Guangzhou Baiyunshan Pharmaceutical : (1) PROPOSED ELECTION OF SUPERVISOR; (2) PROPOSED CHANGE OF AUDITORS; (3) PROPOSED CASH MANAGEMENT OF PART OF THE TEMPORARY IDLE INTERNAL FUNDS; AND (4) NOTICE OF THE ANNUAL GENERAL MEETING

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action you should take, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in the Company, you should at once hand this circular accompanying with the form of proxy to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer, registered institution in securities, or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

(a joint stock company with limited liability established in the People's Republic of China)

(H Share Stock Code: 0874)

1. 1. PROPOSED ELECTION OF SUPERVISOR;
   2. PROPOSED CHANGE OF AUDITORS;
2. PROPOSED CASH MANAGEMENT OF PART OF THE TEMPORARY IDLE INTERNAL FUNDS;
3. 1. 
      AND
   2. NOTICE OF THE ANNUAL GENERAL MEETING

Capitalised terms used in this cover page have the same meanings as those defined in this circular.

A letter from the Board is set out on pages 4 to 7 of this circular. The notice convening the AGM to be held at the Conference Room of the Company, 45 Sha Mian North Street, Liwan District, Guangzhou City, Guangdong Province, the PRC on Thursday, 3 June 2021 at 9:30 a.m. The notice convening the AGM is set out on pages 10 to 16 of this circular.

Whether or not you intend to attend the AGM, please complete the forms of proxy despatched together with the aforementioned notice in accordance with the instructions printed thereon and return the forms of proxy to the office of the Company's H Share Registrar, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong (for holders of H Shares) as soon as possible and in any event not less than 24 hours before the time appointed for the AGM or any adjournment thereof. Completion and return of the forms of proxy will not preclude you from attending and voting in person at the AGM should you so wish.

19 April 2021

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DEFINITIONS

In this circular, unless the context requires otherwise, the following expressions have the following meanings:

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• For ease of reference, the names of the PRC established companies or entities (if any) and the PRC laws and regulations (if any) have generally been included in this circular in both Chinese and English languages and the English names are for identification purposes only. In the event of inconsistency, the Chinese language shall prevail.

• Where the context so permits or requires, words importing the singular number include the plural and vice versa and words importing the masculine gender include the feminine and neuter genders and vice versa.

# All times stated in this circular refer to Hong Kong time.

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LETTER FROM THE BOARD

19 April 2021

To the Shareholders

Dear Sir or Madam

1. 1. PROPOSED ELECTION OF SUPERVISOR；
   2. PROPOSED CHANGE OF AUDITORS；
2. PROPOSED CASH MANAGEMENT OF PART OF THE TEMPORARY IDLE INTERNAL FUNDS；
3. 1. 
      AND
   2. NOTICE OF THE ANNUAL GENERAL MEETING

1. INTRODUCTION

The purpose of this circular is to provide you with information in relation to the resolutions to be

proposed at the AGM on, among other things; (i) the proposed election of Supervisor; (ii) the proposed change of auditors; (iii) the proposed cash management of part of the temporary idle internal funds and give you the Notice (AGM).

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LETTER FROM THE BOARD

2. PROPOSED ELECTION OF SUPERVISOR

Reference is made to an announcement of the Company dated 24 November 2020 wherein the Company announced that (i) Ms. Gao has resigned as a Supervisor; and (ii) the number of supervisors of the Supervisory Committee will be less than three (being the minimum number of Supervisors prescribed by the Company Law of the PRC) upon the resignation of Ms. Gao, the resignation of Ms. Gao would become effective after the new Supervisor has been elected at the AGM to fill the vacancy in the position of Supervisor after the resignation of Ms. Gao.

At the meeting of the Supervisory Committee held on 24 November 2020, Mr. Jian was nominated as a candidate for the Supervisor, and the resolution on the emoluments to be paid to him for year 2021 was approved at the meeting of the Supervisory Committee held on 18 March 2021. In this regard, an ordinary resolution will be proposed at the AGM for the Shareholders to consider and, if thought fit, approve the election of Mr. Jian as a Supervisor and recommend the emoluments to be paid to Mr. Jian by way of cumulative poll. Particulars of Mr. Jian as at the LPD and further information required to be disclosed pursuant to Rule 13.51(2) of the Hong Kong Listing Rules are set out in Appendix to this Circular.

3. PROPOSED CHANGE OF AUDITORS

Reference is made to the Announcement of April, wherein the Company announced, among other things, due to the needs of the business development and audit of the Company, the proposed change of auditors.

As disclosed in the Announcement of April, WUYIGE has confirmed in writing that there are no matters in relation to the change of auditors that need to be brought to the attention of the Shareholders. The Board and the Audit Committee have also confirmed that there are no disagreements or outstanding matters between the Company and WUYIGE, and The Board is not aware of any matters in relation to the proposed change of auditors that needs to be brought to the attention of the Shareholders. The Board has resolved, following the recommendation from the Audit Committee of the Company, to appoint BDO as the new auditors of the Company to fill the vacancy and to hold office until the conclusion of the next annual general meeting of the Company.

In this regard, two separate ordinary resolutions will be proposed at the AGM for the Shareholders to consider and, if thought fit, approve the appointment of BDO as the auditors of the Company for year 2021 and the appointment of BDO as the auditors of the Company for internal control for year 2021, respectively.

4. CASH MANAGEMENT

4.1 Proposed cash management of part of the temporary idle internal funds

In order to utilize the temporary idle internal funds reasonably, enhance the efficiency in the utilization of such funds and bring return to the Group, and after taking into account the normal operation funding needs and the liquidity needs of the Group, the Board proposed that cash management be imposed on certain idle funds. At the April Board Meeting, the Board passed a resolution pursuant to which authorization will be sought from the Shareholders whereupon the

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LETTER FROM THE BOARD

Company be given authorization to impose cash management up to a maximum of RMB3 billion of the internal idle financial resources of the Group ("Authorized Amount"). The aforesaid authorization shall be subject to the following conditions:

1. the authorization given to the Company shall be valid from the date of passing of the relevant Shareholders' resolution to the date of the next annual general meeting of the Company ("Resolution Valid Period");
2. principal-guaranteedwealth management products of banks having high degree of safety and liquidity are to be purchased; and
3. subject to the Authorized Amount at any point of time, the temporary idle internal funds can be utilized on revolving basis during the AGM Resolution Valid Period.

At the Last AGM, the Shareholders had granted authority to the Board to impose cash management on part of the temporary idle internal funds as described in more detail in the circular of the Company dated 13 May 2020. As such authority will expire on 28 June 2021, the Board proposed to seek refreshed authority from the Shareholders at the AGM. Please refer to sections 4.2 and 4.3 below for more information on the cash management referred to in this section.

4.2 Management System on External Investment and cash management

Pursuant to the Management System on External Investment, the Board has the authority to utilize any amount not exceeding the Applicable Net Assets Amount for investment purposes, regardless of the source of funds. Accordingly, the Board may approve any investment amount not exceeding RMB2.614 billion without Shareholders' approval under the Management System on External Investment. Since the Authorized Amount of RMB3 billion exceeds the Applicable Net Assets Amount, Shareholders' approval is required under the Management System on External Investment.

4.3 Implications of the proposed cash management under the Hong Kong Listing Rules

The transactions which may be entered into by the Group under cash management, whether entered into pursuant to the powers of the Board to make investments not exceeding the Applicable Net Assets Amount, the proposed Shareholders' resolution as described in section 4.1 above or otherwise, and regardless of the sources of the funds, may (including on an aggregate basis under Rule 14.22 and/or Rule 14A.81 of the Hong Kong Listing Rules where applicable) constitute notifiable transactions of the Company under Chapter 14 of the Hong Kong Listing Rules and/or the connected transactions of the Company under Chapter 14A of the Hong Kong Listing Rules. Accordingly, the Company must comply with the notification, announcement and shareholders' approval requirements under Chapter 14 of the Hong Kong Listing Rules and/or Chapter 14A of the Hong Kong Listing Rules if so required, even if the proposed Shareholders' resolution as described in section 4.1 above was passed at the AGM. The Company will ensure that the applicable Hong Kong Listing Rules will be complied with in implementing the cash management as described in this circular.

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LETTER FROM THE BOARD

5. CLOSURE OF REGISTER OF MEMBERS FOR HOLDERS OF H SHARES

The register of members of the Company will be closed from Saturday, 1 May 2021 to Thursday, 3 June 2021 (both days inclusive) for the purpose of determining the entitlements of the Shareholders to attend the AGM, during which no transfer of H Shares will be effected. In order to qualify to attend the AGM, all transfers, accompanied by the relevant share certificates, must be lodged with the Company's H Share Registrar, Hong Kong Registrars Limited, at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong no later than 4:30 p.m. on Friday, 30 April 2021.

6. AGM

The AGM will be held at the Conference Room of the Company, 45 Sha Mian North Street, Liwan District, Guangzhou City, Guangdong Province, the PRC on Thursday, 3 June 2021 at 9:30 a.m. The Notice (AGM) is set out on pages 10 to 16 of this circular. Resolutions on all the matters mentioned in this circular will be proposed at the AGM for the consideration of the Shareholders.

Whether or not you intend to attend the AGM, please complete the form of proxy despatched together with the aforementioned notice in accordance with the instructions printed thereon and return the form of proxy to the office of the Company's H Share Registrar, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong (for holders of H Shares) as soon as possible and in any event not less than 24 hours before the time appointed for the AGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM should you so wish.

All the votes of the Shareholders at the AGM will be taken by poll.

7. RECOMMENDATIONS

The Directors consider that the proposed election of Supervisor, the proposed change of auditors and the proposed cash management of part of the temporary idle internal funds as mentioned in this circular is in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that the Shareholders should vote in favour of all the proposed resolutions at the AGM.

8. ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular.

Yours faithfully

The Board of

Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited

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1. BIOGRAPHICAL DETAILS

Mr. Jian Huidong, male, aged 48, holds a bachelor degree and is a senior corporate culture specialist. Mr. Jian began his career in July 1994. Currently, he serves as the deputy chairperson of the labour union of GPHL, the deputy chairperson of the labour union of the Company, and the chairperson of the labour union of the headquarters of GPHL. Mr. Jian has been engaged in the works of labour unions for years and has extensive experience in carrying out effective employee services, protecting employee interests and conducting targeted approach to aid the needy.

2. FURTHER INFORMATION

2.1 Term of office

If elected, the term of office of Mr. Jian as a member of the 8th session of the Supervisory Committee shall commence from the date on which he is elected up to the date on which the members of the new session of the Supervisory Committee (i.e. the 9th session) are elected. The Company will enter into a service contract with Mr. Jian if he is elected as a Supervisor at the AGM.

2.2 Remuneration

Since Mr. Jian received his respective emoluments from GPHL, if elected, Mr Jian is estimated to receive nil emoluments from the Company (from the date on which he is elected at the AGM up to 31 December 2021). The aforesaid emoluments shall be proposed by the Supervisory Committee and be approved and determined by the general meetings of the Company.

2.3 Interests in the shares of the Company within the meaning of Part XV of the SFO

As at the LPD, neither Mr. Jian nor his associates had (or was deemed to have) any interest in the shares of the Company within the meaning of Part XV of the SFO.

2.4 No other information required to be disclosed

Save as disclosed in the preceding sections of this appendix, as at the LPD:

1. none of the Supervisor Candidate had any relationship with any other Directors, Supervisors, senior management or substantial or controlling shareholders of the Company;
2. none of the Supervisor Candidate had or deemed to have any interests in the shares of the Company within the meaning of Part XV of the SFO;
3. none of the Supervisor Candidate had any directorships held in the last three years in public companies the securities of which are listed on any securities market in Hong Kong or overseas;

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1. none of the Supervisor Candidate held any position in the Company or other members of the Group; and
2. there were no other matters concerning any Supervisor Candidate that needed to be brought to the attention of the Shareholders and there was no information to be disclosed pursuant to the requirements of Rule 13.51(2) of the Hong Kong Listing Rules.

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NOTICE OF THE AGM

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this notice, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this notice.

(a joint stock company with limited liability established in the People's Republic of China)

(H Share Stock Code: 0874)

NOTICE OF THE 2020 ANNUAL GENERAL MEETING

IMPORTANT NOTICE

1. • Date and time of the 2020 annual general meeting (the "AGM") to be held on-site: 3 June 2021 (Thursday) at 9:30 a.m.
   • Registration date for determination of entitlement to attend the AGM: 30 April 2021 (Friday)
   • Place at which the AGM will be held: Conference Room of Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited (the "Company"), 45 Sha Mian North Street, Liwan District, Guangzhou City, Guangdong Province, the People's Republic of China (the "PRC")
   • Manner of voting at the AGM: the manner of voting at the AGM will be both on-site and by way of network voting (applicable to A shares)
2. INFORMATION REGARDING THE CONVENING OF THE AGM

1. The resolution on convening the AGM was considered and passed at the 10th meeting of the eighth session of the board of directors of the Company (the "Board").
2. Date and time of the AGM: 3 June 2021 (Thursday) at 9:30 a.m.
3. Place at which the AGM will be held: Conference Room of the Company, 45 Sha Mian North Street, Liwan District, Guangzhou City, Guangdong Province, the PRC.
4. The convener of the meeting: the Board.
5. Manner of voting: the manner of voting for the AGM will be both on-site and by way of network voting (applicable to A shares).

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NOTICE OF THE AGM

1. 1. The system, commencement date, ending date and voting time of the network voting (applicable to A shares):
      The Company will utilize the network voting system of The Shanghai Stock Exchange. The time for casting votes via the voting platform of the trading system is the trading sessions on the date on which the AGM will be held (3 June 2021) i.e. 9:15 to 9:25, 9:30 to 11:30 and 13:00 to 15:00. The time for casting votes via network voting will be from 9:15 to 15:00 on the date on which the AGM will be held.
   2. The voting procedure of accounts in respect of margin trading and securities lending, refinancing, buy-back agreement business and investors of the Northbound Trading Link:
      The voting procedure of accounts in respect of margin trading and securities lending, refinancing, buy-back agreement business and investors of the Northbound Trading Link shall be conducted in accordance with, among others, the relevant provisions of the Detailed Rules of the Shanghai Stock Exchange for Online Voting at Shareholders' General Meetings of Listed Companies.
   3. Solicitation of shareholders' voting rights
      Not applicable.
2. MATTERS TO BE CONSIDERED AT THE AGM

1. To be considered and approved by way of ordinary resolutions:
2. 1. Annual Report and its summary for year 2020;
   2. Report of the Board for year 2020;
   3. Report of the supervisory committee of the Company for year 2020;
   4. Financial report of the Company for year 2020;
   5. Auditors' report of the Company for year 2020;
   6. Proposal on profit distribution and dividend payment of the Company for year 2020;
   7. Proposal on the financial and operational targets and annual budget of the Company for year 2021;
   8. Resolution on appointment of BDO China Shu Lun Pan Certified Public Accountants LLP as the auditors of the Company for year 2021;
   9. Resolution on appointment of BDO China Shu Lun Pan Certified Public Accountants LLP as the auditors for the internal control of the Company for year 2021;

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NOTICE OF THE AGM

1. Resolutions on the emoluments to be paid to the directors of the Company for year 2021:
2. 1. Resolution on the emoluments to be paid to Mr. Li Chuyuan (the Chairperson of the Board) for year 2021;
   2. Resolution on the emoluments to be paid to Mr. Yang Jun (the Vice Chairperson of the Board) for year 2021;
   3. Resolution on the emoluments to be paid to Ms. Cheng Ning (the Vice Chairperson of the Board) for year 2021;
   4. Resolution on the emoluments to be paid to Ms. Liu Juyan (an executive director) for year 2021;
   5. Resolution on the emoluments to be paid to Mr. Li Hong (an executive director) for year 2021;
   6. Resolution on the emoluments to be paid to Mr. Wu Changhai (an executive director) for year 2021;
   7. Resolution on the emoluments to be paid to Mr. Zhang Chunbo (an executive director) for year 2021;
   8. Resolution on the emoluments to be paid to Mr. Wong Hin Wing (an independent non-executive director) for year 2021;
   9. Resolution on the emoluments to be paid to Ms. Wang Weihong (an independent non-executive director) for year 2021;
   10. Resolution on the emoluments to be paid to Mr. Chen Yajin (an independent non-executive director) for year 2021;
   11. Resolution on the emoluments to be paid to Mr. Huang Min (an independent non-executive director) for year 2021;
3. Resolutions on the emoluments to be paid to the supervisors of the Company for year 2021:
4. 1. Resolution on the emoluments to be paid to Mr. Cai Ruiyu (the Chairperson of the supervisory committee) for year 2021;
   2. Resolution on the emoluments to be paid to Ms. Gao Yanzhu (a supervisor) for year 2021;

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NOTICE OF THE AGM

1. 1. 11.3 Resolution on the emoluments to be paid to Mr. Cheng Jinyuan (a supervisor) for year 2021;

   2. Resolution on the application by the Company for general banking facilities not exceeding RMB4 billion;
   3. Resolution on the application for the amounts of bank borrowings by Guangzhou Pharmaceuticals Company Limited, a controlled subsidiary of the Company, and the amounts of guarantees to be provided by it to secure the bank loans for some of its subsidiaries;
   4. Resolution on the proposed cash management of part of the temporary idle internal funds of the Company and its subsidiaries;
   5. Shareholders' Return Plan of Guangzhou Baiyunshan Pharmaceutical Holding Company Limited for the three years from 2021 to 2023;
2. Election of a member of the eighth session of the supervisory committee of the Company by way of cumulative poll:
3. 1. Resolution on the election of Mr. Jian Huidong as a supervisor representing the shareholders of the eighth session of the supervisory committee of the Company and the emoluments to be paid to him for year 2021.

The above proposed resolutions were approved at the 5th meeting of the eighth session of the supervisory committee of the Company held on 24 November 2020, the 10th meeting of the eighth session of the Board and the 6th meeting of the eighth session of the supervisory committee of the Company held on 18 March 2021, the 11th meeting of the eighth session of Board and the 7th meeting of eighth session of the supervisory committee of the Company held on 13 April 2021.

1. ATTENDEES OF THE AGM AND BOOK CLOSURE PERIOD FOR HOLDERS OF H SHARES
   1. Holders of domestic shares (A shares) and overseas listed foreign shares (H shares) whose names appear on the register of members of the Company after the end of the trading hours in the afternoon on Friday, 30 April 2021 (including those holders of H shares who have submitted verified application documents for the transfer of shares on or before Friday, 30 April 2021) are entitled to attend the AGM. The register of members of the Company will be closed from Saturday, 1 May 2021 to Thursday, 3 June 2021 (both days inclusive) during which no transfer of H shares will be effective. In order to determine who are entitled to attend the AGM, all share transfer documents of H shares together with the relevant share certificates must be lodged with the share registrar of the Company in Hong Kong, namely Hong Kong Registrars Limited, at Shops 1712-1716, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong for share transfer registration no later than 4:30 p.m. on Friday, 30 April 2021.

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NOTICE OF THE AGM

1. Any shareholder entitled to attend and vote at the AGM is entitled to appoint one or more proxies (whether or not he/she is a shareholder) to attend and vote at the meeting on his/her behalf. If any shareholder appoints more than one proxy, the proxies can only vote by poll. To be valid, the proxy form and the notarially certified power of attorney and/or other documents of authorization (if any) must be delivered to the address of the Company's office (for holders of A shares) or the office address of the Company's H share Registrar, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong (for holders of H shares) no less than 24 hours before the time appointed for the holding of the AGM or any adjournment thereof.
2. Shareholders who intend to attend the AGM in person or by proxy should complete and return the attached reply slip by hand, by mail or by fax in accordance with the instructions printed thereon on or before Friday, 14 May 2021.
3. The directors, supervisors and senior management of the Company.
4. The lawyers and the auditors of the Company.

IV. REGISTRATION FOR THE AGM

1. Methods of registration
   To attend the AGM, an individual shareholder should bring along his/her identity card, shareholder account card; a proxy should bring along the proxy form, his/her identity card and the identity card of the principal and the shareholder account card of the principal for registration purpose. A legal person shareholder should bring along a copy of the business license, the proxy form signed by the legal entity, the shareholder account card and the identity card of the attendee for registration purpose.
2. Place and time of registration:

1. OTHERS

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17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong (for submitting reply slips or proxy forms)

1. The AGM is expected to last for half a day. Shareholders attending the AGM shall be responsible for their own travelling and accommodation expenses.
2. Reporters attending the AGM should register in advance during the registration time for the shareholders.

VI. DOCUMENTS AVAILABLE FOR INSPECTION

1. Resolutions passed at the 5th meeting of the eighth session of the supervisory committee of the Company and the relevant announcement.
2. Resolutions passed at the 10th meeting of the eighth session of the Board and the relevant announcement.
3. Resolutions passed at the 6th meeting of the eighth session of the supervisory committee of the Company and the relevant announcement.
4. Resolutions passed at the 11th meeting of the eighth session of the Board and the relevant announcement.
5. Resolutions passed at the 7th meeting of the eighth session of the supervisory committee of the Company and the relevant announcement.

The Board of

Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited

Guangzhou, the PRC, 16 April 2021

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NOTICE OF THE AGM

As at the date of this notice, the Board comprises Mr. Li Chuyuan, Mr. Yang Jun, Ms. Cheng Ning, Ms. Liu Juyan, Mr. Li Hong, Mr. Wu Changhai and Mr. Zhang Chunbo as executive directors, and Mr. Wong Hin Wing, Ms. Wang Weihong, Mr. Chen Yajin and Mr. Huang Min as independent non-executive directors.

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