PURCHASING CHARTER

PIERRE FABRE GROUP

- March 2015 -

For a profitable and responsible customer–supplier relationship

SUMMARYThe Pierre Fabre Group in brief ................................................. P3

1. Objectives and context of the Purchasing Charter ................. P4

2. General objectives of the purchasing function ...................... P5

3. Organisation of the purchasing function ............................... P6 3.1 Group Purchasing Department ...................................................................................... P6

3.2 Decentralised purchasing departments and services .................................................... P7

3.3 Analysis of the purchasing turnover .............................................................................. P7

4. Reference purchasing process ............................................... P8

5. Relationship with suppliers ................................................. P10 5.1 General framework ..................................................................................................... P10

5.2Ethicalrulesconcerningnon-contractualrelationswithsuppliers .............................. P11

5.3Compliancewithethicalrulesrelatingtolabourlaws ................................................ P12

5.4 Environmental issues ................................................................................................... P12

5.5Conditionsofpayment ................................................................................................ P12

5.6ExpectationsofthePierreFabreGroupwithrespecttoitssuppliers ......................... P13

CHARTERPURCHASING

PIERRE FABRE GROUP

THE PIERRE FABRE GROUPIN BRIEF

Since its creation, the Pierre Fabre Group has taken action,conductedresearch,completedstudies,andinnovatedtoimprovepeople’s well-being and health. Initiatives have been developedin the areas of medicinal products, family health and dermo-cosmetics.

ThePierreFabreGroup’sturnoveramountedto€2.1billionin2014.

Saidturnoverisdividedbetweentwobranches:

• Thepharmaceuticalbranch:€915million

• Thedermo-cosmeticsbranch:€1.148million

France accounts for 45% of the turnover, and the internationalmarketfor55%.

ThePierreFabreGroupemploys10,000peopleworldwide.

3

CHARTERPURCHASING

PIERRE FABRE GROUP

4

CHARTERPURCHASING

PIERRE FABRE GROUP

1. OBJECTIVES AND CONTEXT OF THE PURCHASING CHARTER

The Group’s Ethical Charter represents an important framework forthePurchasingCharter.The latter is fully integrated intotheGroup’s Corporate Social Responsibility (CSR) Policy, combiningsocialandenvironmental responsibilitywithaconstantconcernforoperationalperformance.ThispromptstheGroup–togetherwith itssuppliers–tostriveforoptimaleconomicperformance,qualityofservice,safetyofsuppliesandinternationalexposure.

The Pierre Fabre Group designs, develops and markets healthproducts. Throughout its activities, it follows high standards interms of ethics, quality and regulatory compliance. In addition,the Group is proud of its regional roots and maintains lastingbusiness relationshipswithanetworkof companiesofall sizes,whilesimultaneouslydevelopingitscollaborationwithcompaniesprovidinginternationalexposure.

As such, in January2011, theGroup subscribed to theCharter for Supplier Relations from La Médiation du Crédit (French Credit Mediation Office) and the Compagnie des Dirigeants et Acheteurs de France (CDAF – French Managers’ and Purchasers’ Association) in order to commit to a progressive approach with respect to its suppliers.

In June 2011, the Group also adopted an Internal Purchasing Function Code,describingwhichdescribesthegeneralobjectivesand the organisation of the Group’s purchasing function, thepurchasingprocessesandthefundamentalbasicvaluesofPierreFabrepurchasers.

Thereby,thePierreFabreGrouphasdefinedtheprinciplesgover-ning itspurchasingpolicy,withaviewtotheimplementationofsaidpolicyby itspurchasingfunction,suppliersandsubcontrac-tors.Thiswouldresultinacustomer-supplierrelationshipthatisbothprofitableandresponsible.

The purchasing function is intended to make a comprehensive contribution to the ambition, strategy and performance of the Pierre Fabre Group.

CHARTERPURCHASING

PIERRE FABRE GROUP

5

2. GENERAL OBJECTIVES OF THE PURCHASING FUNCTION

The purchasing function must make an active contribution tothe Group’s profitability by considering and improving overalland cross-functional costs, ensuring the continuity of suppliesandoperation,andcomplyingwithregulatorystandards.Itaimstoguaranteethecompletesatisfactionofboth internalandendcustomers.

To this end, the purchasing function:

• Monitorsthemarket,

• Streamlinesandoptimisesthenumberofsuppliers,

• Ensuresthesafetyofsupplies,

• Developsstrategiestoreducefixedcapitalassetsandcycletimes,

• IncorporatestheGroup’scommitmentsintoasustainabledevelopmentapproach,

• Selects suppliers likely to support the Company in its development,particularlyinternationally,

• Establishestrustingrelationshipswithsupplierstopromotetheemergenceofbalancedandbeneficialagreementsforallconcerned,

• Negotiates the best economic conditions for purchasingactivitieswithinthisframework,

• Organises and coordinates quality control, and takes intoaccount the concept of quality in its assessments and purchasingdecisions,

• Ensurescompliancewithcontractualcommitments,

• Performsregularassessmentsofmajorsuppliers,

• Participates in the development of activities and productswithselectedsuppliers,

• Definesstrategiesforcostreduction,includingbyoptimisingprocesses and controlling expenses.

6

CHARTERPURCHASING

PIERRE FABRE GROUP

3. ORGANISATION OF THE PURCHASING FUNCTION

The Pierre Fabre Group comprises two branches of activities(pharmaceutical and dermo-cosmetic), coordinated by seniormanagementandcentralserviceswithinthePFSAholdingcompany,which includes the Group Purchasing Department.

3.1-GROUPPURCHASINGDEPARTMENT

The mission of the Group Purchasing Department is to strengthen the Group’s competitiveness within its various branches ofactivitiesbyorganisingandoptimisingthepurchasingfunction.Tothisend,itactsasaGrouprepresentative.

This Department manages the community of professional purchasers, defines major objectives in line with the Groupstrategy (and that of its branches), ensures the distribution ofinformationandbestpracticesusingsuitabletoolsandapproaches,andfacilitatespersonaldevelopmentwithinthefunction.Italsoensures compliance with the Purchasing Charter and checks that the purchasing function contributes to achieving the objectives(whetherintermsofeconomicperformance,continuityofserviceandsupply)andimplementationoftheGroup’sCSRpolicy.

Accordingly, the Group Purchasing Department is required to develop and implement:

• Methodologicalconvergenceprogrammes,

• ITtoolstoconsolidatetheGroup’sinformationandworkingmethods,

• TrainingcoursesforpurchaserstoimprovetheirdailypracticesandincorporatetheGroup’sstrategyaseffectivelyaspossible,inparticularwithrespecttointernationaldevelopment,eco-nomicoptimisation,riskmanagement,productdevelopmentandtheintegrationofCSRcommitments.

Furthermore, theGroupPurchasingDepartment is responsible fortendering,negotiatingandmonitoringcentralpurchasingandmajorcontracts, in coordination with business experts and the Groupcentral management.

CHARTERPURCHASING

PIERRE FABRE GROUP

7

3.2-DECENTRALISEDPURCHASINGDEPARTMENTSANDSERVICES

Purchasersaredecentralisedbyactivityandbybranch.TheGroupexpects them to be highly competent, and provides themwithtoolsanddedicatedtrainingcourses.Internationally,purchasersorpurchasingcontactsarepresentineachoftheGroup’ssignificantsubsidiaries.

The decentralisation of the purchasing function means thatdifferent purchasing services are distributed across the variousactivity branches, and led by purchasing managers. Thesemanagers are Company representatives with respect to theirpurchasing families, for both internal customers and suppliers.Accordingly, the pharmaceutical and dermo-cosmetic brancheseach have their own Industrial Purchasing Departments, whichreporttotheirrespectiveindustrialdirectors.

Thesubsidiaries’purchasersandpurchasingcontactsensurethatglobalcontractsarecompliedwithandimplemented,andseetoitthat the Group’s decisions are respected at the local level. Where necessary,theydealwithinvitationstotenderincoordinationwiththecentralfunctionslocatedinFranceandthebusinessexpertsworkinginthesubsidiary(IT,communication,marketing,etc.).

Shoulda servicenot includea full-timebusinesspurchaser, thecompany relies on business experts with purchasing expertise.Depending on the importance of the specific issues and theautonomy attributed to certain purchasing families, thesebusiness experts either process the invitations to tender jointlywiththeGroupPurchasingDepartment,ormanageandconductthe purchasing process within their sector according to the same principlesasabusinesspurchaser.

3.3-ANALYSISOFTHEPURCHASINGTURNOVER

Thepurchasingstructureallowsforafineanalysisofexpenditurebyfamilyandbysupplier.

Managementcontrolregularlyreconcilesexpensesfromdifferentperiods based on the purchasing family in order to identify anyabnormalchangeswhichmayrequirespecificmeasures.

Thankstothequeryingtoolsattheirdisposal,purchasersareabletoreconstructtheturnoverachievedbyasupplierwiththePierreFabreGroup.

8

CHARTERPURCHASING

PIERRE FABRE GROUP

4. REFERENCE PURCHASING PROCESS

Intheabsenceofanyregulatoryorstrategicobstacles,contractswithsuppliersaresubjecttoatenderingobligationatleasteveryfiveyears.

The Group follows a traditional purchasing process, which includes the following main stages:

• Identifying suppliers (commercialandtechnologicalmonitoring),

• Benchmark: approving suppliers from a business perspective(efficiency)andfinancialperspective(health),

• Defining needs intermsoffunctionality,quantity,qualityandprice,

• Clarifying the choices to bemade upstream by the companybeforeconsultation,

• Organisingtheconditionsforafaircompetitionwithat least 3 suppliers

-basedonprecisespecifications, -withobjectiveselectioncriteria,

• Drafting a contrat incorporating the termsof thenegotiationand specifying the objectives and results (services) expected,contractterminationterms,tariffrevaluation,CSRcommitment,etc.

• AssessingsuppliersaccordingtotheGroup’sratingsystem,

• Engaging in a Quality approach whenever this is required byapplicableregulationorasnecessary,

• Ensuringthesatisfactionofinternalcustomers.

CHARTERPURCHASING

PIERRE FABRE GROUP

9

Incoordinationwith legaldepartments, the invitationto tenderprocess is legally secure, notably with regard to confidentialityand non-disclosure agreements, specifications and contractualprojects.

Conditions for conducting invitations to tender:

• Thesupplierselectionprocessmustbeformal,professional,transparentandindependentofanyinfluence,

• Suppliers must be treated equally (same informationsupplied,samedeadlinesrequested,assessmentoftendersaccordingtothesamecriteria,etc.)

• Theinformationreceivedfromsuppliersisconfidential,andassuchmustnotbedisclosedtoothercompetitors,

• Thewinningsuppliermustbeselectedaccordingtoobjectivecriteria and transparently.

10

CHARTERPURCHASING

PIERRE FABRE GROUP

In this context, purchasers will take the following approach regarding their relationships with suppliers:

• Workwithclearselectioncriteria,

• Treatsuppliersfairly,

• Neverinvolvetheirpersonalinterests,

• Give priority to suppliers that best reconcile price, qualityof service and products, innovation, safety, internationalexposureandcompliancewiththeGroup’sCSRcommitments,

• Maintainaclimateofmutualrespectwiththesupplier,

• Guaranteetheconfidentialityofdatarelatingtothesuppliers,inparticularwithrespecttothirdpartycompaniesusingthesamesuppliersasthePierreFabreGroup,

• Systematicallyinformsupplierswhoarenotselected,

• Payspecialattentiontosupplierscommittedtosustainabledevelopmentandsocialandenvironmentalresponsibility.

5. RELATIONSHIP WITH SUPPLIERS

5.1-GENERALFRAMEWORK

TheGroupstrivesforsustainableperformance,inparticularthroughextensiverelationswithselectedsupplierswhichadheretotheGroup’s policy and are likely to guarantee safe supplies. Despite thedevelopmentofitsinternationalpresenceanditsrelianceonsuppliersabletosupportthismovement,theGroupintendstomaintainsignificanttiestoitsregionalandnationalroots.

CHARTERPURCHASING

PIERRE FABRE GROUP

11

5.2-ETHICALRULESCONCERNINGNON-CONTRACTUALRELATIONSWITHSUPPLIERS

InaccordancewiththeprovisionsoftheGroup’sEthicalCharter,PierreFabreemployees(whetherornottheyarepurchasers)mustadoptastrictlyprofessionalattitudeofrespectandindependencetowards the Group’s partners under all circumstances, therebyavoiding any risks of conflict of interest or corruption, amongother things.

Businessmealsmayhelp tostrengthentherelationshipof trustwhichtheGroupwishestoestablishwithitssuppliers.Thesemealsmust,however,belimitedtothestrictminimum.Theyshouldnotbeextravagant,especiallywhenthesupplieristhehost.

Itiscustomarytoacceptso-calledcourtesygiftsoutofpoliteness,i.e.whentheyareoflimitedvalueandnotcharacterisedbysinglepersonal use. Gifts of excessive value or an extravagant natureshouldbe refused. ShouldGroupemployeesfind themselves inthis situation, theymust return thegiftwitha courteous letter,expressinggratitudeforthegoodintentionsandemphasisingtheiradherence to theGroup’spolicyon thismatter,whichprohibitsthe acceptance of such gifts. As a general rule, they must notacceptgiftsvaluedatmorethan€30eurosor theequivalent inlocal currency.

Itisforbiddentovisitsuppliersforafactorytourortechnicalauditunlessabsolutelynecessary,andforaperiodconsistentwiththeprofessional nature of this type of visit. Such visitsmay not bepreceded or followed by a leisure trip in combinationwith theprofessional visit.

Itisforbiddentoparticipateinanypromotionalactivityorganisedby suppliers which might provide any personal or individualbenefits.

Lastly,purchasersorbusinessexpertsmustinformtheirsuperiorsofanyconnection(familyties,otherpersonalconnection,directorindirectfinancialinterests,etc.)whichtheymighthavewithasupplier,inordertopreventanyriskofconflictofinterest.

12

CHARTERPURCHASING

PIERRE FABRE GROUP

• Anticipate sustainable development issues by measuring theenvironmentalimpactofthepurchasingpolicy,

• ActivelycontributetotheimplementationofinitiativesundertakenbytheGroupasasociallyresponsiblecompany,aspartofitsCSRpolicy,

• Assess the adherence of its suppliers and purchasers to this CSR policy.

5.3-COMPLIANCEWITHETHICALRULESRELATING TOLABOURLAWS

ThePierreFabreGroup iskeen toensure that supplierscomplywiththeethicalrulesregardinglabourlaws,inparticularthoseoftheconventionsoftheInternationalLabourOrganisationintermsof forced labour, illegal labour,child labour,equalopportunitiesand freedomof association.Where necessary, the Pierre FabreGroup ensures that suppliers meet the commitments they make in thisregard.Ifrequired,aprovisionmaybeincludedinthecontractbetweenthemandthePierreFabreGroupbywayofformalisingthese commitments.

5.4-ENVIRONMENTALISSUES

Environmentalissuesaretakenintoconsiderationthroughoutthepurchasing process, in compliancewith theGroup’s CSR policy.Accordingly, the purchasing function is able to systematicallyassess the environmental impact of its activities and decisions,andshallendeavourto:

5.5-CONDITIONSOFPAYMENT

ThePierreFabreGroupundertakestocomplywiththeconditionsofpaymentasdefinedcontractually,oralternativelyasindicatedin itsGeneralPurchasingConditions,whichmuststrictlycomplywiththeapplicablelawsandregulations.

CHARTERPURCHASING

PIERRE FABRE GROUP

13

The Pierre Fabre Group expects its suppliers to commit to:

• Delivering products and/or services in accordance with the price,deadlinesandqualitylevelsdefinedinthecontractualcommitments,

• EngaginginapolicyofinnovationandcontinuousimprovementlikelytomaximisethecompetitiveadvantagesofthePierreFabreGroup,

• AdheringtothePierreFabreGroup’sresponsiblepurchasingpolicy,responding to CSR assessment requests from the Group, andpromotingthisCSRpolicytotheirownsuppliersandsubcontractors,

• Not implementinganymeasures likely tocontravenetherulesandvaluessetbythePierreFabreGroupanditspurchasers,

• Adopting the most transparent approach possible with the PierreFabreGroupintermsoftheirpricesandcosts,andtheirperformanceassessment,

• EnsuringthefairtreatmentofthePierreFabreGroupinrelationtoitscompetitors.

5.6-EXPECTATIONSOFTHEPIERREFABREGROUP WITHRESPECTTOITSSUPPLIERS