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Krka - At the Forefront of European Generic Pharmaceuticals

Krka, d. d., Novo mesto is a public limited company based in Novo mesto, Slovenia. Its business results make it one of Slovenia's most successful companies, with a competitive edge extending well beyond national borders. It is one of the leading global manufacturers of generic medicines. Krka's products are sold in East, Central and Southeast Europe, while further broadening its activities in West Europe and thus present on markets from Vladivostok to Lisbon. In addition, Krka has been expanding its activities in Overseas markets, including in Asia.

Krka's medicines are produced in unique strengths & combinations, innovative dosage forms, and are manufactured using modern and patented technological processes. Krka's innovative procedures warrant advanced products that meet the strictest quality standards at affordable prices. Highly skilled marketing representatives are promoting products and increasing Krka brand awareness. Vertically integrated business model enables Krka to be flexible and vigilant when adopting to changing market conditions.

A Brief History

Krka has come a long way in its existence and development. In April 1954, a small pharmaceutical laboratory was founded in Novo mesto. This laboratory has since become a strong and successful international company with its state-of-the-art production and R&D facilities.

At first, nine people worked in two small laboratories and in the production and packaging room with a tabletting machine and a machine for mixing medicines. A development institute was established as early as in the first decade of the company's operations; the first patents were registered, and the production and sales of cosmetic products began, and the first export steps were taken. In the following years, the company also entered the tourism and health resort services; it started making considerable investments in research and development, developing its own generic drugs. Furthermore, it started penetrating foreign markets and spreading its marketing network by establishing companies and representative offices abroad.

Krka's Activities and Markets

Krka has grown to become an international company with almost 12,000 employees, and is present in more than 70 markets around the world. It is the leading pharmaceutical supplier on domestic market in Slovenia (representing 6% of overall sales), but its largest sales region is East Europe (34%), where the key market is Russian Federation, followed by the Ukraine and others. East European markets are followed by markets of Central Europe (22%), with Poland, followed by Hungary, the Czech Republic, Slovakia and the Baltic states. Next is West Europe (22%) with the largest markets being Germany, the Scandinavian countries, Spain, Italy, France and others. West Europe is followed by South-East Europe (13%), where the largest markets are Romania, Croatia, Serbia, Bulgaria, the Republic of North Macedonia and others. Krka is also expanding business activities in Overseas markets (3%) where the most important markets are Far East and Africa and Middle East. Latest expansion is the entry into China, which has a potential to become an important market for Krka.

In addition to the 47 companies and representative offices abroad, the company's international presence is consolidated through its own production plants in Slovenia, Poland, Russia, Croatia, Germany and, recently, in China as well.

The company is primarily focused on in-house development of high-quality generic medicines with added value, marketed under Krka's own brands. The company's main products are medicines for human consumption. The majority of its products, around 85%, are prescription pharmaceuticals. The product range covers the most common diseases of developed world. New products are therefore mainly being developed for four key areas: medicines for the treatment of cardiovascular diseases, medicines for the systemic treatment of infections, medicines for the treatment of diseases of the alimentary tract and metabolism and medicines for the treatment of diseases of the central nervous system. In addition to that, Krka's future product portfolio will contain also more products from other therapeutic classes (oncology, diabetes, pain relief and others). Krka's NOTOL 2 plant is the largest investment in Krka's history. This state-of-the-art facility for manufacturing solid dosage forms has the target capacity of 5 billion tablets and 8 billion packaged tablets per year.

Prescription pharmaceuticals sales are followed by sales of non-prescription products, which represent 8% of total sales, and animal health products, which account for 5% of overall sales. Krka's business is complemented by health-resort and tourist services, which are provided by its subsidiary Terme Krka, which account for 2% of overall sales.

In 2020, the Krka Group recorded sales of products and services worth EUR 1,530 million, which is 3% more than in 2019, while the Krka Group's net profit amounted to almost EUR 289 million. The proportion of exports in the total Group sales increased, with exports equalling almost 95% of the Group's sales.

Development, Vertical integration and Strategic Goals

Krka pays special attention to development. That is the only way to keep up with similar international companies and to maintain a competitive edge in markets worldwide. The company is working intensely on the development of generic medicines with added value, which are the result of its own knowledge. All its pharmaceuticals are of high quality, and are safe and effective ensuring marketing advantage and recognition in the generic market, where competition is - as elsewhere - becoming more and more intense. New pharmaceuticals are constantly being added to the wide range of Krka products, enabling the company to enter new domains of therapeutic application. Krka's products are high quality, safe and effective. With many laboratory tests and analyses, we ensure top quality in all stages of development and production. The safety and efficacy of Krka's medicines are confirmed with extensive clinical testing. Experts from more than 30 different branches of science and engineering work together in pharmaceutical development, which is based on Krka's knowledge and innovation. We follow the highest international and production standards in the industry.

The vertically integrated business model is applied to control the entire production path of our products. We develop and manufacture the entire medicinal product, from the active pharmaceutical ingredient to the finished product. With prompt marketing authorisation and distribution to markets, we ensure that the medicine reaches the patient. In recent times, vertically integrated business model has proved crucial advantage and remains our core strategic orientation. Approximately 70% of our products are vertically integrated.

Key strategic objectives up to 2024 are:

• To attain at least 5% average annual sales growth in terms of volume and/or value.
• To ensure high standards of product quality, safety, and efficacy.
• To provide sufficient quantities of manufactured products through an efficient and optimised development-and-production chain in a timely manner and in line with target sales growth and market needs.
• To keep the focus on maximising the long-term profitability of the products sold, from development and production to sales of finished products, including all other functions within the Krka Group.
• To ensure growth by long-term partnerships (including joint ventures) and acquisitions in addition to organic growth, when interesting target companies become available. The primary goals are to secure new products and/or markets.
• To maintain the largest possible proportion of new products and the proportion of vertically integrated products in total sales in addition to the existing range of products also referred to as 'the golden standard'.
• To launch a selected product portfolio in selected key markets among the first generic pharmaceutical companies.
• To strengthen the competitive advantage of our product portfolio.
• To improve the cost-effective use of all assets.
• To increase the degree of innovation across all business functions.
• To maintain independence.