Measure, Purchasing Policy and Rules for Purchasing Ethics

Chugai considers suppliers essential business partners in maintaining a sustainable supply chain and co-creating social value. To build and maintain fair and transparent relationships with our business partners on equal footing, we have established the following Purchasing Policy and Chugai Ethical Purchasing Standards.

We are also making a “Declaration of Partnership Building” in order to establish new partnerships, by promoting collaboration and mutual prosperity with all of our supply chain partners and businesses seeking to create value. Please see the link below for our Declaration of Partnership Building. (Japanese only.)
https://www.biz-partnership.jp/declaration/18152-05-24-tokyo.pdf

Under this policy and standards, Chugai engages in proactive communications to consider their needs arising from situations such as inflation.

This Policy is defined for the aim of ensuring the appropriateness of the purchasing activities and building sound business relationships with suppliers. Based on the Purchasing Policy, we have the Indirect Materials Purchasing Management Regulations, which stipulate the basic matters relating to the purchasing of indirect materials. And based on the Indirect Materials Purchasing Management Regulations, we have the Supplier Selection Guidelines, which define the procedures necessary for transparent and fair selection of suppliers, and the Supplier Management Guidelines, which define matters for the proper management of suppliers with whom we do business in the indirect materials.

Chugai Group Purchasing Policy

1. Comply with social norms and others as well as the laws and regulations of each country, promoting fair purchasing activities in accordance with the following principles:
   
   1. Purchaser shall engage in transactions with business partners accredited by the Company.
   2. Purchaser shall select business partners appropriately.
   3. Those authorizing purchases shall verify the validity of orders prior to the orders being placed.
   4. Purchaser shall place orders in writing (individual contracts).
   5. Purchaser shall make payment after deliverables (goods or services) have been successfully accepted.
   6. The Purchasing function shall monitor the above (1) through (5).
2. Build fair and equitable business relationships with domestic and overseas business partners.
3. Promote contributions to a sustainable society by advancing green procurement with the cooperation of business partners.
4. Seek high-quality products and services with the cooperation of business partners.
5. Advance lower costs by procurement at a fair price.
6. Faithfully fulfill obligations under contracts with business partners, establish equally cooperative relationships and aim for mutual growth.
7. Protect confidential information learned through business transactions and establish relationships of mutual trust with business partners.

The Rules, based on the “the Procurement Policy,” are intended to prohibit the receiving or offering of inappropriate profits in relation with the supplier, to promote the proper operation of purchasing activities for direct and indirect materials, and to ensure and maintain the fairness and transparency of business relationship with suppliers.

Basic Principles

• Suppliers shall be selected and managed fairly and properly in accordance with the Guideline for Supplier Selection and the Guideline for Supplier management, separately established by the Procurement Department.
• Employees are required to act with high ethical standards and fairness based on common sense and decency that are accepted and valid by society in general, in doing business with supplier, in addition to complying with relevant laws and regulations and their spirit.
• Any violations of laws and regulations including anti-bribery law are strictly prohibited. It is required to comply with related laws, regulations and the relevant internal rules in the event of offering or accepting to/with public officials and healthcare professionals.
• Abuse of business relationship with the supplier for the convenience or benefit (including benefit of job placement or employment of relatives in addition to economic benefit) of individuals or a person other than the Company (including relatives and friends) is strictly prohibited.
• Any unfair demand (Including acts that may be legally problematic such as bringing the price down or unjustifiable reduction, as well as acts that are unacceptable in terms of social conventions such as forcing supplier to find a hotel free of charge) to the supplier in terms of normal business practices by taking advantage of the Company’s dominant bargaining position is prohibited.
• Employees are required to avoid any act that may cause a misunderstanding (e.g., frequent business meals) of fraudulent relationship with suppliers.

Receiving

• Business meals are allowed only in the occasion of when suppliers invite employees for meals to exchange appropriate business information and when it’s acceptable in terms of social conventions with the conditions, such as the number of meals being served once every half year and the amount being within the specified upper limit of the amount.
• Receiving cash, gift vouchers, gift cards, or any other cash vouchers from suppliers is strictly prohibited.
  Receiving goods from supplier shall be prohibited.
• However, it is acceptable to receive them only when they are of a degree of common courtesy and in accordance with locally accepted business practices (receiving Japanese towels, calendar, notebook, novelties, etc.), acceptable in terms of social conventions.
• Receiving any ceremonious gifts from the supplier shall be prohibited.
• Accepting entertainment from suppliers shall be prohibited.

Offering

• Offering business meals are allowed in the occasion of when employees invite suppliers for meals to exchange appropriate business information with the conditions, such as the number of meals being served once every half year and the amount being within the specified upper limit of the amount.
• Offering cash, gift vouchers, gift cards, or any other cash vouchers to suppliers shall be prohibited.
• Offering goods to suppliers shall be prohibit. However, offering souvenirs upon visiting suppliers’ site and at various events organized by the Company shall be acceptable if certain requirements are met.
• Offering any ceremonious gifts to suppliers shall be prohibited. However, it is acceptable to send a congratulatory and a condolence telegram.
• Offering entertainment to suppliers shall be prohibited.