Letter from Our CEO

(G4-1) (G4-2)

At Genomma Lab Internacional we have consolidated the expansion of our operations and we have strengthened ourselves as a world-class company. The road was known as a challenge, but substantial achievements were reached, which strengthened our positioning in order to grow in a more sustainable and profitable way.

As part of these results, we are pleased to present with great satisfaction our sixth Sustainability Report, through which we demonstrate the growing importance of sustainable development for our business and our stakeholders.

Our commitment to sustainability is reflected in the objectives, the definition of goals and those responsible for their achievement, integrating economic, environmental and social aspects in our management.

This allows us to make sustained progress in the positioning, diversification and strengthening of our brands, products and distribution chain.

Our vision and actions in terms of sustainability translate into constant generation of value for the long-term permanence of the business. The growing global expansion and strengthening of our operations is reflected in a greater consolidation and capitalization of investments, resulting from a formal, focused, standardized and sustained international business planning.

In 2016 we operate in 19 countries. Our positioning at international level is the result of various actions such as strategic acquisitions and focus on core brands taking into consideration the preferences of our target markets and growth segments, as well as a reduction of non-key brands; which had a positive impact on product turnover, higher revenues, improved cash flow and financial margin.

Innovation has been a key factor in the creation of megabrands and power brands through the diversification of successful products in by-products, which meet the requirements and needs of the market, being offered in different presentations.

The expansion took place as part of a comprehensive strategy that not only improved margin and income, but was accompanied by greater efficiency with its consequent reduction in costs, through an optimal organizational structure for business development.

We focus on strengthening our position as a leading company in our categories of over-the-counter medicines (OTC) and personal care products (PC), implementing responsible actions that ensure proper reputational management in our goal of positively impacting the health and well-being of people, communities and the environment.

We are aware that strategic achievements and business progress are only feasible through proper talent management, continuous training and organizational culture across all levels of the Company.

Our supply chain, one of our main pillars, is made up of more than 1,700 suppliers. This structure has been key to achieving a solid penetration and diversity in the markets in which we operate. Our relationship is key, given the quality standards we demand from this chain, so we carry out a strict process of audits on expected quality and service.

Our operations are developed in a business environment with highly demanding regulations, especially for products related to the health and well-being of the human being, thus we adhere to the specific regulations of each country. By ensuring that the quality of our products is in balance with the applicable regulatory compliance, we align our processes to agencies recognized by their high performance standards such as the European Medicines Agency (EMA) and the US Food and Drug Administration (FDA).

On the other hand, we work steadily and aim to obtain attractive financial results with the least possible environmental impact. This is achieved by defining specific goals and actions for our internal operations, as well as for our business partners and supply chain. We voluntarily conduct our Greenhouse Gas Inventory (GHG) on an annual basis and establish measures for the adequate management of water, packaging and waste generated, implementing mitigation measures, thus showing our commitment to minimize the environmental impact of our actions.

We recognize the great work and relevance of the communities where we operate, it is because of them that we maintain our commitment to have programs to support vulnerable groups with concrete actions of social responsibility.

The presentation of this report gives us the opportunity to maintain a clear and transparent communication with our stakeholders who are a key factor in the performance of our activities. We are aware that all these actions are the reflection of a current and future profit generation platform, which generates greater value especially for the investors. On the other hand, the generation of our report allows us to analyze with a strategic vision the actions taken as a whole always compared to the requirements of the market. We seek to contrast our investments and achievements against the possible areas of business opportunity, achieving a constant evolution.

We keep relationships with Chambers and Organizations at national and international level, endorsing our commitment to the development, growth and strengthening of the industry in the social, environmental, economic and ethical fields.

This year we made significant achievements that generated substantial value both within and outside of the Company. These include:

  • The implementation of the SAP ERP IT system version S/4HANA, which is a new generation business system, that is being called the biggest technological update in over two decades and replaces the old R3 version. An interdisciplinary team, under the leadership of Engineer Antonio Zamora Galland, Executive Vice President of Administration and Finance, successfully concluded its implementation this year, with the collaboration of different areas in our operations in Mexico.
  • The signing of agreements with our manufacturers to comply, and standardize processes that satisfy and exceed the quality of our products, which at the same time will be reflected in all stages of the value chain, from the purchasing of materials, innovation, development, manufacturing, storage and distribution, up to the shelf where our consumers take the product.
  • The creation of an independent whistleblower hotline to report abnormal situations occurred in the workplace or that undermine the Company’s assets.
  • The signing of the Covenant against child malnutrition in Colombia, “GEN CERO” in which our commitment to support the eradication of chronic malnutrition in Colombia by 2030 becomes official.
  • Environmental measures aimed at efficiency in the use of materials and water and energy resources.

In Genomma Lab Internacional we continue adding achievements in terms of sustainability and social responsibility, having been honored for the tenth consecutive year, with the award as a Socially Responsible Company (SRC). Likewise, we were awarded the Acknowledgment of Family-Responsible Company and in 2014 the Award “Gilberto Rincón Gallardo” as Inclusive Company with a validity of three years. Similarly, since 2007, we adhered to the Global Compact as a company active on human rights issues, health and anti-corruption, we joined the Global Compact initiative Call to action: Anti-corruption to prevent or avoid the practice of acts of corruption in all its forms.

For the fourth consecutive year, we endorse our permanence in the Sustainable Index of Prices and Quotations (IPC, for its acronym in Spanish) of the Mexican Stock Exchange. Of the 80 sustainable companies qualified in Mexico to make up the group of sustainable issuers in our country, only 30 were selected within the Sustainable IPC, with Genomma Lab Internacional being one of them. In this way, our Company demonstrates its invaluable and strategic commitment to sustainability. In addition, we were recognized by the Issuers’ Committee of the Sustainable IPC for our outstanding performance in Social Responsibility.

 

In order to ensure the quality, safety and efficacy of our products, during 2016 we continue investing in research and development, encouraging innovation and creativity of our collaborators, thus promoting our culture of improvement.

I thank all those who contributed to the establishment of our strategy and the achievement of our goals and objectives to promote the sustainable development of Genomma Lab Internacional.

Máximo Juda

CEO Genomma Lab internacional, S.A.B. DE C.V

Reporte de Sustentabilidad 2016 de Genomma Lab Internacional

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