Formosa Laboratories 2022 Material Topic: The Management of Supplier Management




Supplier Risk Assessment

Formosa Laboratories requires its main raw material suppliers to sign a Declaration of Hazardous Substance Use and a Declaration of Non-Use of Conflict Minerals in order to disperse risks and continuously improve the overall quality of the supply chain. This policy is incorporated into the necessary items of supplier procurement management through the internal SOP for the Supplier Qualification and Assessment Certification Procedure. The main raw material suppliers are required to commit that their supplied products or components, corporate governance, and worker rights protection are in line with the Company's ESG management philosophy.

Formosa Laboratories actively assists and guides suppliers who fail to meet the Company's requirements in implementing improvement plans, while also implementing improvements in employee health and safety, human rights, and corporate social responsibility. If there is a violation of relevant regulations, the Company may assert termination or dismissal of the contract, and is committed to reducing supply chain risks and promoting supplier partners to jointly enhance corporate social responsibility.

  • All main raw materials suppliers must sign the Declaration of Hazardous Substance Use.
  • Formosa Laboratories requires its main raw material suppliers to sign a Declaration of the Use of Hazardous Substances, committing to the products or components they supply, including product attachments, packaging materials, and other related attachments for product delivery. If there is any violation of relevant regulations, Formosa Laboratories reserves the right to terminate or rescind the contract to avoid any impact on human health and environmental safety. The response rate in 2022 is 100%.
  • Suppliers are required to sign the Halal Declaration, Allergen Declaration, Melamine Declaration, and Genotoxic Impurity Declaration.
  • Formosa Laboratories will continue to request suppliers to sign a Halal Declaration stating that no animal sources, ethanol, or anesthetics are used in the production process, to sign an Allergen Declaration stating that no allergens are included in the production process, raw materials, or equipment used, to sign a Melamine Declaration stating that melamine is not included in the production process, storage, or transportation, and to sign a Genotoxic Impurity Declaration stating that the product does not contain potential genotoxic impurities caused by methylsulfonate salts, dihydroxyethyl sulfonate salts, toluenesulfonate salts, and benzenesulfonate salts.
Social Risks
  • All main raw materials and materials suppliers must not use conflict minerals.
  • Formosa Laboratories requires its main raw material suppliers not to use conflict minerals, such as tantalum (Ta), tin (Sn), tungsten (W), gold (Au), and cobalt (Co), to ensure that the minerals used in the Company's products do not contribute to armed conflicts. If suppliers use any of these minerals, they must disclose the source of those minerals.

Note: Main raw materials means raw materials that can form the main structure of the product (API).


In addition, Formosa Laboratories will continue to request new suppliers to sign relevant statements and declarations to ensure that the quality and source of raw materials and materials comply with safety standards, do not contain harmful substances that are restricted, and will not have a negative impact on the environment or society. The number of new suppliers signed in 2022 is 22, accounting for 22% of the total number of new suppliers that year.

In addition to the requirement of signing a declaration with suppliers, the Company expects to include environmental protection, labor conditions, occupational health and safety, human rights, and other related issues in the assessment through supplier questionnaires, evaluations, and audits. More comprehensive screening criteria will be introduced and a supplier evaluation system will be established as part of the Company's supplier management policy to enhance our corporate social responsibility.


Supplier Evaluation

Formosa Laboratories conducts supplier evaluations based on SOP 099 Raw/Supply Material Supplier Evaluation Procedure and Materials by the Procurement Department. A supplier evaluation form is designed annually in the first quarter of the following year based on the quality and delivery records and the service attitude from the previous year. Through communication and visits with suppliers and contractors, we learn about the status of their compliance with regulations to ensure the proper implementation of laws and regulations. In addition, the Company also conducts annual evaluations of raw materials and materials suppliers, with scoring criteria divided into four categories: 90 points and above, 76-90 points, 60- 75 points, and below 60 points. If a supplier's score on the evaluation form is below 60 points, they will be required to make improvements within a specified period. If it is confirmed that they are unable to make concrete improvements, their application may be cancelled and their name removed from the list of qualified suppliers.

Based on the degree of impact on operations, we have adjusted the weightings of the supplier evaluation items.

In 2022, the Company's supplier evaluation items and weightings include: quality assurance 70%, delivery stability 10%, and service 20%. The supplier evaluation results for Formosa Laboratories in the past 3 years are as follows:

Formosa Laboratories Supplier Evaluation Results in the Past 3 Years

Note: The statistics are rounded, so there may be some errors in the calculations.