical, health, and pharmaceutical commerce industries. Following the approach of maximizing overall benefits, it aims for systematic improvement and optimization across the industrial chain, value chain, and production factors, continuously promoting the highquality development of the Company’s principal businesses. “Extensive growth” emphasizes foresight and insight. Based on the overall strategic requirements and orientation, we actively explore strategic mergers and acquisitions, strategic cooperation, and other models to complement and strengthen the existing industrial segments, and quickly break through the existing growth bottlenecks. This dual approach enables the Company to establish a sound and resilient industrial portfolio system and to achieve sustainable, high-quality development.

(3) Transformation from training internal talents to the model of “training internal talents + introducing external talents”

The Company believes in the pivotal role of talent in driving its development. It has established a systematic and scientific training system that offers diverse career development pathways, fostering both specialized knowledge and comprehensive skills, with the mutual development of talents and the Company as the objective. The Company concentrates its superior resources and actively introduces high-level professionals from multiple fields, including drug R&D, digital construction, and strategic investment. It continues to enhance its business

capabilities in multiple dimensions, such as innovative R&D, lean operations, and investment and mergers & acquisitions. By nurturing internal talents, actively recruiting external experts, and fully utilizing its organizational environment for talent development and market resources, the Company strives to build a high-quality talent pool aligned with its future growth requirements.

(4) Transformation from a traditional manufacturing enterprise to a smart enterprise based on digital operations The Company continues to advance its transformation into a digital and intelligent enterprise, using

digitalization as the core driver and adopting a customer-centric approach to optimize its business operations, thereby comprehensively enhancing B2B channel services and the B2C consumer experience. The Company leverages digital technologies such as big data, artificial intelligence, and the Internet of Things to empower its core businesses, including TCM R&D, full-industrial-chain management, intelligent manufacturing, and omni-channel marketing, thereby restructuring the end-to-end, scenario-based customer service processes and integrating the endto-end chain spanning production, sales, and fulfillment. The Company continues to strengthen its unified data foundation and improve data governance to support the implementation of the Leigong TCM Big Model. Leveraging AI and RPA (Robotic Process Automation) digital employees, the Company has established an intelligent decisionmaking system to digitize operations, quality control, and risk management. A full-chain digital and intelligent framework has now been established. Leveraging the “Digital Intelligence of Yunnan TCM” Platform, the industry’s first TCM lighthouse factory, and a “one product, one code” system, the Company has built a closed-loop system that enables efficient iteration across marketing, R&D, and production.

5. Business data overview

In the first half of 2026, the Company steadily implemented its strategic plan and continued to pursue its development strategy of “growth, efficiency, and value creation.” As a result, its performance maintained steady growth, and its operational resilience and long-term growth potential were further strengthened. Core flagship products in the pharmaceuticals and health products segments continued to generate stable revenue, and new products were launched in an orderly manner. The Company remained committed to innovation and R&D as growth drivers, advancing both major TCM products and innovative drugs in parallel. Significant progress has been made in the industrial chain deployment, releasing the synergies across the supply chain of TCM materials.

During the reporting period, the Company generated operating revenue of RMB 21.884 billion, representing a year-on-year increase of 2.95%; net profit attributable to the parent company was RMB 3.701 billion, up 1.88% year on year; net profit attributable to the parent company after deducting non-recurring profits and losses was RMB

• 3.518 billion, up 1.66% year on year, reaching a record high for the same period; and basic earnings per share were

RMB 2.07, up 1.47% year on year. The Company’s business structure continued to optimize. The industrial revenue amounted to RMB 8.772 billion, accounting for 40.08% of the total operating revenue, up 0.07 percentage points year on year, with the growth rate of industrial revenue reaching 3.15%. Since 2023, the proportion of industrial revenue in total revenue has continued to increase. The Company’s investment income from Shanghai Pharma for the current period was affected by fluctuations in one-time extraordinary gains and losses, resulting in a year-onyear decrease of RMB 169 million. Excluding this impact, the Company’s net profit attributable to the parent company for the first half of 2026 increased by 8.33% year on year, while net profit attributable to the parent company for the second quarter rose by 13.18% year on year.

In terms of growth quality, the Company’s net operating cash flow for the reporting period was RMB 4.106 billion, representing a year-on-year increase of 3.66%; the weighted average return on equity was 9.04%; selling expenses decreased by 2.62% year on year, and administrative expenses decreased by 9.88% year on year. During the reporting period, R&D investment totaled RMB 217 million, representing a significant year-on-year increase of 27.13%, and the Company’s R&D capabilities continued to improve. The Company continued to maintain a healthy asset structure. At the end of the reporting period, the Company had total assets of RMB 55.145 billion, net assets attributable to the shareholders of the listed company amounted to RMB 40.973 billion, the asset-liability ratio was 25.56%, and the cash and bank balance stood at RMB 9.57 billion.

• (II) Review of the main work and prospects

1. Party building as the driving force behind high-quality development

Under the leadership of the Yunnan Provincial Committee of the CPC and the provincial government, as well as the Party Committee of the Provincial State-owned Assets Supervision and Administration Commission, the Company’s Party Committee has unwaveringly implemented the requirements of the “Two Consistencies,” resolutely and decisively ensuring that the decisions and directives of the Central Committee of the CPC, as well as the requirements of the Provincial Party Committee and the provincial government, are fully and effectively carried out at Baiyao. Actively aligning with the “Healthy China” initiative and Yunnan Province’s “3815” strategic development goals, based on the overarching principle of synergistically advancing “growth, efficiency, and value creation,” while focusing on a development approach that is “profitable, high-quality, and sustainable,” we will deepen Party-building leadership, promote integration and empowerment, and drive innovation to enhance quality, striving to transform our political and organizational strengths into competitive advantages that propel the Company’s high-quality development, and continuously improve the quality, efficiency, and core competitiveness of the Company.

2. Promoting improvements in the quality and efficiency of decision-making through scientific governance

During the reporting period, the Company focused on scientific governance to systematically improve the quality and efficiency of decision-making. We completed the appointment of management, clarified the division of responsibilities, and strengthened implementation; optimized the organizational structure, with the Board of Directors reviewing and approving the 2026 Corporate Organizational Structure Plan to provide organizational support for the implementation of the strategic plan. We systematically refined the decision-making mechanism for “major issues, significant projects, important appointments, and large-scale expenditures,” clarified the boundaries of authority and responsibility among various governance bodies, and further improved corporate governance mechanisms. This will enable the Party Committee to “set the direction, oversee the overall situation, and ensure implementation,” the Board of Directors to “formulate strategies, make decisions, and mitigate risks” and the executive management to “plan operations, ensure implementation, and strengthen management,” thereby fostering a clearer and more efficient collaborative relationship among the three.

3. Maintaining strategic resolve to ensure efficient execution

During the reporting period, the Company remained focused on its strategic direction, maintained strategic resolve, closely followed the guidelines of the “15th Five-Year Plan,” iteratively updated its “15th Five-Year Plan” strategy, and resolutely advanced the development of the century-old Baiyao to new heights. In addition, the Company was firmly committed to implementing its strategy, with a comprehensive focus on decoding and executing it. Each business unit aligned with the Group’s overall direction, systematically broke down objectives, and assigned tasks at every level to ensure the strategy is implemented efficiently. First, we focused on our products, continued to advance the “flagship product” strategy, and built a product system characterized by “flagship products leading the way, mid-range products providing support, and basic products laying a solid foundation.” Second, we focused on our distribution channels, strengthening our ability to manage them with precision, and based on the differing customer needs across online and offline channels, carefully designed product matrix tailored to those needs, streamlined distribution channels, and allocated resources efficiently, so as to improve channel operational efficiency. Third, we focused on allocating resources, including human resources, capital, budgets, and incentives, to the Company’s strategic direction, key industries, and key products, thereby continuously improving the efficiency of our investments.

4. Focusing on our principal businesses to consolidate our foundations and explore new avenues; achieving breakthroughs across multiple fronts with our “flagship product” matrix; and promoting coordinated development across the industrial chain

(1) Pharmaceutical Business Group During the reporting period, the Pharmaceutical Business Group generated revenue of RMB 4.93 billion. First, Yunnan Baiyao’s core product lines continued to post steady growth, with sales revenue from Yunnan Baiyao Aerosol exceeding RMB 1.5 billion and sales revenue from Yunnan Baiyao plaster exceeding RMB 700 million. Second, the “flagship products” of the second curve continued to achieve breakthroughs. Sales revenue for the flagship product, Qixuekang Oral Liquid, continued to grow rapidly, reaching RMB 339 million, an increase of approximately 68.1% year on year. Third, other brands of TCM products achieved impressive results. Sales revenue for Pudilan Anti-Inflammatory Tablets exceeded RMB 100 million, representing a year-on-year increase of 27.8%; and sales revenue for Huoxiang Zhengqi Oral Liquid surpassed RMB 50 million, representing a year-on-year increase of 60.2%.

In the first half of 2026, the Pharmaceutical Business Group, guided by its strategy, remained committed to driving performance growth through flagship products by strengthening its brand presence and enhancing products through clinical research. We continued to upgrade the “Yunding Jingwei” ecosystem collaboration model to foster mutual progress with partners at all levels, achieving sustained growth for products in the traumatology pain management field despite a high baseline. Meanwhile, the Pharmaceutical Business Group continued to expand the promotion of key products in high-potential therapeutic areas, including cardiovascular and cerebrovascular, respiratory, gastrointestinal, and urological, thereby increasing the market share of its second-tier flagship products. First, we continued to focus on the clinical value of our products, actively conducting clinical research and postmarketing re-evaluation studies to strengthen the medical foundation for key products such as Yunnan Baiyao Capsules, Yunnan Baiyao Aerosol, Yunnan Baiyao Plaster, Qixuekang Oral Liquid, Gongxuening Capsules, and Tongshu Capsules. We have expanded indication studies, opening up broader application scenarios, and maintaining growth in our “fundamental base” of the pharmaceutical business. Second, we continued to upgrade the “Yunding Jingwei” ecosystem cooperation model. By leveraging the direct data connection system, we established a streamlined, efficient direct-supply model through tier-one distributors, enabling point-to-point delivery of products from production to the point of sale. This will allow for more effective management of the “brand+channel+service” trinity within the ecosystem, while simultaneously strengthening traceability management and sales promotion services to set a benchmark for channel management in the pharmaceutical industry. Third, we actively expanded

our online market and used online platforms as channels for brand and content promotion, building a comprehensive, coordinated marketing matrix that integrates both on-site and off-site efforts. This will not only drive sales growth but also strengthen Yunnan Baiyao’s brand awareness and market competitiveness in the on-demand health consumption sector. Fourth, we fully leveraged the strengths of our field sales teams to organize and implement large-scale, systematic “mass mobilization” campaigns tailored to project needs, coordinating personnel across provinces and regions, and directly driving sales growth. Fifth, we implemented a scenario-based, specialized, and youth-oriented content marketing system. Focusing on scenarios such as “traumatology pain,” “workout partners,” “nourishing the spleen during the long summer” and “Qi and blood health,” we leveraged major IP projects and utilized various platforms to conduct matrix-style content promotion. Through omni-channel integrated marketing that deeply integrates brand building, effectiveness, and sales, we have driven sales growth and rejuvenated the brand image.

Looking ahead, the Pharmaceutical Business Group will continue to implement the “1+4+N” industry portfolio and development strategy. Centered on the “1” core area - pain management, we will continuously enhance the clinical value of our products and expand our market share in the healthcare channel through specialized research initiatives, while driving steady growth in the retail channel through professional brand management. At the same time, we will identify high-potential, high-quality, and high-value products in the pain management sector to supplement our portfolio and refine our product matrix. Focusing on the “4” key breeding areas - cardiovascular and cerebrovascular, respiratory, gastrointestinal, and urological, we will concentrate on promising products and leverage our supply chain and channel strengths to cultivate a series of flagship products that will form a second growth curve. We will also continue to incubate and explore multiple (“N”) promising therapeutic areas, such as oncology, autoimmune diseases, and gynecology, to meet future consumer demand and drive sustained, healthy business growth.

(2) Health Products Business Group During the reporting period, the Health Products Business Group generated revenue of RMB 3.454 billion. In the oral care sector, Yunnan Baiyao toothpaste maintained its position as the top-ranked brand in terms of omnichannel market share in China during the first half of 2026 (Source: Nielsen Retail Research Data). While continuing to consolidate the competitive edge of Yunnan Baiyao Toothpaste, the Company has actively expanded into new market segments with remarkable results. In the first half of 2026, sales of sensitivity-relief toothpaste reached RMB 242 million, and sales of whitening toothpaste reached RMB 208 million. Sales of these two new toothpaste categories have already significantly exceeded the total sales for the previous year. In the hair loss prevention and

care sector, backed by a special cosmetic license and a national invention patent, Yangyuanqing hair care products generated sales revenue of RMB 254 million, representing a year-on-year increase of nearly 17%. During the 2026 “618” shopping festival, Yangyuanqing retained its position as the top Chinese anti-hair loss shampoo brand on Tmall (Source: shangzhizhen.com). Faced with the challenge of sluggish growth in traditional offline channels, the Company, while maintaining its competitive edge in those channels, implemented a comprehensive strategy across all channels. Through scenario-based marketing, educational content promoting product benefits, and integrated short-video and live-streaming campaigns to drive conversions, we achieved a significant year-on-year increase of 21% in online sales for the health products segment, effectively fostering steady growth in that segment. In addition, driven by the optimization of the Company’s product matrix and improvements in operational efficiency, the profitability of the Company’s health products business continued to rise, with net profit in this segment reaching a new high for the same period since 2023.

In the first half of 2026, we focused on deepening our presence in functional segments in the oral care sector, maintaining a stable foundation for the gum care category as a core functional segment, driving expansion into new categories through professional R&D, taking into account the varying oral health needs of different demographics, and engaging in continuous innovation centering on areas such as gum care, sensitivity relief, whitening, and children’s care, precisely identifying and meeting consumers’ diverse and niche oral care needs, enriching the product matrix, and opening up new avenues for category growth. The sensitivity-relief toothpaste incorporates patented micron-sized hydroxyapatite and is professionally formulated with sensitivity-relief ingredients to provide specialized care for people with sensitive teeth. Whitening toothpaste features the proprietary 3S Dual-Action Whitening Technology, which fights stains, whitens teeth, and repairs enamel. Children’s toothpaste utilizes yolk immunoglobulin-based biological cavity prevention technology and “Shu’anfu” cavity prevention technology to effectively reduce tooth decay in children. In the hair care and anti-hair loss category, the Yangyuanqing product line has achieved sustained growth driven by digital retail. For existing products, the brand continues to deepen research and development into the application of Yunnan’s efficacious botanical ingredients, driving iterative upgrades to anti-hair loss formulations, efficacy, and fragrances. In terms of new products, the brand has launched the “Anti-Hair Loss+” Scalp Health Management Series, which precisely addresses diverse scalp care needs such as oil control, strength and resilience, and volume, further enriching the product matrix.

Looking ahead, the Health Products Business Group will continue to expand its existing customer base and strengthen its product categories to establish a sustainable growth model. To expand the existing customer base, we will fully tap into the potential of our current products and users, using scenario-based operations and product

reinvention to boost repeat purchases and customer loyalty. To develop new product categories, we will focus on anti-allergy, skin-brightening, children’s, and hair and body care products to build a technology-driven second growth curve. The Health Products Business Group will focus on its core development priorities, continuously refine its development strategies, fully tap into the potential of its products and markets, foster sustainable growth momentum, and drive high-quality development across the category.

(3) TCM Resources Business Group During the reporting period, the TCM Resources Business Group achieved external revenue of RMB 744 million. The TCM Resources Business Group earnestly fulfilled its responsibilities as the “chain leader,” with an aim to build a TCM materials industry cluster and drive coordinated development across the supply chain. We continued to perform our obligations in the Yunyao Enterprise Alliance and the Digital Intelligence of Yunnan TCM Platform Testing Alliance, successfully exploring and forming a distinctive Yunnan-style “one product, one chain” development path for the TCM materials industry. The TCM Resources Business Group has stabilized its core revenue streams and, through the integrated “Large-scale Procurement” management platform, has significantly reduced procurement and production costs.

In the first half of 2026, the business units within the TCM Resources Business Group worked together in a coordinated effort. First, we have developed the seed industry from a high starting point by implementing a targeted R&D and commercialization model of “1 variety + 1 expert team + 3-5 cooperative bases.” We have systematically formulated 39 industry standards, including 33 standards for seeds and seedlings of 11 key varieties, as well as six standards such as the Procedures for the Construction and Evaluation of High-Quality Seed Propagation Bases for TCM Materials (Non-Forest Tree Species). We have fully launched the “Yunyao Seed Valley” strategy and accelerated the construction of key seed source projects, including the Pingbian Virus-Free Ginger Tissue Culture Plant, the Wenshan Panax notoginseng Seed Source Base, and the Lijiang High-Altitude Seed Source Base, thereby laying the groundwork for a modern seed industry system that spans from germplasm evaluation and elite variety selection to standardized propagation. Second, we have promoted high-standard cultivation by shifting cultivation management from “experience-based judgment” to “data-driven decision-making.” We added more than 19,000 mu of GAP-certified cultivation areas and conducted six cultivation training sessions, reaching nearly 1,000 participants, thereby demonstrating and driving the overall upgrading of TCM materials cultivation across Yunnan. During the harvest season of Carthamus tinctorius, more than 700 metric tons were collected and stored from demonstration planting areas, benefiting over 10,000 farming households and reinforcing the quality and stable supply of “excellent Yunnan TCM resources.” Third, we advanced high-level processing. We continued to advance the “One Product,

One Chain” model, establishing 8 standardized origin warehouses in major medicinal materials production areas to achieve significant improvements in product standardization and quality consistency. We leveraged the integration of data from the “Digital Intelligence of Yunnan TCM” platform and the warehouse management system to enhance inventory turnover and order fulfillment speed and reduced overall operating costs through the use of energyefficient equipment, control of processing losses, and the development of a collaborative processing network. Fourth, we developed high-level markets through “Digital Intelligence of Yunnan TCM,” our independently developed “1+1+N” one-stop platform for direct supply of TCM materials from their places of origin, which is designed to achieve “optimal costs at the source” and “consistent high quality.” As of the end of August 2026, the platform’s cumulative transaction volume had exceeded RMB 4.2 billion, with over 90,000 farmers registered online. Leveraging the synergies between origin warehouses in Yunnan’s authentic TCM production regions and distribution warehouses in markets such as Bozhou, Anhui, and Yulin, Guangxi, we continue to build a comprehensive “origin-to-market” marketing system. Fifth, we have taken a strategic approach to brand building by establishing “Rapid Testing Stations” and developing the “Yunjian Bencao” brand. We formulated 26 corporate standards for TCM materials and decoction pieces, two of which were ranked first on the provincial “leader” list. We led the revision of Pharmacopoeia standards for Panax notoginseng and Atractylodes lancea, released three group standards for Yunnan Paris polyphylla seeds, on-site processing, and production environment, co-established two provincial-level key laboratories and developed multiple ready-to-eat decoction pieces to diversify our product matrix, and developed a range of high-value-added foods and raw materials, including ginger oil, Carthamus tinctorius extract, and Dendrobium catenatum pulp, to drive new product development. We obtained one invention patent for Carthamus tinctorius extract, and organized the formulation of 15 standards for the Dendrobium catenatum series. Sixth, breakthroughs were achieved in cross-border business, with the first-ever exports of the medicinal materials Dipsacus asperoides and Gentiana macrophylla. Exports of eucalyptus oil opened up opportunities for cooperation in the Southeast Asian fragrance market, and the brand’s influence was significantly enhanced. Seventh, steady progress has been made in other business areas. The natural plant extracts business is accelerating its transformation. Breakthroughs have been achieved in projects such as flavorings and co-branded products, and the flavor and fragrance production platform project has been approved.

Looking ahead, the TCM Resources Business Group will continue to undertake the strategic positioning and responsibility of Yunnan Baiyao Group as the “chain leader” for the high-quality development of the TCM industry in Yunnan Province, and tap into Yunnan’s inherent advantages in TCM resources. In terms of branded herbal medicines, we will leverage Yunyao resources to strengthen the foundation of the Yunyao supply chain. With regard

to Digital Intelligence of Yunnan TCM, we will create new business models and build new service platforms. In the natural plant extracts sector, we will adjust our business operations to fully empower our products through a combination of technology and branding. Through the coordinated advancement of these businesses, we will help transform Yunnan’s natural endowment of TCM materials into a competitive industrial advantage, thereby achieving the strategic goal of supporting “excellent TCM products” by “excellent Yunnan TCM resources,” contributing to the industry’s in-depth development.

(4) Yunnan Pharmaceutical Co., Ltd (“Yunnan Pharma”) During the reporting period, Yunnan Pharma realized revenue of RMB 12.289 billion. At the product level, the expansion of the non-pharmaceutical distribution business has begun to show results, with sales up 23.6% year-onyear. Under the “hospital-adjacent store” model, specialized pharmacies handling new and specialty drugs, which actively capture prescriptions diverted from hospitals, maintained strong growth, with sales up 36.1% year-on-year.

In the first half of 2026, faced with ongoing policy adjustments in the pharmaceutical industry and profound changes in the macroeconomic market environment, Yunnan Pharma fully implemented its “Regaining Growth” strategy, centering on “consolidating and improving existing business while driving innovation to expand new growth areas.” By deepening supply chain collaboration, optimizing its business structure, and strengthening digital and intelligent operations, we have effectively enhanced our overall resilience and ability to adapt to the changing environment. First, we optimized our business structure based on the principle of seeking progress while maintaining stability. The Company continued to consolidate its core business of pharmaceutical sales in the tiered healthcare market, steadily driving the recovery and rebound of sales in the commercial market segment, and achieving significant results in expanding its in-hospital non-pharmaceutical distribution business. At the same time, the Company deeply engaged in the primary markets in prefectures and cities, continuously expanding its presence in primary healthcare facilities and third-party retail outlets. In the non-hospital market, we leveraged our “Specialty Pharmacy for New and Rare Drugs” and the “Yunzhaoyao” online platform to achieve dual improvements in sales and service efficiency. We have also piloted the use of drones to deliver emergency medical supplies to key hospitals within various service areas, providing healthcare institutions with a faster delivery experience while better fulfilling our social responsibility to safeguard people’s lives and health. Second, we deepened supply chain collaboration to improve quality and efficiency and maximize management effectiveness. Taking the integration of procurement and sales as a key strategy, and incorporating collaborative mechanisms throughout the entire upstream and downstream partnership chain, the Company has comprehensively enhanced supply chain efficiency and the ability to source core products. Third, we accelerated the transition to intelligent manufacturing. Taking the development of tightly-

knit county-level medical consortiums as an opportunity, the Company has innovatively created a “Medical Consortium Intelligent Medication Management Platform + Central Pharmacy” model. Employing digital tools to restructure the three-tiered (county, township, and village) pharmaceutical and medical device supply and pharmaceutical service system, we have achieved “five unifications” in drug formularies, procurement, stockpiling, monitoring, and pharmaceutical services. We helped expand and extend high-quality medical resources to underserved areas, promote the modernization of the pharmaceutical and medical device supply system in remote regions, and effectively improve the equity and accessibility of primary healthcare services.

Looking ahead, Yunnan Pharma will steadfastly implement its core business strategy of “stabilizing growth, managing risks, and improving profitability.” Leveraging our core strengths, including digital and intelligent operations, a mature compliance system, and a solid operational foundation, we will precisely capitalize on opportunities arising from the industry’s transformation and development, maintain steady growth in a complex and ever-changing market environment, and continue to consolidate and enhance our leading position in the province’s pharmaceutical distribution sector.

(5) Central Research Institute The Company focuses on TCM and innovative drugs. On the one hand, we develop TCM by pursuing innovation and integrity. Efforts have been focused on strengthening the identification of evidence-based medical data to fully release the potential of existing products and the clinical value of TCM, resulting in significant progress in the redevelopment of major TCM products. On the other hand, we strive to make differentiated deployment in innovative drugs. Based on the criteria of technology frontier, clinical demand and resource endowment, we take the initiative to integrate into the national and local biomedical strategies, and deploy and develop innovative drugs with more competitiveness and market prospects. At the same time, the Company is extending the R&D capabilities it has built up in the pharmaceutical sector to empower the iterative upgrades of other health products. During the reporting period, upholding the innovation-driven strategy, the Company has promoted the transformation of results, continuously improved the development momentum, and promoted scientific planning of short-, medium- and longterm projects in an orderly manner.

For short-term projects, we will dedicate our efforts to the innovative redevelopment of marketed varieties and the development of drugs and medical devices, and drive the development of health products by leveraging the R&D capabilities of pharmaceutical companies. In the short term, R&D will remain firmly focused on clinical value. We will continue to conduct clinical studies on marketed products using evidence-based medicine approaches to strengthen our evidence base, thereby expanding product indications, broadening application scenarios, and fully

realizing the value of our existing product matrix. Twenty-four large varieties of TCM involving redevelopment are currently under research, and 53 projects are in progress. The progress of key projects during the reporting period is as follows:

For medium-term projects, we have made every effort to promote the development of innovative TCMs and continued to build star products of Yunnan Baiyao transdermal preparations. The progress of key projects during the reporting period is as follows:

For the long-term projects, based on its industrial expertise, financial strength, and collaborative resources spanning industry, academia, and research, guided by unmet clinical needs and empowered by cutting-edge technologies, the Company has established a differentiated innovation strategy centering on the development of radiopharmaceuticals. By advancing the R&D of multiple high-value innovative drugs in a phased manner, the Company is forging an innovation growth trajectory distinct from that of TCM enterprises and continuously fostering the momentum for its long-term sustainable development. The progress of key projects during the reporting period is as follows:

The Company will focus on building a collaborative, open, and efficient innovation system and promote the formation of a dual-helix mechanism for the coordinated development of the industrial chain and the innovation chain. First, we will strengthen the development of innovation platforms, enhance our capacity for scientific and technological innovation, and focus on achieving breakthroughs in core technologies related to the strategic industrial layout. Second, we will enhance our capacity for innovative development, establish a proactive business portfolio management system, and promote effective synergy between our core businesses and emerging growth businesses. Third, we will accelerate the development of new-quality productive forces, actively coordinate the planning of key industries and infrastructure projects, fully leverage the benchmarking advantages of our “Lighthouse Factories,” and promote the expansion and enhancement of digital and intelligent manufacturing. Fourth, we will strategically target high-potential sectors and accelerate the development of new sectors, new pathways, and new business models that align with our operational and developmental needs. Fifth, we will actively foster a positive environment that encourages innovation, firmly establish the mindset of driving enterprise development through science and technology and strengthening the enterprise with talents, and effectively build a team of scientific and technological innovation talent, so that a culture of “wanting to innovate, daring to innovate, and being able to innovate” becomes the norm within the enterprise.

(6) Digital and intelligent technologies empowering business upgrades and innovative development During the reporting period, the Company, in line with the overall framework for digital transformation outlined in the “15th Five-Year Plan” and securing key positions in areas such as AI application, AI scenario validation, data governance, data assetization, and digital marketing, actively promoted the industrial transformation and upgrading as well as innovative business development. Our proprietary “Digital Intelligence of Yunnan TCM” platform was selected as a model case of AI applications by the Ministry of Industry and Information Technology, making it the only platform in the field of TCM nationwide to be selected. Focusing on five core business areas including production, supply chain, and marketing, the Company

systematically advanced its data asset inventory and governance efforts, successfully obtaining DCMM Quantitative Management Level (Level 4) certification. It became the first company in China’s pharmaceutical industry to receive this certification, with its governance capabilities now on par with the top tier of domestic companies. We were the first in the TCM industry to establish a nationwide system for tracking product flow and inventory that extends down to the product specification and retail store levels, effectively empowering the development of the “Yunding Jingwei” channel value chain. The Omni-channel Marketing Platform 1.0 has been officially launched, completing the full implementation of “one product, one code” for core personal care categories such as toothpaste, thereby establishing an integrated, closed-loop system that covers omnichannel marketing outreach, business execution, and risk management. Aligning closely with the national strategic direction for reforming the market-based allocation of data as a production factor, and leveraging its proprietary “one item, one code” core dataset, the Company has become the first publicly listed company in the TCM industry to recognize data assets on its balance sheet, officially entering a new phase of data assetization.

II. Analysis on Core Competitiveness

(II) Full industrial chain advantage

We will further uphold our responsibilities as a chain leader, based on the strategic positioning of “the ‘chain leader’ with high-quality development of Yunnan TCM resources.” Relying on the authentic medicinal resources and location advantages of Yunnan Province, we will leverage Yunnan Baiyao’s strengths and influence in production, technology, distribution channels, and branding, as well as the demonstration, leading and driving role of the leading enterprise in industrial development. We have built a digitalized industrial chain ecosystem for TCM materials with the model of “1+1+N,” which consists of “1 TCM production, research and marketing integrated digital intelligence platform + 1 new specialized market for TCM materials at the origin + multi-dimensional synergies,” to promote the standardization, scaling, branding and digitalization of the TCM industry and transform resource advantages into industrial competitive advantages and long-term sustainable development advantages, so

• as to support “excellent TCM products” by “excellent Yunnan TCM resources.” Driven by its long-term and continuous investment in key strategic varieties of TCM materials, the Company

has achieved a complete and closed-loop industrial chain from seed selection and cultivation to production and processing, established a robust supply system for strategic medicinal materials, effectively ensured the quality

stability of TCM raw materials, controlled the price fluctuations of strategic TCM raw materials, and thus laid the groundwork for the long-term and sustainable development of Yunnan Baiyao.

• (II) Continuous innovation capability Yunnan Baiyao consistently meets the rapidly evolving and upgrading consumer demand through continuous

innovation. The Company is committed to integrating TCM into modern life. We have evolved from a single hemostatic product to a vast Yunnan Baiyao industrial group, covering various sectors of the holistic wellness industry, and created classic examples of innovation and the integration of TCM products into daily life, such as “Yunnan Baiyao Woundplast” and “Yunnan Baiyao Toothpaste.”

Looking ahead, the Company is committed to integrating cross-regional resources to build a modern R&D system, driving the inheritance and innovation of TCM alongside advancements in biopharmaceutical technology, and leveraging digital and intelligent transformation to continuously enhance our innovation efficiency. Currently, the Group’s Central Research Institute has established five major R&D centers and more than 10 national and provincial-level research platforms, building a cross-regional R&D capability that spans TCM and ethnic medicine, radiopharmaceuticals, biopharmaceuticals, transdermal formulations, medical devices, and skin care. Through collaboration with numerous leading domestic research institutions and universities, the Company has integrated industry-academia-research resources and attracted top-tier R&D talents. Leveraging a dual-track mechanism of “external recruitment and internal development,” we have established a high-caliber talent team led by members of the Chinese Academy of Engineering, recipients of the National “Ten Thousand Talents Program” and recipients of the National Science Fund for Distinguished Young Scholars, with over 60% of the team holding master’s or doctoral degrees. Leveraging the strengths of its R&D system, which focuses on “building platforms, establishing mechanisms, and attracting talent,” the Company adheres to a market-driven approach to R&D and innovation. We deeply explore the clinical value of existing products and are fully committed to promoting the synergistic development of the industrial and innovation chains, thereby achieving the effective commercialization of research outcomes, cross-disciplinary integration, and innovative breakthroughs. In addition, the Company has identified “AI+Healthcare” as the core focus of its strategic transformation, deeply integrating technologies such as artificial intelligence, big data, and cloud computing to empower drug discovery and clinical research, thereby continuously improving R&D efficiency.

• (III) Channel advantages In terms of pharmaceuticals, the Company has built a marketing network covering medical institutions and

retail pharmacies across various provinces, regions, counties, and towns in China, and simultaneously expanded its

presence in the online market. We have developed the “Yunding Jingwei” ecosystem cooperation model, establishing a streamlined, flat-structured, data- and intelligence-driven direct-supply model from primary distributors. This enables point-to-point delivery of products from manufacturers to pharmacies, facilitates a more effective “brand+channel+service” integrated ecosystem management model, and continuously strengthens traceability management and sales performance monitoring, thereby setting a new industry benchmark for channel management in the pharmaceutical sector. In the advantageous over-the-counter (“OTC”) channels, we have nationwide coverage, serving 5,000 top-tier chains and reaching nearly 400,000 retail stores. In terms of healthcare facilities, our network covers the more than 12,000 hospitals nationwide (including primary care facilities). In the online marketplace, we have precisely targeted the “immediacy” trend in O2O channels, establishing a comprehensive “on-site+off-site” collaborative matrix, and engaging in extensive partnerships with major ecommerce platforms to effectively reach modern consumers through customized digital marketing.

Regarding health products, Yunnan Baiyao has established a comprehensive nationwide sales team dedicated to holistic wellness products, covering all terminals. Yunnan Baiyao Toothpaste continues to maintain a leading market share in China with a high brand penetration in the oral product category. Through ongoing optimization of its full chain channels, the Company has not only strengthened its position in traditional offline channels but also experienced significant growth in emerging business models such as on-demand retail, community group purchases, and interest-based e-commerce. This demonstrates the Company’s willingness to experiment and adapt, taking measured steps forward along the way, all of which enhance its ability to quickly respond to evolving business trends. Such channel advantages of Yunnan Baiyao have significantly enhanced market competitiveness of the Company, laying the foundation to continuously commercialize new products.

• (IV) Talent team strengths The Company continues to strengthen the development of a specialized workforce aligned with the Group’s

strategic development, while collaboratively advancing the development of talent pipelines across all fields. First, we have established a long-term mechanism for talent development, opening up career pathways across management, technical, and professional tracks, and implement targeted recruitment based on specific needs, promoting the recruitment of highly skilled, highly technical, and high-level talent in core professional fields essential for our development. Second, in order to advance the development of our talent pool in the new era, we have established a career grading system and training mechanisms, and implemented a lifelong vocational skills training system, leveraging the mentorship and guidance provided by professionals in various fields to build a highquality, specialized workforce. Third, we keep refining our incentive mechanisms, using a variety of approaches to

stimulate the creativity of all types of talent. We have further aligned our compensation system with areas such as industrial transformation and upgrading, technological innovation, reform and development, value creation, new product development, and the development of flagship products, prioritizing those working in frontline positions that are arduous, dirty, dangerous, or physically demanding. This ensures employees genuinely feel the benefits of the Company’s growth, helps maximize the enthusiasm and creativity of our staff in pursuing their work and building the business, and propel the Company toward high-quality development, laying a solid foundation for achieving collaborative win-win outcomes among all stakeholders.

• (V) Brand strength Yunnan Baiyao is a well-established Chinese heritage brand with a history of over 124 years. Centered around

the Yunnan Baiyao brand, the Company has expanded from a pharmaceutical brand into a multi-brand ecosystem covering personal healthcare products, crude drugs, and holistic wellness products. We have built a diverse portfolio of brands and continuously expanded our reach to target audiences, enhancing our brand value over the long term. The Company has been repeatedly named to Interbrand’s China’s Best Brands List and Kantar BrandZ’s Top 100 Most Valuable Chinese Brands list, among others.

III. Analysis on Principal Businesses

Overview Refer to “I. Principal Businesses of the Company during the Reporting Period” for details. Year-on-year changes in the key financial data

Unit: RMB

Significant changes in the profit composition or profit source of the Company during the reporting period

□ Applicable  Not applicable There were no significant changes in the profit composition or profit source of the Company during the reporting period. Operating revenue structure

Unit: RMB

The industries, products, or regions that account for more than 10% of the Company’s operating revenue or operating profit Applicable □ Not applicable

Unit: RMB

When the statistical caliber of the Company’s principal business data is adjusted in the reporting period, the Company’s principal business data should be subject to the one after the statistical caliber at the end of the reporting period is adjusted in the latest period

□ Applicable  Not applicable

Ⅳ. Analysis on Non-principal Businesses

Applicable □ Not applicable

Unit: RMB

Note: Investment income from Shanghai Pharma amounted to RMB 615 million. This investment represents a strategic collaboration between the two parties, facilitating synergies in their respective industries. The investment income is sustainable.

V. Analysis on Assets and Liabilities

1. Significant changes in assets composition

Unit: RMB

2. Major overseas assets

□ Applicable  Not applicable

3. Assets and liabilities at fair value

Applicable □ Not applicable

Unit: RMB

Other variations: None.

Whether the Company has significant changes in measurement attributes of main assets during the reporting period

□ Yes No

4. Restrictions on asset rights as of the end of the reporting period

Unit: RMB

VI. Investment Analysis

1. Overview

Applicable □ Not applicable

2. Significant equity investments made during the reporting period

□ Applicable  Not applicable

3. Significant non-equity investments in progress during the reporting period

Applicable □ Not applicable

Unit: RMB

4. Financial assets investment

(1) Securities investment

□ Applicable  Not applicable The Company had no securities investments during the reporting period.

(2) Investments in derivatives

□ Applicable  Not applicable The Company had no investments in derivatives during the reporting period.

5. Use of proceeds

• □ Applicable  Not applicable The Company had no use of proceeds during the reporting period.

• VII. Significant Assets and Equity Sales

• 1. Significant assets sales

□ Applicable  Not applicable The Company had no significant assets sales during the reporting period.

• 2. Significant equity sales

□ Applicable  Not applicable

• VIII. Analysis on the Majority-controlled Companies and Joint-stock Companies

Applicable □ Not applicable Major subsidiaries and joint-stock companies with a net profit impact of over 10%

Unit: RMB

Note: In accordance with relevant company regulations, the Health Products Company recognized brand usage fees totaling RMB 609 million payable to the parent company for the use of the “Yunnan Baiyao” main brand trademark. Excluding brand usage fees, the Health Products Company achieved a profit of RMB 1.258 billion for the first half of 2026.

Acquisition and disposal of subsidiaries during the reporting period Applicable □ Not applicable

Description of the major holding companies and joint-stock companies: None.

Ⅸ. Structured Entities Controlled by the Company

See Section VIII “X. Interest in Other Entities.”

X. Risks and Countermeasures

(I) Policy changes

In recent years, a series of supportive policies for the pharmaceutical industry have been introduced successively, opening up favorable development opportunities for pharmaceutical enterprises. Meanwhile, the healthcare reform will be further deepened, and the routine centralized volume-based procurement will cover more pharmaceuticals. Comprehensive revisions to laws and regulations pertaining to drug supervision are also on the horizon. All these factors are exerting higher requirements for the healthy development of the pharmaceutical industry. Given this context, the Company will place even greater emphasis on aligning with the Chinese pharmaceutical policy direction and intensify its efforts in tracking, analyzing, and comprehending critical industry information, and remain steadfast in upholding pharmaceutical compliance standards. Guided by clinical value, we will drive the establishment and optimization of our innovation and R&D system as well as our efficacy evaluation system, thereby fostering the Company’s sustained and stable growth.

• (II) Market uncertainties Due to fluctuating raw material costs, price controls on pharmaceutical products, and intensified competitions

• at the terminal level, the pharmaceutical industry is experiencing significant operational pressure. Health consumer products are grappling with challenges such as wavering consumer confidence, which is posing obstacles to business growth. In response to these pressures, the Company will continue to leverage its full industry chain competitiveness and innovation as key drivers. By continuously consolidating the supply chain foundation, enhancing operational efficiency and refining management of channels and retail, the Company aims to deepen its innovation, cost, and channel advantages, which enables the Company to navigate through economic cycles and achieve sustainable, high-quality development in the competitive market.

• (III) Transformation of innovation and R&D achievements

In pursuit of enhancing core competitiveness, the Company has consistently escalated its investment in drug R&D over recent years. Generally, new drug R&D is featured with large amount of investment, long R&D cycle, less-than-expected industry transformation rate, market uncertainty after industrialization in the future, etc. Any changes in relevant policies and market demands will be likely to affect the commercial value of the products under

R&D. Upon completion of R&D, the successful commercialization of a new drug stands as an important factor influencing R&D yields. The Company is poised to meticulously assess the R&D projects of novel drugs within the framework of its strategic direction. Resources will be apportioned to key projects, bolstering risk management capabilities throughout the R&D. Collaborative IUR efforts will be fortified, optimizing the transformation of achievements and reducing the uncertainties associated with R&D investments.

(IV) External expansion

By implementing an industrial development strategy to seek both internal growth and external expansion, the Company actively advances towards its strategic goals and strives to inject new momentum into sustainable development. In the process of pursuing external expansion, a key challenge for the Company is how to leverage investment and innovation to introduce new variables, build a new Baiyao platform, integrate more external resources, and develop a complete industry chain, to ultimately establish a strong foothold in a highly competitive and rapidly changing market. The Company will remain strategy-driven and user-centric, continuously sharpening market insight to build a healthy, sustainable portfolio.

XI. Implementation of the Market Capitalization Management System and Valuation Improvement Plan

Whether the Company implemented the market capitalization management system Yes □No Whether the Company disclosed the valuation improvement plan

□ Yes No

To effectively enhance the Company’s investment value, standardize market capitalization management practices, ensure the compliance, scientific rigor, and effectiveness of such activities, maximize corporate value and shareholder interests, and actively respond to the call in the State Council’s Several Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development of the Capital Market to encourage listed companies to establish market capitalization management systems, the Company’s 10th Board of Directors held its first session of 2025 on March 31, 2025, and approved the Market Capitalization Management System of Yunnan Baiyao Group Co., Ltd. For details, please refer to the system disclosed on the same day on www.cninfo.com.cn.

XII. Implementation of the “Enhancement of Quality and Returns” Initiative

Whether the Company disclosed the Announcement of the “Enhancement of Quality and Returns” Initiative Yes □No

The Company disclosed the Announcement on “Enhancement of Quality and Returns” Initiative (Announcement No.: 2024-12) on March 9, 2024.

Firmly upholding the principle of rewarding shareholders, and consistently focusing on its principal businesses and maintaining prudent operations, the Company kept enhancing shareholder returns, while continuously advancing high-quality development. In April 2025, in active response to the call in the State Council’s Several Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development of the Capital Market to encourage listed companies to establish market capitalization management systems, the Company formulated the Market Capitalization Management System of Yunnan Baiyao Group Co., Ltd in accordance with the Company Law of the People’s Republic of China, the Securities Law of the People’s Republic of China, the Rules Governing the Listing of Shares on Shenzhen Stock Exchange, the Self-Regulatory Guidelines No. 1 for Companies Listed on Shenzhen Stock Exchange - Standardized Operation of Listed Companies on the Main Board, and the Listed Company Regulatory Guidance No. 10 - Market Capitalization Management, other laws and regulations and normative documents as well as the Articles of Association of Yunnan Baiyao Group Co., Ltd. In accordance with the regulations and in light of our own circumstances, we adopted a comprehensive set of measures, including enhancing the quality of information disclosure, managing investor relations, conducting cash dividends, and encouraging major shareholders to increase their holdings, to promote the rational reflection of the Company’s investment value and its high-quality development achievements.

(I) Constantly improving the quality and efficiency of production and operation

In the first half of 2026, the Company steadily implemented its strategic plan and continued to pursue its development strategy of “growth, efficiency, and value creation.” As a result, its performance maintained steady growth, and its operational resilience and long-term growth potential were further strengthened. Core flagship products in the pharmaceuticals and health products segments continued to generate stable revenue, and new products were launched in an orderly manner. The Company remained committed to innovation as drivers of growth, advancing both major TCM products and innovative drugs in parallel. Significant progress has been made in the industrial chain deployment, releasing the synergies across the supply chain of TCM materials.

During the reporting period, the Company generated operating revenue of RMB 21.884 billion, representing a year-on-year increase of 2.95%; net profit attributable to the parent company was RMB 3.701 billion, up 1.88% year on year; net profit attributable to the parent company after deducting non-recurring profits and losses, was RMB 3.518 billion, up 1.66% year on year, reaching a record high for the same period; and basic earnings per share were RMB 2.07, up 1.47% year on year. The Company’s business structure continued to optimize. The industrial

revenue amounted to RMB 8.772 billion, accounting for 40.08% of the total operating revenue, up 0.07 percentage points year-on-year, with the growth rate of industrial revenue reaching 3.15%. Since 2023, the proportion of industrial revenue in total revenue has continued to increase. The Company’s investment income from Shanghai Pharma for the current period was affected by fluctuations in one-time extraordinary gains and losses, resulting in a year-on-year decrease of RMB 169 million. Excluding this impact, the Company’s net profit attributable to the parent company for the first half of 2026 increased by 8.33% year on year, while net profit attributable to the parent company for the second quarter rose by 13.18% year on year.

In terms of growth quality, the Company’s net operating cash flow for the reporting period was RMB 4.106 billion, representing a year-on-year increase of 3.66%; the weighted average return on equity was 9.04%; selling expenses decreased by 2.62% year on year, and general and administrative expenses decreased by 9.88% year on year. During the reporting period, R&D investment totaled RMB 217 million, representing a significant year-onyear increase of 27.13%, and the Company’s R&D capabilities continued to improve. The Company continued to maintain a healthy asset structure. At the end of the reporting period, the Company had total assets of RMB 55.145 billion, net assets attributable to the shareholders of the listed company amounted to RMB 40.973 billion, the assetliability ratio was 25.56%, and the cash and bank balance stood at RMB 9.57 billion.

(II) Enhancing returns to shareholders in multiple dimensions The Company takes a multi-pronged approach to enhance shareholder satisfaction, including cash dividends

and increasing the frequency of dividend payments.

During the reporting period, with a track record of consistently high dividends, the Company increased the frequency of dividend payments to enhance investors’ sense of benefit through special dividends. In April 2026, the Company completed the distribution of dividends for the 2025, paying a cash dividend of RMB 15.84 (tax inclusive) per 10 shares to all shareholders, for a total cash dividend payout of RMB 2.824 billion. When combined with the special dividend already paid in 2025, the total cumulative cash dividend for 2025 reached RMB 4.643 billion, accounting for 90.09% of the Company’s net profit attributable to parent company in 2025.

On August 28, 2026, the 11th Board of Directors of the Company considered and approved the 2026 special dividend plan at its sixth session of 2026. Based on the Company’s total issued share capital of 1,784,262,603 shares as of the first half of 2026, the plan proposes to distribute a cash dividend of RMB 10.38 (tax inclusive) per 10 shares to all shareholders, with no bonus shares (tax inclusive). The total amount of this cash dividend is RMB 1,852,064,581.91, and no capital reserves will be used to increase share capital. The total amount of the 2026 special dividend represents 50.04% of the net profit attributable to the parent company for the first half of 2026.

• (III) Continuously improving the information disclosure quality The Company consistently adheres to the principles of truthfulness, accuracy, completeness, timeliness, and fairness in information disclosure, strictly following applicable laws, regulations, and corporate policies. Actively engaging with investors, the Company carefully considers their needs and suggestions regarding periodic reports. The Company discloses the interim report data across multiple dimensions, including segments and channels, ensuring compliance while offering a comprehensive view of its operations and development. Meanwhile, the Company practically engages in voluntary information disclosure, proactively sharing information that aids investors in value assessment and decision-making, thereby enhancing the relevance and transparency of disclosures. In addition, the Company employs various methods to present and interpret periodic reports, including graphics, videos, and PowerPoint presentations, to communicate information in a clear, engaging, and easy-to-understand manner. As of the end of the reporting period, Yunnan Baiyao has been awarded the Class A rating in the information disclosure assessment by the Shenzhen Stock Exchange for the 18th consecutive time.
• (IV) Fully protecting the rights and interests of investors and ensuring smooth communication channels The Company has established a smooth communication channel to effectively safeguard the rights and interests

of investors and continuously improves the effectiveness of positive interaction with investors. During the reporting period, the Company held a total of one performance briefing, with a record high level of investor participation. We received investors for a total of 16 times (online and offline), involving more than 100 organizations and more than 230 investors, and survey records were released in a timely manner in accordance with information disclosure requirements. We responded to 24 inquiries at irm.cninfo.com.cn. Specialized personnel were assigned to answer investor relations hotline calls in earnest, ensuring the effective operation of the investor relations hotline. In addition, the Company has scientifically built a professional financial media matrix through text, video and other forms, and actively engages in multi-channel information dissemination, building and maintaining the Company’s multi-dimensional value in the capital market.

(V) Exploring and practicing the path of high-quality development

The Company has a clear strategic plan. For intensive growth, we will focus on the foundational development of the three key segments, that is pharmaceutical, health and distribution, and systematically explore potential and enhance efficiency across the industrial chain, value chain, and production factors. For extensive growth, we will, in line with the overall strategic requirements and orientation, actively explore ways to complement and strengthen existing industrial segments through strategic mergers and acquisitions, strategic partnerships, and other approaches, enabling us to rapidly overcome current growth bottlenecks and achieve sustained growth. The Company aims to

achieve growth in revenue, profit, asset scale, and other key indicators through the two-phase strategy, which will drive the century-old Baiyao toward becoming a Chinese leading and world-class modern pharmaceutical industry group.

Creating value, managing value, and realizing value are essential steps in the value enhancement journey for listed companies. The Company will strictly remain committed to fulfilling its responsibilities and obligations as a listed company. Through focusing on our principal businesses, continuous innovation, and operational improvements to enhance our intrinsic value, we aim to promote the healthy and sustainable development of the Company by continuously exploring and practicing the methodology of high-quality development. We will adhere to the “investor-oriented” principle, striving to safeguard investors’ rights and interests through various means, enhance investment returns and bolster investors’ sense of achievement. By effectively implementing the “Enhancement of Quality and Returns” initiative, we seek to boost market confidence and contribute to the positive and healthy development of the capital market.

Section IV Corporate Governance, Environment and Society

I. Changes of Directors and Senior Management of the Company

Applicable □ Not applicable

II. Profit Distribution and Conversion of Capital Reserve into Share Capital during the Reporting Period

Applicable □ Not applicable

III. Implementation of the Company’s Equity Incentive Plan, Employee Stock Ownership Plan (ESOP), or Other Employee Incentive Measures

□ Applicable Not applicable The Company had no equity incentive plans, employee stock ownership plans, or other employee incentive measures and their implementation during the reporting period.

IV. Disclosure of Environmental Information

Whether the listed company and its major subsidiaries are included in the list of enterprises legally required to disclose environmental information Yes □No

V. Social Responsibility

In the first half of 2026, under the guidance and arrangements of the Provincial Party Committee, the provincial government, and the Party Committee of the Provincial State-owned Assets Supervision and Administration Commission, Yunnan Baiyao Group leveraged its core strengths across the TCM materials industry chain. With an aim to precisely address the needs of Weixi County in rural revitalization, improve the quality of the TCM materials industry, and ensure the health of residents in border areas, the Group dispatched key personnel, allocated special funds, implemented distinctive projects, and effectively carried out initiatives to improve people’s livelihoods. Through these efforts, the Group advanced its targeted poverty alleviation work in a comprehensive, multi-level, and practical manner, and yielded significant phased results. Earnestly shouldering its social responsibility, the Group has effectively assisted Weixi County in consolidating and expanding the achievements of poverty alleviation while advancing the quality and efficiency of rural development.

In the first half of 2026, the Group continued to dispatch six village-based work team members to take up posts on the front lines in Weixi to carry out assistance work, making every effort to ensure the smooth implementation of the village-based work. In the first half of 2026, a total of RMB 2.3317 million was allocated for various forms of assistance, including RMB 120,000 for village-based work expenses, RMB 350,000 for industrial assistance, and RMB 1.8617 million for consumption-based assistance procurement. During this period, two key assistance projects

were implemented in rural counties; 10 industrial skills training sessions were conducted, reaching 300 participants; three rural prosperity leaders were cultivated; and two public welfare initiatives were successfully completed, benefiting more than 2,100 people. All assistance efforts were carried out with precision and achieved significant results. At the same time, we continued to strengthen the medical and health security system in Diqing Prefecture, thoroughly resolving the challenges of medicine distribution in remote rural areas, achieving 100% coverage of medical supplies throughout the prefecture, and effectively safeguarding the lives and health of the people in the border regions.

(I) Accurately addressing needs, improving support mechanisms, and promoting higher quality and greater efficiency in support efforts

In the first half of 2026, taking a problem‑ and demand‑oriented approach, the Group proactively engages and swiftly responds to assistance‑related needs from Diqing Prefecture and Weixi County. It has established an efficient, interconnected and closed‑loop implementation mechanism for support efforts to ensure all assistance tasks are delivered in a thorough and detailed manner.

First, we responded quickly to requests and improved the closed-loop support mechanism. In March 2026, in response to the specific assistance requests submitted by Weixi County regarding industrial upgrading, talent support, and consumption-based poverty alleviation, the Group’s Party Committee attached great importance to the matter, and promptly convened a special meeting to discuss and make arrangements, systematically reviewing the list of requests item by item, clarifying the responsible parties for each item, and formulating implementation plans for each one. The Group established a working mechanism featuring “regular communication, dedicated personnel for specific tasks, and full-process tracking and supervision,” ensuring that every assistance request receives a response, every matter is resolved, and progress is made every month.

Second, we established a special task force to tackle key challenges and provided targeted assistance through a multi-pronged approach. Focusing on the five key priorities for improving the quality of the TCM materials industry in Weixi County, the Group established a dedicated support task force and dispatched professionals from the TCM Resources Business Group to conduct multiple on-site surveys and provide guidance in Weixi. This effort has enabled the Group to precisely advance key initiatives, including supply chain integration, the implementation of a digital platform, the construction of high-quality seedling bases, the promotion of primary processing technologies, and guidance on Good Agricultural Practice (GAP) certification. Focusing on gaps in rural talent development and taking into account the actual conditions of Weixi’s industrial development, we partnered with the county’s agriculture and rural affairs department to conduct specialized skills training in areas such as cultivation,

base operation and maintenance, and on-site processing of TCM materials. In the first half of 2026, we provided training to a total of 300 grassroots officials and farmers, effectively addressing the shortage of industry talent. Focusing on farmers’ income‑growth needs, the Group has expanded channels for consumption‑based assistance. Through multiple approaches including trade‑union procurement, staff internal purchases and consignment sales via platforms, the Company directly purchased TCM materials and special agricultural products from Weixi worth RMB 1.8617 million in the first half of 2026, benefiting 4,543 residents. Consumption‑led support has effectively driven steady income growth for local farmers.

(II) Building on industrial strengths, deepening targeted assistance, and creating a model of Baiyao’s support efforts

In the first half of 2026, the Group thoroughly implemented the requirements of the Three-year Action Work Plan for the High-quality Development of the TCM Industry in Yunnan Province (2025-2027), closely aligning with Weixi County’s “3455” development strategy for the TCM materials industry. Leveraging its own full-industrychain resources in TCM, the Group focused its efforts precisely on five dimensions (standardization, digital empowerment, supply chain integration, brand building, and skills enhancement) to drive the transformation of Weixi’s TCM materials industry from “extensive cultivation” to “high-quality, efficient, and standardized development,” thereby producing a series of replicable and scalable outcomes in targeted assistance.

First, we achieved a breakthrough in GAP certification and lay a solid foundation for industry standardization. To address the paint points of low standardization and a lack of authoritative certification in the cultivation of TCM materials in Weixi County, the Group proactively coordinated with the provincial task force responsible for evaluating GAP bases for TCM materials, ensuring that key bases in Weixi County were included in the list for the first round of on-site inspections in 2026. We dispatched senior base management experts to provide on-site assistance to Weixi Baixin TCM Materials Co., Ltd, offering comprehensive, one-on-one professional guidance in areas such as establishing a standardization system, on-site management of cultivation bases, standardizing production records, upgrading warehousing facilities, and standardizing signage. Thanks to the targeted assistance, the Company successfully passed the GAP on-site inspection in June 2026, becoming the first model entity for standardized cultivation of TCM materials in Weixi County and laying a solid foundation for the standardized, regulated, and branded development of the county’s TCM materials industry.

Second, we implemented a digital and intelligent platform to empower businesses and established a digital channel linking production and sales. To address the issues of information asymmetry and low distribution efficiency in the production and sales of TCM materials in Weixi, the Group promoted the implementation of the

“Digital Intelligence of Yunnan TCM” platform in Weixi, fully committed to building a digital production and sales system. In the first half of 2026, the platform team traveled to townships and villages to conduct specialized outreach sessions and hands-on training, covering three pilot townships (Pantiange Township, Yongchun Township, and Baohe Town) and 23 administrative villages. The team provided guidance on establishing a whitelist system for 30 enterprises affiliated with the county’s TCM materials cultivation and breeding associations, and a total of 666 farming households were registered on the whitelist. By establishing a digital production-to-sales linkage mechanism based on the “enterprise + production base + farmer” model, we ensured a seamless end-to-end process for TCM materials from field cultivation and traceability at the source to corporate procurement, significantly reducing distribution costs and increasing farmers’ income.

Third, we integrated local resources into the Group’s supply chain system to expand product sales channels. The Group proactively integrated upstream and downstream segments of the industrial chain, established targeted partnerships with local pharmaceutical companies in Weixi, and actively promoted the inclusion of high-quality local TCM material resources into the Group’s nationwide supply chain system. In the first half of 2026, we focused on conducting in-depth negotiations with local companies such as Weixi Weihong Pharmaceutical, Weixi Baixin TCM Materials, and Shangri-La Lancao Pharmaceutical. We promoted a stable “order-based inventory lock-in” cooperation model and successfully added two key local pharmaceutical companies to the Group’s supplier database. We also provided on-site hands-on training on the SRM procurement system to help these companies effectively integrate with the Group’s procurement channels, thereby completely resolving the challenges local TCM materials producers faced in obtaining fair prices for high-quality products and finding adequate sales channels.

Fourth, we built a distinctive medicinal cuisine brand to enhance the influence of local products. Building on Weixi’s distinctive industrial resources, we focused on upgrading the “Weixi Glutinous Yam” brand, a nationally renowned, unique, high-quality, and innovative agricultural product. In the first half of 2026, the Group partnered with the Weixi County Bureau of Agriculture and Rural Affairs to host the “Weixi Glutinous Yam Feast” competition, dispatching professional TCM practitioners and culinary chefs to serve as judges and provide technical guidance. At the same time, we guided Weixi County in participating in the Yunnan Provincial Medicinal Cuisine Innovation Competition, where the signature dish featuring glutinous yam won the Specialty Award in the Lijiang division. This effectively enhanced the visibility, reputation, and market competitiveness of “Weixi Glutinous Yam,” helping to boost the quality and efficiency of this specialty industry through brand empowerment.

Fifth, we organized skill competitions to comprehensively improve industrial processing standards. To comprehensively enhance farmers’ capacity for the primary processing of TCM materials, the Group allocated RMB

350,000 from its special fund for the development of the TCM materials industry and, in collaboration with the Weixi County Bureau of Agriculture and Rural Affairs, successfully hosted the opening ceremony for Weixi County’s first “Medicinal Herb Street,” along with a medicinal herb primary processing skills competition and the “Weixi Glutinous Yam Feast” competition. The TCM materials Primary Processing Skills Competition covered more than 60 administrative villages across 8 townships in the county, with 160 core growers participating. By using the competition to promote learning and practice, the event effectively established a platform for technical exchange, standardized the primary processing procedures for TCM materials, comprehensively improved the quality of local medicinal material processing, and advanced the refined development of the Weixi TCM materials industry.

(III) Upholding our mission for public wellbeing, fortifying the health‑safety line, and fully safeguarding drug safety in border areas

Diqing Prefecture is characterized by significant variations in elevation, a vast territory, and poor transportation infrastructure; as a result, difficulties in distributing medicines to rural areas and ensuring the availability of emergency medications have long been persistent challenges affecting people’s livelihoods. In the first half of 2026, the Group, taking safeguarding the lives and health of people in frontier regions as the core of its livelihood assistance initiatives, continuously improved the localized pharmaceutical supply system, and thoroughly bridged the “last mile” gap in access to medications for grassroots healthcare.

First, we expanded the intelligent pharmaceutical distribution network and established an integrated countylevel pharmaceutical supply system. By deepening its localized operations in Diqing, the Group has established a smart pharmaceutical supply network featuring multi-warehouse coordination, tiered distribution, and end-to-end cold chain logistics. Through innovative, refined, and agile dispatch and distribution mechanisms, the Group has achieved 100% coverage in the distribution of medical supplies to 9 prefectural and county-level medical institutions, 30 primary-level health centers, and 163 village clinics in Diqing Prefecture. Among these, we achieved direct doorto-door delivery to 42 village health clinics, completely resolving the issues of untimely medication access and inadequate distribution in remote villages. In addition, we spared no effort in assisting with the implementation of the “Integrated Procurement and Distribution for Medical Consortiums” project. Taking the construction of the central pharmacy for the Shangri-La City Medical Consortium as a model, we helped Weixi establish a standardized management model featuring “unified drug directory, unified procurement, and unified distribution,” thereby significantly improving the efficiency of drug procurement at the grassroots level, the accuracy of inventory management, and end-to-end traceability capabilities, and ensuring the safety of medications for the public.

Second, we tackled the challenges in ensuring the supply of special medications and strengthened the health and safety defenses along the border. To address the challenges of distributing emergency and special cold-chain medications, such as antivenom, neonatal emergency drugs, and insulin, the Group spared no expense to ensure the supply of emergency and special medications and comprehensively safeguard the lives and health of people of all ethnic groups in border regions by utilizing diverse transportation methods, including high-speed rail, air transport, and specialized refrigerated vehicles. In 2025, the Group supplied medical and pharmaceutical supplies worth a total of RMB 105 million to public medical institutions in Diqing Prefecture, including RMB 14 million worth of drugs developed and manufactured in-house by the Group, thereby continuing to strengthen the foundation of medical and health care in border regions.

Section V Significant Events

I. Commitments of the Company’s De Facto Controller, Shareholders, Related Parties and Acquirers, as well as the Company Itself and Other Related Entities Fulfilled during the Reporting Period or Ongoing at the Period-End

Applicable □ Not applicable

II. Occupation of the Company’s Capital by the Controlling Shareholder or any of Its Related Parties for Non-Operating Purposes

□ Applicable Not applicable During the reporting period, there was no occupation of the Company’s capital by the controlling shareholder or any of its related parties for non-operating purposes.

III. Non-compliant Provision of External Guarantees

□ Applicable Not applicable There was no non-compliant provision of external guarantees during the reporting period.

IV. Engagement and Disengagement of Auditor

Whether the interim financial statements were audited or not

□ Yes No The Company’s interim financial statements were unaudited.

V. Explanations Given by the Board of Directors Regarding the Auditor’s “Modified Opinion” on the Financial Statements of the Reporting Period

□ Applicable Not applicable

VI. Explanations Given by the Board of Directors Regarding the Auditor’s “Modified Opinion” on the Financial Statements of Previous Year

□ Applicable Not applicable

VII. Bankruptcy and Reorganization

□ Applicable Not applicable There were no bankruptcy or reorganization related events during the reporting period.

VIII. Legal Matters

Material litigation or arbitration matters

□ Applicable Not applicable During the reporting period, the Company had no material litigation or arbitration matters. Other litigation Applicable □ Not applicable

IX. Punishments and Rectifications

□ Applicable Not applicable There was no punishment or rectification involving the Company during the reporting period.

X. Credit Quality of the Company as well as its Controlling Shareholder and De Facto Controller

□ Applicable Not applicable

XI. Significant Related Party Transactions

1. Related party transactions in relation to daily operations

□ Applicable Not applicable There were no related party transactions related to daily operations during the reporting period.

2. Related party transactions arising from acquisition or sale of assets or equity

□ Applicable Not applicable There were no related party transactions arising from acquisition or sale of assets or equity during the reporting period.

3. Related party transactions regarding joint investments in third parties

□ Applicable Not applicable There were no related party transactions regarding joint investments in third parties during the reporting period.

4. Amounts due to and from related parties

□ Applicable Not applicable There were no amounts due to and from related parties during the reporting period.

5. Transactions with related finance companies

□ Applicable Not applicable There were no deposit, loan, credit or other financial business occurring between the Company and its related finance companies/related parties.

6. Transactions with related parties by finance company controlled by the Company

□ Applicable Not applicable There were no deposit, loan, credit or other financial business occurred between any finance companies under the control of the Company and related parties.

7. Other significant related party transactions

Applicable □Not applicable

Based on its routine business needs for 2026, the Company has made reasonable estimates regarding various related-party transactions related to daily operations, including procurement and sales of goods. The Company estimated that the total amount of routine related-party transactions with Shanghai Pharma and Tibet Jiushi Zhihe

Marketing Co., Ltd in 2026 would be RMB 2,300 million, accounting for 5.74% of the Company’s audited net assets of RMB 40,044.0588 million as of the end of 2025, which shall be submitted to the Company’s 2025 Annual Shareholders’ Meeting for consideration.

This matter has been considered and approved by the Company’s 11th Board of Directors at its second session of 2026 and at the 2025 Annual Shareholders’ Meeting. For details, please refer to the Announcement on Estimated Routine Related-Party Transactions for 2026 (Announcement No. 2026-11), the Announcement on the Resolutions of the Second Meeting of the 11th Board of Directors in 2026 (2026-08), and the Announcement on the Resolutions of the 2025 Annual Shareholders’ Meeting (2026-15).

Inquiries regarding the website for the disclosure of interim reports on significant related-party transactions

XII. Major Contracts and Their Performance

1. Entrustment, contracting and leases

• (1) Entrustment

□ Applicable Not applicable There were no entrustment events of the Company during the reporting period.

• (2) Contracting

□ Applicable Not applicable There were no contracting events of the Company during the reporting period.

• (3) Leases

□ Applicable Not applicable There were no leases of the Company during the reporting period.

2. Major guarantees

□ Applicable Not applicable There were no major guarantees of the Company during the reporting period.

3. Entrusted wealth management

Applicable □ Not applicable

Unit: RMB’0,000

Details regarding the Company’s engagement of financial institutions as a single client to conduct asset management or invest in high-risk wealth management products with lower safety and poorer liquidity

Applicable □ Not applicable

Unit: RMB’0,000

4. Other Significant Contracts

□ Applicable Not applicable There were no other significant contracts of the Company during the reporting period.

XIII. Registration Form of Survey, Communication, Interviews and Other Activities Received During the Reporting Period

Applicable □ Not applicable

XIV. Explanation for Other Significant Events

Applicable □ Not applicable

1. Progress of R&D projects

On April 1, 2026, the Company issued the Announcement on the Approval of INB301 Injection for Drug Clinical Trial (Announcement No. 2026-13). The Company received the Notice of Approval for Clinical Trials of Drugs (Notice No.: 2026LP01002) issued by the National Medical Products Administration. Upon review, the clinical trial application for INB301 Injection (“the Product”), which was accepted on February 24, 2026, was found to comply with the relevant requirements for drug registration, and approval was granted to conduct clinical trials of the Product for cancer cachexia.

On June 3, 2026, the Company issued the Announcement on the Approval of a New Drug Clinical Trial Application for INB301 Injection by U.S. Food and Drug Administration (Announcement No. 2026-20). The Company received notification from the U.S. Food and Drug Administration (the “U.S. FDA”) that the New Drug Clinical Trial Application for INB301 Injection submitted by the Company has been approved by the U.S. FDA, which has granted permission to conduct clinical trials. The intended indication for development is cancer cachexia.

2. Progress on the private placement of exchangeable corporate bonds to shareholders

On April 20, 2026, the Company disclosed the Reminder Announcement Regarding the Entry into the Exchange Period for Exchangeable Corporate Bonds Issued Privately to Shareholders Holding More Than 5% of the Shares (Announcement No. 2026-14). The Company received a written notice from New Huadu, a shareholder holding more than 5% of our shares, stating that these exchangeable bonds will enter the exchange period on April 23, 2026,

with the current exchange price set at RMB 71.66 per share. The exchange period runs from the first trading day six months after the completion of the exchangeable bond issuance until the trading day immediately preceding the delisting of the exchangeable bonds, specifically from April 23, 2026 to October 20, 2028.

On April 27, 2026, the Company issued the Notice Regarding the Adjustment of the Exchange Price for Exchangeable Corporate Bonds Issued Privately to Shareholders Holding More Than 5% of the Shares (Announcement No. 2026-17). On April 27, 2026, the Company received a written notice from New Huadu, a shareholder holding more than 5% of our shares, stating that the exchange price for these exchangeable bonds would be adjusted. As the Company has disclosed the specific plan for Yunnan Baiyao’s 2025 annual equity distribution, in accordance with the relevant provisions of the Prospectus, the conversion price of these exchangeable bonds will be adjusted from RMB 71.66 per share to RMB 70.08 per share, effective from April 30, 2026, the ex-dividend and ex-rights date for this equity distribution.

3. Pledge and lifting of pledge of some shares by the shareholders

• (1) On January 23, 2026, the Company issued the Announcement Regarding the Lifting of Pledge of Certain

Shares by a Shareholder (Announcement No. 2026-01), stating that the Company was informed that New Huadu had released 75,000,000 shares of the Company (representing 4.20% of the total issued share capital) from pledge.

• (2) On February 3, 2026, the Company issued the Announcement Regarding the Pledge of Certain Shares by

a Shareholder (Announcement No. 2026-02), stating that the Company was informed that New Huadu had pledged

• 6,750,000 shares of the Company (representing 0.38% of the total issued share capital).

(3) On February 25, 2026, the Company issued the Announcement Regarding the Pledge of Certain Shares by a Shareholder (Announcement No. 2026-05), stating that the Company was informed that New Huadu had pledged

• 7,470,000 shares of the Company (representing 0.42% of the total issued share capital).

• (4) On March 24, 2026, the Company issued the Announcement Regarding the Pledge of Certain Shares by a

Shareholder (Announcement No. 2026-07), stating that the Company was informed that New Huadu had pledged 10,450,000 shares of the Company (representing 0.59% of the total issued share capital).

XV. Significant Events of the Company’s Subsidiaries

Applicable □ Not applicable

On May 22, 2026, at the Annual General Meeting of Shareholders, the Board of Directors of YNBY International received a share repurchase authorization from the shareholders of YNBY International to repurchase on the open market no more than 10% of the total number of issued shares of YNBY International as of the date the

resolution was passed at the Annual General Meeting of Shareholders. The Board of Directors of YNBY International has formally resolved to authorize the management to exercise this repurchase authorization from time to time, as appropriate, on the open market to implement the share repurchase program. YNBY International may repurchase shares at an appropriate time, depending on the circumstances. If YNBY International repurchases any shares pursuant to the repurchase authorization, YNBY International may, based on market conditions at the time of the repurchase and its capital management needs, cancel such repurchased shares and/or hold them as treasury shares.

As of August 14, 2026, YNBY International had repurchased a total of 109,936,000 shares under its repurchase authorization, representing approximately 1.15% of YNBY International’s total issued shares. The repurchased shares will be canceled or held as treasury shares, depending on market conditions and YNBY International’s capital management needs.

Section VI Changes in Shareholdings and Particulars about Shareholders

I. Changes in Shares

1. Changes in shares

Unit: share

Reasons for changes in shareholdings

• □ Applicable Not applicable Approval of changes in shareholdings
• □ Applicable Not applicable Transfers for changes in shareholdings
• □ Applicable Not applicable Progress of share repurchase implementation
• □ Applicable Not applicable Progress of the implementation of the reduction and repurchase of shares through centralized bidding
• □ Applicable Not applicable

The impact of changes in shareholdings on financial indicators such as basic and diluted earnings per share, net assets per share attributable to the Company’s ordinary shareholders for the latest year and period

• □ Applicable Not applicable Other disclosures the Company deems necessary or required by securities regulators
• □ Applicable Not applicable

2. Changes in shares subject to trading moratorium

Applicable □ Not applicable

Unit: share

II. Issuance and Listing of Securities

□ Applicable Not applicable

III. Number of Shareholders of the Company and Their Shareholdings

Unit: share

Note: New Huadu Industrial Group Co., Ltd (hereinafter referred to as “New Huadu”) completed the issuance of exchangeable bonds of RMB 2 billion on October 22, 2025. On September 29, 2025, New Huadu transferred 56,000,000 unrestricted tradable shares of Yunnan Baiyao it held to the “New Huadu Group – Guosen Securities – 25 New Huadu EB01 Guaranteed and Trust Property Special Account” opened at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited. Guosen Securities Co., Ltd, the trustee for this bond issue, will act as the nominee holder, and the shares will be used to provide collateral for the exchange of shares by holders of this exchangeable corporate bond and for the repayment of principal and interest on this bond issue. The shares subject to this security and trust registration (including dividends accrued during the trust registration period) will be held in the name of Guosen Securities, the bond trustee, and registered in the Company’s securities holder registry under the name “New Huadu Group – Guosen Securities – 25 New Huadu EB01 Guaranteed and Trust Property Special Account.” When exercising voting rights attached to shares subject to security and trust registration, Guosen Securities will seek New Huadu’s opinion in advance and act in accordance with New Huadu’s opinion, provided that such actions shall not harm the interests of the holders of this series of bonds.

Shareholders holding more than 5% of shares, top 10 shareholders and top 10 shareholders not subject to trading moratorium participating in the lending of shares in the securities finance

• □ Applicable Not applicable Changes in top 10 shareholders and top 10 shareholders with shares not subject to trading moratorium compared to the previous period

• due to lending/returning of shares in the securities finance
• □ Applicable Not applicable

Whether the top 10 ordinary shareholders and the top 10 ordinary shareholders not subject to trading moratorium of the Company conducted any agreed repurchase transactions during the reporting period

• □ Yes No

The top 10 ordinary shareholders and the top 10 ordinary shareholders not subject to trading moratorium of the Company did not conduct any agreed repurchase transactions during the reporting period.

IV. Changes in Shareholdings of Directors and Senior Management

□ Applicable Not applicable There was no change in the shareholdings of the directors and senior management of the Company during the reporting period. For details, please refer to the 2025 Annual Report.

V. Changes in Controlling Shareholders or De Facto Controllers

If the Company has previously disclosed that its actual controller is planning a change in control but the change has not yet been completed, please describe the progress of the change in control.

• □ Applicable Not applicable Changes in controlling shareholders during the reporting period
• □ Applicable Not applicable There was no change in the controlling shareholders of the Company during the reporting period. Change of de facto controllers during the reporting period
• □ Applicable Not applicable There was no change in the de facto controllers of the Company during the reporting period. VI. Preference Shares
• □ Applicable Not applicable There were no preference shares in the Company during the reporting period.

• Section VII Bonds
• □ Applicable Not applicable

Section VIII Financial Statements

• I. Auditors’ Report Whether the Interim Report has been audited

□Yes  No The Company’s interim financial statements were unaudited.

• II. Financial Statements The units in the Notes to the Financial Statements are presented in RMB.

1. Consolidated balance sheet

Prepared by: Yunnan Baiyao Group Co., Ltd.

June 30, 2026

Unit: RMB

Legal representative: Zhang Wenxue Accounting officer: Ma Jia Head of accounting center: Xu Jing

2. Balance sheet of parent company

Unit: RMB

3. Consolidated income statement

Unit: RMB

Net profit realized by the combined party in business combination under common control before the business combination in the current period was RMB 0, and net profit realized by the combined party in the previous period was RMB 0. Legal representative: Zhang Wenxue Accounting officer: Ma Jia Head of accounting center: Xu Jing

4. Income statement of parent company

Unit: RMB