Krka, d. d., Novo mesto
2021
ANNUAL REPORT
2
Contents
INTRODUCTION ................................................................................................................................................. 3
Statement by the President of the Management Board .................................................................................................. 3
Krka Group Financial Highlights ..................................................................................................................................... 7
At a Glance ..................................................................................................................................................................... 8
2021 Highlights ............................................................................................................................................................. 12
Subsequent Events ...................................................................................................................................................... 14
Business report ............................................................................................................................................... 15
Corporate Governance Statement ................................................................................................................................ 15
Non-Financial Statement .............................................................................................................................................. 37
Krka Group Development Strategy ............................................................................................................................... 39
Macroeconomic Forecast for 2022 ............................................................................................................................... 44
Risk Management ........................................................................................................................................................ 48
Investor and Share Information .................................................................................................................................... 69
Business Performance ................................................................................................................................................. 72
Marketing and Sales ..................................................................................................................................................... 79
Product
and Service Groups ....................................................................................................................................... 92
Research and Development ....................................................................................................................................... 112
Production and Supply Chain ..................................................................................................................................... 121
Investments ................................................................................................................................................................ 125
Integrated Management System and Quality ............................................................................................................. 128
SUSTAINABLE DEVELOPMENT................................................................................................................... 138
About the Report ........................................................................................................................................................ 139
Employees .................................................................................................................................................................. 142
Patients and Other Customers ................................................................................................................................... 151
Corporate Social Responsibility .................................................................................................................................. 153
Natural Environment ................................................................................................................................................... 158
Krka's Sustainable Development Indicators ............................................................................................................... 174
GRI GS (Global Standards) Content Index ................................................................................................................ 176
FINANCIAL REPORT ..................................................................................................................................... 183
Introduction to Financial Statements .......................................................................................................................... 185
Statement of Compliance ........................................................................................................................................... 186
Consolidated Financial Statements of the Krka Group ............................................................................................... 187
Financial statements of Krka, d. d., Novo mesto ........................................................................................................ 252
Enclosure 1 ................................................................................................................................................................ 321
SIGNING OF THE 2021 ANNUAL REPORT AND ITS CONSTITUENT PARTS ........................................... 323
2021 Annual Report – Introduction
3
INTRODUCTION
Statement by the President of the Management Board
1
Dear shareholders, business partners and employees,
The Supervisory Board of Krka appointed me President of the Management Board and Chief Executive Officer for another
term commencing on 1 January 2022. I accepted the responsibility with great confidence as Krka recently strengthened
its position as one of the leading generic pharmaceutical companies in the world. My fellow board members and I focus
on the future built on new products, development and strategies adopted to achieve our financial and sustainability goals.
Over the past few years, Krka has been growing and competing successfully with its competitors in the industry. Our
business model and corporate culture, which stem from a strong pharmaceutical tradition, ensured our continued
successful performance in 2021. Despite the pandemic and its impact on our business operations in almost all markets,
this was our most successful year to date. We proved once again that we are flexible, well prepared and able to react to
opportunities and challenges in our markets instantly thanks to our vertically integrated business model. I am proud of our
colleagues' exceptional flexibility and ability to respond quickly. They helped materialise our commitment to supply
medicines to patients in our markets and ensure the Krka Group's continuous growth and stability.
Record Sales to Date
Even though our marketing-and-sales activities were still somewhat limited compared to pre-pandemic times, we achieved
record sales in 2021. The Krka Group recorded the strongest sales since its incorporation totalling €1,565.8 million.
Revenue in markets outside Slovenia reached €1,467.4 million, accounting for 94% of total Krka Group sales. Despite the
pandemic, we recorded 2% growth in terms of value and volume compared to the previous year.
By selling more and relying on effective business processes, we improved our margins and recorded net profit of
€308.2 million, the highest to date, up 7% on 2020. ROE reached 16.8%. Our results prove that we managed to adapt
quickly and efficiently, preserving high profitability. The consistent growth of our sales, a sound increase in profit and a
positive cash flow demonstrate the resilience and sustainability of our operations.
Region East Europe generated the strongest sales of all our regions, earning €547.8 million or 35.1% of total sales, a 6%
increase from 2020. Our successful business performance in the Russian Federation contributed the most to the results,
as country sales amounted to €332.9 million, up 2% (denominated in the rouble, growth was 9%). In Ukraine, where market
conditions in 2021 were harsh, we recorded sales in the amount of €96.4 million, up 12% compared to 2020. In Uzbekistan,
our sales increased by 18%, totalling €31.2 million. We recorded growth in all other regional markets, except in Armenia
and Tajikistan.
Our sales increased by 3% to €351.5 million in Region Central Europe, constituting 22.5% share of total Krka Group sales.
We recorded growth in all markets of the region. In Poland, the largest regional market, product sales reached
€166.7 million, up 2% compared to 2020 (denominated in the zloty, growth was 5%). In Hungary, sales amounted to
€50.3 million. Compared to 2020, sales in the Czech Republic increased by 5%, totalling €48 million, while in Slovakia,
sales of products amounted to €40.3 million. The highest relative growth in Region Central Europe was recorded in Latvia,
where our sales increased by 6% year on year, totalling €15 million in 2021.
Generating €305.2 million or 19.6% of the Krka Group total sales, Region West Europe was the third largest region in
terms of sales. Sales dropped 11% due to price pressures and slightly fewer new product launches in 2021. Germany
remained our most important regional market with product sales of €80.3 million. Even so, we recorded substantial sales
growth compared to 2020 in several Western European markets: 4% in Benelux, 6% in Austria, 9% in the United Kingdom,
and 13% in Ireland.
Product sales in Region South-East Europe amounted to €209.2 million, 5% higher than in 2020, constituting 13.4% of
total Krka Group sales. In Romania, we generated €58.6 million in sales of products and services. In Croatia, our sales
1
GRI GS 102-14
2021 Annual Report – Introduction
4
amounted to €36.1 million. We recorded sales growth in all other regional markets, the highest in Serbia, North Macedonia
and Bulgaria.
In Slovenia, our domestic market, we sold €92.9 million of products and services, contributing 6% to total Krka Group
sales. Product sales generated the majority of sales, €56.4 million, recording 2% growth. Health resorts and tourist services
yielded €36.5 million, a 23% rise on 2020, making an important contribution to the Krka Group's 9% sales growth in
Slovenia.
Region Overseas Markets accounted for a 3.4% share of total Krka Group sales and yielded €53.7 million in sales, an
18% year-on-year increase. We recorded growth in all markets. Product sales in the markets of the Far East and Africa
reached €28 million, up 3% compared to 2020. Product sales in the markets of the Middle East generated €24.2 million, a
42% increase on the previous year. The strongest sales growth in terms of value and in relative terms was recorded in
China with a product containing pregabalin.
No Compromises on Quality and Innovation
Our key priority is to continuously develop new technologies and products that improve patient treatment. Today,
cardiovascular medicines account for more than 50% of our prescription pharmaceutical sales, followed by medicines for
the treatment of the central nervous system and gastrointestinal tract. Apart from key therapeutic classes, we have recently
been focusing mainly on antidiabetics and analgesics. Our development activities remain aimed at oncology medicines
and autoimmune diseases to make our own contribution to the treatment of the most widespread illnesses of modern
times. We continue adding new products to our non-prescription and animal health portfolios.
Long-term growth depends primarily on the continuous increase of supply, making it imperative to supplement our portfolio
with new generic molecules, in-house innovative R&D and technological solutions each year. In 2021, we obtained
marketing authorisations for 16 new products, completed more than 200 registration procedures, and obtained more than
1,000 new marketing authorisations in different countries.
We offer products in various therapeutic classes and are considered one of the leading providers of medicinal products.
We make no compromises on quality and innovation, the two main foundations of our achievements. Our main goal and
commitment is to ensure that as many patients as possible in our existing and new markets have access to our state-of-
the-art and innovative portfolio of quality, safe and effective products in advanced therapeutic forms at affordable prices.
We firmly believe that innovations of all types are a prerequisite to improving our competitiveness. This is why we
encourage creativity in all work processes, which is reflected in our effective business operations. We pay special attention
to new products, new therapeutic classes, and improved processes and technologies. In 2021, we filed 12 patent
applications for new technological solutions considered novel on the global stage. More than 200 patents protect our
technological solutions.
Innovation and quality are integral parts of our operations that give a series of tangible results. We use them to ensure
efficient processes. They guarantee quality, safe, and effective finished products, rational business operations, reasonably
priced products for our customers, and good relations with our shareholders.
Stable Production in Uncertain Times
Governments and healthcare institutions in many countries worldwide are cutting back on their healthcare expenses and
encouraging the use of generic products. The demand for generic products is increasing, in particular in emerging markets.
In 2021, we manufactured and packed 16.2 billion tablets, film-coated tablets and capsules, comparable to the record
quantity manufactured in 2020 and a billion units more than manufactured in 2019.
We consider this an important achievement. In 2021, we faced serious incoming material shortages, lower manufacturing
output of our partners, and transport issues due to the COVID-19 pandemic. Krka’s supply chain processes remained
uninterrupted owing to our vertically integrated model. We produce a large part of raw materials used in our finished
products. At the same time, the Company’s good liquidity and capital structure allow for the financing of sufficient
inventories of base materials. Because of this, we were able to ensure adequate quantities of other raw materials at
unchanged prices despite the unstable situation.
2021 Annual Report – Introduction
5
Consistent preventive measures, including vaccinations for employees, prevented the COVID-19 pandemic from affecting
our operations in 2021. Moreover, we are pleased to report that none of our business processes were hindered and the
supply of our finished products remained uninterrupted.
Investments to Increase Production Capacities
In 2021, more than 30 investment projects worth over €66 million were made in the Krka Group. Most of our investments
were geared towards increasing and modernising the capacities for producing finished products and APIs. Let me mention
just a few of the larger ones. The Notol 2 plant, our most advanced plant for the production of tablets, film-coated tablets
and capsules, manufactured more than one-third of all Krka Group products. Due to increasing demands on production
capacities, we have continued to purchase additional technological equipment for Notol 2. Its full manufacturing capacity
will reach 5 billion tablets and 8 billion packagings per year.
The construction of new API development and production capacities is planned at Krško, a town 30 km from Krka’s central
site. The investment worth €163 million complies with our vertical integration strategy, which Krka uses to control all product
stages, from product development to production.
The expansion and modernisation of the Krka-Rus plant located in the industrial zone of a town north-west of Moscow is
one of the key investments in Krka subsidiaries abroad. The plant manufactures more than 75% of products intended for
the Russian market, giving us the status of a domestic producer in the Russian Federation. We started increasing its
laboratory and production capacities in 2020. Moreover, we plan to continue to purchase manufacturing and quality control
equipment for our joint venture Ningbo Krka Menovo in China.
Krka Share Price Exceeded €100
Krka’s share was the most actively traded security on the Ljubljana Stock Exchange also in 2021. Its price increased by
29.1% to €118.00 at the end of the year, while market capitalisation of Krka amounted to €3.9 billion. The growth of Krka’s
share price is the result of good business performance and the trust shareholders place in our operations and strategy.
We plan to preserve our long-term dividend policy, in which at least 50% of the net profit of the controlling company's
equity holders is allocated for dividends. The Krka Group’s financial requirements for investments and potential
acquisitions are also taken into account. The shareholders received €5.00 gross per share, up 17.6% on the previous year.
The dividend yield was 4.2%.
Strong Supply Chain and Development Activities at the Start of 2022
We know that our markets shares can grow only if our development is strong, we produce as many innovative products of
high quality as possible, have a solid supply chain, flexible and rapid manufacture, and effective marketing and sales. The
2022 business results will depend on the slowing down of the pandemic and the related containment measures adopted
by countries. The situation in Ukraine and the Russian Federation and the ensuing global economy developments will
certainly impact the Krka Group’s business activities.
The main short-term risk is the current situation in Ukraine, economic sanctions, volatility and depreciation of the Russian
rouble, and credit risk. In our opinion, other markets and sales regions will not sustain direct harm on the account of the
present situation. The indirect impact on all other markets of Region East Europe will depend on how long the situation in
Ukraine and the Russian Federation lasts.
Krka has been present in Region East Europe for over 50 years. In that time, we encountered several challenges that
affected our business operations through devaluation of national currencies and short-term decreases in demand, but in
the long term, Krka managed to strengthen its market position after each such situation. The vertical integration system
ensures our resilience against external shocks and responsiveness to fast-changing market situations. We have a strong
capital structure, generate a robust cash flow from operating activities, and have no financial debt, so our successful
business performance in the long run is not jeopardised. We closely monitor events and implement all necessary activities
to ensure business continuity in the two countries. We also take measures to manage operational risks and reduce any
potential negative impact on business results.
2021 Annual Report – Introduction
6
In 2022, the Krka Group plans product and service sales at €1.610 million and net profit at approximately €300 million. We
plan to allocate €130 million to investments, primarily for expanding and upgrading our production and development
capacities as well as the infrastructure. We plan to increase the total number of employees in Slovenia and abroad by 2%.
The 2022 business plan was derived from expectations, assessments, projections and other available data at disposal to
the Management and Supervisory Boards at the time of its preparation.
Vertically Integrated Model at the Heart of Our Strategy
Members of the Management and Supervisory Boards have adopted the updated strategy for the period up to 2026, to
adapt to the changes and challenges in the external environment, transforming them into new opportunities for the Krka
Group. The strategy is based on two key starting points: to improve our achievements, and plan Krka’s strategic
development.
In the upcoming five years, we plan to achieve at least 5% average annual sales growth and EBITDA margin of at least
25%. We intend to further strengthen and optimise our vertical integration business model, which has proven to be an
effective strategic guideline and competitive advantage. It will allow us to ensure high product quality, safety, and efficacy
standards. We plan to enter new therapeutic areas, develop complex products, maintain profitability on which future
development depends, secure organic growth, and pursue growth through long-term partnerships, and ensure a stable
dividend policy. In all our endeavours, we intend to prioritise digitalisation, automation and optimisation of processes, as
well as further strengthen the Krka Group’s commitment to environmental sustainability.
Part of a Broader Environment
We remain committed to the values of sustainable development. We endeavour to devote even closer attention to
conserving natural and societal heritage and further improving it throughout the Krka Group. At Krka, we have always
believed that a company needs to have good operating results and focus on environmental, social, and corporate
governance (ESG) issues to achieve business success.
We intend to set clear sustainability goals and indicators to check our progress in these areas. We will continue our efforts
to preserve natural resources and climate change management, and reduce our impact on the natural environment. With
regard to social issues, we are mainly concerned with the availability of our products to all those who need them, a safe,
healthy and encouraging work environment, employee satisfaction and support for community development. Krka’s
success stems from our renown and the trust enjoyed by the Krka brand. This could not be possible without ethical and
responsible corporate governance. Our goal is to further improve the sustainability culture in the Krka Group. We believe
that investors and our current and future employees will favour companies with clear environmental sustainability goals
that can create value for their stakeholders in the long term.
Focused on Results
The members of the Management Board have been appointed for another six-year term of office. We intend to justify the
trust placed in us by continuing to pursue revised company goals from the updated strategy. My colleagues and I believe
that our key responsibility is to successfully meet any challenges arising from the increasingly rapid global changes and to
ensure that our products reach more than 50 million patients in 70 markets quickly and efficiently. I am convinced that
under the leadership of this experienced team, all of us at Krka can help create an environment that will be beneficial to
all – patients, customers, shareholders, Krka employees and the local community – and which will allow us to continue
achieving good results.
Jože Colarič
President of the Management Board and CEO
2021 Annual Report – Introduction
7
Krka Group Financial Highlights
2
€ thousand
2021
2020
2019
2018
2017
Revenue
1,565,802
1,534,941
1,493,409
1,331,858
1,266,392
– Of that revenue from contracts with customers (products
and services)
1
1,560,288
1,529,959
1,489,080
1,326,747
1,260,898
Earnings before interest, tax, depreciation and amortisation
(EBITDA)
2
463,625
502,432
385,437
343,280
306,638
Operating profit (EBIT)
3
354,788
390,744
274,195
232,686
198,741
Profit before tax (EBT)
362,417
338,992
284,368
202,573
176,174
Net profit
308,150
288,949
244,272
174,008
152,576
Non-current assets (year-end)
1,075,747
990,998
1,041,833
1,010,811
1,033,008
Current assets (year-end)
1,461,936
1,244,544
1,142,785
974,258
886,123
Equity (year-end)
1,919,085
1,751,812
1,667,516
1,540,270
1,487,699
Non-current liabilities (year-end)
162,674
172,796
160,905
123,058
121,182
Current liabilities (year-end)
455,924
310,934
356,197
321,741
310,250
R&D expenses
154,559
153,447
152,421
130,700
125,864
Investments
66,386
76,613
112,568
96,293
105,088
RATIOS
2021
2020
2019
2018
2017
EBITDA margin
29.6%
32.7%
25.8%
25.8%
24.2%
EBIT margin
22.7%
25.5%
18.4%
17.5%
15.7%
EBT margin
23.1%
22.1%
19.0%
15.2%
13.9%
Net profit margin (ROS)
19.7%
18.8%
16.4%
13.1%
12.0%
Return on equity (ROE)
4
16.8%
16.9%
15.2%
11.5%
10.4%
Return on assets (ROA)
5
12.9%
13.1%
11.7%
8.9%
8.0%
Liabilities/Equity
0.322
0.276
0.310
0.289
0.290
R&D expenses/Revenue
9.9%
10.0%
10.2%
9.8%
9.9%
NUMBER OF EMPLOYEES
2021
2020
2019
2018
2017
Year-end
11,511
11,677
11,696
11,390
10,832
Average
11,581
11,631
11,484
11,129
10,823
SHARE INFORMATION
2021
2020
2019
2018
2017
Total number of shares issued
32,793,448
32,793,448
32,793,448
32,793,448
32,793,448
Earnings per share (EPS) in €
6
9.92
9.27
7.73
5.46
4.74
Gross dividend per share in €
5.00
4.25
3.20
2.90
2.75
Closing price on LJSE at the end of the period in €
118.00
91.40
73.20
57.80
57.50
Price/Earnings ratio (P/E)
11.90
9.86
9.47
10.59
12.14
Book value in €
7
58.52
53.42
50.85
46.97
45.37
Price/Book value (P/B)
2.02
1.71
1.44
1.23
1.27
Market capitalisation in € thousand (31 Dec)
3,869,627
2,997,321
2,400,480
1,895,461
1,885,623
1
Revenue generated in 2021, 2020, 2019, and 2018 complies with IFRS 15. Revenue generated in 2017 from contracts with customers for the
sale of products and services has also been presented accordingly.
2
The difference between operating income and expenses increased by accumulated depreciation and amortisation
3
The difference between operating income and expenses
4
Net profit/Average shareholders' equity in the year
5
Net profit/Average total asset balance in the year
6
Net profit for the year attributable to majority equity holders of the controlling company/Average number of shares issued in the year, excluding
treasury shares
7
Equity as at 31 Dec/Total number of shares issued
2
GRI GS 102-7, 102-10, 201-1
2021 Annual Report – Introduction
8
At a Glance
3
The Krka Group consists of the controlling company, Krka, d. d., Novo mesto, a subsidiary in Slovenia, Terme
Krka, d. o. o., Novo mesto, and 31 subsidiaries outside Slovenia.
The Krka Group develops, produces, markets, and sells human health products (prescription pharmaceuticals and non-
prescription products), animal health products, and health resorts and tourist services.
Production takes place in the controlling company in Slovenia and in Krka subsidiaries in the Russian Federation, Poland,
Croatia, and Germany. In addition to production, these subsidiaries, apart from Krka-Rus in the Russian Federation, deal
with marketing and sales. In China, production takes place in leased production facilities. Other subsidiaries outside
Slovenia carry out marketing and/or sales of Krka products but do not have production capacities.
Terme Krka, d. o. o., Novo mesto deals with health resorts and tourist services, and operates through the following
branches: Terme Dolenjske Toplice, Terme Šmarješke Toplice, Hoteli Otočec, and Talaso Strunjan. Terme Krka is also
the majority owner of Golf Grad Otočec, d. o. o.
In 2021, we established a wholly owned subsidiary in Germany, 123 Acurae Pharma GmbH.
ID Card
Krka, d. d., Novo mesto
Registered office
Telephone
+386 (7) 331 21 11
Fax
+386 (7) 332 15 37
E-mail
info@krka.biz
Website
www.krka.si
Core business
Manufacture of pharmaceutical preparations
Business classification code
21,200
Year established
1954
Registration entry
1/00097/00, District Court of Novo mesto
Tax number
82646716
VAT number
SI82646716
Company ID number
5043611000
Share capital
€54,732,264.71
Total number of shares issued
32,793,448 ordinary registered no-par value shares
3
GRI GS 102-1, 102-3, 102-5
2021 Annual Report – Introduction
9
Krka Group Business Model
2021 Annual Report – Introduction
10
Krka Group Organisational Chart
Russian Federation
KRKA-RUS LLC
Russian Federation
KRKA FARMA LLC
Region East Europe
Poland
KRKA - POLSKA Sp. z o.o.
Hungary
KRKA Magyarország Kft.
Region Central Europe
KRKA, d. d., Novo mesto
TERME KRKA, d. o. o.,
Novo mesto
Region Slovenia
Region West Europe
Spain
KRKA FARMACÉUTICA, S.L.
Sweden
Krka Sverige AB
Ireland
KRKA PHARMA DUBLIN LIMITED
Portugal
KRKA Farmacêutica, Unipessoal Lda.
Germany
TAD Pharma GmbH
Austria
KRKA Pharma GmbH, Wien
Slovakia
KRKA Slovensko, s.r.o.
Czech Republic
KRKA ČR, s. r. o.
Croatia
KRKA-FARMA d.o.o.
Serbia
KRKA-FARMA DOO BEOGRAD
North Macedonia
KRKA-FARMA DOOEL Skopje
Region South-East Europe
Romania
KRKA ROMANIA S.R.L.
Bosnia and Herzegovina
KRKA FARMA d.o.o., Sarajevo
Lithuania
UAB KRKA Lietuva
Ukraine
KRKA UKRAINE LLC
Latvia
SIA KRKA Latvia
Italy
KRKA FARMACEUTICI MILANO S.R.L.
France
KRKA France Eurl à capital variable
Belgium
KRKA Belgium, SA
Kazakhstan
LLС ‘KRKA Kazakhstan’
The chart includes companies in operation as at 31 December 2021.
Other subsidiaries outside Slovenia
Production and distribution companies
Health resorts and tourist services
China
Ningbo Krka Menovo
Pharmaceutical Co. Ltd.
Bulgaria
KRKA Bulgaria EOOD
Region Overseas Markets
United Kingdom
KRKA UK LTD
Finland
KRKA Finland Oy
US
KRKA USA LLC
Joint venture for development, production, and distribution
Greece
KRKA HELLAS E.P.E.
Germany
123 Acurae Pharma GmbH
2021 Annual Report – Introduction
11
Krka in Global Markets
4
4
GRI GS 102-4
2021 Annual Report – Introduction
12
2021 Highlights
Business Operations
In 2021, the Supervisory Board appointed the current Management Board for another six-year term of office ending
on 31 December 2027. The Management Board is comprised of the President of the Management Board Jože
Colarič, members of the Management Board Dr Aleš Rotar, Dr Vinko Zupančič and David Bratož, and member of
the Management Board and Worker Director Milena Kastelic.
At the beginning of the year, we presented Krka’s Big Five: products or product families that in 2020 surpassed the
milestone of 1 billion tablets sold. These are Nolpaza, Atoris, and Krka’s valsartans, perindoprils and losartans.
They are known for quality, efficacy, safety, trust, completed clinical trials, and wide recognition among doctors and
patients.
The 27th Annual General Meeting was held on 9 July 2021. The proposed dividend per share of €5.00 gross, up
17.6% on the previous year, was approved.
We organised online conferences to maintain regular contact with investors in capital markets. Krka’s share price
saw strong growth in 2021, exceeding the price of €100 per share for the first time since 2008.
In mid-October, Krka passed the 26th audit of its integrated management system, conducted by the Slovenian
Institute of Quality and Metrology (SIQ). During an online and onsite audit, the auditors inspected five management
systems adapted to the following standards: ISO 9001, ISO 14001, HACCP, ISO 45001 and ISO/IEC 27001. No
non-compliances were identified during the audit. The validity of all certificates we hold was confirmed.
The development strategy of the Krka Group is drawn up for a five-year period and updated every two years. At
their November meeting, the Management Board adopted the 2022–2026 Krka Group Development Strategy,
which the Supervisory Board approved at their meeting of 17 November.
Visibility
For the tenth time, Krka was included in the Golden Thread (Zlata nit) research project conducted by the Slovenian
media company Dnevnik on the quality of the relationship between an organisation and its employees.
Assessments show that employees value their relationship with Krka. This aspect is especially important in the
current uncertain times, in which Krka continues to provide safe and stable employment.
Krka ranked among top employers of 2020 in the reputation measuring survey (Ugled delodajalca 2020) conducted
by the recruitment portal MojeDelo.com and published in March 2021. The project included more than
12,000 individuals from the Slovenian labour market.
Once again, Krka researchers proved they belong among the very best. At last year’s innovation ceremony of the
Chamber of Commerce of Dolenjska and Bela krajina (GZDBK), Krka’s innovations received four gold and four
silver awards.
At the end of November, the Slovenian Chamber of Commerce and Industry (GZS) presented Krka with two silver
awards for innovations in high blood pressure therapy: one award for a bi-layer tablet containing a combination of
candesartan and amlodipine, and one award for a solid pharmaceutical form containing a combination of
olmesartan, amlodipine, and hydrochlorothiazide.
At the end of the year, the Ljubljana Stock Exchange presented Krka with the Prime Market Share of the Year
award for the fourth consecutive year and the Best Investor Relations Award for the third time.
2021 Annual Report – Introduction
13
Sustainability
We have formed a project group for sustainability to put additional focus on sustainability and introduce the ESG
system to the Krka Group in line with legislation, in particular the EU’s Corporate Sustainability Reporting Directive.
The 2020 Talent-of-the-Year award was announced at the 15th traditional meeting with Krka’s sponsorship
recipients. Three outstanding young people received the award for their accomplishments in sports and culture.
On 22 September, as part of the European Mobility Week, we organised the 6th consecutive Krka Car-Free Day
for Krka employees in Slovenia and abroad. Our commitment to green mobility grows ever stronger: sustainable
means of transport is becoming a habit and not just a one-time act for an increasing number of employees.
We regularly meet with local communities because we care for the natural and social environment in which we
operate. This year, circumstances did not yet allow for in-person meetings. Because we believe in the importance
of uninterrupted dialogue, we prepared an informative issue of Krka’s Utrip magazine covering the relevant
environmental protection topics and distributed it to the residents of the Ločna-Mačkovec community.
In 2020, we marked the 50th anniversary of Krka Prizes. Due to the circumstances at that time, the ceremony was
postponed until the beginning of September 2021. On this occasion, the President of the Republic of Slovenia Borut
Pahor presented the national Order of Merit to Krka for its Krka Prizes, which have been encouraging scientific
achievements, particularly among the young, for half a century.
In 2021, we continued with our unique and long-standing tradition of Krka Prizes. The recipients of the secondary
school, undergraduate and graduate-level prizes were declared at online symposiums.
Employees
The 18th International Regulatory and Pharmacovigilance Conference was organised remotely. More than
300 colleagues from 40 countries attended the online event. The best regulatory affairs employees received
awards, recognitions, and commendations.
The slogan Rethink and React marked the 23rd Marketing and Sales Conference. The online event was attended
by 190 colleagues in 42 markets and established new foundations for achieving even better results in the future.
On Krka Awards Day, we conferred plaques to employees who celebrated their many years of service, best
employees, best managers, and those who excelled in the field of innovation.
In July, 18 worker assemblies were held at Krka in Slovenia. The President and members of the Management
Board briefed employees on performance results, plans for the current year, the strategy, and other current issues.
For the 21st consecutive year, Marketing Awards were conferred on the best employees in marketing.
Through our innovation and efficiency, we developed several concrete solutions that support quality processes,
quality finished products, and rational business operations that help us ensure reasonably priced products for our
customers and good relations with our shareholders. Individuals and organisational units that contributed the
highest number of proposals were recognised for their efforts.
2021 Annual Report – Introduction
14
Subsequent Events
The events after the end of the period had no impact on the 2021 financial statements.
Situation in Ukraine and the Russian Federation: Impact on the Krka Operations
We conduct business in Ukraine and the Russian Federation, sales Region East Europe, through three subsidiaries and
the controlling company, Krka, d. d., Novo mesto. The registered office of our subsidiary Krka Ukraine LLC engaged only
in marketing, but not manufacturing, is in Kiev. The registered office of Krka-Rus LLC engaged in pharmaceutical
production is in Istra, a town in the vicinity of Moscow. Main offices of Krka Farma LLC, a company engaged in marketing
and sales, are in Moscow.
On account of rapid changes and their unpredictability, it is not possible to reliably forecast the impact of the situation in
Ukraine and Russian Federation on our business operations in 2022 and any long-term consequences. Krka has a strong
capital structure, generates a strong cash flow from operations and has no financial debt, so its successful business
performance in the long run is not jeopardised. Our Management Board closely monitor events and implement all
necessary activities to ensure business continuity in the two countries. They also take measures to manage operational
risks and reduce the eventual negative impact on business results. The Management Board will prepare and publish the
eventual revision of guidance for 2022, when and if tangible assessment of short and long term implication of current
situation is possible.
Please find further explanation in Note 35 'Subsequent events' to the consolidated financial statements of the Krka Group
and Note 36 'Subsequent events' to the financial statements of Krka, d. d., Novo mesto.
Acquisition of Treasury Shares in 2022
From 1 January 2022 to 14 April 2022, we acquired 21,689 treasury shares. At the end of this period, Krka held
1,705,597 treasury shares, accounting for 5.201% of total shares.
2021 Annual Report – Business Report
15
BUSINESS REPORT
Corporate Governance Statement
5
Corporate governance at Krka is a two-tier system. The Management Board runs the Company and is controlled by the
Supervisory Board. Corporate governance is based on the legislation of the Republic of Slovenia, Slovenian and
international good practice, the publicly available Corporate Governance Policy of the Company and its internal rules.
Governing bodies are:
Annual General Meeting (AGM);
Supervisory Board; and
Management Board.
Annual General Meeting
Under the Slovenian Companies Act (ZGD-1), the Company's highest body is the Annual General Meeting (AGM). It is
where shareholders directly participate in the Company's governance and where all fundamental and statutory decisions
are taken. Each share, except for treasury shares, represents one vote at the AGM. Krka has one share class only: ordinary
no-par value shares.
The Management Board calls the regular AGM once a year, at least 30 days before the due date. Upon request, all the
materials for each AGM can be viewed at the Company's registered office from the day of the call.
All shareholders entered in the shareholder register as at the record date, which is published in the notice, have the right
to attend the AGM and vote. The same applies to their representatives and proxies.
At the AGM, the Management Board provides shareholders with all the information required to assess the agenda, taking
into account all legal or other information disclosure restrictions.
In the 2021 AGM notice, per Item 6.2 of the Corporate Governance Code for Listed Companies in force at the time, the
Company requested all major shareholders to publicly disclose their investment policies in respect of their shareholdings
in the Company, in particular their voting policy, the type and frequency of their engagement in the Company’s governance,
and the flow of their communication with the Company’s managerial and supervisory bodies.
At the 27th AGM of 8 July 2021, the shareholders:
Received information about the 2020 Annual Report from the Management Board, including the remuneration of
Management and Supervisory Board members, the auditor's report, and the report of the Supervisory Board on
its verification and approval of the 2020 Annual Report;
Adopted the resolution on the appropriation of accumulated profit for 2020;
Discharged the Management and Supervisory Boards of liability for 2020;
Incorporated in the Articles of Association (i) the option to hold shareholder meetings online and resolved that,
for a justified reason, an AGM can be held in any other place in the Republic of Slovenia besides the Hotel Šport
in Otočec; (ii) added C.32.500 ‘Manufacture of medical and dental instruments and supplies’ to Krka's business
activites; (iii) adopted certain other amendments to the Articles of Association in compliance with legislative
changes; (iv) determined the procedure for convening an AGM in closer detail;
Updated the remuneration system for Supervisory Board members, which was adopted on 7 July 2011, and
brought it in line with the current good practice.
According to the 2022 financial calendar, the regular AGM is due on 7 July. The Company must give a clear 30 days’
notice before the AGM is held and publish it on the AJPES website, in the Company’s printed or online publication if it is
due for publication at the time of the call and on the Company’s website. The notice must also comply with the Financial
Instruments Market Act.
Further information on shareholders and voting rights is available under ‘Investor and Share Information’.
5
GRI GS 102-18
2021 Annual Report – Business Report
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Supervisory Board
The Supervisory Board supervises the Company’s operations and business management, and selects and appoints
members to the Management Board. The body meets at least four times a year. Under the provisions of the Articles of
Association, the Supervisory Board pre-approves the annual business and financial plan and the strategy for adoption by
the Management Board. It also carries out other tasks in accordance with the Companies Act. It primarily approves (i) the
appointment, removal, and remuneration of the Head of Internal Audit; (ii) the act regulating the purpose, meaning, and
duties of Internal Audit; and (iii) the annual and multi-year plans of Internal Audit. It is also briefed about the annual report
of Internal Audit. The President of the Supervisory Board concludes a contract with an external auditor.
The composition of the Supervisory Board is stipulated by the Company's Articles of Association. The Supervisory Board
is composed of nine members: six are elected by the AGM, and three employee representatives are elected by the
Company's Works Council. The President of the Supervisory Board is always elected from the AGM-appointed members.
Members are appointed for a five-year term and can be reappointed.
The 26th regular AGM was held on 9 July 2020. With the terms of office expired for Jože Mermal, Andrej Slapar, Julijana
Kristl, and Boris Žnidarič, the AGM elected Jože Mermal, Matej Lahovnik, Julijana Kristl, and Boris Žnidarič to a new five-
year term of office. Another two shareholder representatives sit on our Supervisory Board. Borut Jamnik was elected by
the AGM on 6 July 2017, and Mojca Osolnik Videmšek on 4 July 2019.
The President of the Supervisory Board is Jože Mermal. His deputies are Matej Lahovnik, the shareholder representative,
and Franc Šašek, the employee representative. If the President of the Supervisory Board is absent, the shareholder
representative replaces him, and if the latter is also absent, the employee representative replaces him in turn.
The Supervisory Board’s work complies with legislation, recommendations of professional associations, above all the
Slovenian Directors' Association, and other good practice recommendations, particularly the Slovenian Corporate
Governance Code for Listed Companies.
The remuneration, reimbursement, and other benefits of Supervisory Board members do not directly depend on the
Company's performance and are disclosed in the financial report under the Note entitled ‘Related Party Transactions’. In
addition to attendance fees, members receive fixed amounts for exercising their functions and additional payments, i.e. for
membership on committees, presiding the Supervisory Board or acting as a deputy to its president, presiding committees,
and for special undertakings. All remuneration amounts were fixed by resolutions passed at the 27th regular AGM in 2021.
Supervisory Board members report to the Company and competent institutions on any acquisitions or disposals of
Company shares. Krka makes the information public. Please find the disclosure on how many Krka shares are held by
Supervisory Board members in the 'Related Party Transactions' section of the financial report.
In addition to the Companies Act, the Rules of Procedure of the Supervisory Board govern any potential conflict of
interest on the part of Supervisory Board members. Supervisory Board members must consider the Company’s objectives
in their work and subordinate any personal interests or interests of third parties accordingly. All members have been asked
to complete a conflict of interest questionnaire. The questionnaire is available on the Krka website. The Rules of Procedure
of the Supervisory Board outline members' conduct in the event of a conflict of interest. The document is available at
http://www.krka.biz/en/for-investors/documents/corporate-governance-documents/. A conflict of interest can constitute an
impediment to voting. Any non-temporary material conflict of interest may be grounds for termination of a member's term
of office and is assessed when drafting the proposal for that person's election.
The work of the Supervisory Board and related committees in 2021 is detailed in the Supervisory Board report.
2021 Annual Report – Business Report
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Shareholder Representatives
Jože Mermal
President of the Supervisory Board
Jože Mermal (born 1954) is from Ljubljana and holds a university degree in economics. Since 2019, when BTC introduced
the one-tier management system, Mermal has chaired the company’s management board. He had successfully managed
BTC for over 26 years before that, having worked creatively in many responsible managerial positions since 1978.
He initiated and managed the project to restructure and transform public warehouses into a successful, dynamic, and
rapidly expanding company that has also become one of the largest business, shopping, entertainment, recreation, culture,
and innovation centres in Europe: BTC City. As the founder and strategist of BTC, he has been supporting investments in
development to reach the company's long-term goal: to make BTC an open company for future generations. Under his
management, the company has established connections with long-term business partners through various activities and
is becoming a unique business ecosystem, seeking new opportunities and finding challenges in a vast society,
globalisation, innovation and sustainable development.
In partnership with the Municipality of Ljubljana, he has been involved in setting up a 230 hectare urban regeneration
project for the city of Ljubljana, the Šmartinska District Partnership. Crystal Palace, the Radisson Blu Plaza Hotel, and Ikea
have been constructed as part of the project. He has also collaborated with the Municipality of Ljubljana in setting up the
Intermodal Logistic Terminal (ILT) Ljubljana.
Under his management, ABC Accelerator was established in 2015. Its principal function is the development of a start-up
business ecosystem. He also holds key managerial functions in various sports organisations and at international sporting
events.
Under his management, BTC has received a plethora of awards and prizes for various community projects. He participates
in cultural, sporting, educational, humanitarian, and scientific events, which he supports and is involved in.
He is the receipient of several awards for his work, including Manager of the Year in 1997 and the Primus award for
excellence in communication in 2001 by the Slovenian Public Relations Society. He is a keen supporter of culture and
received the title of Cultural Patron of the Year in 2011. His visionary management and creativity at BTC earned him the
Vision Manager Award in 2012, which is conferred by public relations experts from South-Eastern Europe. In 2013, the
Municipality of Ljubljana conferred the Marjan Rožanc Award on Mermal for sporting achievements. The Chamber of
Commerce and Industry of Slovenia awarded him for exceptional business and entrepreneurial achievements in the
category of large companies for the year 2013. Under Mermal's management, BTC has become the first – and, to this
date, the only – Slovenian company listed on the London Stock Exchange. In 2015, he received a gold plaque from the
Managers’ Association of Slovenia for more than two decades of support. It was followed by the highest managerial lifetime
achievement award, the Best Manager of South-East Europe 2016 award, which is bestowed by the Independent Agency
for the Selection and Promotion of Managers. Mermal was awarded the title of a 2017 honorary citizen of Ljubljana, the
highest honour bestowed by the Municipality of Ljubljana, for his contribution to the renown, significance, and development
of the municipality and its inter-city and international relations. At the awards for best managers and companies from
Central and South-Eastern Europe, he received the Best Manager and Best Company in Europe lifetime-achievement
award in 2019. In 2020, the Management Board of the Managers’ Association of Slovenia awarded Mermal the Lifetime
Achievement Award in Management.
Prof. Dr Matej Lahovnik
Deputy President of the Supervisory Board
Matej Lahovnik (born 1971) holds a PhD in economics. He is a full professor at the Faculty of Economics in Ljubljana and
has worked there since 1995. As a researcher, teacher and mentor, he deals with strategic management, mergers and
acquisitions, organisation and business skills. Lahovnik has served twice as Minister of Economic Development and
Technology to the Government of the Republic of Slovenia. During Slovenia's OECD membership talks, he led the
corporate governance and investment negotiation teams.
2021 Annual Report – Business Report
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He has been involved in numerous scientific project teams researching the behaviour of enterprises and financial
institutions in the transition period; Slovenian economic development strategy; successful competitive strategies of
Slovenian and Croatian companies; company acquisitions in economies in transition; and market regulations after
accession to the EU. He has authored or co-authored many papers on strategic management and mergers and
acquisitions, published in scientific and research journals and at conferences. He has co-authored a scientific monograph,
and authored or co-authored two university textbooks. He is also vice-president of the supervisory board of Mercator.
Dr Boris Žnidarič
President of the Human Resource Committee
Boris Žnidarič (born 1948) holds a PhD in social sciences and a Master's degree in law. Up to his retirement, he served
on the management board of Kapitalska družba, d. d., Ljubljana, a company that manages additional funds for pension
and disability insurance. Prior to that, he held various roles at the Triglav Group insurance company. He was assistant to
the president of the management board of Zavarovalnica Triglav, where, in addition to leading and directing heads of
organisational units, he was also responsible for strategic human resource management at subsidiaries. He was on the
management board of Triglav Osiguranje in Zagreb, Croatia. He also managed the Celje regional unit of Zavarovalnica
Triglav, and led the central department for the prevention and detection of insurance fraud. Before taking up that role, he
was an adviser to a management board member for strategic human resource management in the Triglav Group, and an
assistant director for legal, human resources, and general affairs at the Ljubljana unit. He holds a certificate of professional
competence for supervisory board membership. In addition to his diverse career in insurance, he is also a university
lecturer.
Borut Jamnik
President of the Audit Committee
Borut Jamnik (born 1970) is from Ljubljana and graduated in mathematics from the Faculty of Natural Sciences and
Engineering at the University of Ljubljana. He commenced his career at the Agency of the Republic of Slovenia for
Restructuring and Privatisation. After completing his traineeship, he managed many ownership transformation projects.
After a brief spell at the Securities Market Agency of Slovenia, Jamnik took up a post at the IT and analyses department
of Kapitalska družba, a company that evaluates investments and prepares the grounds for management decisions. He
managed the project that led to establishing the First Pension Fund in Slovenia. In 2000, he began his term on the
management board of Kapitalska družba in charge of finance, analyses, information technology, and pension fund
management activities. Jamnik chaired the management board of Kapitalska družba from 2003 to 2005 and from 2008
to 2011. In the intervening years, he was a board member with responsibility for finance and group management at Hit,
then at Probanka Asset Management, first as a management consultant and later as a management board member. During
that tenure, he oversaw the merger of two hotels, HIT Alpinea and Kompas Hoteli KG, and was involved in negotiations
with the strategic partner, the then Harrah’s Entertainment. He chaired the board of a special business consulting company
Posebna družba za podjetniško svetovanje (PDP) until its dissolution following the merger with Slovenski državni holding
(SDH, Slovenian Sovereign Holding), a procees that involved a series of financial and business restructurings, culminating
int the companies being sold. In 2011 he began chairing the management board at Modra zavarovalnica, where he is
responsible for asset management, compliance, planning and controlling, legal and HR matters.
Since 1999, he has chaired many management bodies of major Slovenian companies, including Telekom Slovenije,
Pivovarna Laško, Zavarovalnica Triglav, NLB, Luka Koper, Comet, Swaty, Lesnina, Žito, and Krka. Until 2018, he was a
management board member of the European Association of Public Sector Pension Institutions (EAPSPI). He is currently
a member of the supervisory board and audit committee at Nova KBM.
Jamnik held the presidency of the Slovenian Directors’ Association (SDA) from 2008 until 2020, where he helped to
develop corporate governance expertise and practices and the functioning of supervisory and management boards.
Since 2020, he has chaired the SDA's Policy Committee. He also chaired Slovensko zavarovalno združenje (SZZ,
Slovenian Insurance Association), where he currently continues his tenure as a committee board member.
As an executive and member of supervisory boards, he has been involved in various complex corporate campaigns and
helped resolve complex business issues using his extensive experience and negotiation skills.
2021 Annual Report – Business Report
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Mojca Osolnik Videmšek
Mojca Osolnik Videmšek (born 1966) holds a university degree in economics. She is director of GB Leasing, where she is
primarily responsible for finance, general support services, and risk management. Before that (2014–2019), she served
one term of office on the management board of Gorenjska banka, where she was in charge of risk management, financial
management and support, legal affairs, and corporate compliance.
Before taking up employment with Gorenjska banka, she was responsible for various challenging areas of work at
NLB, d. d., primarily concerning corporate governance at the NLB Group. As director of Capital Investments Management
and Control she sat on several supervisory boards and audit committees of subsidiaries in Slovenia and abroad. She was
also director of the office of the management board and secretary general at NLB.
She also has experience in dealing with challenging tasks in public administration. From September 1994 until April 1999,
she worked as head of the Prime Minister’s Office. Between 2001 and 2003, she was director of the Administrative Office
of the Prime Minister of the Republic of Slovenia and, for a brief spell in 2000, Secretary General at the Ministry of Foreign
Affairs. She has extensive experience in governance and control. She holds a certificate from the Slovenian Directors’
Association. She sat on the management board of the Slovenian Directors’ Association for three terms of office.
Prof. Dr Julijana Kristl
Julijana Kristl (born 1953) holds a PhD in pharmaceutical sciences and worked at the Faculty of Pharmacy at the University
of Ljubljana (1977–2021). She upskilled at the University of Geneva and the University of Lyon, and also in the
pharmaceutical industry.
During her career, she served as Vice-Dean, Head of the Chair of Pharmaceutical Technology, Dean of the Faculty of
Pharmacy and as Vice-Rector at the University of Ljubljana (two terms). She is an active member of many prominent
commissions and committees at state and university level.
Her scientific career started in the area of pharmaceutical technology. Her greatest achievements include developing and
deploying pharmaceutical nanotechnology in Slovenia. Her work initially focused on the development and evaluation of
API nanodelivery systems that support innovative modes and new mechanisms of treatment. Her notable achievements
include research and development on lipid and polymer nanostructures (various nanoparticles and nanofibres), the
discovery of mechanisms for increasing solubility and bioavailability of active ingredients, understanding the correlation
between the structural composition and the real-time cell response after coming into contact with them. Her achievements
have won her global renown as a pharmaceutical nanotechnologist.
She is committed to research, gaining and sharing knowledge with students and the scientific and business communities.
She sets high professional goals, is future-focused, and acts to benefit the community. Her knowledge, personal skills,
independence, and autonomy are solid foundations for a successful tenure on the Supervisory Board of Krka.
Employee Representatives
Franc Šašek
Deputy President of the Supervisory Board
Franc Šašek (born 1967) has a degree in organisational sciences. He joined Krka in 1984 and heads up Technical
Services. He has worked in engineering and technical services from the outset in roles ranging from technologist, Head of
the Technical and Technological Preparations Department, and later as a senior specialist in maintenance and project
management. In 2004, he was the SAP PM-maintenance project team leader for the roll out of the business process
management system (SAP) and was later appointed process owner for maintenance in the Krka Group. Since 1999, he
has also served as an authorised person and trainer for quality assurance. As a certified internal quality auditor, he also
conducted internal audits from 2000 to 2013. He is jointly responsible for the development and maintenance of the
Company's integrated quality system.
In 2009, he underwent training for supervisory and management board members at the Slovenian Directors’ Association.
Šašek was elected President of Krka's Works Council for 2009–2013 and 2014–2018, and again for 2019–2022. He
assumed his third term as an employee representative on the Supervisory Board on 21 June 2019.
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Dr Mateja Vrečer
Mateja Vrečer (born 1966) has worked at Krka since 1990. She started as a pharmaceutical engineering graduate, later
passing the pharmaceutical engineering certification examination, which she followed up with a Master's degree and then
a doctorate in pharmaceutical sciences. She first worked in Research and Development on regulatory feasibility studies
for proposed new products, and once approved, she managed product registration and produc launch projects in Slovenia.
In 1997, she was appointed Deputy Director of Quality Management, and in March 2007, she took up the role of head of
International Quality Assurance. In September 2011, she accepted the position of Director of Quality Management.
She was an employee representative of the Krka Supervisory Board in 2005–2009 and 2009–2014. In June 2014, she
was reappointed to her third term of office. The Works Council elected Vrečer as an employee representative for another
term of office commencing on 21 June 2019.
Tomaž Sever
Tomaž Sever (born 1967) has a degree in mechanical engineering and a Master’s degree in management and
organisational sciences. He has been employed at Krka since 1995. He is Deputy Director of Sales and Director of Region
Central Europe, entrusted with market research; putting forward and expanding Krka’s presence in individual markets;
specifying the product range; recommending pricing strategies for individual markets; involvement in planning sales
promotion; formation, development and management of distribution channels; and building the sales network abroad.
Before joining Krka, he worked for IBM Slovenia from 1992 to 1995, first as an information systems sales representative,
then as an information system project manager.
Sever joined the Krka Supervisory Board as an employee representative in the 2005–2009 term, was reappointed for
another five-year term of office in 2009, and started his third term as an employee representative in June 2014. The Works
Council elected him to the Supervisory Board as an employee representative for another term of office that commenced
on 21 June 2019.
Independent Expert, Member of the Audit Committee
In accordance with Article 280 of the Companies Act, the Supervisory Board appointed Borut Šterbenc, an independent
accounting and auditing expert, to the Audit Committee. He is not a member of the Supervisory Board.
Borut Šterbenc
Independent Accounting and Auditing Expert, Member of the Audit Committee
Certified auditor, Borut Šterbenc (born 1978 in Ljubljana) holds a university degree in economics. He graduated from the
Faculty of Economics, University of Ljubljana. On 1 January 2020, he assumed chairmanship of the management board
of Kolpa, d. d., Metlika, and chairmanship of Kolpa Holding, d. o. o. Up to 2011, he was a project manager at KPMG, where
he planned, led, and conducted complex audits at many Slovenian companies, including Krka, Intereuropa, Sava, NEK,
and Lama. Šterbenc is also a supervisory board member at Pokojninska družba A, d. d. and an experienced rapporteur to
governance and supervisory bodies. He is a certified auditor and registered as such with the Agencija za nadzor nad
revidiranjem (Agency for Public Oversight of Auditing). He also holds a certificate of professional competence for
supervisory board membership issued by Slovenian Directors’ Association. He is fluent in English, Croatian, and Russian.
2021 Annual Report – Business Report
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Management Board
The primary Management Board duties are to:
Manage the Company and make business decisions directly and independently;
Adopt the development strategy of the Krka Group following endorsement by the Supervisory Board;
Ensure appropriate risk management; and
Act with the reasonable care and diligence of a good and honest manager and protect business secrets.
The Management Board is composed of five members:
President of the Management Board;
Three members; and
A worker director who represents the employees’ interests regarding human resource and social issues.
President and other members of the Management Board of Krka were not members of any management or
supervisory bodies outside the Krka Group in 2021.
The term of office of Management Board members is six years. Members can be reappointed. The candidacy procedure
and delegation of authority to Management Board members and criteria for appointment are disclosed in section
‘2021 Supervisory Board Report’, subsection ‘Appointing Management Board Members for Next Term of Office’.
The Management Board’s operational functions and assignment of duties are set down in the Rules of Procedure of
the Management Board. The body’s operating approach is to coordinate opinions and make decisions by consensus. In
line with the Rules of Organisation and the Rules of Procedure of the Management Board, Management Board members
also have executive management duties. Every member is responsible for a certain number of organisational units, which
permits direct cooperation between the Management Board and directors of organisational units.
The following bodies assist the Management Board:
Directors' Committee;
Sales Committee;
Development Committee;
Quality Committee;
Investment Committee;
Human Resource Committee;
Information Technology Committee;
Economics and Finance Committee; and
Corporate Identity Committee.
The committees bring together Management Board members, managerial staff, and experts from individual sectors in
Krka. They prepare business policies and strategic guidelines by individual areas and have some decision-making
responsibilities relating to implementing annual plans. Certain committees also have a risk management remit.
Remuneration, reimbursements, and other benefits for Management Board members are fixed in work contracts drawn
up between the Supervisory Board and individual Management Board members. Since 24 August 2021, shareholders
decide on reimbursement policies at AGM assemblies. This is an amendment to the Companies Act.
In 2021, payments to Management Board members were made in cash. The data are disclosed in ‘Related Party
Transactions’ section of the financial report.
The section also includes data on equity stakes in Krka held by Management Board members. Management Board
members and their related parties report to the Company and the competent institutions on any acquisition or disposal of
the Company's or related parties' shares. Krka makes this information public.
Management Board members’ obligations regarding any potential conflict of interest are governed by the Companies
Act, and operationally also by the Rules of Procedure of the Management Board based on good practices, in particular on
the Corporate Governance Code for Listed Companies. Under the Rules of Procedure of the Management Board, the
2021 Annual Report – Business Report
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members must be absolutely loyal to the Company. They must disclose any conflict of interest to the Supervisory and
Management Boards immediately, but no later than three days after it arises. They must comply with anticompetitive
practices throughout their term of office. In conformance with the Rules of Procedure, they can accept membership on
supervisory bodies of companies outside the Krka Group only after notifying the Supervisory Board of Krka accordingly
and obtaining their approval. In 2021, no member of the Management Board of Krka was a member of a supervisory body
of any company outside the Krka Group. The existence of any conflict of interest is assessed prior to their nomination.
As regards the Management Boards’ powers, the shareholders adopted a resolution at the 26th AGM of 9 July 2020,
authorising the Management Board to acquire treasury shares over a 36-month period provided that total treasury
shares, including new purchases and shares already held, do not exceed 10% of total share capital. The Company
informed the public about the treasury share repurchase programme on the web portal of the Ljubljana Stock Exchange
SEOnet (http://seonet.ljse.si).
Management Board Members
Please, find below the CVs of the members of the Management Board presided over by Jože Colarič. Their six-year term
of office commenced on 1 January 2016 and ended on 31 December 2021. The Supervisory Board reappointed the
unchanged Management Board for another six-year term of office that commenced on 1 January 2022.
Jože Colarič
President of the Management Board and CEO
Jože Colarič (born 1955 in Brežice) finished his secondary education at Gimnazija Novo mesto, then continued studies at
the Faculty of Economics in Ljubljana, graduating in 1979.
He has been employed at Krka since 1982. He started work in the Finance Sector, where he initially headed Foreign
Currency Payments, and then won promotion to Assistant Director. In 1989, he started managing the Exports Department
within the Import-Export Sector, and two years later became Deputy Director of Import-Export.
Early in 1993, Colarič was appointed Deputy Chief Executive for Marketing and Finance, and in September of the same
year also accepted management of Marketing-and-Sales Sector.
In 1997, he was appointed as a member to the Management Board. The following year, the Supervisory Board appointed
him Deputy President of the Management Board, and in 2002, endorsed him as a future president of the Management
Board, making him responsible for proposing candidates for the new Management Board team.
At their meeting of 12 July 2004, the Supervisory Board appointed Colarič President of the Management Board and Chief
Executive Officer. His five-year term of office began on 1 January 2005. At their meeting of 21 January 2009, the
Supervisory Board appointed him for another six-year term of office commencing on 1 January 2010. Under his
management, Krka has developed into one of the leading generic pharmaceutical companies in the world and built solid
foundations for growth. Colarič’s actions rely on Krka's in-house knowledge, new product development, annual
investments, recruitment, and regular dividend payments. In 2015, the Supervisory Board therefore unanimously
appointed him President of the Management Board and CEO for a new six-year term of office commencing on
1 January 2016. When that term of office ended, the Supervisory Board appointed him President of the Management
Board and CEO for another six-year term of office commencing on 1 January 2022. He put forward the unchanged
Management Board, and the Supervisory Board unanimously reappointed the body and member od the management
board-worker director, proposed by Works Council, for the 2022–2027 term of office as proposed.
Dr Aleš Rotar
Member of the Management Board and Director of Pharmaceutical R&D and Production
Aleš Rotar (born 1960 in Zadar, Croatia) graduated in pharmacy from the Ljubljana Faculty of Natural Sciences and
Engineering in 1984, and earned a Master’s degree seven years later. In 1993, he finished the international business
programme and got his MBA from IEDC, Brdo. He earned his doctorate from the Faculty of Pharmacy, Ljubljana, in 2000.
2021 Annual Report – Business Report
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He started working at Krka in the Stability Department in 1984. In 1991, he was appointed Head of Pharmaceutical
Technology and two years later Head of Pharmaceutical Development within Research and Development. In 1998, he was
appointed Deputy Director and in 1999, Director of Research and Development.
He was appointed to the Management Board in 2001. He began his second term on 31 July 2002 and was reappointed
for the period from 31 July 2007 to 31 December 2009. Rotar has been Director of Research and Development since 2002.
At their meeting of 29 July 2009, the Supervisory Board reappointed him to the Management Board for a further six-year
term of office, starting on 1 January 2010. Rotar has notably contributed to know-how and establishment of business
functions for in-house research and development at Krka. Because of his successful performance, in November 2015 the
Supervisory Board unanimously appointed Aleš Rotar to the Management Board for a new term of office from 2016 to 2021
following a proposal by Colarič. Within that term, he successfully united development and production processes into
Pharmaceutical R&D and Production, one of Krka’s largest organisational units. Synergies between the experts from
development and production helped improve technology transfer and product life cycle management, also leading to higher
production output. During his terms of office Krka almost doubled product launches.
Following the 2021 proposal by Colarič, the Supervisory Board unanimously appointed him a member of the Management
Board for another six-year term of office commencing on 1 January 2022.
Dr Vinko Zupančič
Member of the Management Board and Director of API R&D, Production and Supply Chain
Vinko Zupančič (born 1971 in Novo mesto) finished his secondary education at Gimnazija Novo mesto. He graduated from
the Faculty of Pharmacy in 1996, earning a Master’s degree in pharmacy. In 1998, he passed a certification examination
in pharmacy and in 2010 earned a doctorate from the Faculty of Pharmacy.
He joined Krka in 1997 as a Warehousing and Transport of Product Supply trainee. In 1998, he became a warehouse
technologist and then a senior warehouse technologist. In 2000, he assumed the job of assistant to the head of Warehouse
and Transport Services and in 2002 became Deputy Head of Supply Chain. Commencing on 1 February 2004, Zupančič
took up his appointment of Director at Krka’s representative office in Bangalore, India. He returned to Krka in Slovenia on
1 July 2005 to act as Head of Supply Chain at Product Supply. He was appointed Deputy Director of Product Supply on
1 December 2008 and Director of Product Supply on 1 January 2010.
On 29 July 2009, the Supervisory Board appointed him member of the Management Board for a six-year term commencing
on 1 January 2010. Krka’s significant competitive advantage is that we manufacture most of the APIs and raw materials
we require, enhancing product economics and cutting response time. Zupančič has been integral to the success of this
strategy. Following the 2015 proposal by Colarič, the Supervisory Board unanimously appointed him to the Management
Board for a term of office from 2016 to 2021. He successfully managed raw material development, production, and the
supply chain during that term. As concerns finished products, he played a key role in supply chain management, from
improving raw material economics to process optimisation. He is also to be credited for constant improvement in utilisation
of warehousing capacities and optimisation of road and other means of transport.
He chairs the Krka Otočec Tennis Club (Slovenia).
Following the 2021 proposal by Colarič, the Supervisory Board unanimously appointed him a member of the Management
Board for another six-year term of office commencing on 1 January 2022.
David Bratož
Member of the Management Board
David Bratož (born 1976 in Novo mesto) holds a university degree in economics. Having finished his secondary education
at Gimnazija Novo mesto, he continued his studies at the Faculty of Economics in Ljubljana, and graduated in 2000,
specialising in finance.
Bratož began his career at Krka in 2001 in the department of Finance, where he managed several major projects. In 2003,
he began working in Sales, Region Central Europe, and was primarily in charge of the Polish market. Owing to his good
2021 Annual Report – Business Report
24
performance, he was appointed Director of Krka - Polska in 2007, where he managed operations in marketing, sales,
production, and distribution. Two years later, he was appointed President of the Board of Directors.
Bratož and his team worked together to make Krka - Polska one of the largest and most successful Krka subsidiaries.
Product sales and production volume doubled during his tenure in Poland, winning him and Krka - Polska many awards.
David Bratož has extensive knowledge of all business functions of a big company. Following the 2015 proposal by Colarič,
the Supervisory Board appointed him to the Management Board for his first term of office, from 2016 to 2021. He
contributed to the renewal of our development strategy and was also accountable for managing finance, economics of
international and domestic business operations, Krka Group controlling, business intelligence, and development of
business informatics. He instigated the implementation of business compliance, corporate integrity, and personal data
protection in the Company. During his term of office, Krka accelerated digitalisation and the use of cloud technologies and
upgraded information security. He leads the expert team for upgrading sustainable management (ESG) in the Company.
As a member of the Management Board, Bratož cooperates closely with the Works Council and the two trade unions. He
is also responsible for issues related to employee recreation, meals during worktime, housing issues, and Krka’s societies.
He sits on the supervisory board of the Chamber of Commerce and Industry of Slovenia.
Following the 2021 proposal by Colarič, the Supervisory Board unanimously appointed him a member of the Management
Board for another six-year term of office commencing on 1 January 2022.
Milena Kastelic
Member of the Management Board – Worker Director; Deputy Director of Pharmaceutical Production
Milena Kastelic (born 1968 in Novo mesto) holds a degree in food technology. After finishing her secondary education at
Gimnazija Novo mesto in 1986, she enrolled at the Biotechnical Faculty at the University of Ljubljana. In 1991, she won
the Prešeren Award for students for her undergraduate diploma thesis, ‘Evaluation of glucoamylase activity in yeast
Saccharomyces diastaticus’. In 1993, she completed training in work design at the REFA Association in Germany.
She started her career at Krka in 1992 and has been a successful staff member ever since. Over a span of nearly three
decades, her professional career has been closely linked to herbs, production of non-prescription products, and
prescription pharmaceuticals for human use and animal health. She completed her traineeship in the Auxiliary Medicinal
Products and Herbs Programme with an assignment on the technology of drying plant-based raw materials. She worked
as a production technologist for five years. In 1996, she became the Head of the Plant for the Production of Herbal
Medicines, today's Bršljin Department, which she successfully managed until April 2018. At present, Kastelic heads Semi-
Solid, Liquid and Other Products. She took up the position of Deputy Director of Pharmaceutical Production in charge of
the corresponding segment in July 2021 and also gives employee training.
As Krka's internal auditor of 15 years, she has contributed to improving business processes in the Company. This function
gave her the opportunity to become familiar with other organisational units, the importance of close connections between
them, and the results of mutual cooperation.
She sits on the management board of the Stopiče Tourist Association (Slovenia).
In 2015, the Works Council proposed her as the Worker Director, and the Supervisory Board unanimously appointed her
to the Management Board for her first term of office from 2016 to 2021. Kastelic is well-trusted by the employees, and on
that account, the Works Council reappointed her Worker Director.
The Supervisory Board, therefore, unanimously appointed her a member of the Management Board – Worker Director for
another six-year term of office commencing on 1 January 2022.
2021 Annual Report – Business Report
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Roles and Responsibilities of Management Board Members
Roles and responsibilities of Management Board members are available at https://www.krka.biz/en/about-krka/whos-who-
in-krka/management-board/.
In compliance with good practice, we herewith state the Management Board member David Bratož acts under the board
resolution as the expert team leader for upgrading sustainable management (ESG).
2021 Management and Supervisory Board Diversity Policy
In 2020, the Management and Supervisory Boards adopted the Diversity Policy and published the document on the
corporate website.
The bodies closely followed recommendations by the Slovenian Directors' Association for the voluntary pursuit of gender
diversity in management and supervisory bodies. By the year 2026, they aim to gradually implement the 40-33-2026 model
(i.e. 40% of women on the Supervisory Board, and 33% on the Management and Supervisory Boards together). In 2021,
women accounted for 33% of the Supervisory Board structure and constituted 29% of the Management and Supervisory
Boards together.
Key areas of the Diversity Policy are gender, age, and qualification profile diversity. The policy aims at balanced gender
structure, suitable interdisciplinarity and age structure, allowing for the transfer of experiences and knowledge. The policy
addresses the diversity of the Management and Supervisory Boards, but the Company intends to apply it rationally also
to all other management levels.
Krka provides its employees with equal opportunities, regardless of their gender, race, colour, age, medical condition or
disability, religious, political or any other belief, trade union stewardship, national or social origin, family status, financial
condition, sexual orientation, or other personal particulars.
Diversity policy monitors are:
Human Resource Committee of the Supervisory Board;
Supervisory Board;
Management Board;
Works Council;
Any committees involved in procedures for selecting members to management and supervisory bodies; and
Human Resources of Krka.
Governance of the Krka Group
The Krka Group comprises the controlling company Krka and subsidiaries in Slovenia and beyond. Generally, Krka is the
sole owner of the subsidiaries incorporated as limited liability companies.
Uniform rules on governance, organisation, and operation are applied to all companies in the Krka Group, unless otherwise
required by national legislation. The controlling company sets the strategies and objectives of all individual subsidiaries in
the Krka Group and monitors the implementation of their plans. To ensure cohesive management and supervision across
the Group, the controlling company's Management Board also acts as the Annual General Meeting of all subsidiaries.
An exception is Ningbo Krka Menovo Pharmaceutical Co. Ltd., the joint venture in China, where Krka holds 60%, and the
Chinese partner, Ningbo Menovo, a 40% shareholding. Krka has two representatives in the company's three-member
Board of Directors, one of whom is the President.
2021 Annual Report – Business Report
26
Corporate Compliance and Integrity
Values, Norms, Integrity
6
Corporate integrity, compliance, and transparency of operations are important for Krka and apply to all levels of business
operations, employees, and third parties. We endeavour to increase the culture of ethics and protect Krka's renown and
property. When working and carrying out tasks, the basic guideline for all employees is to comply with fundamental ethical
principles of honesty, loyalty, professionalism, applicable regulations, and Krka's internal rules. We constantly increase
employee awareness of any potential fraud, non-compliance and other violations, and ways of managing them,
accountability in their detection and reporting.
Krka’s Code of Conduct, containing principles and rules of ethical conduct, good business practice, and standards of
conduct, is the umbrella document for this area. The Management Board passed the document in 2018 at the Group level.
It was updated in 2020 and is to be reviewed and, if necessary, updated biennially. It is available in 29 languages on our
corporate website or websites of our subsidiaries. National legislation and transparent business practices must be
considered by subsidiaries.
The code applies to every employee. It emphasises that all employees must endeavour to comply with ethical, uncorrupted,
and legal conduct principles.
The code outlines how to act in case of conflicts of interest. A conflict of interest exists when the personal interests of an
individual affect or could affect the ability of an employee to carefully and objectively make decisions and carry out work
to the benefit of Krka. A conflict of interest can also arise from an individual's involvement in entrepreneurial, scientific,
political, or other associations. The basic principle employees must follow is making decisions in Krka’s interest. Under the
code, employees must refrain from decision-making that has a risk of conflicts of interest attached to it.
Education and Training on Corporate Compliance and Integrity
7
At the Krka Group level, we provide regular education and employee awareness on the importance of corporate
compliance and corporate integrity. Employees take refresher courses every two years via eCampus, while Marketing
employees also attend internal professional meetings. Refresher training was last completed in autumn 2021.
Krka’s various departments examine customers, suppliers, and business partners. For now, we also manage risks related
to corporate compliance and corporate integrity in this manner. New employees are informed accordingly at induction
seminars and receive a printed copy of the code each. When a training course is completed, this is evident from lists of
attendance or eCampus.
Addressing Purported Irregularities
8
Any violation of Krka’s Code of Conduct, potential fraudulent, corruptive, or any other non-compliant action causing harm
to Krka is handled in accordance with Directive (EU) 2019/1937 or the ensuing national legislation, and internally also with
Rules on Fraud Prevention, Detection and Investigation.
Employees can send reports of any purported irregularities to our publicly available address at
compliance.officer@krka.biz. Our subsidiaries with more than 250 employees have followed our example and set up their
own channels. The compliance officer considers the reports, who in turn appoints a working team for each case separately
by including experts on relevant issues. We look into each report carefully. We guarantee anonymity to reporters and
safeguard them against any potential retaliatory measures. When a case is closed, we adopt corrective measures if
necessary.
6
GRI GS 102-16
7
GRI GS 205-2
8
GRI GS 103-1, 103-2, 103-3, 205-3
2021 Annual Report – Business Report
27
Krka’s Code of Conduct entered into force on 1 May 2018. Since then, the compliance officer has received 64 reports for
consideration to the public address (compliance.officer@krka.biz), of that 15 in 2021; 25 in 2020; 10 in 2019; and
14 in 2018. We adopted relevant corrective actions with this regard to further improve our internal controls.
Chief Compliance Officer
A Chief Compliance Officer, whose autonomous and independent function is to monitor corporate integrity, is appointed
at the Krka Group level. He liaises with Legal Affairs, employees from individual organisational units who provide advice
on how to manage compliance in their respective areas, and a secretary. The Chief Compliance Officer informs the
Supervisory Board on his activities through the Integrity Plan discussed by the body biennially. He reports to the
Management Board on all undertakings once a year.
Our subsidiaries with 250 or more employees employ their own compliance officers. In 2021, subsidiaries in the Russian
Federation, Poland, Ukraine, Germany, and Terme Krka (Slovenia) had their own officers in charge of compliance. They
report to Krka’s Chief Compliance Officer every quarter.
Integrity Plan
In 2020, based on good practice (Corporate Governance Code for State-Owned Enterprises), we drew up the Integrity
Plan that describes risk in the areas of integrity, ethics, and compliance in business operations and proposes
improvements. Updates to the plan are given every year. The plan commits us to constant improvements in compliance
of operations in areas below.
2021–2022 Integrity Plan includes as follows:
Investments, acquisition of fixed assets, and execution of major maintenance works;
Purchase of raw materials;
Insider trading, shareholder relations;
Recruitment and human resource management;
Personal data processing;
Documentary-and-financial control, accounting processes, independence of internal and external auditors;
Fraud risk or non-compliance with corporate instructions in subsidiaries;
Marketing of prescription pharmaceuticals, non-prescription products, and animal health products;
Product sales;
Sponsorships and donations;
Gift receiving and giving;
Environmental management;
Use of information technologies;
Product quality;
Systemic risk related to integrity and compliance.
The probabilities and consequences of adverse events are evaluated as low, moderate, or high. Individual risk is evaluated
vis-à-vis of potential harm and the likelihood of it occurring. With respect to the risk level and established internal controls,
further corrective actions are taken if necessary.
Our subsidiaries in the Russian Federation, Poland, and Ukraine drew up their integrity plans in 2021, while our German
subsidiary and Terme Krka (Slovenia) started preparing them in the same year.
In 2021, no high risk was detected in connection with any area stated above.
9
Description of Code of Ethics Governing Interactions with Healthcare Professionals
Our subsidiaries comply with national legislation and Krka’s Code of Promotion in marketing activities. Activities pursued
by employees when marketing prescription pharmaceuticals are further detailed in Krka’s Code of Promotion, and
9
GRI GS 205-1
2021 Annual Report – Business Report
28
operational instructions for visits to healthcare professionals and professional meetings, education and training, and
company visits. Cooperation with the healthcare community relates in particular to healthcare workers, healthcare
organisations, patients, and patient societies.
The said rules were last reviewed in 2020 and 2021, and have been translated to all official languages used in countries
with Krka’s marketing network. The employees engaged in marketing activities receive information through eCampus, at
internal cyclic meetings, and training courses for marketing employees. They learn about the rules stated above and sign
a relevant statement.
Management Approach to Non-Discrimination
10
The non-discrimination principles are set in two umbrella documents, Krka’s Code of Conduct and the Integrity Plan, an
implementation document.
We have so far not received any reports on purported discrimination based on race, colour of the skin, gender, religious
or political conviction, nationality, or social origin.
Contributions and Other Spending
11
In 2021 and over the past five years, Krka did not fund any political campaigns, political organisations, lobbyists, or lobbying
organisations.
The Krka Group companies are members of those advocacy groups, where their membership is obligatory or considered
a common practice in the industry.
12
We regularly disclose any transfers of funds to healthcare professionals, healthcare providers, associations, and patient
societies. We publish disclosures on our corporate website every year by 30 June for the past year.
According to Item 6.18 of the Articles of Association, the Supervisory Board approves The Krka Group Development
Strategy which serves as the umbrella document regulating sponsorships and donations. Activities are carried out in
accordance with The Krka Group Sponsorship Manual governing sponsorships and donations. In accordance with our
primary mission, ‘Living a healthy life.’, we allocate most of our sponsorships and donations to projects related to health
and quality of life. We allocate most funds to sports, culture, healthcare, science, education and humanitarian actions.
Please refer to section ‘Sustainable Development’ for further information in this regard.
Human Rights in Business Operations
13
On 31 May 2019, Krka signed Commitment to Respect Human Rights in Business Operations instigated by the Ministry
for Foreign Affairs of the Republic of Slovenia. The document was signed by 18 major Slovenian companies. At the state
level, the issue is governed by National Action Plan of the Republic of Slovenia on Business and Human Rights.
Contracts concluded by Krka with business entities currently do not include stipulations on human rights, but we are
committed to honouring them by Krka’s Code of Conduct. We pursue all legal regulations and standards related to human
rights in all countries where we operate.
Human resources are referred to by the Integrity Plan, which is updated every year; the latest update was made in
June 2021.
10
GRI GS 103-1, 103-2, 103-3, 406-1
11
GRI GS 103-1, 103-2, 103-3, 415-1
12
GRI GS 102-12, 102-13
13
GRI GS 102-12, 103-1, 103-2, 103-3, 412-3
2021 Annual Report – Business Report
29
Internal Audit
Internal auditors discharge their duties in the Krka Group based on medium-term and annual work plans per the applicable
rules (International Standards for the Professional Practice of Internal Auditing, Code of Ethics).
In line with the 2021 work plan, seventeen regular internal audits were conducted using the COSO (Committee of
Sponsoring Organizations of the Treadway Commission) methodology.
This methodology is globally recognised and serves as the basis for comprehensive risk management monitoring. Internal
auditors use these methods to assess the fulfilment of audit objectives in several categories: business operations,
reporting, and regulatory compliance in each audit area.
The following areas were subject to internal audits: sales, regional marketing, engineering, quality of sterile, semi-solid,
solid and liquid dosage forms, human resource management, supply chain planning, regulatory affairs, health and safety
at work, and information technology management in certain subsidiaries and specified processes. Regular internal audits
were also conducted in several subsidiaries and representative offices in Slovenia and abroad. Moreover, internal auditors
provided consulting services in line with the abovementioned standards.
Internal auditors provided assurances that the applied systems of internal controls in the audited areas and processes had
been established, had been in place and effective for achieving set objectives. However, there was room for improvement,
so they made recommendations categorised by individual risk level and regularly verified their implementation.
Internal auditors work with the Krka Supervisory Board and its Audit Committee and external auditors. In line with the
Standards, Internal Audit was subject to three independent external quality audits. We received positive opinions.
Internal Controls and Risk Management Relating to Financial and Tax Reporting
14
The Krka Group has established internal controls, i.e. guidelines and procedures that it implements at every level of
operation to manage risks related to financial and tax reporting. Internal controls ensure the reliability of financial reporting
and compliance with the applicable legislation and other internal and external regulations. The implementation of standard
information systems in subsidiaries and the development of business information systems improve the efficiency in
exchanging accounting data between the subsidiaries and the controlling company, and therefore also control of
information.
Accounting controls, including internal tax controls, are based on the principles of veracity and segregation of duties,
transaction controls, updated accounting records, reconciliation of accounting balances and the actual balance, separation
of record-keeping from payment transactions, professionalism of the accounting staff, and independence.
The Krka Group Tax Strategy and Krka Group Tax Code of Conduct set out the policy, objectives, guidelines, and principles
of tax management, including transfer pricing, based on principles and rules of ethical conduct and good business practices
and standards of conduct, which are defined in Krka's Code of Conduct.
The basic guidelines and principles that the Krka Group follows in the tax field are to: act in accordance with the legislation
in the country in which we operate; settle tax liabilities voluntarily and on time; avoid risky tax decisions; to consider tax
perspective when changes occur or when introducing new business models; monitor changes in tax legislation and
continuously train employees involved in the tax process; work with tax authorities and ensure open, fair and constructive
cooperation, and maintain a good partnership. All this should be ensured through the appropriate organisation and
functioning of the Krka Group's tax function and clearly defined responsibilities.
Accounting and tax controls are closely linked to information technology controls, which, among other things, ensure
restrictions and the supervision of access to networks, data and applications and the completeness and accuracy of data
capture and processing. Authorised external agents also verify the compliance of operations and the existence of the
requisite controls within information systems on an annual basis.
14
GRI GS 207-1, 207-2, 207-3
2021 Annual Report – Business Report
30
We manage risks related to the consolidated financial statements of the Krka Group by directing the accounting activities
and their supervision in the subsidiaries and by auditing the annual financial statements of all Krka Group subsidiaries.
External Audit
The audit firm Ernst & Young d. o. o., Ljubljana, audits the financial statements of the controlling company and the
consolidated financial statements of the Krka Group. The external auditor reports audit findings to the Management Board,
Supervisory Board, and the Audit Committee of the Supervisory Board.
Transactions between Krka and the audit firm Ernst & Young d. o. o., Ljubljana, and transactions between the Krka Group
companies and individual audit firms are disclosed in the 'Notes to the Financial Statements' section, item 'Transactions
with the Audit Firm'.
2021 Annual Report – Business Report
31
Composition of Supervisory Board of Krka as at 31 December 2021
15
Name and surname
Jože Mermal
Borut Jamnik
Matej Lahovnik
Julijana Kristl
Boris Žnidarič
Mojca Osolnik
Videmšek
Franc Šašek
Mateja Vrečer
Tomaž Sever
Function
President
Member
Deputy President
Member
Member
Member
Deputy President
Member
Member
First appointed
2015
2017
2020
2010
2016
2019
2009
2005
2005
Term of office until
2025
2022
2025
2025
2025
2024
2024
2024
2024
Representative of
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
Employees
Employees
Employees
Attendance at
meetings
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
Gender
Male
Male
Male
Female
Male
Female
Male
Female
Male
Citizenship
Slovenian
Slovenian
Slovenian
Slovenian
Slovenian
Slovenian
Slovenian
Slovenian
Slovenian
Year of birth
1954
1970
1971
1953
1948
1966
1967
1966
1967
Education and
qualifications
University degree in
economics
University degree in
mathematics
PhD in economics
PhD in
pharmaceutical
sciences
PhD in social sciences
and master’s degree in
law
University degree in
economics
University degree in
organisational
sciences
PhD in pharmaceutical
sciences
University degree in
mechanical
engineering and
master’s degree in
management and
organisational
sciences
Independent according
to Corporate
Governance Code for
Listed Companies
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Conflict of interest in
the financial year
In 2021, no permanent or relevant conflicts of interest were identified in respect of any Supervisory Board member.
Statements of independence are published on the Company’s website.
Committee
membership
No
President of the Audit
Committee
Member of the
Audit
Committee
Member of the
Human Resource
Committee
President of the
Human Resource
Committee
Member of the
Audit
Committee
Member of the
Audit Committee
Member of the Human
Resource Committee
Member of the
Human
Resource
Committee
Attendance at regular
committee meetings
No
6/6
6/6
4/4
4/4
6/6
6/6
4/4
4/4
Membership of
supervisory bodies of
other companies
Members of the Supervisory Board, especially representatives of shareholders, have seats on supervisory or management boards of other companies, but not to the extent that would influence their work on the
Supervisory Board of Krka. They comply with the provisions of the Companies Act.
ESG competencies
Received several
awards for his
visionary
entrepreneurship as
well as activities in
culture, sports,
education, and
the humanitarian field
Long-time president
of the Slovenian
Directors’ Association;
made a key
contribution to the
development of the
area and practice of
corporate governance
Authored and
co-authored many
scientific papers on
strategic management
and has extensive
international
experience in
economic policy-
making and
governance
Long-time professor
and dean at the
Faculty of Pharmacy;
extraordinary
achievements include
developing and
establishing
pharmaceutical
nanotechnology in
Slovenia as well as
researching and
lecturing on affordable
treatment
University lecturer in
social sciences with
many years of
leadership experience
in an international
insurance company,
primarily in human
resource management
and talent attraction
and retention
Leadership experience
in banking, risk
management,
compliance, and
corporate governance
support
Active in the field of
employee inclusion
and participation in
management for many
years (President of
Krka's Works Council)
Experience in the field
of quality (head of
quality management
at Krka);
elected to the
Supervisory Board as
an employee
representative
Leadership and
organisational
experience in the field
of responsible sales
(Deputy Director of
Sales at Krka); elected
to the Supervisory
Board as an employee
representative
15
GRI GS 405-1
2021 Annual Report – Business Report
32
External Members of Committees as at 31 December 2021
Audit Committee
Name and surname
Borut Šterbenc
Function
Independent external expert of the Audit Committee in accordance
with Article 280 of the Companies Act
Attendance at meetings
6/6
Gender
Male
Citizenship
Slovenian
Year of birth
1978
Education and qualifications
Holds a university degree in economics with experience in planning, leading,
and conducting complex audits;
is a certified auditor and registered as such with the Agency for Public Oversight of Auditing
Independent according to the Corporate Governance Code for Listed Companies
Yes
Membership of supervisory bodies of other companies
Member of the supervisory board of Pokojninska družba A, d. d
ESG competencies
Transparency in terms of reporting and business operations; is a certified auditor
2021 Annual Report – Business Report
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Composition of the Management Board as at 31 December 2021
16
Name and surname
Jože Colarič
Aleš Rotar
Vinko Zupančič
David Bratož
Milena Kastelic
Function
President
Member
Member
Member
Member, Worker Director
Area of work in the
Management Board
Marketing, sales, human
resources, investments,
public relations, legal affairs,
new products to a certain
extent, certain administrative
services
Research and development of
finished products, new
products, quality
management, health and
safety at work
API R&D and production,
supply chain management
Corporate performance
management, finance,
information technology,
relations with trade unions and
the works council, certain
administrative services
Acts as a workers’
representative and represents
their interests in human
resource and social issues
First appointment to the
Management Board
1997
2001
2010
2016
2016
Duration of current term of
office
Until the end of 2021, followed by a new six-year term of office for all current members
Gender
Male
Male
Male
Male
Female
Citizenship
Slovenian
Slovenian
Slovenian
Slovenian
Slovenian
Year of birth
1955
1960
1971
1976
1968
Education and qualifications
University degree in
economics
PhD in pharmaceutical
sciences
PhD in pharmaceutical
sciences
University degree in economics
University degree in food
technology
Membership of supervisory
bodies of non-related parties
No
No
No
No
No
ESG competencies
Many years of leadership
experience; numerous awards
for running a large company;
an outstanding reputation as
a good businessman; under
his leadership, Krka
developed into one of the
leading international generic
pharmaceutical companies
Knowledge of and extensive
experience in development
and production of quality
products for accessible
healthcare
(managing development,
research, pharmaceutical
production, new products)
Supply chain management,
contributed to uninterrupted
supply of medicines in
markets and a resilient and
flexible vertically integrated
business model
Head of the ESG expert team
at Krka; contributed to the
development of the local
community (Krka's societies);
contributed to tax and reporting
transparency (responsible for
the relevant organisational
unit)
Effective representation of
workers' interests with regard
to
human resource and social
issues as well as health and
safety at work
Independence
Yes. Members' independence is assessed upon their appointment.
Under the Rules of Procedure of the Management Board, the members must immediately disclose any conflicts of interest.
The Rules of Procedure of the Management Board propose measures to manage such conflicts.
The composition and amount of remuneration of the Management Board members are disclosed in the section ´Related Party Transactions'
16
GRI GS 405-1
2021 Annual Report – Business Report
34
Corporate Governance Code Compliance Statement
In 2021, Krka's code of reference was the Slovenian Corporate Governance Code for Listed Companies (hereinafter: the
Code), adopted on 27 October 2016 by the Ljubljana Stock Exchange and the Slovenian Directors' Association. The Code
was valid from 1 January 2017 to 31 December 2021 and is available on the Ljubljana Stock Exchange website. On
1 January 2022, a new version of the Code entered into force.
The Management Board and Supervisory Board of Krka, tovarna zdravil, d. d., Novo mesto hereby declare that in 2021
individual members of the Management and Supervisory Boards and the Management and Supervisory Boards as bodies
of a listed company acted in compliance with the principles and recommendations of the Code. Some of the
recommendations were not implemented in full. However, we have always endeavoured to implement these
recommendations and find appropriate ways of doing so. Individual derogations from the Code valid until the end of 2021
are explained below.
In the context of self-assessment, the Supervisory Board can establish an annual training plan for its members and
determine indicative training costs. In 2021, no proposal for additional training was made, so the plan was not adopted
(Item 13.1 of the Code).
Supervisory Board members themselves evaluate the board's performance by thoroughly following the methods and
Supervisory Board Assessment Manual prepared by the Slovenian Directors' Association. The evaluation process was
carried out professionally and objectively. As there was no need for external professional support in 2021, an external
assessment of the Supervisory Board's performance in collaboration with a specialised institution or other experts was not
carried out (Items 14.2 and 14.4 of the Code). Internal Audit of Krka monitors the procedures related to corporate
governance to the extent required by International Standards for the Professional Practice of Internal Auditing.
Krka's Rules of Procedure of the Supervisory Board stipulate that the President of the Supervisory Board has two deputies:
a shareholder representative and an employee representative. This is necessary to ensure the inclusion of employee
representatives in the most important activities of the bodies. The Rules of Procedure of the Supervisory Board state that
the shareholder representative is first to assume the duties of the President, and only in the absence of the former does
the employee representative assume this role. This ensures we do not deviate significantly from the Code, which stipulates
that only a shareholder representative may act as Deputy President of the Supervisory Board (Item 15.4 of the Code).
In 2021, Krka's 'Corporate Governance Statement' was reviewed by an external auditor as part of the regular audit. An
additional external assessment of the statement's adequacy was not performed (Item 5.7 of the Code).
Krka does not list any association of members of the Management and Supervisory Boards with any governance or
supervisory bodies of non-related companies in the uniform tables (Attachments C1 and C2 to the Code in force at the
time) in the 'Corporate Governance Statement' section of the 2021 Annual Report of Krka. The information is included in
members' CVs, which also state their managerial functions and duties (Items 5.5. and 29.5 of the Code). Data from
Attachments C3 and C4 to the Code on composition and remuneration amounts are almost entirely disclosed in
accordance with the recommendations of the Code (Items 5.6 and 29.7). Only for the purposes of year-on-year
comparability, the Company discloses them in the same manner as before the Code entered into force, i.e. in the 'Related
Party Transactions' section of the financial report. The variable amount of the salaries is always paid in two parts. The first
part is paid according to the interim results. The second after the Supervisory Board confirms the annual report at their
meeting, always together with the monthly salary for the following month (Item 21.2).
The Supervisory Board updated the criteria for the variable part of the Management Board remuneration in 2012, 2014,
2016, and 2018, when this was necessary due to additional duties of the Management Board arising either from the
business strategy, change of business environment, or remuneration trends. However, the criteria were not determined
every year in exactly the same way as stipulated by Item 12.10 of the Code, as the manner described above is better
suited to the actual needs of the Supervisory Board for monitoring the work of the Management Board, which is related
mainly to the biennial renewal of the strategy.
The Rules of Procedure of the Management Board stipulate that members of the Management Board may become
members of supervisory boards of non-related companies only after they inform the Company's Supervisory Board
2021 Annual Report – Business Report
35
accordingly and obtain the Supervisory Board’s consent. This is a partial derogation from Article 19.6 of the Code, which
addresses all companies, not only the non-related ones.
Krka publishes contact details for investors and the public on its website, but not the names of individuals (Item 28.2 of the
Code), as several persons are in charge of various areas.
The Company also published the Rules of Procedure of the Supervisory Board. In the 2021 'Corporate Governance
Statement', Krka disclosed the composition, competences, and other aspects concerning the operation of its bodies, and
thereby all essential information on corporate governance. No other operational documents were published in 2021
(Item 29.9 of the Code).
According to the Code (Item 25.3), a company should replace the external auditor at least once every seven years.
Following a motion of the Audit Committee and the Supervisory Board, the AGM of Krka appointed the current auditor for
another three-year term. Therefore, the same external auditor will audit Krka's business operations for more than seven
years, i.e. ten years, which is the maximum duration of an audit engagement permitted by law. However, the audit firm did
replace the audit partner and the coordinator responsible for audit performance in compliance with International Auditing
Standards.
Two members of the Supervisory Board, i.e. employee representatives, could be regarded as members of the expanded
management according to certain criteria (Item 11 of the Code). This is despite the fact that they cannot independently
make decisions regarding allocations of financial resources and employment and cannot fully plan the strategy for their
respective work areas.
Krka also complied with more than half of provisions of Best Practice for GPW Listed Companies 2021, i.e. the code
relating to companies listed on the Warsaw Stock Exchange. The discrepancies are explained in a separate document
published in the dissemination system of the Warsaw Stock Exchange.
Novo mesto, 28 March 2022
Jože Colarič
President of the Management Board and CEO
Jože Mermal
President of the Supervisory Board
2021 Annual Report – Business Report
36
Signing the Governance Statement and Its Constituent Parts
Jože Colarič
President of the Management Board and CEO
dr. Aleš Rotar
Member of the Management Board
dr. Vinko Zupančič
Member of the Management Board
David Bratož
Member of the Management Board
Milena Kastelic
Member of the Management Board – Worker Director
2021 Annual Report – Business Report
37
Non-Financial Statement
The Management Board of Krka, tovarna zdravil, d. d., Novo mesto hereby declares that Krka adheres to the policies of the Krka
Group relating to the social sphere and human resources, respect for human rights and diversity, anti-corruption and anti-
bribery management, and the environment.
The Krka Group operates in accordance with the business model presented in the 'Krka Group Business Model' section and also
monitors its own placement in various environments. Further information is available in the ‘Risk Management’ section.
Krka is committed to high ethical standards. The Krka Code of Conduct includes principles and rules of ethical conduct, as well as
good business practices and standards of conduct in the Group, which are binding on all Krka employees. The Code is also the
basis for all other Krka's internal rules. The guiding principle is to act in accordance with the highest moral standards, principles
governing honesty, loyalty, and professionalism, and consistent compliance with regulations and guidelines provided by
international organisations for the pharmaceutical industry, and with Krka's bye-laws. The Code is published on the Krka website.
All business partners are familiar with the Code, and we expect them to adhere to it when doing business with Krka.
The Krka Group places strong emphasis on the social sphere and human resources. We realise that employees and their
knowledge, experience, and cooperation are key to achieving the planned results of the entire Krka Group. Our success depends
on employees’ commitment, good and constructive relationships, as well as contemporary and stable management methods which
guide our employees towards efficiency, proactivity, improvement, and development, and thus uphold Krka values. We try to make
our overall operations reflect responsibility towards employees, the environment, and stakeholders. Krka values guide us when
setting objectives, achieving results, and working with employees, as well as in managing them and developing their potential.
Together, we encourage a culture of mutual trust, respect, cooperation and teamwork, lifelong learning, and responsible, efficient,
and sustainable work. Krka employees are known to be loyal, innovative, flexible, diligent, and focused on achieving business
objectives and results of the Krka Group. For further information, please see sections 'Employees' and 'Corporate Social
Responsibility'.
We provide a safe and healthy working environment and regularly adopt measures to reduce and eliminate potential health and
safety risks. We adhere to all regulations and bye-laws related to health and safety at work. Smoking is prohibited at all Krka sites.
We respect human rights as defined in internationally recognised principles and guidelines. We operate in accordance with all
regulatory requirements and standards relating to human rights in all countries where Krka operates. We respect the dignity,
personal integrity, and privacy of each individual. We also respect the freedom of speech and expression of opinions, and always
treat others with respect. We communicate openly with our employees, regardless of their professional qualifications and leadership
position. All forms of unfair and unauthorised work are prohibited. Any discrimination against employees is prohibited. We treat all
employees equally, regardless of their nationality, race or ethnicity, national or social origin, gender, colour, medical condition,
disability, religion or belief, age, sexual orientation, family status, trade union membership, financial standing, or any other personal
circumstance.
Any form of harassment and ill-treatment in the workplace is prohibited. We provide adequate working conditions and an open and
creative working environment. Our working environment is free from any psychological pressure, sexual or other harassment, or ill-
treatment by other employees, superiors, or third parties. All employees are required to refrain from any inappropriate action that
would threaten the dignity of another person. Any employee may report mobbing to the relevant company officer.
Krka's diversity policy applies the principle of integration and equal opportunities also in respect of the composition of the supervisory
and management bodies, among others. In 2020, the Management and Supervisory Boards adopted document 'Diversity policy',
which is available to the public, in line with the recommendations of the Slovenian Directors' Association. See also 'Corporate
Governance Statement', subsection '2021 Management and Supervisory Board Diversity Policy'.
The Rules on Fraud Prevention, Detection and Investigation, which are available to the public, govern the prevention of fraud and
corruption, measures to combat it, and the responsibility of employees in its detection. Krka applies the principle of zero tolerance
with regard to fraud and corruption prevention, and corporate compliance. This means that no unethical, unprofessional, or unlawful
conduct on the part of employees and business partners is allowed. We do not exploit Krka business opportunities, its assets, and
information for personal, commercial, or third-party gain. We do not promise any benefits and do not give gifts to influence the
decisions of national authorities, public officials, business partners, or other entities, nor do we accept gifts or any other benefits
that may influence our decisions in relation to our work. We ensure that persons who have access to inside information are aware
of the confidentiality levels and sensitivity of such information. We have bye-laws governing trading in the Krka’s financial
instruments, and we have oversight mechanisms in place for employees and third parties that handle such information. This gives
us a platform to prevent potential abuses and insider trading. Periodic restrictions are in place for all persons with access to inside
information, during which time they are prohibited from trading in Krka's financial instruments. You can find more on this topic in the
Krka Code of Conduct and 'Corporate Governance Statement', subsection 'Corporate Compliance and Integrity'. In 2021, no cases
of corruption were detected or confirmed.
2021 Annual Report – Business Report
38
We safeguard the environment and respect environmental regulations, while working in tandem with the local community and
beyond. Our commitment to preserving the natural environment is set out in our environmental policy, and thereby we undertake to
safeguard the environment in accordance with the newly issued ISO 14001:2015 standard, and to prevent or reduce our
environmental impact to the largest extent possible. More information is available in the 'Natural Environment' section.
As a public limited company with more than 500 employees, Krka is subject to the EU Taxonomy Regulation (EU) 2020/852 on the
establishment of a framework to facilitate sustainable investment and is committed to complying with all the applicable rules and
regulations. We examined the economic activities that qualify as contributing to the environmental objectives set out in the
Regulation. Based on our current understanding, available data and assessment of requirements, we believe that none of our key
activities belongs to one of the categories defined in the Annexes on EU taxonomy technical screening criteria and substantially
contribute to climate change mitigation or adaptation. The Regulation and the issued delegated acts contain references and
definitions that are currently still under interpretation and for which adequate explanations have not yet been published. We cannot
exclude the possibility that substantial contributions of specific activities to EU taxonomy might be identified in the near future. As
this Regulation is subject to further amendments, we will continue to take account of its impact and the reporting obligations it
imposes.
The non-financial risks faced by the Krka Group are addressed in the 'Risk Management' section, and non-financial indicators and
results of the aforementioned policies under the 'Sustainable Development' section.
The Krka Group's sustainability culture is an integral part of our current 2022–2026 group development strategy. We want to further
integrate sustainability aspects in corporate governance and business decisions, and maintain accountability in terms of economics,
society, and nature in all environments where we operate.
The 'Corporate Governance Statement', subsection 'Corporate Compliance and Integrity' describes our activities in the following
areas: corporate compliance and integrity, education and training on corporate compliance and corporate integrity, addressing
purported irregularities, the role of Chief Compliance Officer in the Company, integrity plan, management approach to non-
discrimination, and human rights in business operations.
Jože Colarič
President of the Management Board and CEO
dr. Aleš Rotar
Member of the Management Board
dr. Vinko Zupančič
Member of the Management Board
David Bratož
Member of the Management Board
Milena Kastelic
Member of the Management Board – Worker Director
2021 Annual Report – Business Report
39
Krka Group Development Strategy
17
The current Krka Group development strategy covering the five-year period from 2022 to 2026 was prepared by the
Management Board and approved by the Supervisory Board of Krka in November 2021. The strategy focuses on
maximising added value for the Krka Group and investors and covers all areas of operation within the Krka Group,
especially its core pharmaceutical and chemical activities. The strategy views the Krka Group as an international company
since it operates through subsidiaries and representative offices abroad and cooperates with partners wherever it is
present. It regards all business processes within the Krka Group, from development and production to marketing and sales,
including all support processes. The Krka Group updates its development strategy every two years. The next update is
planned for autumn 2023.
The development strategy builds on the mission, vision, and values of the Krka Group.
18
Mission, vision, and values
MISSION
Living a healthy life.
VISION
We are continually consolidating our position as one of the leading generic pharmaceutical companies in the world.
VALUES
Speed and flexibility
Partnership and trust
Creativity and efficiency
The development strategy is based on an in-depth analysis of Krka's position in the global generic pharmaceutical industry.
The strategy outlines the originator and generic pharmaceutical industry characteristics, growth projections for the generic
market, and Krka's position in the international generic pharmaceutical industry. These aspects were considered in
identifying possibilities and opportunities for further development and independent existence in the future.
In addition to these starting points, the strategy comprises three different sections: the strategy and objectives at the Krka
Group level, objectives by regions and territories with a product range strategy, and strategies of individual business
functions and processes. It also includes a draft development, financial, and investment business plan.
The strategy also considers risk management, which is incorporated in all Krka Group business processes. Risk
management is based on the Risk Register. The Risk Register provides a comprehensive overview of risks at the Group
level and is designed to promptly identify and manage factors that could derail the objectives defined in the development
strategy. Every time the strategy is updated, the Risk Register is updated as well. Further information on risks is available
in the ‘Risk Management’ section.
The strategy also outlines the Krka Group’s focus on sustainability and reinforces our commitment to further integrate
sustainability aspects into corporate governance and business decisions and thereby maintain our economic, social and
environmental responsibility to the environment in which we operate.
Strategic objective success is measured against performance criteria established at three levels: the Krka Group, product
and service groups, and business functions. The Group’s performance criteria are monitored by the Management Board,
while criteria at the level of product and service groups and business functions are monitored by the relevant committees
(Sales Committee; Development Committee; Economics and Finance Committee; Information Technology Committee;
Human Resource Committee; Quality Committee; and Corporate Identity Committee). The guiding principle in managing
the system of criteria is to increase the competitiveness of the Krka Group as a whole and of individual companies within
the Group.
In order to maintain and improve the Krka Group position in an international context, we use all external opportunities and,
as much as possible, all internal advantages, especially the coordinated and synergistic functioning of organisational units
within the Krka Group and efficient management of all partnerships in the value-added chain.
17
GRI GS 103-1, 103-2, 103-3,
18
GRI GS 102-16
2021 Annual Report – Business Report
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Key Strategic Objectives of the Krka Group up to 2026
To attain at least 5% average annual sales growth in terms of volume/value, achieve above-average sales growth against market
dynamics, and remain or rank among the leading generic pharmaceutical companies with our brands in individual markets and
selected therapeutic categories.
To strengthen and optimise the vertically integrated business model, proven to be an effective strategic guideline and a
comparative advantage. To ensure high standards of product quality, safety, and efficacy.
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, and to achieve an average EBITDA margin of at least 25%.
To ensure that new products and vertically integrated products account for the largest possible proportion in total sales in addition
to the existing range of products, also referred to as ‘the golden standard’. To enter new therapeutic categories and specialities as
an innovative generic pharmaceutical company and develop complex products, including biosimilars.
To ensure growth through long-term partnerships and targeted acquisitions in addition to organic growth. The primary goal is to
increase sales by entering new markets and adding new products.
To allocate 10% of revenue to research and development and an approximate amount of calculated amortisation, i.e. €110 million
annually on average, to investments.
To pursue a stable dividend policy and consider the Group's financial requirements for investments and acquisitions when
determining the net profit share for dividend payout each year, and to allocate at least 50% of net profit of majority shareholders for
dividends.
To upgrade the Krka Group’s sustainability culture, integrate sustainability aspects into corporate governance and business
decisions, and maintain our economic, social and environmental responsibility to the environments in which we operate. To
disclose sustainability topics in accordance with the GRI standards in 2022 and obtain an ESG rating in 2023.
To exploit digitalisation potentials in all business phases.
To maintain independence.
Key Strategic Guidelines of the Krka Group up to 2026
Markets
To consolidate and strengthen our presence in our traditional markets of Regions East Europe, South-East Europe, Central
Europe, and Slovenia and bolster our presence in the Region West Europe and in Asian markets.
To maximise sales potential in all six sales regions and to focus primarily on key markets (the Russian Federation, Poland,
Ukraine, Germany, Slovenia , Romania, Hungary, the Czech Republic, Slovakia, and Croatia), key customers, and key products.
To strengthen our position as one of the five leading generic pharmaceutical companies in all our traditional markets, which
involves strengthening our sales and market shares, especially in therapeutic categories and molecules with a traditionally strong
Krka’s presence (cardiovascular system, central nervous system, gastrointestinal tract, and pain relief), and in categories with a
high growth potential (diabetes and oncology).
To enhance the visibility of Krka (Krka and TAD brands) and our market position in markets of the Region West Europe through our
subsidiaries and unrelated partners and to strengthen our position as one of the ten leading generic pharmaceutical companies in
all western European markets.
To market our products under our brand names in the Region Overseas Markets through partnerships with unrelated parties and
through our companies. To continue product registration and sales activities and win tenders in China through direct presence in
the market.
Products
To enter the segment for complex generic products. To introduce innovative products in key therapeutic areas, namely
combinations, new strengths, dosage forms, and delivery systems. To expand the range of sterile dosage forms.
To asses specific projects on biosimilars with strategic partners in European markets and to assume a central role in regulatory
affairs, sales and marketing in these projects. To prioritise therapeutic areas of diabetes and diseases of the immune system.
To extend the range of non-prescription products not affected by seasonal demand. To supplement the portfolio with products that
complement key therapeutic areas as regards prescription pharmaceuticals. To focus on markets of Regions East Europe,
Slovenia, and South-East Europe.
To focus on companion animal products – the most promising segment in animal health – accounting for more than 60% of animal
health sales. To extend the range of antiparasitics and pain relief medicines with dermatologicals and cardiovascular agents. To
maintain the range of products for farm animals. To focus on our key markets and all markets in Region West Europe and to
assess entry to the US market.
Development and manufacture of products and quality
To strengthen cost-effective vertical integration, from product development, through production and to sales.
2021 Annual Report – Business Report
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To develop generic medicines and prepare relevant registration documents before data protection expires and obtain marketing
authorisations before the product patent or marketing protection expires to be one of the first generic entrants.
To ensure cost competitiveness and manage further sales growth of established products under lifecycle management principles
while taking into account new regulatory requirements on safety and quality of medicines and obtaining additional marketing
authorisations for new markets.
To manage the development and production of vertically integrated active ingredients manufactured at Krka and our contractual
partners using our own technological processes and provide sufficient quantities of high-quality and cost-competitive active
ingredients to be incorporated in our finished products.
Investments and financial stability
To invest in production, development, and infrastructure facilities in a stable and optimal manner.
To actively seek opportunities for further sales growth by entering new markets and increasing market shares in selected existing
markets through acquisitions of pharmaceutical companies, products and technologies, and long-term partnerships.
To reduce the impact of financial risks on the Krka Group operations, especially credit and currency risks.
To ensure transparent reporting and provide up-to-date information to investors and financial community and improve the visibility
of Krka’s business model, strategic guidelines and financial results to enhance the appeal of Krka share to shareholders and
investors.
Digitalisation of operations
To further pursue digitalisation of business operations, manage information technology efficiently and in compliance with regulatory
standards, and ensure high availability and information security of the implemented IT solutions.
International group accountable to its business environment
To strengthen professional and cost synergies within the Krka Group and maximise the utilisation of competitive advantages in the
business environments of Krka subsidiaries abroad.
To ensure personnel are appropriately qualified by providing continuous training to employees throughout their careers at Krka.
To strengthen internationalisation within the Krka Group by managing employee potential in an international environment and
ensure the activation of all human resource potentials to attain strategic and operational goals of the Group.
To effectively identify and manage sustainability risks and opportunities to strengthen Krka’s competitive advantages and maintain
its long-term ability to achieve strategic goals and creating value for stakeholders.
To enhance the visibility and positive image of the Krka Group with all stakeholders.
To ensure high levels of business ethics, integrity, transparency, and corporate and business compliance.
Objectives by Markets
To strengthen the reputable and well-known Krka brand in Krka’s traditional markets (Regions Slovenia, South-East Europe,
Central Europe, and East Europe) among general practitioners, selected specialists and pharmacists, and to continue to market the
majority of products under our own brand names. To build reputation and recognition among target groups of specialists, to whom
medicines from new therapeutic areas will be presented.
To strengthen the recognition of Krka (Krka and TAD brands) as well as its market position in the Region West Europe, primarily
through subsidiaries and unrelated partners. To take advantage of the potential of the current range of products, expand the
product range in the existing therapeutic areas while entering new therapeutic areas, and strengthen our position with pharmacists
and selected target groups of doctors.
To market Krka products under our own brands, enter new markets by acquisitions and establishing specialised local joint ventures
in which Krka has the majority share (marketing authorisations, marketing, etc.), and continue with marketing through unrelated
partners in the Region Overseas Markets.
Product and Service Portfolio
Prescription pharmaceuticals
To retain cardiovascular diseases, the central nervous system, the gastrointestinal tract, and pain relief as the key therapeutic
areas. To add diabetes to our key therapeutic areas.
To introduce innovative products, in addition to generic products, in the market of leading medicines (innovative combinations, new
strengths, dosage forms, and delivery systems) in the key therapeutic areas.
To supplement the range of (double or triple) combinations for the treatment of high blood pressure, heart failure, and pain relief.
To supplement the portfolio of medicines for antiaggregant and anticoagulant therapy and oncology medicines with new products.
To continue entering into the therapeutic area of autoimmune diseases. To launch the first medicines for the treatment of multiple
sclerosis and assess possible entry into the therapeutic areas of rheumatic diseases and diseases of the alimentary tract.
To provide a wide range of medicines from other therapeutic areas with our products or products of unrelated partners (third
parties).
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To expand our portfolio of medicines by entering the segments of complex peptides and biosimilars.
To launch products from new therapeutic areas in several Krka markets.
To provide key sales products through the vertically integrated business model.
To ensure cost competitiveness and profitability of key sales products by optimising formulations and technological procedures and
manufacturing products cost-effectively. To ensure formulation and procedure optimisation and cost competitiveness of new
products from the launching phase.
To launch products with higher sales potential among the first generics – right after patent expiry.
To adapt the registration of medicinal products and their names (brands and names consisting of international non-proprietary
name and marketing authorisation holder, INN MAH) to market situations and regulatory requirements.
To launch at least one medicine with high sales potential and several medicines with less considerable sales potential every year.
To launch at least one medicine with high sales potential on each key market every year.
Non-prescription products
To retain medicines for pain relief, products for the gastrointestinal tract and metabolism, cough and cold remedies, and
vasoprotectives as our key therapeutic areas.
To supplement the umbrella brands of medicines for pain relief, cough and cold remedies, and vasoprotectives with products with
new ingredients and dosage forms.
To supplement our portfolio with products related to key therapeutic areas of prescription pharmaceuticals, with products that can
be switched from prescription to non-prescription status (synergy in promotion), and products from other or new categories with
marketing potential.
To search for new products of unrelated partners (third parties), which are promising and have appropriate economic value.
To focus on markets in sales regions East Europe, Slovenia, and South-East Europe.
Animal health products
To retain products for companion animals (antiparasitics and medicines for pain relief) as our key therapeutic area.
To supplement the product range for companion animals with dermatologicals and medicines for the treatment of cardiovascular
diseases.
To expand the product range for companion animals with new combinations, dosage forms, and technologies.
To maintain the existing range of products for farm animals.
To focus on markets in Region West Europe and selected traditional markets and consider possible entry into new markets.
Health resorts and tourist services
To deliver at least 3% average revenue growth per year and increased profitability.
To ensure that foreign visitors account for one-third of total visitors.
To retain the leading market share among Slovenian natural health resorts in healthcare services.
Delivering on Krka Group Objectives in 2021
In 2021, the Krka Group sales revenue amounted to €1,565.8 million (of which revenue from contracts with customers on sales of
products and services reached €1,560.3 million, while revenue from contracts with customers on sales of materials and other sales
revenue constituted the difference), up 2% on 2020 and 2% more than planned.
Regional dispersion of sales among Regions Slovenia, East Europe, West Europe, Central Europe, South-East Europe, and
Overseas Markets is good. The largest sales region was Region East Europe. The Russian Federation remained the largest
individual market.
The proportion of sales in markets outside Slovenia amounted to 94% as planned.
Prescription pharmaceuticals were the most important product group in terms of sales, accounting for 84% of total sales, which is in
line with our plans.
Net profit of €308.2 million was higher than planned.
The number of the Krka Group employees was 1% lower than at the end of 2020.
Krka Group Business Objectives for 2022
Sales of products and services are expected to reach €1.610 billion.
The proportion of sales in markets outside Slovenia is estimated at 94%.
Prescription pharmaceuticals are set to remain the most important product group, composing 84% of overall sales.
Profit is planned at approximately €300 million.
The total number of employees in Slovenia and abroad is projected to increase by 2%.
We plan to allocate €130 million to investments, primarily for expanding and modernising production facilities and infrastructure.
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Sustainability Management of the Krka Group
We have introduced sustainability criteria in the management of Krka Group to contribute to its improved business
performance in the 2022–2026 strategic period. We aim to make progress and increase the value of the Krka Group as a
whole through a comprehensive sustainability management process.
At the beginning of 2021, the Member of the Management Board David Bratož was designated as the responsible person
for sustainability and integration of the ESG system into business and Finance as the dedicated body to integrate ESG
topics into the strategy. Its tasks will be transferred to a new body, which will address ESG aspects at the Group level and
operate under the umbrella ESG policy. An interdisciplinary sustainability project team has also started on its work. At
strategic meetings, management teams of all organisational units discussed the sustainable management model.
An upgrade of sustainability aspects of governance was identified as a strategic objective, which will be considered in
updated relevant policies and a more comprehensive set of performance indicators.
Materiality Assessment
19
The interdisciplinary sustainability project team conducted a comprehensive process of updating the list of our stakeholders
and identifying material ESG topics of the Krka Group. Following a resolution, the Management Board approved the
identified topics. Their boundaries were verified in structured discussions with representatives of key stakeholder groups,
where we examined their understanding, assessment, and expected disclosures. The outcomes will help us to improve
the system.
Key Stakeholders
Patients
Health professionals, healthcare providers and direct customers
Employees, prospective employees, and trade union organisations
Regulatory agencies/bodies and government organisations
Educational and scientific research institutions
Shareholders, financial institutions and other capital market stakeholders
Strategic partners and suppliers
Local communities and non-governmental organisations
Media
Professional associations and interest groups
Material ESG Topics
We identified material ESG topics and divided them into seven groups, which we will regularly verify and update. We
considered the interests and expectations of key stakeholders about the industry and the Krka Group, regulatory
requirements, requirements of professional guidelines and standards, media analyses, future risks, and opportunities
related to the environment, society and governance.
We used the collected information as the basis for a double materiality matrix, presented in more detail in the ‘Sustainable
Development’ section.
Groups of Material ESG Topics of the Krka Group
Product quality and patient safety
Talent attraction and retention
Accessible healthcare
Good leadership and governance practices
Compliance, integrity and transparency
Planet and climate change
Economic impact and taxes
19
GRI GS 102-46
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44
Macroeconomic Forecast for 2022
Dispersed international operations and a vertically integrated business model ensure stable performance of the Krka Group
despite different macroeconomic situations in individual key markets.
In 2020, following several consecutive years of favourable macroeconomic trends, economic activity slowed due to
pandemic-related restrictions. The economy recovered in 2021. In 2020, governments and central banks passed measures
to stimulate economic growth and mitigate the negative impact of the pandemic. This continued in 2021 and is expected
to continue in 2022. Inflation increased rapidly in 2021. Its acceleration surpassed expectations and reached the highest
levels in the last ten years. Inflation is projected to start easing in 2022. Following increased volatility of exchange rates
and uncertainty in the financial markets in 2020, the macroeconomic situation stabilised in 2021. Due to the situation in
Ukraine and the Russian Federation, the volatility of exchange rates is expected to increase in 2022. Measures to limit the
spread of the pandemic and stimulus measures to aid economies of individual countries adopted throughout 2021 were
disproportionate.
Amid the resumption of economic activity and improvement of macroeconomic trends in 2021, expectations for the
upcoming years are moderately optimistic. Forecasts of the European Commission and international banks indicate that
the macroeconomic situation in our sales markets should improve in 2022. However, the 2022 macroeconomic forecasts
for our target markets are more encouraging, because they were prepared before the outbreak of the complex situation
between Ukraine and the Russian Federation that started in February 2022 and could affect business situation in certain
countries of the Region East Europe and also elsewhere.
2022 Macroeconomic Forecasts
Country
Pharmaceuticals
market growth
(%)
Projected value of
pharmaceutical market at
wholesale prices
(million)
FX rate
(currency/€)
Slovenia
7
€850
Eurozone
Croatia
8
€1,500
7.5
Romania
7
€4,500
5.0
Poland
4
€6,900
4.6
Hungary
4
€2,940
365
Czech Republic
6
€3,200
25.5
Slovakia
5
€1,550
Eurozone
Western Europe
3
€263,000
Primarily Eurozone
China
4–7
$150,000
7.4
Sources (pharmaceutical market forecasts): internal estimates. Sources (foreign exchange rates): bank reports, internal estimates.
Slovenia
With the removal of most restrictions, Slovenia’s economy grew substantially by 6.9% in the first half of 2021 compared to
the same period in 2020, exceeding pre-pandemic levels of 2019. All supply and demand components also increased
compared to 2020. Strong economic growth is expected to continue in the remainder of 2022 and 2023 mainly due to
consumption and investment growth. The economy is expected to continue growing strongly in 2022 and 2023, by 3.8%
and 3.6%, respectively. High public expenditure is projected to hinder a stronger improvement in public finances. Public
consumption growth is forecast to be moderate. However, public investments are expected to grow rapidly thanks to the
availability of European Structural Funds and the Recovery and Resilience Facility financing. Inflation in 2021 was 4.9%.
It is projected to exceed 2% in 2022 before stabilising under 2% in the following years. The general government deficit in
2021 was 7.2% of GDP. Negative impacts of the pandemic on unemployment were short-lived due to measures to support
economic activity. Unemployment increased in 2020 and decreased to 4.6% in 2021. Unemployment is projected to decline
in 2022 and 2023, reaching 4.5% in 2022 and settling at 4.4% in 2023. Labour shortages are poised to become a limiting
factor to the economic growth over the forecast horizon. In 2021, public debt decreased to 77.7% of GDP. It is projected
to further decrease to 76% of GDP by 2023.
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In 2022, we estimate the sales value of pharmaceuticals at €850 million, or 7% more compared to 2021.
Croatia
Recovery of Croatia’s economy in 2021 was supported by strong consumption and a better-than-expected performance
of the tourism sector. GDP growth reached 10.5% in 2021. Robust household consumption supported by favourable labour
market developments, high accumulated household savings, and growth in consumer loans should be the main engine of
growth also in 2022. Additional new investments are likely to contribute to growth in the upcoming years. In 2022, GDP is
forecast to grow by 4.8%, followed by 3% in 2023. Inflation rose to 2.7% in 2021, mainly due to a surge in energy and food
prices. Inflation in 2022 is forecast at 3.5%. It is expected to stabilise in the upcoming years and fall under 2% in 2023.
Favourable economic developments spilled over to the labour market, which experienced strong recovery after 2020. In
2021, unemployment declined to 6.7%. It is expected to further drop to 6.2% in 2022 and 5.8% in 2023. The general
government deficit, which increased in 2020, narrowed to 4.1% of GDP in 2021. This trend is expected to continue in the
upcoming years. Public debt is set to gradually decrease from 82.3% of GDP in 2021 to 77.9% in 2023. Croatia entering
the Schengen Area and adopting the euro could benefit the country’s economy. Conversely, low vaccination rates, which
could lead to stricter containment measures, may compromise economic growth.
We expect the value of the Croatian pharmaceutical market to grow by 8% in 2022 compared to the previous year, to
approximately €1.5 billion.
Romania
After a strong rebound in the first half of 2021, Romania’s GDP is set to reach its pre-pandemic levels before the end of
the year with economic growth at 6.3%. Going forward, growth is expected to remain robust in 2022 and 2023 at 4.2% and
4.5%, respectively. It is set to be propelled by strong consumption and growing investments. Export growth is set to be
less dynamic than that of imports due to supply-side bottlenecks, especially in the automotive industry. Problems in forming
a new government could delay public investments, compromising economic growth. In the upcoming years, unemployment
rates are set to gradually drop to under 5% due to economic growth. Inflation increased year-on-year to 4.1% in 2021,
largely on account of the increase in energy prices. It is projected to reach 5.3% in 2022. As the price shocks are expected
to gradually phase out over the forecast horizon, inflation is set to reach 2.5% in 2023. Romania’s general government
deficit decreased to 8% of GDP in 2021. It is expected to gradually fall in the upcoming years and reach 6.3% of GDP in
2023. The general government debt rose to 49.3% of GDP in 2021. It is expected to further increase to 53.2% of GDP in
2023. Risks to public finances are broadly balanced, while in the short-term the risk of a delayed budget, and the risk of
more waves of infection due to low vaccination rates and further restraining measures loom.
We expect the value of the Romanian pharmaceutical market to grow by 7% in 2022 compared to 2021, reaching
€4.5 billion.
Russian Federation
In 2021, the economic growth was the highest in the past ten years and reached 4.7%. Imposing strict sanctions at the
beginning of 2022 will heavily burden economic activity. Credit crunch and falls in consumer and investment spending are
expected due to a sharp rise in key interest rates. At the same time, strong energy exports at elevated prices of oil and
gas are expected to generate large current account surplus, which will importantly contribute to economic growth, as long
as energy exports are not included in imposed sanctions. In this case, economic activities are expected to shrink by 3 to 5%
in 2022. As value of the national currency is falling, inflation should get a significant momentum.
Economic sanctions, volatility and depreciation of the Russian rouble represent key short-term risks. In the mid-term,
economic sanctions could make business activities in the Russian Federation more difficult, cause additional currency and
credit risks, inflation, a decrease in standard of living, and of purchasing power.
Ukraine
After the recession in 2020, the Ukrainian economy increased by 3%. Because of the events that started at the end of
February, a deep recession is expected in 2022. Macroeconomic outlook is highly uncertain. A sharp drop in domestic
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demand is expected, as well as a pronounced decrease in imports. Export is also expected to drop due to disrupted
logistics and manufacturing capacity, and closed air and seaports. Economic activity is expected to fall by at least 10%
in 2022, which is comparable to the 2015 decline, assuming the conflict is resolved quickly and substantial donor support.
A long-term conflict would significantly deteriorate macroeconomic outlook. In that case, the economic contraction would
be much higher, between 25 to 35%.
Key short-term risk comprises security of the country, geopolitical instability, and credit risk.
Poland
The Polish economy rebounded strongly in the first half of 2021, reaching pre-pandemic levels of GDP in the second
quarter of the year. Record low unemployment levels and increased consumption have driven economic activity, which
rose by 5.7%. Economic growth is expected to remain strong in 2022 and 2023, mainly due to investment growth, changes
in the personal income tax, and increasing household incomes, despite supply chain disruptions and rising costs of raw
material. Private sector investments are set to grow on the back of a favourable financial position of companies and low
borrowing costs. Economic growth is projected at 5.5% and 4.2% in 2022 and 2023, respectively. Rising energy prices
and unit labour costs put upward pressure on inflation. It reached 5.2% in 2021 and is expected to accelerate to 6.8% in
2022. However, inflation is expected to slow in the upcoming years, to 3.8% in 2023. General government deficit declined
to 3.3% of GDP in 2021. This is driven by substantial increase in fiscal revenue, in particular taxes and social contributions,
mainly due to the economic recovery and favourable labour market developments. Further decrease of public deficit to
around 2% of GDP is expected in 2022 and 2023. In 2021, public debt represented 54.7% of GDP. It is expected to decline
to less than 50% of GDP by 2023.
Given the anticipated 4% growth, the value of the Polish pharmaceutical market is estimated at approximately €6.9 billion.
Hungary
Hungary’s GDP expanded by 6.5% in 2021, driven by fiscal stimulus offsetting external headwinds. Global supply chain
disruptions dampened GDP growth in 2021. Despite projections that this trend will continue in 2022, economic growth is
expected at 5%. Growth is expected to slow to 3.2% in 2023 as policy support is gradually withdrawn. High consumer
confidence is driven by government support measures, which also stimulate household income gains. Household
consumption is forecast to accelerate. Public investment is also expected to grow in the upcoming years. Rising prices of
raw materials and wage pressures hike up production costs and inflation. In 2021, inflation peaked at 5.2%. It is set to rise
further to 5.4% in 2022, then gradually drop to 3.6% in 2023. Unemployment fell to 4.1% in 2021. It is expected to further
decrease, reaching 3.1% in 2022 and 2.9% in 2023. Despite strong economic rebound, general government deficit and
debt are projected to decline only gradually. Large fiscal expenditure contributed to public deficit at 7.5% of GDP in 2021.
The additional fiscal space generated by a robust growth in revenues is set to be utilised for new expansionary measures
addressed to various social groups. Public deficit of 5.7% of GDP is expected in 2022. In 2021, public debt dropped to
79.2% of GDP. Public debt is set to further decrease in the upcoming years.
We expect the Hungarian pharmaceutical market to grow by 4% in 2022, reaching €2.9 billion.
Czech Republic
Following the decline of economic activity in 2020 caused by supply-chain disruptions, GDP rose by 3.3% in 2021.
Economic activity is forecast to accelerate in early 2022, driven by both domestic and foreign demand as well as
investments, including public. The Czech economy is set to reach its pre-pandemic level in the second half of 2022. Starting
from 2022, investments will be additionally supported by the Recovery and Resilience Facility. Economic growth is
projected at 4.4% and 3.9% in 2022 and 2023, respectively. Inflation rose to 3.3% in 2021 due to a combination of rising
energy prices, supply-side bottlenecks and robust demand. It is estimated to rise to 5.8% in 2022 and gradually drop down
to 2.2% in 2023. The unemployment rate was 2.7% in 2021. It is set to decrease further in the following years, reaching
2.6% in 2022 and 2.4% in 2023. The government deficit rose to 7% in 2021 due to wide fiscal stimulus to mitigate the
negative impact of the pandemic. It is set to decline to 4.3% of GDP in 2022, mainly due to withdrawn support measures,
but is projected to stay well above the levels before the start of the pandemic. Public debt rose to 42.4% of GDP in 2021
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and is projected to further increase in the upcoming years. Public debt is expected to reach 46.3% of GDP in 2023. It
remains low compared to other EU Member States.
The Czech pharmaceutical market is expected to grow by 6% and its value to reach approximately €3.2 billion.
Slovakia
In 2021, Slovakia’s economy recovered from the 2020 recession. GDP growth was recorded at 3%. However, supply-
chain disruptions and resurging COVID-19 infections are expected to slow the recovery in the short term. Accelerated
growth is forecast from 2022 onwards, also boosted by Recovery and Resilience Facility-financed public investments.
Economic activity is forecast to rise to 5% in 2022. Strong GDP growth is expected to continue in 2023, reaching 5.1%.
Similarly to 2021, inflation is forecast to rise also in 2022 due to a combination of supply-side bottlenecks and robust
demand. In 2021, inflation was recorded at 2.8%. It is projected to climb to 6.4% in 2022. Inflationary pressures are
projected to stabilise in 2023 and inflation is set to drop to 2.4%. Unemployment increased somewhat in 2021 to 6.8%. It
is set to decrease further in the following years, reaching 6.4% in 2022 and 5.6% in 2023. Fiscal support is set to weaken
as from 2022, and the public deficit is projected to decrease, due to accelerated economic growth, from 7.3% of GDP in
2021 to 4.2% of GDP in 2022. Public debt edged up to 61.8% of GDP in 2021. It is projected to start declining in the
upcoming years and stabilise at 60% of GDP.
We expect the Slovakian pharmaceutical market to grow by 5%, to approximately €1.6 billion.
Western Europe
Following a decline in 2020, economic activity increased in 2021 and GDP growth amounted to 5.1%. The momentum
gained in the first half of 2021 was slowed in the second half of the year due to supply chain disruptions that constrained
production recovery. Gradual improvements in supply chain conditions are expected in 2022. Resurging COVID-19
infections followed by country shutdowns and eroding household purchasing power caused by increased energy prices
pose an additional risk to economic growth. The retreat of COVID-19 is expected in spring, while the pressure on
healthcare and hospitals is projected to endure longer. GDP growth of 3.5% and 3% is projected in 2022 and 2023,
respectively. Varying price pressures, including rising prices of energy, basic goods and commodities, services and food
have pushed inflation to 2.6% in 2021. These pressures are expected to persist throughout 2022, and in particular in the
first half of the year, hindering economic growth. Inflation is forecast to reach 3.8% in 2022. In 2023, it is expected to fall
to 1.6% due to the projected low private consumption. In 2021, the unemployment rate was 7.7%. It is expected to further
decrease in the upcoming years. Public deficit was under pressure at 6.9% of GDP due to increased fiscal expenditure in
2021. However, it is projected to improve in 2022 and settle at around 4.8% of GDP. If necessary, the government will
continue to support the economy within the scope of fiscal policy in 2022. In 2021, public debt was 100% of GDP. It is
expected to decrease in the upcoming years and drop to 97.8% of GDP by 2023.
We expect the value of the Western European pharmaceutical market to grow by 3% in 2022, reaching €263 billion.
China
China’s economy seems to be slowing, burdened mainly by ongoing turmoil in the property sector, which is set to hinder
growth in the upcoming years. China’s economic growth was estimated at 8.1% in 2021. Stronger measures for stimulating
economic growth are expected, but contrary to those adopted in the past, these will no longer include real estate sector
incentives. China’s policy focus recently shifted towards tighter managing of corporate indebtedness, in particular in the
property sector, and delivering on ambitious climate change targets. The government is likely to increase support for
infrastructure investments, in particular projects for reducing the carbon footprint. Consumption growth is likely to remain
affected by increasing unemployment. GDP growth is expected to moderate to 4.7% and 4.8% in 2022 and 2023,
respectively. Stable public deficit at around 3% of GDP is forecast in the coming years. Inflation was 1.8% in 2021. It is
expected to climb to 2.8% in 2022 and drop to 2.2% in 2023. Public debt is expected to increase from 91% of GDP in 2021
to 95% of GDP in 2022 and 97% of GDP in 2023. Export growth is set to slow down in 2022, as global consumer trends
seem to be shifting from goods to services consumption. Ongoing disruptions in the domestic property sector, possible
energy crisis, supply chain risks, and geopolitical tensions all constitute risks to economic growth.
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We estimate the value of the Chinese pharmaceutical market at approximately $150 billion of which the generic market
accounts for approximately 65%. Growth in the upcoming years is forecast at 4–7%.
Risk Management
In accordance with legislation and good practice, risk management comes under the remit of the Management Board,
which regularly reports on risks and adopted measures to the Audit Committee and the Supervisory Board. During each
business results analysis, the Audit Committee and the Supervisory Board are briefed about the operational and financial
risk management. Their risk management work is described in the '2021 Supervisory Board Report' section. The Krka
Group monitors its exposure to various forms of risk on a daily basis and adopts measures to manage those risks.
The following committees and Management Board-authorised representatives also have certain risk management-related
responsibilities:
Quality Committee;
Information Technology Committee;
Development Committee;
Sales Committee;
Human Resource Committee;
Business Continuity Officer;
Information Security Officer;
Chief Compliance Officer.
Risk management is integrated into all business processes in the Group. The controlling company manages financial risks
centrally at the Group level, while subsidiaries manage business risks independently in accordance with controlling
company guidelines. We apply over 2700 standard operating procedures relating to quality systems and other bye-laws
and instructions that determine the activities and responsibilities that allow for uninterrupted operations and mitigate risks.
We use the Krka Group Risk Register as a risk management support tool. The Risk Register provides a comprehensive
overview of risks at the Group level and serves to timely identify and manage factors that may derail efforts to deliver on
the objectives defined in the current Krka Group Development Strategy and the Quality Manual. The Integrity Plan
complements the Risk Register and addresses ethics, integrity, and compliance. In cooperation with relevant departments,
the Chief Compliance Officer drew up the Integrity Plan in accordance with the Corporate Governance Code for State-
Owned Enterprises. The Management Board adopts the Integrity Plan, reviews it annually, and updates it if necessary. To
manage risks, we also apply guidelines from the Business Continuity Strategy, Information Security Management System
(ISMS), principles of Good Manufacturing Practice (GMP), requirements of the ISO 14001 standard, and guidelines
relating to the integration of quality management in all business processes. Sustainability risks or ESG (Environment,
Social, Governance) risks are managed as part of various risks and are included in their risk management processes.
Below we outline Krka's significant operating risks and how we manage them. Every risk assessment is based on
assessing the extent of the damage and the probability of its occurrence. The final assessment of an individual risk is
made by considering the extent of damage and the likelihood of it occurring at the same time, whereby the impact of control
activities has already been taken into account. Preliminary risk assessments in the 'Operational risks and business
continuity' table were made in the previous version of the Risk Register.
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OPERATIONAL RISKS AND BUSINESS CONTINUITY
Risk area
Risk description
Control activities
Preliminary
risk
assessment
Latest risk
assessment
Availability of
critical resources
to ensure
production and
sales of key
products
Unplanned stoppages and
unavailability of key
resources for production and
sales of finished products
(employees, buildings,
equipment, various
materials, media supply,
information, epidemiological
situation)
Business continuity management system, business
impact analysis, requirement for the availability of
critical resources and services, risk analysis by
area; measures to increase process resilience
against disturbance and mitigate consequences of
incidents, supervision of hygiene, organisational,
and technical measure implementation to prevent
the spread of infections, business continuity plans
for critical processes, training, tests, drills
Moderate
Moderate
Supply of APIs
and finished
products
Delays in the supply of
production materials and
finished products and
ineffective utilisation of
means of production
Careful supply chain planning in consideration of
the economic, health, and political situation around
the world, pandemics, natural disasters,
explosions, etc., careful planning of production
material inventories, maintaining contingency
stocks, ensuring several sources from various
locations; providing adequate production capacities
at Krka's sites and alternative sites with contract
manufactures, establishing remote technology
transfer, fast adaptation to sudden increases in
product demand by providing additional resources
and adjusting priorities; setting up alternative
transport routes for production materials and
finished products
Moderate
High
Quality
management
Loss of a manufacturing
authorisation, distribution
permit, or marketing
authorisation
Compliance with legal and regulatory
requirements, and implementation of all activities in
the Krka Group processes that are critical in terms
of good quality practices
Moderate
Moderate
Technical
services
Inadequate supplies of
production media to
processes and substandard
technical maintenance
Redundant power supply resources, robustly
planned media supply systems, redundant
capacities and planned maintenance processes
Moderate
Moderate
Information
technology
Business process disruption
due to a disruption in
information resources
Independent security checks and preventive
measures to rectify disruption; assessment of
different types of risks, information technology
continuity plan, recovery procedures following
major incidents and disasters
Moderate
Moderate
Employees
Workplace accidents or
injuries, infectious diseases
(epidemic, pandemic)
Testing technological procedures, system for
workplace risk assessment, preventive measures,
introduction of cautionary measures – sanitary,
health, and organisational actions that prevent the
introduction and spread of potential infections,
while also ensuring uninterrupted implementation
of all work processes
Moderate
Moderate
Issues arising from the
epidemiological situation in
the country, unplanned
increase in absences, and
shortages of personnel in the
labour market
Employee interchangeability, new recruitment
methods, appropriate and regular communication
with employees, employee education and training,
reorientation of activities to basic processes in the
case of a significant loss of available personnel
(e.g. pandemic, natural and other disasters)
Protection of
property
Alienation and destruction of
property
Security plan, systematic threat assessment, and
implementation of necessary measures
Moderate
Moderate
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BUSINESS RISKS
Risk area
Risk description
Control activities
Preliminary
risk
assessment
Latest risk
assessment
Research and
development
Ineffectiveness of
development processes;
inadequacy of regulatory
procedures and supply of
new products
Detailed planning of development projects and
management of regulatory processes
Moderate
Moderate
Marketing and
sales
Unfavourable situations in
sales markets and
inadequacy of marketing
activities, also due to
difficulties with or inability to
make personal contacts
Responding to changing business conditions in
markets, establishing standardised, compliant,
and transparent sales and marketing activities,
continuously educating and testing employees'
knowledge, using modern communication tools
Moderate
Moderate
Intellectual
property
protection
Infringement of third-party
intellectual property rights or
unjustified use of Krka's
intellectual property
Monitoring patent processes, consistent respect
for the intellectual property rights of others, and
forming provisions for potential damages when
reasonable
Moderate
Moderate
Delays in hearings and
decisions in cases where we
have to seek the revocation
of secondary patents of third
parties in order to enter the
market
Additional risk assessment and formation of
provisions for potential damages where possible
Quality
management
Substandard quality of
development and production
process, substandard quality
of products, and failing to
maintain the validity of
manufacturing authorisations
and GMP certificates
Timely implementation of new regulatory
requirements, precise implementation and
control of prescribed quality management and
quality control procedures in all key
development, control, and production processes
Moderate
Moderate
Environmental
protection
Waste removal issues,
environmental pollution due
to hazardous substance spills
and emissions during
emergencies; deviations from
statutory requirements, and
loss of reputation due to
excessive environmental
pollution
Effective control of the environmental
management process, continuous emission
monitoring; application of best available
techniques to reduce environmental impact, and
cooperation with several business partners in the
field of waste management
Moderate
Moderate
Investment
projects
Poor decisions on investing
in production and other
capacities, and
implementation of
investments
Constant supervision of all project phases, plan
monitoring, systematic selection of contractors
Moderate
Moderate
Human
resources
Issues with providing key and
qualified personnel (recruiting
and retaining) and social
dialogue with employees
Systematic work with key personnel,
remuneration system, employee development,
continuous education and training, measuring of
the organisational culture and climate
Moderate
Moderate
Legal matters
Inadequate legal regulation
of business relations and
non-compliance with or
incorrect interpretation of
legislation, issues arising
from potential court and other
legal proceedings, especially
disputes
Involving Legal Affairs department in key areas,
cooperation with external specialised legal
experts
Moderate
Moderate
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FINANCIAL RISKS
Risk area
Risk description
Risk management method
Preliminary
risk
assessmen
t
Latest risk
assessmen
t
Foreign
exchange risk
Potential major financial
losses due to unfavourable
changes in foreign exchange
rates
Financial market tracking; monitoring currency
exposure; working with leading global financial
institutions; monitoring new practices of foreign
exchange risk hedging; use of financial instruments;
natural hedging
High
High
Interest rate risk
Unfavourable interest rate
changes
Monitoring interest rate changes; negotiations with
credit institutions; hedging with appropriate financial
instruments
Low
Low
Credit risk
Customers defaulting on
payment prompt receivable
write-off accrual
Credit rating calculations; limiting maximum
exposure to individual customers; active
management of receivables; utilisation of
instruments for insurance of payments and
receivables with a credit insurance company
Moderate
Moderate
Liquidity risk
Insufficient liquid assets for
settling operating and
financial liabilities
Credit lines agreed in advance and planned liquidity
requirements; cash pooling
Moderate
Moderate
Risk of damage
to property
Damage to property caused
by natural disasters and
other risk factors
Systematic risk assessment for buildings; taking
measures in accordance with fire safety studies;
arranging appropriate insurance
Moderate
Moderate
Risk of claims for
damages and
civil actions
Claims for damages by third
parties due to loss events
caused accidentally by
Company activities, property,
or products placed on the
market
Insurance for civil, employer and environmental
liability; product liability insurance; and clinical trials
liability insurance
Moderate
Moderate
Risk of financial
losses due to
business
interruption
Financial loss resulting from
interruption of production due
to property damage
Insurance of labour costs, amortisation and
depreciation, other operating expenses and
operating profit, and technical and organisational
measures to reduce the impact of business
interruption
Moderate
Moderate
Operational Risks and Business Continuity
Availability of Critical Resources to Ensure the Production and Sales of Key Products
Major emergencies that halt the production and sale of products for a lengthy period could compromise the existence of
the Krka Group We analyse their impact on operations to estimate the criticality of processes and risks to operations. As
a result of these activities, the Business Continuity Officer prepares Business Impact Analysis, Risk Assessment, and
Business Continuity Management Strategy together with the persons involved in critical processes. The documents are
discussed and adopted by Krka's Management Board. The documents are renewed at least every five years or with each
major technological and/or organisational change, the emergence of new threats or an increase of existing ones.
We apply effective measures to protect employees, property, and other key resources and prevent emergencies. We have
designed action plans, and disaster relief measures for emergencies, measures for mitigating direct damage, and
emergency operations plans until normal operations can be restored. Based on the Business Continuity Management
Strategy, we prepare business continuity plans for each critical process or service. In agreement with Business Continuity
Officer, we appoint persons responsible for critical processes to prepare and maintain these plans. The plans are approved
by critical process or critical service managers and the Business Continuity Officer.
Adequacy of plans is reviewed at least once a year and harmonised with the business continuity policy and strategy.
Exercises and training are the key part of testing the implementation of individual business continuity measures. The
Quality Committee discusses the adequacy of the implementation of these plans annually. In 2020, Krka's Management
2021 Annual Report – Business Report
52
Board also included measures in the event of a pandemic into the Business Continuity Management Strategy. A pandemic
could pose risks in various areas, resulting in, e.g. supply chain disruption, increased employee absences, and
outsourcing-related issues. By identifying and implementing appropriate preventive and other measures, we ensure that
critical resources are adequately available to ensure the production and sales of key products.
Risks Related to Supply of APIs and Finished Products
We continuously monitor the supply market, suppliers, and prices of production materials to ensure the required quantities
in line with annual and monthly production plans and in accordance with the standard operating procedure (SOP). We
carefully plan our inventories and maintain contingency stocks to ensure uninterrupted access to production materials
required for manufacturing finished products. We apply adopted criteria to assess and select our suppliers and regularly
audit them in accordance with both relevant SOPs. Twice a year, the Quality Committee discusses the findings of past
audits, indicators, supplier risk assessment, and the audit plan for the next period. A regular supplier audit is conducted
every three years. In the case of emergencies and deviations, a risk assessment and an audit is conducted immediately.
In addition to regulatory compliance, guaranteed quality, and environmental protection, we primarily focus on price
competitiveness and supply reliability when selecting our contractual partners. Selection and evaluation of a contractual
partner for the manufacture of finished products as well as the implementation and management are also regulated by a
relevant SOP. SOPs are part of the quality system described in 'Quality Management Risks' section. Further information
on performed audits and regular controls are available in the subsection 'Inspections and Audits of the Management and
Quality System' of the 'Integrated Management System and Quality' section.
We ensure the punctual supply of finished products by monitoring every product supply phase. Production material
inventories are planned according to sales forecasts. Inventory levels are checked regularly, and we have contingency
stocks as well as several independent supply sources for strategically important production materials.
We carefully plan optimal utilisation of production capacities and measure production efficiency. In this respect, we
introduce measures for continuous process improvement. We meet sales requirements by purchasing new equipment and
making new investments; we increase our own production capacities and expand contractual alliances.
We adhere to good manufacturing practices in production processes and verify that the production environment is suitable.
We ensure that production equipment operates reliably and to a high standard through regular and preventive
maintenance. In major emergencies, we can ensure the production of key products at several plants.
We comply with good warehousing and manufacturing practices when warehousing incoming materials, bulk products,
and finished products. Our production material and finished product warehousing system allow us to keep goods at several
standalone warehouses when handling major emergencies. We organise the transport of production materials and
products using our own vehicles and those of our selected partners. All vehicles are equipped so as to ensure appropriate
transport conditions and safety.
Technical Service Risks
Technical service risks include risks related to utility supplies, including power and other utilities used in processes, the
reliability and availability of technical systems, and risks associated with metrology.
To provide an uninterrupted electricity supply, we have put in place a back-up electricity system and a diesel-powered
generator for critical processes. We continuously monitor the situation on the electric power market and make partial
purchases. We use natural gas to generate thermal power and extra-light fuel oil as a back-up fuel, of which we keep extra
stocks.
As part of the Business Continuity Management Strategy and the Business Continuity Plan for 2021 in terms of risks and
opportunities as a result of climate change, we identified a potential risk of insufficient supply of drinking water for
production purposes. At the central production site in Novo mesto, Slovenia, where the vast majority of all Krka Group's
products are manufactured, the short-term, medium-term, and long-term water supply is adequate and the risk low thanks
to public infrastructure upgrades in 2020. In the case of loss of water supply from the main source due to force majeure, it
is possible to connect to an alternative water source from the public infrastructure. We did not identify any other risks and
opportunities due to climate change.
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We mitigate risks related to inadequate production and distribution of power and process utilities (electricity, steam, heating
water, compressed air, refrigerant water, river water, pharmaceutical and process water) by critical equipment redundancy,
robust system planning, computer control, quality control of process utilities, regular preventive maintenance and system
testing, and keeping critical spare parts in stock. Employees undergo regular training, and their skills and qualifications
are regularly tested.
We carry out preventive and scheduled maintenance of air-conditioning systems. Our maintenance team is well organised
and trained to intervene swiftly in the event of a failure. The team uses a central control system to issue alerts rapidly and
detect faults. It also keeps inventories of spare parts. Non-critical equipment is dispersed to ensure that a single breakdown
does not significantly impact production capacities. All air-conditioning and power supply systems in server rooms are
duplicated, have technical security systems in place, and are regularly tested for potential breakdowns.
We mitigate risks related to the reliability and availability of technical systems by continuously monitoring performance,
conducting preventive checks, servicing, improving the equipment, and introducing new maintenance approaches. Failures
and disruptions are rectified according to planned procedures and instructions. In order to remedy failures and disruptions
promptly and effectively, we have our own qualified maintenance teams and spare parts inventories which we regularly
check and replenish. The employees who monitor and maintain technical systems undergo regular training. Their
qualifications and skills are regularly tested.
We have a management system in place for monitoring and measuring devices. We regularly measure, calibrate, and
maintain the monitoring and measuring equipment.
We ensure the reliability and availability of technical systems with our own facilities and employees and in cooperation
with external contractual partners.
Information Technology Risks
We manage information security risks through an ISO 27001-certified Information Security Management System (ISMS).
The ISMS is a separate business process within Krka's quality system. The Company's Management Board appointed the
Information Security Officer to lead the ISMS process, which includes key organisational units and business processes in
the controlling company. In 2021, we started to overhaul the ISMS in all Krka Group subsidiaries. We plan to complete the
overhaul in 2022. Each quarter, the Information Security Officer reports to David Bratož, a Management Board member,
on the ISMS. Further information on the ISMS is available in the 'Integrated Management System and Quality' section. A
comprehensive report on the Krka Group information security is discussed annually by the Information Technology
Committee.
Krka specifies the criticality of information resources (information systems and services) using annual criticality
assessments of business processes and information resources to implement the business process. All information
systems, including infrastructure systems, refer to the criticality level of business services. Given the criticality in planning,
construction, and use of information systems, we implement all relevant information and cyber security elements.
We have identified threats and risks regarding resource availability, confidentiality, and integrity for all critical information
resources (information systems, equipment, premises, and employees using the information systems). Risk assessments
by individual processes are reviewed and approved by directors or heads of organisational units in which the processes
are carried out. Based on risk assessments, organisational units take steps to eliminate unacceptable risks. Another
method of threat detection involves independent security audits of our information resources. In 2021, the organisation
behind the ISO 27001 standard conducted an independent preventive security audit of the ISMS. Their report was
discussed by the Company's Management Board and the Information Security Officer briefed the Information Technology
Committee on this topic. Information security internal audits are conducted in organisational units as well. We consistently
eliminate any inconsistencies identified in external and internal audits and inspections.
In the field of information technology, we perform comprehensive security audits every two years and partial security audits
several times a year while eliminating any shortcomings. To mitigate risks during major emergencies, we introduced
duplicated computer capacities for all critical information resources in two separate locations: back-up server rooms at the
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Krka headquarters (i.e. the Disaster Recovery Centre – DRC) and at an adequate off-site location, where critical data is
backed up daily.
We also mitigate information security risks using modern tools such as advanced threat protection (ATP), security
information and event management (SIEM) system, and vulnerability management. Krka has taken out cyber insurance to
cover any damages caused by potential cyber attacks.
As an international group, we are required to protect personal data in conformity with national legislation of all countries
where our subsidiaries and representative offices are located. The Management Board appointed Data Protection Officer
at the Company and Group level, who ensures that personal data are protected in accordance with EU regulations or
national legislation insofar it lays down different or stricter rules.
Employee Risks
We manage all employee-related risks, systematically identify and evaluate them, and take appropriate measures to
prevent and mitigate risks based on this. The Management Board checks and confirms the effectiveness of risk
management.
We use our own methods to assess workplace risks concerning health and safety at work, i.e. the probability of a specific
incident and its consequences and any probable health implications for individual workplaces. Risks are assessed
periodically, and security measures are taken to keep them at acceptable levels.
In addition, we also assess the risks related to individual technological procedures carried out by authorised professionals
for health and safety at work and responsible technologists. Risk assessments are conducted for all new technological
procedures in research and development and if any changes are made to these procedures. The result of this process is
the consent to the technological procedure including a risk assessment. The consent is issued for every technological
procedure carried out on a pilot or production scale. The risk assessment methodology is based on identifying different
risks related to each technological procedure. We identify hazards for each technological phase. Based on the occupational
exposure band (OEB), exposure time, and level of hazard, we determine the safety measures strategy to prevent
employees from exposure to a specific technological procedure. We continually verify the suitability and appropriateness
of technical and organisational measures and personal protective equipment by conducting relevant measurements during
technological operations.
Technological Risk Assessments
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When there is a risk of infection (epidemic, pandemic), we implement a series of sanitary, health, and organisational
measures to prevent the introduction and spread of the possible infection, while ensuring not to disrupt work processes.
We promote health among our employees and constantly raise awareness of health and safety at work.
Identifying key employees and their potential in all work processes allows us to ensure the replacement of employees in
key job positions. The training and recruitment methods applied in all organisational units facilitate the quick exchange of
employees posted in similar positions should a shortage of employees occur in a certain organisational unit due to large-
scale absences or increased workload.
Protection of Property
The exposure of our buildings and property is subject to regular and systematic assessments in accordance with the
Security Plan (18 types of threats). Based on the assessment, we prescribe physical and/or technical security measures
and other security actions and guidelines to prevent emergencies or act accordingly if they occur.
Business Risks
Research and Development Risks
Krka's products must be of a high quality, safe, and effective. The required properties have to be confirmed by relevant
studies and data, in compliance with regulatory requirements and standards. Risks to products and technologies include
scientific and research risks and technological and technical risks. We mitigate these by introducing contemporary
approaches and methods and exploiting in-house and acquired knowledge and experience in research and development
and technology. Business and professional risks in product and technology development are managed based on a risk
matrix at various levels of monitoring and decision-making. Responsibilities of leaders, organisational units, and work
processes involved are clearly defined.
We appoint a project team with a leader to manage, monitor, and document all crucial activities for each project. The
Development Committee approves proposals for new product development based on feasibility studies, in which the
proposed project is considered from regulatory, developmental, safety, cost, and other aspects. In addition to key
development milestones, the Development Committee also monitors all development projects to be able to respond
appropriately to any market, development, or regulatory changes that require a change or adjustment in the development
scenario. The Committee meets several times a year. In the period between the Committee meetings, we monitor projects
at several organisational levels (project, product meetings, project meetings) and thus ensure that activities are
appropriately controlled and directed. Key organisational units with precisely defined individual responsibility in the product
development phase are New Products, Pharmaceutical Research and Development, API Research and Development,
Quality Management, Pharmaceutical Production, and Industrial Property.
We mitigate these product and technological risks at the early stages of development through process updates, the
introduction of modern technologies, and adjustments to regulatory requirements and through successful work of highly
educated professionals, constant broadening of knowledge and the use of state-of-the-art equipment. The vertically
integrated development and production model is important, as it allows us to control the entire process, from raw materials
to the finished products.
We maintain the vertically integrated development model with investments, annual achievements, and research-and-
development results related to:
Medicines and therapeutic areas: we venture into therapeutic areas with new medicines and provide for their
research, development, and evaluation, and prepare new combinations of active ingredients with patients in mind.
We aim to achieve the same therapeutic effect with lower concentrations of individual ingredients and reduce the
number of daily doses at the same time;
Krka's active ingredients: we introduce innovative preparation procedures and new synthesis routes;
Pharmaceutical forms: we prepare advanced pharmaceutical forms that allow for easier dosage and administration;
Research and development capacities: we introduce the most advanced development and technological processes,
and invest in research and development capacities.
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Regulatory risk management, associated with changes in legislation and its interpretation, starts at the early stages of
developing a new product and continues throughout its life cycle. We monitor regulatory legislation, implement new
requirements relating to active ingredients and finished products already in the development phase, and take them into
account when preparing registration documentation and registration strategies to mitigate risks. The acceptability of any
increased risks is discussed and approved by the Development Committee or a subsidiary supervisory body. Through
official consultative mechanisms, Krka verifies its development solutions for each product and the planned content of
marketing authorisation documents with regulatory bodies. This reduces the risk of encountering potential issues or even
failure when obtaining or extending marketing authorisations. We are also engaged in working groups of various industry
associations to participate actively in drafting legislative amendments in this field.
Sales and Marketing Risk
The Krka Group has a broad marketing-and-sales network, as it sells its products in more than 70 countries around the
world. It operates in a variety of geopolitical and macro-economic climates, as well as in legal and competitive
environments, and is exposed to different sales and marketing risks of varying intensities.
Our key advantages over the competition are our quick response to altered business circumstances and prompt adjustment
of sales and marketing activities in individual markets. In 2021, we successfully adapted to new circumstances brought
about by the epidemic-related measures to restrict movement and limit contacts. We continuously monitor market
conditions (especially competing generic producers and national pharmaceutical industry), the legal frameworks for
marketing pharmaceuticals, systemic pricing arrangements, and government reimbursements for pharmaceuticals (in
some countries based on statutory partial co-funding of healthcare budgets by medicine suppliers, i.e. clawback) through
Krka's in-house departments and independent data sources.
Once a year, the Sales Committee is briefed about the systemic pricing arrangements in markets where they exist. At their
meetings, the supervisory bodies of subsidiaries and representative offices regularly discuss the changes in the legal basis
related to price recording and government reimbursements. We ensure that medicine advertisement is suitable and give
special attention to organising and supervising the work of employees in the marketing network. Our employees regularly
undergo training, and we frequently test their qualifications, skills, and how familiar they are with instructions for work,
legislation, and applicable regulations. When marketing our products, we consistently comply with legislation,
recommendations of Medicines for Europe, and ethical norms related to advertising pharmaceuticals. In this regard, we
also carry out comprehensive training and knowledge assessment for our employees. We place particular focus on
business compliance, so marketing is also included in the Company's Integrity Plan, discussed by the Management Board.
We also comply with the personal data protection legislation in marketing and sales.
We monitor the risks related to entering new markets and new therapeutic areas by lowering prices of medicines in
compliance with national regulations, by cross-border reference country impacts, and changing practises regarding the
prescribing and/or dispensing and/or reimbursing of medicines. We systematically discuss entering new markets at annual
meetings and determine where to obtain marketing authorisations for individual products. Prior to concluding sales
agreements, the customer has to present evidence that their business establishment is duly registered. We pay special
attention to risks related to individual market environments and economies, risks associated with each customer, in
particular the risk of their insolvency or bankruptcy, risks related to payment terms, and other risks related to compliance
with contractual provisions. Foreign currency risks and their impact on sales revenue denominated in euros in markets
where sales are conducted in national currencies (especially in the Russian Federation) have been recognised as high
risks.
We continuously monitor market conditions, analyse them, adjust payment terms if necessary, and hedge against payment
defaults. We systematically monitor the satisfaction level of direct and indirect customers. Krka's Quality Committee
discusses the report for each year. We monitor sales at the primary level (sales to direct customers, primarily wholesalers)
and if possible, also at the secondary level (wholesalers' sales to their customers, mainly pharmacies) and at the tertiary
level (sales to end-users in pharmacies). We ensure that inventories are optimised and meet needs throughout the
distribution chain. We duly monitor pharmacy networks and any changes by individual market, and adjust our actions
accordingly. All of the above is regularly discussed at the Sales Committee meetings.
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We regularly evaluate the market potential of individual therapeutic areas and their products. We use a range of external
data sources and our own market research and analyses to monitor global, regional, and national trends as well as product
supply in the market. Based on these, we define both the product portfolio and our activities according to current market
positions of particular active ingredients and the vision of their development. We perform systematic analyses in terms of
product position and market share movements in individual therapeutic classes at least twice a year. The number of
important new active ingredients available for marketing to generic manufacturers at present or in the future has been
declining. Therefore, we seek opportunities in new innovative fixed-dose combinations of existing active ingredients and
in new therapeutic areas while continually striving to further improve the establishment of our products that contain existing
active ingredients in less developed markets. We monitor the effectiveness of our marketing strategies and tactics using
performance indicators and exert systematic control over marketing activities, which we plan, implement, and analyse in
cycles, including compliance in marketing and sales. Indicators at the Krka Group level are discussed once a year by the
Sales Committee and by Krka's Management Board in the context of performance indicators as part of the Company's
successful strategy implementation. At their regular meetings, supervisory bodies of subsidiaries and representative offices
discuss more specific indicators at the level of individual markets.
Intellectual Property Risk
Respect for the intellectual property rights of third parties, especially patent-related rights, is one of the fundamental
principles of Krka Group operations. We, therefore, start the development of a new product by analysing the extent of third
party property rights related to the new product and determine which solutions are protected. We define and direct our
development work based on these findings and assess whether the solutions produced by our own development infringe
the applicable rights of third parties. The current situation and any potential changes in the patent protection are monitored
throughout a product's development up to its launch.
If we believe that patents have been granted to third parties without proper grounds, which means that the subject of a
patent is not actually an invention (the solution is not new or does not include an inventive step), and when such patents
might hinder our work, we use the available legal remedies to cancel such patents. This prevents holders of such patents
from filing actions against us for infringement. Despite these measures, if a patent holder considers that Krka has infringed
its rights and takes legal action against Krka, we form appropriate provisions for potential damages and adopt relevant
measures.
If we believe that the results of our research work are new and innovative, we apply for patent protection.
The same risk management method applies to distinctive signs, industrial designs, and other relevant intellectual property
rights.
Quality Management Risks
The Krka Group evaluates quality management risks from the aspects of product quality, product safety, and Group
operations. We apply well-known methods to assess risks and implement them in line with good manufacturing practice
requirements (ICH Q9 Quality Risk Management).
Product quality is defined during the development stage of a product and specified in the marketing authorisation
documents. We adhere to standard procedures and requirements throughout the production process. From the purchase
of various incoming materials, other purchases, and manufacturing processes to the manufacture of finished products,
quality control, warehousing, and distribution, all while ensuring that the pharmaceutical product manufacturing complies
with the relevant quality standards and the product's marketing authorisation documents. When the product is already on
the market, the pharmacovigilance system is used to establish, evaluate, and respond to new findings on adverse effects
and other safety aspects of a medicine. We employ a special system to process customer feedback and pursue constant
internal improvements according to the PDCA (plan, do, check, and act) principle to upgrade and improve processes and
products.
Product quality management is a primary activity that involves various quality assurance elements: we focus on the suitable
quality of incoming materials (i.e. active ingredients, excipients, and packaging materials) and conduct risk assessments
to classify material- and supplier-related risks. We plan audits and other activities based on the identified risks as part of
the GxP partner evaluation procedure.
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We ensure the compliance of our production and control equipment and production rooms by qualifications and validations
of equipment, production rooms, production environment, manufacturing processes, computer systems, cleaning
procedures, calibrations, qualification of instruments, as well as maintenance procedures in order to prevent undesirable
effects on the production process and product quality. Systematic approaches, monitoring, and documentation of all
processes, procedures, and controls are crucial for product quality assurance. We, therefore, regularly examine, overhaul,
upgrade, and improve the quality system and ensure that any necessary changes are made correctly. Further information
on the quality system is available in the 'Integrated Management System and Quality' section, subsection 'Quality System
Objectives'.
We focus in particular on ensuring data integrity in quality management and thus mitigate the risk of improper use of test
results when determining the suitability of raw materials, packaging, processes, and finished products
Continuous monitoring of new developments in legislation and timely implementation of new requirements reduces the
risk of quality system inadequacy and consequently the risks related to maintaining manufacturing and marketing
authorisations and GMP certificates.
We regularly raise awareness and provide employee training to ensure compliance with standard production and product
control procedures. We control production processes, intermediate products, bulk products, finished products, and the
production environment to ensure product compliance and conformity with the requirements of national legislation and
GMP principles in the EU and other countries where we market our products.
For non-compliant products (deviations, complaints), we apply control mechanisms, perform tests, investigate causes, and
implement preventive and corrective actions in order to prevent any other non-compliance.
Concerning quality risk management, we assess the risks related to maintaining manufacturing authorisations, GMP
certificates, and other management systems applied in Krka manufacturing and distribution units for every quality
assurance element separately.
We regularly and systematically check the efficiency and effectiveness of the quality system in the Krka Group through
external (agency and regulatory inspections, partner and certified body audits) and internal (internal self-control, internal
audits, Quality Committee, quality indicators) verification. Where required, we make improvements and thus continuously
upgrade the quality system and effectively manage risks related to product and service quality.
Vertical integration of quality allows us to manage product and process quality risks effectively. Quality is vertically
integrated through know-how, experience, understanding of the entire product life cycle – from an active ingredient to the
finished product – through planning, development, quality assurance throughout the manufacturing process, and through
the Company's organisational structure, which supports the integration of quality into all processes.
The risk management process includes the regular identification, analysis, and evaluation of risks as well as operational
strategy upgrades. Due to COVID-19, we introduced additional measures to our regular procedures, strategies, and risk
assessments to ensure business continuity in a pandemic.
Environmental Protection Risks
Krka recognises and manages any environment-related risks in line with the requirements of the ISO 14001 standard and
by managing the business continuity system. Every year, we review all environmental aspects, the associated risks, and
extraordinary events and evaluate their impact on the environment. Risks and emergencies related to environmental
protection, including climate change risks, are assessed and managed by the Committee for Monitoring Environmental
Aspects at least twice a year and as part of regular activities of certain organisational units or business processes. All
identified risks are included in the Report on Implementing Environmental Management System, which the Quality
Committee discusses once a year. We mitigate environment-related risks and provide for efficient actions in the event of
an emergency by using the best available techniques in manufacturing, warehousing, wastewater treatment, waste air
treatment, waste management, preventive examinations and maintenance of equipment, employee training, and by
employing our own fire brigade, which is qualified to intervene in cases of emergency, and emergency event drills.
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In 2021, we recorded no extraordinary events with a negative impact on the environment.
We reduced the risk that might arise if our contractual partners did not collect our waste on time or at all by adding
warehousing facilities for waste solvents and dividing our waste streams. We also stepped up cooperation with several of
our waste-collection and removal partners.
Investment Project Risks
Investment project risks primarily include risks related to planning investments and their value, the purchase of equipment,
execution of works, schedules, quality, and changes to the original plan. We reduce these risks through document planning
and preparation, and implementing the established system for selecting contractors and equipment suppliers, and regularly
reviewing them. We supervise all execution phases. We review the compliance of project documents from the technical,
technological, and regulatory points of view, and the compliance of contractual documents from the legal and accounting
aspects. We examine whether potential changes are justified and what impact they could have on costs and schedules.
We constantly monitor costs, i.e. regular costs and those incurred by subsequent changes in a project.
Human Resource Risks
We pay special attention to key personnel who are crucial to attaining the objectives of the Krka Group and are also highly
sought after by our competitors.
We regularly plan and monitor the training and development of our employees and at the same time assign them new
work responsibilities, encourage them to take on new duties, and delegate them to new job positions. We plan employee
training and development in our annual training plan, prepared by individual organisational units together with Human
Resources and Training and Development. The Quality Committee discuss the plan and implementation of Krka's quality
system training twice a year. Three times a year, the Human Resource Committee discuss the plan and implementation
of other training and education programmes, such as part-time studies, Krka International Leadership School, and national
vocational qualification programmes. We offer a range of incentives to strengthen employee loyalty to the Krka Group and
minimise employee turnover.
We manage risks related to the lack of experts on the labour market by being actively present in the labour market,
bolstering Krka's image as a reputable employer, working with faculties and schools, and by awarding scholarships. This
allows us to attract new employees required to meet our strategic, development, and sales plans. We systematically
educate and train our employees to acquire national vocational qualification certificates.
Financial Risks
The Krka Group manages financial risk centrally in the Finance division of the controlling company in Slovenia. Financial
departments of subsidiaries and representative offices abroad perform risk management operational tasks in accordance
with the guidelines set out by the controlling company. Key financial risks include credit, market, liquidity, and insurance-
related risks.
The Krka Group's main market risk is foreign exchange risk. We monitor interest rate risk; however, in 2021, we did not
take any measures due to low interest rate exposure. The risk of market value changes of raw materials and the risk of
market value changes of shares and bonds do not significantly impact the Krka Group's net financial result. This is why
we monitor changes in exposure to these risks but do not implement any risk management measures.
Foreign Exchange Risk
The Krka Group operates in diverse international environments and is exposed to foreign exchange risk in certain sales
and purchase markets.
Currency exposure arises from the difference in the value of assets and liabilities in a particular currency in the financial
position statement of the Group and from differences between operating income and expenses generated in individual
currencies.
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The key accounting categories composing a currency position are trade receivables, trade payables, liquid financial assets
in foreign currencies, derivatives for currency risk hedging, and subsidiary funding by the controlling company.
Currency Position Structure of the Krka Group
Percentage of the Currencies in the Krka Group Currency Position Structure
At the end of 2021, the Russian rouble accounted for the largest, 29%, share of the Krka Group currency position, taking
into account the size of the position in roubles was partially hedged with derivatives. The position in the rouble arises from
trade receivables in the Russian market and partly from the controlling company’s funding in the Russian Federation.
The importance of the Russian sales market, level of currency exposure, and volatility of the Russian rouble are why we
pay special attention to Russian rouble risk management.
Unlike with other currencies, a surplus of liabilities over assets has accrued in regular business operations from exposure
to the US dollar, or in other words, the currency position is short. Exposure to the US dollar arises primarily from purchasing
raw and other materials. Considering liquid financial assets in US dollars, which offset the short currency position from
operations, the exposure in US dollars accounts for approximately 6% of the Krka Group total currency exposure.
The exposure to the Romanian leu, accounting for 18% of the currency position at the end of 2021, arises from trade
receivables accrued due to extended payment terms in Romania. Exposure to the Polish zloty is the result of trade
receivables and manufacturing facilities held by the Group in Poland and represents 15% of the currency position.
Other currencies, among them the Croatian kuna, Swedish krona, North Macedonian denar, Kazakh tenge, Serbian dinar,
British pound, Czech koruna, Ukrainian hryvnia, and Hungarian forint, account for 32% of the Krka Group currency position.
2021 Currency Markets
Krka's key sales and purchase markets experienced imbalanced dynamics in terms of economic recovery and uncertainty
with regard to rising inflation in individual countries while at the same time facing a constant risk of economies shutting
down again. Uncertainty in currency markets led to high volatility of individual exchange rates.
The 2021 fluctuation in the Russian rouble was favourable for us. The value of the rouble expressed in the euro went up
by 7.2% during the year. The average 2021 value of the Russian rouble was 5.1% below the 2020 level.
The Brent oil price expressed in US dollars jumped by 50% in 2021. The value of the rouble expressed in the euro did not
follow the dynamics of oil price increase. After 2020, which was heavily affected by the pandemic, the Russian economy
recorded high economic growth and rising inflation in 2021. Consequently, the Central Bank of the Russian Federation
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increased its key interest rate by 4.25 percentage points. Owing to high interest rate growth accompanied by a significant
rise in oil prices, the rouble strengthened against the euro and the US dollar. Interest rate increase in the Russian
Federation led to a gradual rise in the cost of hedging Krka’s position in roubles in 2021.
The Polish zloty was more stable in 2021. Its value dropped by 0.8% from the beginning to the end of the year, while the
average value was 2.7% lower than in 2020. In the last quarter of 2021, the Polish central bank started to increase its key
interest rate due to the rising inflation. The central bank is not in favour of strengthening the domestic currency, which
impacted the market value of zloty.
Over the course of 2021, the value of the Romanian leu expressed in the euro declined by 1.7%, which was in line with
the gradual depreciation of the currency against the euro in recent years.
The Croatian kuna, participating in the ERM II mechanism since 2020, remained stable against the euro. In 2021, the
British pound went up 7% against the euro. Although the movement of both currencies in 2021 positively impacted the
Krka Group's net financial result, the contribution was small.
The value of the US dollar expressed in the euro went up by 8.3% over the course of 2021, while the average value of the
dollar expressed in the euro was 3.4% below the 2020 level. The US dollar strengthened more significantly in the second
half of 2021, when it became clear that the inflation in the US and worldwide would rise over the longer term. In the second
half of the year, the US Federal Reserve announced that it would gradually withdraw monetary stimulus measures and
increase the key interest rate for the first time in 2022. Meanwhile, the European Central Bank decided to delay and slow
down the tightening of its monetary policy, which further contributed to strengthening of the US dollar against the euro
in 2021.
In 2021, the Ukrainian hryvnia strengthened again after plummeting in 2020. However, its value against the euro weakened
due to the geopolitical risk at the end of the year. The macroeconomic situation in the country remains uncertain, which
will continue to be reflected in currency movements.
2021 Movement of Currencies Expressed in Euro (Index 31 Dec 2020 = 100)
Currency Risk Management Results
The Krka Group generally mitigates currency risks by natural hedging, primarily by increasing purchases and liabilities in
currencies in which sales invoices are issued. When this is not possible, we use derivatives or do not hedge the risk.
Generally, only forward contracts are used for hedging.
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In 2021, Krka continued its policy of partial hedging against rouble-related risk. Less than 50% of the risk exposure to the
Russian rouble was hedged using forward contracts. Due to the strengthening of the rouble value in euros, we generated
net foreign exchange gains partially offset by net expenses from forward contracts used for hedging the rouble.
The increasing operational risk exposure and an interest rate difference between the euro and the US dollar that is
favourable for Krka are two key reasons that contributed to partial hedging of the exposure in the US dollar with financial
instruments also in 2021. Due to the short currency position, the dollar strengthening had a negative financial impact on
the Krka Group result. In 2021 however, this was largely offset by income from the US dollar hedging instruments.
We generated net foreign exchange losses from other currencies in 2021. Exposure to other currencies was not hedged.
The Krka Group's currency exposure to the Ukrainian hryvnia, Kazakh tenge, Serbian dinar, and certain other currencies
is less significant, and no hedging instruments are available.
The currency risk balance in 2021 was positive, totalling €7.7 million. Net financial result of the Krka Group, which also
included currency risk result, interest income and expenses, and other financial income and expenses, totalled €7.6 million.
2022 Objectives
In 2022, we intend to retain partial hedging for the exposure to the Russian rouble and the US dollar by using financial
instruments. We will continue to focus on activities to offset currency exposure by natural hedging.
2021 Foreign Exchange Rates
31 Dec 2020
31 Dec 2021
Lowest
value
Highest
value
Average
value
Standard
deviation
Coefficient of
variation*
RUB
91.47
85.30
80.64
92.38
87.17
2.93
3.4%
HRK
7.55
7.52
7.48
7.59
7.53
0.03
0.4%
RON
4.87
4.95
4.87
4.95
4.92
0.03
0.5%
PLN
4.56
4.60
4.45
4.71
4.57
0.05
1.1%
CZK
26.24
24.86
24.86
26.42
25.64
0.32
1.2%
HUF
363.89
369.19
345.82
370.91
358.54
6.26
1.7%
UAH
34.61
30.98
29.89
34.95
32.24
1.33
4.1%
RSD
117.56
117.41
116.74
118.00
117.42
0.12
0.1%
USD
1.23
1.13
1.12
1.23
1.18
0.03
2.4%
GBP
0.90
0.84
0.84
0.91
0.86
0.01
1.5%
* Standard deviation to mean value ratio
Interest Rate Risk
Interest rate risk is the risk of losses that result from a change in interest rates and is related to Krka’s non-current
borrowings and investments.
The interest rate risk with current borrowings and current investments is managed as part of the Group's liquidity risk.
The Krka Group had no non-current borrowings in 2021.
2022 Objectives
If we obtain non-current borrowings or make non-current investments resulting in interest rate risk exposure, we will
consider all options to mitigate the risk using relevant financial instruments.
2021 Annual Report – Business Report
63
Credit Risk
The key credit risk of the Krka Group arises from trade receivables. This is the risk of customers failing to settle their
liabilities by maturity dates.
Credit Risk Management Process
The Krka Group introduced a centralised credit control process in 2004. The system includes all customers with credit
limits exceeding €20,000. Numbering over 570 at the end of 2021, they accounted for more than 95% of total trade
receivables. Receivables due from small customers accounted for less than 5% of total trade receivables. Control over
small customers is decentralised in the sales network and under the constant supervision of the controlling company.
Credit control is a two-step process. The first step involves assessing the credit risk for each customer, determining
hedging instruments, and assigning relevant credit limits. We assess each new customer and review the credit ratings of
all customers twice a year. Each credit rating includes many different financial and non-financial indicators, which fall into
four categories; each has a different weight in the final assessment.
Credit Risk Assessment Indicator Categories
Each customer is assigned a customised credit limit according to the credit rating and the expected shipment and payment
dynamics.
The second step in the credit-control process involves regular dynamic monitoring of a customer's payment discipline. The
information systems of all Krka Group companies engaged in sales monitor available limits and overdue receivables.
Control is exercised for each shipment of Krka products to customers. A shipment is automatically blocked if a customer
is in arrears or if receivables together with the new shipment exceed the approved credit limit. Sales personnel are required
to initiate a payment collection procedure or arrange hedging for the outstanding settlements.
Krka’s internal rules determine the process of credit control and authorisations for granting credit limits to customers. Credit
control also avails of a system of regular reporting on trade receivables and the customer's payment discipline. The
reporting system aids the early detection of customers at increased risk of defaulting on payments and facilitates effective
credit risk management.
The credit control process employs uniform rules which apply to all customers. Due to specifics of individual sales markets,
additional national controls have been introduced in individual subsidiaries. Credit control processes are regularly adjusted
to changes in the sales markets.
2021 Annual Report – Business Report
64
Credit Risk Management Results
Credit control guarantees permanent control over the quality of the trade receivables portfolio. The result of the credit
control process is a low percentage of receivable write-offs and impairments in total Krka Group sales.
The amount of receivable write-offs and impairments is also low because receivables are dispersed across many
customers and sales markets, and the majority of outstanding receivables are due from customers with whom Krka has
been doing business for several years.
Despite the risks arising from the COVID-19 pandemic, receivables were well managed in 2021. At the end of 2021, the
value of trade receivables increased by 22% compared to the beginning of the year. However, the amount of overdue and
outstanding receivables remained within limits acceptable for Krka.
The amount of the newly established valuation allowance for receivables exceeded the amount of the reversed allowance.
The impact of net impairments and write-offs on the Krka Group's bottom line in 2021 was less than 0.07% of sales.
Receivable Impairments and Write-Offs (Net)
Trade Receivable Insurance
Since 2009, the Krka Group has insured part of its trade receivables with a credit insurance company. In the second
quarter of 2020, trade receivable insurance was extended and supplemented. At the end of 2021, more than 98% of trade
receivables were insured. Bank guarantees and letters of credit are used only exceptionally to secure payments.
2021 Annual Report – Business Report
65
Insured and Uninsured Receivables
Trade Receivables by Region
The structure of receivables by sales region is stable and conforms to the structure of sales and payment terms in individual
countries.
Trade Receivables by Region
Maturity Structure of Trade Receivables
The maturity structure of receivables remained stable. The percentage of overdue receivables compared to total trade
receivables remained low at the end of 2021.
2021 Annual Report – Business Report
66
Receivables by Maturity
2022 Objectives
We will continue standard credit risk management activities in 2022. The insurance contract for our trade receivables
expires in the middle of 2022. Once renewed, we plan to optimise the conditions for receivable insurance further. As before,
we plan to redouble our monitoring of customers from markets with less favourable macroeconomic environments and
markets where we have identified increased risks in the wholesale distribution of medicines. Where individual customer
exposure above the acceptable levels is established, we will introduce individual measures to reduce the exposure
gradually.
Our goal remains low receivable impairment and write-off total at the Group level.
Liquidity Risk
Business partners value Krka for its excellent financial discipline and stable cash flows. In 2021, we settled all financial
liabilities regularly. Krka Group exposure to liquidity risk was low last year.
We did not use any new short-term funding from banks or draw funds from existing credit lines in 2021.
At the end of 2021, the Krka Group recorded excess liquidity, primarily as cash at bank or deposits with first-class
commercial banks. The 2021 increase in excess liquidity resulted from surplus cash flow from operating activities over
negative cash flows from investing and financing activities.
In the European Economic and Monetary Union (EMU) money markets, negative interest rates still apply to low-risk cash
investments. In accordance with internal rules on diversification of investments and taking account of banks’ credit risks,
we deposited a part of the cash surplus with banks during the year. In this way, we reduced the cost of negative interest
rates and invested another part in short-term bonds of selected European countries.
The controlling company manages liquidity risk centrally for the entire Group. The controlling company finances
subsidiaries through intra-group loans. Any potential cash surpluses are deposited with the controlling company. Excess
cash from all Group companies is transferred to the controlling company's master account either automatically daily (cash
pooling) or manually through individual bank transfers. This allows for cash management optimisation, currency risk
mitigation, an overview of liquidity of all Group companies, and enhanced security of cash transactions.
The Krka Group also reported favourable and stable liquidity ratios at the end of 2021. The continuing COVID-19 pandemic
did not increase the Group’s liquidity risk in 2021.
2021 Annual Report – Business Report
67
Krka Group Liquidity Ratios
2021
2020
2019
2018
2017
Five-year
average
Current ratio
3.21
4.00
3.21
3.03
2.86
3.26
Quick ratio
2.21
2.54
2.02
1.89
1.85
2.10
Acid test ratio
0.69
1.04
0.62
0.38
0.15
0.58
Receivables turnover ratio
3.45
3.50
3.21
2.68
2.36
3.04
Current ratio = Current assets/Current liabilities
Quick ratio = (Current assets – Inventories)/Current liabilities
Acid test ratio = (Investments + Cash and cash equivalents)/Current liabilities
Changes in Krka Group Liquidity Ratios
2022 Objectives
In 2022, we intend to ensure adequate liquidity of all Group companies based on cash flow management within the Krka
Group.
Property, Liability, and Business Interruption Insurance
The Krka Group holds insurance policies with domestic and foreign insurance companies to insure property, liabilities, and
financial losses in the event of a business interruption. Insurance is one of the risk management tools. Our internal
Insurance Policy defines types of insurance and their characteristics. The document was adopted by the Management
Board, which also confirms any changes to it.
Decisions on insurance type and scope of coverage are made based on the materiality of risks and the insurance price.
The materiality of risks is determined based on estimates concerning the probability of occurrence and the extent of
potential damages, and the impact on operations. The Krka Group primarily invests in prevention, as the effect on risk
management is more optimal compared to purchasing insurance. One of the reasons for taking out insurance is legislation,
which may require specific types of insurance.
We adjust insurance scope and coverage to our business growth, property value, and conditions in the international
insurance markets. We also consider the wider community's interests and those of our stakeholders, for example,
concerning environmental liability insurance or product liability insurance.
2021 Annual Report – Business Report
68
Among the most important insurance policies taken out by the Krka Group for risk management are property and business
interruption insurance, general civil liability insurance, insurance of product liability, clinical trials and product recalls, and
freight-in-transit insurance.
The controlling company manages the insurance policies of all Krka Group companies, except local car insurance policies.
However, the Company still provides guidelines and monitors car insurance. The entire Krka Group is insured in
compliance with uniform principles. The competitiveness and safety of individual insurance companies is reviewed every
year. We consider the quality of coverage, premium rates, references, financial security, and national legal requirements
when selecting insurance companies. Insurance premiums exclusive of car insurance amounted to 2.25‰ of sales in 2021
and accounted for 2.01‰ of total sales over the past six years.
In order to improve our insurance programme, we surveyed the international insurance market in 2021. Krka makes
gradual improvements every year and at the same time assumes part of the risk, either through insurance deductibles or
by cancelling low-risk insurance policies. In 2020, we introduced a new method for insuring freight in transit, whereby the
process of consignment insurance was automated. In 2021, Krka continued optimising the programme by increasing
insurance deductibles and optimising insurance coverage. At the same time, three insurance audits were carried out in
the Krka Group. We received no critical recommendations.
Krka has been investing systematically in damage prevention. Our buildings are designed so that their hazard exposure
is as low as possible. They are equipped with active fire protection systems, for example, fire and smoke alarms, sprinkler
systems, fire flaps, and safety lighting. Preventive inspections and fire drills are arranged regularly. Employees undergo
theoretical and practical emergency response training.
Planned preventive actions and insurance coverages have reduced property damage over the last five years, which
remains low, and all insurance claims were promptly resolved.
Share of Insurance Premiums in Sales
Note: This chart does not include car or personal insurance
2021 Annual Report – Business Report
69
Investor and Share Information
Shareholder Return
Krka Share Price on the Ljubljana Stock Exchange
€
2021
2020
2019
2018
2017
Year high
120.00
92.60
74.60
59.80
58.00
Year low
91.20
54.00
56.80
53.60
50.75
31 December
118.00
91.40
73.20
57.80
57.50
Annual change (%)
29.1
24.9
26.6
0.5
8.7
In 2021, the Krka share price rose by 29.1%. In the same period, the value of the blue-chip index of the Ljubljana Stock
Exchange (SBITOP) advanced by 39.8%.
Krka Share Price Performance Compared to Selected Share Indices Over the Last Five Years
Sources: The Ljubljana Stock Exchange and S&P Dow Jones Indices LLC
Dividend Policy
The Annual General Meeting decides on the proposed dividend amount. In 2021, we allocated 53.6% of the consolidated
net profit attributable to equity holders of the controlling company generated in 2020 for the payout of dividends. Gross
dividend per share increased by 17.6%. When determining the net profit share for dividend payout each year, the
Company's long-term dividend policy is considered. At least 50% of the net profit of the controlling company's equity
holders is allocated for dividends. The Group’s financial requirements for investments and potential acquisitions are also
taken into account.
2021 Annual Report – Business Report
70
Dividends and Dividend Yield
2021
2020
2019
2018
2017
Earnings per share
1
(€)
9.92
9.27
7.73
5.46
4.74
Gross dividend per share
2
(€)
5.00
4.25
3.20
2.90
2.75
Dividend payout ratio
3
(%)
53.6
54.3
58.2
60.8
81.7
Dividend yield
4
(%)
4.2
4.6
4.4
5.0
4.8
1
Net profit of the year attributable to equity holders of the controlling company/Average number of shares issued in the period, excluding treasury
shares
2
Dividends paid for the previous period per the AGM resolution
3
Total dividends paid/Net profit attributable to majority equity holders of the controlling company
4
Gross dividend per share/Share price as at 31 December
Share Trading and Shareholding
20
Krka shares are listed on the prime market of the Ljubljana Stock Exchange. Since April 2012, they have been dual-listed
on the Warsaw Stock Exchange. All Krka shares traded on the Ljubljana and Warsaw stock exchanges are of the same
class: ordinary and freely transferable. Each share, except treasury shares, carries one vote at the AGM. Krka shares are
traded freely through brokerage companies and banks that are members of the Ljubljana or Warsaw stock exchanges.
Krka Share Trading
Sources: The Ljubljana Stock Exchange and the Warsaw Stock Exchange
Krka shares are the most traded security on the Ljubljana Stock Exchange. In 2021, the average daily trading volume of
Krka shares on the Ljubljana Stock Exchange reached €0.65 million or 6,200 shares, including blocks.
20
GRI GS 102-5, 102-10
2021 Annual Report – Business Report
71
Ten Largest Shareholders as at 31 December 2021
Shareholder
Number of shares
Percentage of total shares
issued (%)
1
Kapitalska družba, d. d.
3,493,030
10.65
2
Slovenski državni holding, d. d. (SDH)
2,949,876
9.00
3
Republic of Slovenia
2,366,105
7.22
4
OTP banka, d.d.
1
1,610,316
4.91
5
Erste Group Bank AG - PBZ Croatia Osiguranje
1
1,199,638
3.66
6
Clearstream Banking SA
1
1,064,929
3.25
7
State Street Bank and Trust
1
591,727
1.80
8
Luka Koper, d. d.
433,970
1.32
9
KDPW
1
327,475
1.00
10
Privredna banka Zagreb d. d.
1
318,434
0.97
Total
14,355,500
43.78
1
The shares are on custody accounts with the above banks and are owned by their clients.
At the end of 2021, Krka had 46,820 shareholders, or just over 1% less than at the end of 2020.
Shareholder Structure (%)
Source: KDD
Foreign investors' holdings have declined by 1 percentage point, while holdings of domestic retail investors and treasury
shares have somewhat advanced.
In 2021, the Company acquired 142,134 treasury shares valued at €15,238 thousand on the regulated market and held
1,683,908 treasury shares as at 31 December 2021.
Communication with Investors
21
We strive for open, prompt, and consistent communication with investors as much as possible and mutual exchange of
information. We provide them with information mainly related to our business results and the Krka Group’s future strategy,
complying with the information disclosure policy. Investors and financial analysts give us feedback, which we always
carefully consider and present to Krka’s Management Board. In 2021, we participated in 15 online investment conferences
21
GRI GS 102-43, 102-44
2021 Annual Report – Business Report
72
with investors from more than 15 countries. We organised four webcasts to present our quarterly business reports and
held several conference calls with more than 100 investors. We hosted a virtual Krka Investor Day, where we presented
our nine-month business report to 32 investors that attended the meeting. The event also offered a great opportunity to
outline professional competency in development and regulatory affairs at Krka. Director of Pharmaceutical R&D and
Director of New Products made the presentations. Of all companies listed on the Ljubljana Stock Exchange, we took home
two prizes at the Ljubljana and Zagreb Stock Exchanges’ Investor Day, winning the Prime Market Share of the Year Award
for the fourth successive time and Best Investor Relations Award for the third consecutive time.
Krka’s business results are available in Slovenian and English on SEOnet (http://seonet.ljse.si) of the Ljubljana Stock
Exchange, ESPI of the Warsaw Stock Exchange, and Krka’s webpages.
Business Performance
Operating Income
Revenue
In 2021, the Krka Group sales revenue amounted to €1,565.8 million, of which revenue from contracts with customers on
sales of products and services reached €1,560.3 million. Revenue from contracts with customers on sales of materials
and other sales revenue constituted the difference. Sales grew by €30.9 million, up 2% on 2020. Over the past five years,
average annual sales grew by 3.7% in volume and 5.9% in value. Other operating income of the Krka Group amounted to
€11.4 million.
In 2021, the Company generated sales of €1,381.4 million, of which revenue from contracts with customers on sales of
products and services amounted to €1,211.5 million. Revenue from contracts with customers on sales of materials
accounted for €163.3 million and other revenue from sales totalled €6.6 million. Sales dropped by €65.7 million or 5%
on 2020. Other operating income amounted to €6.7 million.
2021 Annual Report – Business Report
73
Operating Expenses
The Krka Group operating expenses totalled €1,222.4 million, up €67.7 million or 6% on 2020. The Company incurred
operating expenses of €1,114.7 million, which remained at the 2020 level.
The Krka Group operating expenses comprised costs of goods sold amounting to €674.6 million, selling and distribution
expenses of €305.9 million, R&D expenses of €154.6 million, and general and administrative expenses totalling
€87.4 million. Operating expenses accounted for 78% of sales and, over the past five years, ranged between 75% in 2020
and 85% in 2017.
Costs of goods sold, up 8% on 2020, represented the largest item in the Krka Group operating expense structure.
Expressed as a percentage of sales, they accounted for 43.1% in 2021 and 40.6% in 2020. Selling and distribution
expenses rose by 5% on 2020 and accounted for 19.5% of total sales, 0.5 percentage points more than in 2020. R&D
expenses accounted for 9.9% of total sales, down 0.1 percentage points compared to 2020 and up 1% year on year.
General and administrative expenses amounted to 5.6% of total sales, a 1% increase on 2020, while expressed as a
proportion of sales they remained at the 2020 level.
The Company's operating expenses included costs of goods sold amounting to €614.8 million, selling and distribution
expenses of €271.4 million, R&D expenses of €150.2 million, and general and administrative expenses totalling
€78.2 million. Costs of goods sold, which fell by 1% compared to 2020, represented the largest item in the Company's
operating expense structure. They accounted for 44.5% of total sales, or 1.4 percentage points more than in 2020. Selling
and distribution expenses grew by 3% on 2020 and accounted for 19.6% of total sales, a 1.4 percentage point increase
on 2020. R&D expenses accounted for 10.9% of total sales, up 0.5 percentage points on 2020, and remained at the 2020
level. General and administrative expenses accounted for 5.7% of sales, up 4% on 2020, increasing as a proportion of
sales by 0.5 percentage points.
Financial Income and Expenses
Krka Group
Company
€ thousand
2021
2020
2019
2018
2017
2021
2020
2019
2018
2017
Financial income
19,711
23,259
24,987
5,935
24,041
24,714
31,786
34,410
17,382
24,908
Financial
expenses
-12,082
-75,011
-14,814
-36,048
-46,608
-12,083
-72,837
-14,751
-33,891
-46,599
Net financial
result
7,629
-51,752
10,173
-30,113
-22,567
12,631
-41,051
19,659
-16,509
-21,691
In 2021, the Krka Group’s net financial result amounted to €7.6 million, and the Company’s net financial result totalled
€12.6 million.
The Krka Group operates in diverse international environments and is exposed to foreign exchange risks in certain sales
and purchase markets. The Group's currency risk yielded a profit of €7.7 million in 2021. You can find more on foreign
exchange risk on pages 59-62.
The Krka Group financial income comprised net foreign exchange gains of €15.1 million, derivatives income totalling
€3.0 million, interest income of €0.8 million, income from dividends and other profit shares worth €0.7 million, and other
financial income totalling €0.1 million. Financial expenses consisted of derivatives expenses of €10.5 million, interest
expenses of €0.5 million, and other financial expenses of €1.1 million.
The Company's financial income comprised net foreign exchange gains totalling €15.1 million, income from dividends and
other profit shares worth €6.1 million, derivatives income of €3.0 million, interest income of €0.5 million, and other financial
income totalling €0.1 million. Financial expenses consisted of derivatives expenses of €10.5 million, interest expenses of
€0.5 million, and other financial expenses of €1.1 million.
2021 Annual Report – Business Report
74
Operating Results
Operating Profit and Net Profit for the Year
The Krka Group’s EBIT amounted to €354.8 million, down €36.0 million or 9% on 2020. The drop is attributable to relatively
higher operating expenses compared to 2020, when the COVID-19 pandemic had a stronger impact. The Krka Group’s
EBITDA amounted to €463.6 million, down €38.8 million or 8%.
The Company's EBIT totalled €273.3 million, while its EBITDA reached €358.2 million.
In 2021, the Krka Group's profit before tax rose by €23.4 million or 7% to €362.4 million. The Krka Group's effective tax
rate was 15.0%. The Company's profit before tax amounted to €286.0 million.
22
The Krka Group recorded net profit of €308.2 million, a €19.2 million or 7% climb on 2020. The Company's net profit
totalled €245.2 million.
22
GRI GS 207-4
2021 Annual Report – Business Report
75
Assets
Krka Group
Company
€ thousand
2021
Share
(%)
2020
Share
(%)
Index
2021/20
2021
Share
(%)
2020
Share
(%)
Index
2021/20
Non-current
assets
1,075,747
42.4
990,998
44.3
109
1,095,419
45.1
1,032,949
46.8
106
Property, plant
and equipment
774,352
30.5
807,824
36.1
96
570,086
23.5
605,164
27.4
94
Intangible assets
104,301
4.1
107,371
4.8
97
25,628
1.1
27,893
1.3
92
Investments and
loans
149,183
5.9
25,796
1.2
578
486,336
20.0
385,055
17.4
126
Other
47,911
1.9
50,007
2.2
96
13,369
0.5
14,837
0.7
90
Current assets
1,461,936
57.6
1,244,544
55.7
117
1,332,521
54.9
1,175,430
53.2
113
Inventories
455,707
18.0
453,690
20.3
100
394,323
16.2
389,178
17.6
101
Trade receivables
467,764
18.4
383,560
17.2
122
424,588
17.5
415,286
18.8
102
Other
538,465
21.2
407,294
18.2
132
513,610
21.2
370,966
16.8
138
Total assets
2,537,683
100.0
2,235,542
100.0
114
2,427,940
100.0
2,208,379
100.0
110
At the end of 2021, the Krka Group's assets were valued at €2,537.7 million, up €302.1 million or 14% on year-end 2020.
The ratio of non-current to current assets in the overall asset structure differed from that recorded at year-end 2020, as
non-current assets dropped 1.9 percentage points, accounting for 42.4%.
At the end of 2021, the Company's assets were valued at €2,427.9 million, up €219.6 million or 10% on year-end 2020.
The ratio of non-current to current assets in the overall asset structure differed from that recorded at year-end 2020, as
non-current assets dropped 1.7 percentage points, accounting for 45.1%.
The Krka Group's non-current assets were valued at €1,075.7 million, up €84.7 million or 9% on year-end 2020. The most
important item in the asset structure of the Krka Group was property, plant and equipment (PP&E). It was valued at
€774.4 million and accounted for 31% of total Group assets (of which the Company's PP&E accounted for €570.1 million
or 74% of the Krka Group's PP&E). Intangible assets were worth €104.3 million and accounted for 4% of total assets (of
which the Company's assets accounted for €25.6 million or 25% of total Krka Group intangible assets). The Krka Group's
non-current loans totalled €40.3 million or 1.6% of total Krka Group assets.
The Krka Group's current assets were valued at €1,461.9 million, a €217.4 million or 17% increase on year-end 2020.
Trade receivables due from customers outside the Krka Group totalled €467.8 million, accounting for 18% of total Krka
Group assets. Inventories amounted to €455.7 million and accounted for 18% of total Krka Group assets. Trade
receivables increased by €84.2 million, or 22%, and inventories saw a rise of €2.0 million or 0.4%. The Krka Group's
current loans totalled €192.4 million or 8% of total Krka Group assets. They comprised bank deposits of the controlling
company maturing in 90 days or more, totalling €190.3 million. Cash and cash equivalents were valued at €159.8 million,
down €153.7 million or 49% on year-end 2020, accounting for 6% of total Krka Group assets.
The Company's non-current assets were valued at €1,095.4 million, accounting for a €62.5 million or 6% rise on year-
end 2020. The most important item worth €570.1 million or 23% of total Company assets was PP&E. Investments in
subsidiaries totalled €346.4 million or 14% of total Company assets. Intangible assets of €25.6 million accounted for 1%
of total assets. The Company's non-current loans totalled €31.0 million or 1% of total Company assets.
The Company's current assets were valued at €1,332.5 million, up €157.1 million or 13% on year-end 2020. Trade
receivables totalled €424.6 million or 17% of Company assets (of which trade receivables due from customers outside the
Krka Group totalled €191.3 million), and inventories amounted to €394.3 million or 16% of total Company assets. Trade
receivables grew by 2% and inventories by 1%. The Company's current loans totalled €195.5 million or 8% of total
Company assets. Cash and cash equivalents were valued at €145.0 million, down €151.4 million or 51% on year-
end 2020, accounting for 6% of total Company assets.
2021 Annual Report – Business Report
76
Equity and Liabilities
Krka Group
Company
€ thousand
2021
Share
(%)
2020
Share
(%)
Index
2021/20
2021
Share
(%)
2020
Share
(%)
Index
2021/20
Equity
1,919,085
75.6
1,751,812
78.4
110
1,876,142
77.3
1,791,850
81.1
105
Non-current
liabilities
162,674
6.4
172,796
7.7
94
128,783
5.3
136,380
6.2
94
Current liabilities
455,924
18.0
310,934
13.9
147
423,015
17.4
280,149
12.7
151
Total equity and
liabilities
2,537,683
100.0
2,235,542
100.0
114
2,427,940
100.0
2,208,379
100.0
110
As at 31 December 2021, the Krka Group equity increased by €167.3 million or 10% on year-end 2020. The rise was
attributable to the Krka Group's net profit totalling €308.2 million, other comprehensive income net of tax amounting to
€25.1 million, and acquisition of non-controlling interests valued at €5.2 million. Equity declined as a result of dividend
payout of €155.9 million and repurchase of treasury shares of €15.3 million.
The Krka Group's provisions totalled €126.2 million (of which post-employment and other non-current employee benefits
accounted for €124.3 million, provisions for lawsuits €0.6 million, and other provisions €1.3 million). They fell by
€8.5 million or 6% compared to year-end 2020. Provisions for post-employment and other non-current employee benefits
declined by €5.9 million, provisions for lawsuits by €1.6 million, and other provisions by €1.0 million.
Among the Krka Group's current liabilities, trade payables grew by €22.9 million (of which payables to suppliers abroad by
€14.4 million and payables to domestic suppliers by €8.5 million). Current liabilities from contracts with customers rose by
€18.4 million (of which bonuses and volume rebates by €15.7 million and contract liabilities by €3.5 million, while right of
return decreased by €0.8 million). Other current liabilities climbed by €111.7 million, of which liabilities from repurchase
agreements by €102.2 million, payables to employees by €6.3 million, and other liabilities by €3.1 million.
As at 31 December 2021, the Company’s equity increased by €84.3 million or 5% on year-end 2020. The increase was
attributable to the Company's net profit amounting to €245.2 million and other comprehensive income net of tax totalling
€10.2 million, while the decrease was a result of dividend payouts amounting to €155.9 million and repurchase of treasury
shares totalling €15.3 million.
The Company's provisions totalled €113.1 million (of which post-employment and other non-current employee benefits
accounted for €112.6 million and provisions for lawsuits €0.5 million). Compared to year-end 2020, provisions declined by
€6.7 million or 6% due to a decrease in provisions for post-employment and other non-current employment benefits by
€5.1 million and provisions for lawsuits by €1.6 million.
Of the Company’s current liability items, trade payables increased by €34.8 million. Current liabilities from contracts with
customers rose by €2.9 million and other current liabilities by €104.8 million, of which liabilities from repurchase
agreements by €102.2 million. At the end of 2021, the Company’s current borrowings from subsidiaries amounted to
€55.1 million.
Cash Flow Statement
Krka Group
Company
€ thousand
2021
2020
2021
2020
Net cash from operating activities
386,097
360,759
348,239
352,510
Net cash from investing activities
-372,637
-109,594
-338,401
-87,552
Net cash from financing activities
-169,850
-154,609
-163,901
-162,301
Net change in cash and cash equivalents
-156,390
96,556
-154,063
102,657
Net change in cash and cash equivalents (exclusive of exchange rate fluctuations) of the Krka Group totalled
-€156.4 million in 2021, since the positive cash flow from operating activities was lower than the negative cash flows from
investing and financing activities.
2021 Annual Report – Business Report
77
The Krka Group generated profit from operating activities before changes in net current assets totalling €485.1 million.
Changes in current assets that positively influenced cash flow included changes in trade payables and other current
liabilities, while changes in trade receivables, inventories, provisions, and deferred revenue had a negative impact.
Negative cash flows from investing activities of €372.6 million were primarily accrued due to net payments in connection
with loans amounting to €162.5 million, net payments in connection with investments totalling €134.6 million, and
acquisition of PP&E accounting for €65.9 million. Negative cash flows from financing activities totalling €169.9 million
primarily resulted from payouts of dividends and other profit shares of €155.9 million and repurchased treasury shares of
€15.3 million.
Performance Ratios
All 2021 performance ratios of the Krka Group and the Company are among the best in the past five years.
2021 Annual Report – Business Report
78
Operating Figures of Krka Group and Company for Past Five Years
Krka Group
Company
€ thousand
2021
2020
2019
2018
2017
2021
2020
2019
2018
2017
Revenue
1,565,802
1,534,941
1,493,409
1,331,858
1,266,392
1,381,367
1,447,112
1,390,248
1,231,784
1,197,756
EBIT
1
354,788
390,744
274,195
232,686
198,741
273,325
338,882
263,852
199,305
196,953
– EBIT margin
22.7%
25.5%
18.4%
17.5%
15.7%
19.8%
23.4%
19.0%
16.2%
16.4%
EBITDA
2
463,625
502,432
385,437
343,280
306,638
358,188
424,028
345,929
282,493
278,627
– EBITDA
margin
29.6%
32.7%
25.8%
25.8%
24.2%
25.9%
29.3%
24.9%
22.9%
23.3%
Net profit
308,150
288,949
244,272
174,008
152,576
245,216
258,474
249,411
163,329
153,730
– Net profit
margin
19.7%
18.8%
16.4%
13.1%
12.0%
17.8%
17.9%
17.9%
13.3%
12.8%
Assets
2,537,683
2,235,542
2,184,618
1,985,069
1,919,131
2,427,940
2,208,379
2,129,960
1,916,065
1,837,482
ROA
3
12.9%
13.1%
11.7%
8.9%
8.0%
10.6%
11.9%
12.3%
8.7%
8.4%
Equity
1,919,085
1,751,812
1,667,516
1,540,270
1,487,699
1,876,142
1,791,850
1,664,178
1,552,300
1,493,325
ROE
4
16.8%
16.9%
15.2%
11.5%
10.4%
13.4%
15.0%
15.5%
10.7%
10.5%
1
The difference between operating income and expenses
2
The difference between operating income and expenses increased by accumulated depreciation
3
Net profit/Average total asset balance in the year
4
Net profit/Average shareholders' equity in the year
2021 Annual Report – Business Report
79
Marketing and Sales
In 2021, the Krka Group generated €1,565.8 million from sales of products and services, a 2% year-on-year rise. Of that
revenue from contracts with customers on sales of products and services amounted to €1,560.3 million, while other
revenue from contracts with customers on sales of material and other sales revenue constituted the difference. Sales in
markets outside Slovenia reached €1,467.4 million and accounted for 94% of overall Krka Group sales. Product sales
volume increased by 2%.
Sales by Region
23
Region East Europe recorded the highest sales, €547.8 million or 35.1% of total Krka Group sales. Region Central Europe
achieved the second-highest sales, €351.5 million or 22.5% of total Krka Group sales. Region West Europe ranked third
in terms of sales with €305.2 million, accounting for 19.6% of total Krka Group sales. Sales generated by Region South-
East Europe totalled €209.2 million or 13.4% of total sales, and by Region Overseas Markets €53.7 million or 3.4% of total
sales. Region Slovenia generated sales of €92.9 million, accounting for 6% of total Krka Group sales.
2021 Krka Group Sales by Region
Krka Group and Krka Sales by Region
Krka Group
Krka
€ thousand
2021
2020
Index
2021/20
2021
2020
Index
2021/20
Region Slovenia
92,880
85,138
109
56,421
55,385
102
Region South-East Europe
209,166
199,406
105
205,491
197,185
104
Region East Europe
547,778
517,231
106
320,973
289,471
111
Region Central Europe
351,501
341,463
103
336,699
325,793
103
Region West Europe
305,246
341,057
89
246,350
313,365
79
Region Overseas Markets
53,717
45,664
118
45,560
40,812
112
Total
1,560,288
1,529,959
102
1,211,494
1,222,011
99
23
GRI GS 102-6, 102-7
2021 Annual Report – Business Report
80
Quarterly Krka Group Sales by Region
2021
2020
€ thousand
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Region Slovenia
18,270
23,502
27,033
24,075
23,325
15,022
26,207
20,584
Region South-East Europe
53,276
58,990
51,900
45,000
63,794
39,740
48,279
47,593
Region East Europe
132,122
144,401
121,226
150,029
153,082
118,606
105,495
140,048
Region Central Europe
97,805
91,098
82,955
79,643
113,706
68,969
79,328
79,460
Region West Europe
80,535
79,087
69,334
76,290
94,312
87,260
81,458
78,027
Region Overseas Markets
12,515
14,945
14,298
11,959
13,510
10,521
13,951
7,682
Total
394,523
412,023
366,746
386,996
461,729
340,118
354,718
373,394
Krka Group Sales by Region in Past Five Years
Revenue since 2017 is presented in compliance with the IFRS 15.
Region Slovenia
In Slovenia, one of Krka's key markets, sales of products and services amounted to €92.9 million in 2021. Product sales
reached €56.4 million, accounting for 2% growth in value. Prescription pharmaceuticals made up a major proportion of
sales or 74%. Non-prescription products accounted for 21%, and sales of animal health products generated the
remaining 5%. Holding a 7.4% market share, we maintained the leading position among providers of generic medicines in
Slovenia in terms of sales value. Health resorts and tourist services generated €36.5 million, up 23% on the year before,
contributing to 9% sales growth in the domestic market.
Medicines for the treatment of cardiovascular diseases, pain, the gastrointestinal tract, and the central nervous system
contributed to the highest prescription pharmaceutical sales. Market shares of all key therapeutic classes of prescription
medicines increased.
The highest sales volume was recorded by medicines for the treatment of cardiovascular diseases, most notably: Prenewel
(perindopril/indapamide); Prenessa (perindopril); Amlessa (perindopril/amlodipine); and Amlewel
(perindopril/amlodipine/indapamide). Of our cholesterol-lowering agents, sales of Sorvasta (rosuvastatin) were most
substantial. We also strengthened the recognition of Sorvitimb (rosuvastatin/ezetimibe). We strengthened recognition of
Roxiper, the only product on the market that contains perindopril, indapamide and rosuvastatin. We introduced a new
single-pill combination of rosuvastatin, amlodipine, and perindopril, Roxampex.
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Our most prominent pain relievers were Nalgesin Forte (naproxen) and Doreta (tramadol/paracetamol), including
Doreta SR (tramadol/paracetamol) prolonged-release tablets. We placed on the markets our non-opioid analgesic
Algominal (metamizole). Nolpaza (pantoprazole) and Emozul (esomeprazole) were our most notable agents for treating
gastrointestinal diseases. From our range for the central nervous system, our most prominent brands included: Asentra
(sertraline); Mirzaten (mirtazapine); Dulsevia (duloxetine); Kventiax (quetiapine); Parnido (paliperidone); and Memaxa
(memantine). We added to our product portfolio Vitamin D3 Krka (cholecalciferol) available on prescription and an
oncology agent Pemetrexed Krka (pemetrexed).
Sales of non-prescription products were driven by Magnezij Krka, followed by Nalgesin S (naproxen), and Vitamin D3 Krka
(cholecalciferol). Sales of animal health products were driven by Fypryst Combo (fipronil/S-methoprene), Rycarfa
(carprofen), and Grovit vitamins and minerals.
Krka Group Market Position in Slovenia
Holding a 7.4% market share, we placed first among all providers of generic medicines.
Of all medicines sold in Slovenia, one in five was made by Krka.
We were the leading provider of:
Non-steroidal anti-inflammatory and antirheumatic medicines, accounting for more than a 65% market share;
Proton pump inhibitors, accounting for more than a 55% market share;
Statins, accounting for approximately a 55% market share;
Agents acting on the renin-angiotensin system, accounting for approximately a 45% market share;
Products with effect on pharynx, accounting for approximately a 40% market share;
Antipsychotics, anxiolytics, anti-dementia medicines, and antidepressants, accounting for approximately a 35% market share.
We were the leading provider of medicines containing alprazolam; atorvastatin; ciprofloxacin; dexamethasone; doxazosin;
donepezil, enalapril; esomeprazole; gliclazide; indapamide; carvedilol; quetiapine; losartan, including losartan in combination
with hydrochlorothiazide; memantine; metronidazole; naproxen; omeprazole; pantoprazole; perindopril, including perindopril in
combinations with amlodipine and indapamide; ramipril; rosuvastatin; sertraline; simvastatin; tramadol in combination with
paracetamol; valsartan; and venlafaxine.
We were the leading provider of generic medicines containing aripiprazole; duloxetine; etoricoxib; olanzapine; tamsulosin; and
valsartan in combination with hydrochlorothiazide.
We were the leading provider of non-prescription products as follows: products with effect on pharynx; non-steroidal anti-
inflammatory drugs (NSAIDs); group B vitamins, proton pump inhibitors; magnesium-containing products; and vitamin D.
Among medicines that generated strongest sales were: Nalgesin (naproxen); Nolpaza (pantoprazole); Sorvasta (rosuvastatin);
Prenewel (perindopril/indapamide); Prenessa (perindopril); and Doreta (paracetamol/tramadol).
Region South-East Europe
Product sales in Region South-East Europe amounted to €209.2 million, a 5% year-on-year increase. We recorded growth
on all regional markets. Serbia recorded the highest absolute sales growth of €2.4 million year on year. In terms of absolute
sales growth, it was followed by North Macedonia and Bulgaria, where sales increased by €2.1 million and €1.9 million,
respectively.
Prescription pharmaceuticals accounted for almost 87% of regional sales and were followed by non-prescription products
at just shy of 10%. Animal health products constituted slightly less than 4% of total regional sales. Our leading product
group of prescription pharmaceuticals achieved 6% growth year-on-year. Non-prescription product sales advanced by 2%,
while animal health products lagged behind the 2020 sales figure by 1%.
In Romania, one of our key markets and the largest regional one, year-on-year sales increased by 1% to €58.6 million.
We held a 2.1% market share, or more than 6.8% of the market share volume, ranking us the country's third foreign
provider of generic prescription pharmaceuticals. Our most important medicines in terms of sales were: Atoris
(atorvastatin); Co-Prenessa (perindopril/indapamide); Doreta (tramadol/paracetamol); Roswera (rosuvastatin); Nolpaza
(pantoprazole); and Dexametazona Krka (dexamethasone). Our best-selling non-prescription products were Bilobil
(ginkgo leaf extract) and Nalgesin (naproxen) in that order. Companion animal products constituted the major part of animal
health product sales, notably Fypryst (fipronil) and Milprazon (milbemycin/praziquantel).
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82
Krka Group Market Position in Romania
We ranked fifth among foreign providers of generic medicines holding a 1.7% market share.
We were among the leading providers of:
SNRI antidepressants, accounting for more than a 55% market share;
Statins, accounting for more than a 20% market share;
Antimicrobials (fluoroquinolones), accounting for approximately a 20% market share;
Prescription analgesics and antipyretics, accounting for approximately a 20% market share;
Angiotensin II receptor antagonists, also their combinations with diuretics, accounting for approximately a 15% market share;
ACE inhibitors and ACE-based combinations, accounting for more than 10% market share.
We were the leading provider of medicines containing ciprofloxacin; dexamethasone; duloxetine; enalapril; lansoprazole; losartan;
mirtazapine; naproxen; norfloxacin; perindopril in combination with amlodipine; pramipexole; ropinirole; sulfasalazine; telmisartan;
and tramadol, including the combination with paracetamol.
We were the leading provider of generic medicines containing aripiprazole; esomeprazole; ivabradine; ginkgo leaf extract;
combination of perindopril and indapamide; and combination of perindopril, indapamide, and amlodipine.
Croatia, our another key market, ranked second in the region in terms of sales. Croatian sales totalled €36.1 million, up 2%
on 2020. We ranked fifth among all providers of generic medicines and placed second among manufacturers of animal
health products. Year-on-year sales of prescription pharmaceuticals and non-prescription products increased, while sales
of animal health products decreased.
According to the plan, sales of prescription pharmaceuticals generated the highest value, above all: Atoris (atorvastatin);
Emanera (esomeprazole); Co-Perineva (perindopril/indapamide); Roswera (rosuvastatin); Co-Dalneva
(perindopril/amlodipine/indapamide); Valsacombi (valsartan/hydrochlorothiazide); Helex (alprazolam); and
Dexamethason Krka (dexamethasone). Of non-prescription products, Nalgesin (naproxen) and the Septolete brand
products recorded the strongest sales. Sales of Fypryst (fipronil) and Enroxil (enrofloxacin) were most substantial in the
animal health range.
Krka Group Market Position in Croatia
We placed third among foreign providers of generic medicines, holding a 3.2% market share.
We were the leading provider of:
Angiotensin II receptor antagonists, also their combinations with diuretics, accounting for more than a 60% market share;
Antimicrobials (oral fluoroquinolones), accounting for more than a 55% market share;
Antitussives, accounting for more than a 35% market share;
Statins, accounting for approximately a 30% market share;
ACE inhibitors and ACE-based combinations with diuretics, accounting for more than a 25% market share;
Antidepressants, accounting for more than a 15% market share.
We were among the leading providers of:
Mono-component corticosteroids for systemic treatment, accounting for more than a 40% market share;
Typical antipsychotics, accounting for approximately a 30% market share;
Sulphonamide antidiabetics, accounting for more than a 25% market share;
Proton pump inhibitors, accounting for approximately a 25% market share;
Anxiolytics, accounting for more than a 15% market share;
ACE inhibitors and ACE-based combinations with calcium channel blockers, accounting for more than a 15% market share;
Angiotensin II receptor antagonists, also in combination with calcium channel blockers, accounting for more than a 15%
market share.
We were the leading provider of medicines containing: alprazolam; atorvastatin; butamirate; dexamethasone; diosmin;
escitalopram; esomeprazole; clarithromycin; lansoprazole; norfloxacin; perindopril, including perindopril in combination with
indapamide; rosuvastatin; theophylline; and valsartan, including valsartan in combination with hydrochlorothiazide.
We were the leading provider of generic medicines containing: desloratadine; gliclazide; perindopril in combination with
amlodipine; perindopril in combination with amlodipine and indapamide; valsartan in combination with amlodipine; valsartan in
combination with amlodipine and hydrochlorothiazide; and simvastatin.
Serbia generated €30.2 million in sales and recorded 9% growth, ranking it third among regional markets. Owing to strong
sales of prescription pharmaceuticals in pharmacies, rapid market share growth continued. Their share grew by 10% and
accounted for 87% of total sales. Nolpaza (pantoprazole); Co-Amlessa (perindopril/amlodipine/indapamide); Roxera
(rosuvastatin); Co-Prenessa (perindopril/indapamide); Atoris (atorvastatin); and Ampril (ramipril) were key medicines from
this group. Nolpaza (pantoprazole) with 6.3 million packs sold and 16% year-on-year sales value growth remained one of
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83
five medicines presenting strongest sales in Serbia. Nalgesin (naproxen), Bilobil (ginkgo leaf extract), and products sold
under the Septolete brand generated strongest non-prescription product sales, down 2% in terms of value. Sales of animal
health products increased by 3% compared to 2020. Fypryst (fipronil); Dehinel; Enroxil (enrofloxacin); and Tuloxxin
(tulathromycin) were at the forefront.
In Bulgaria, sales climbed for the eighth consecutive year, primarily due to successful expansion of our product range in
several therapeutic areas, and rapid adaptation to the state of the market. Prescription pharmaceuticals climbed by 8% to
€25.5 million and contributed the most to overall sales. Co-Valsacor (valsartan/hydrochlorothiazide); Valsacor (valsartan);
Roswera (rosuvastatin); Co-Amlessa (perindopril/amlodipine/indapamide); Dexamethason Krka (dexamethasone);
Nolpaza (pantoprazole); and Wamlox (valsartan/amlodipine) generated strongest sales. Non-prescription product sales
climbed by 11% on 2020, while animal health products advanced by 5%.
We have recorded sales growth in North Macedonia for seventeen successive years. Sales totalled €24.3 million, up a
good 9% on 2020. Krka remained the leading foreign provider of generic medicines in the country. Contributing most to
sales total, prescription pharmaceuticals were pivotal, in particular: Roswera (rosuvastatin); Nolpaza (pantoprazole); Enap
(enalapril); Co-Prenessa (perindopril/indapamide) Atoris (atorvastatin); Tanyz (tamsulosin); and Lorista (losartan). Our
non-prescription product sales went up by 25% on 2020, and were driven by: Daleron (paracetamol); Septanazal
(xylometazoline/dexpanthenol); Bilobil (ginkgo leaf extract); Septolete Total (benzydamine/cetylpyridinium chloride); and
Nalgesin (naproxen). We increased sales of animal health products by 29%. Fypryst (fipronil) and Floron (florfenicol)
contributed to the increase the most. In 2021, we started marketing several products in North Macedonia, most notably
our prescription pharmaceutical Xerdoxo (rivaroxaban).
In Bosnia and Herzegovina, we recorded sales of €20.3 million, up 1% on 2020. Despite restrictions that applied to
foreign manufacturers on certain reimbursement lists, we maintained the leading position among foreign providers of
generic medicines on the market. Sales were driven in particular by prescription pharmaceuticals. Agents that recorded
strongest sales were: Enap H/HL (enalapril/hydrochlorothiazide); Lexaurin (bromazepam); Roswera (rosuvastatin); Enap
(enalapril); Nolpaza (pantoprazole); Atoris (atorvastatin); Amlewel (perindopril/amlodipine/indapamide); and Lorista H/HD
(losartan/hydrochlorothiazide). Non-prescription product sales were driven by: Nalgesin (naproxen); B-Complex; the
Septolete brand products; Panatus (butamirate); and Bilobil (ginkgo leaf extract). Key animal health products were Fypryst
(fipronil), Rycarfa (carprofen), and Calfoset. In 2021, we started marketing several products, most notably our prescription
pharmaceutical, Xerdoxo (rivaroxaban) and a non-prescription product, Vitamin D3 Krka (cholecalciferol).
In Kosovo, we recorded a 12% sales increase, placing us among the leading providers of medicines in the country. Sales
reached €7.9 million. Year-on-year sales went up by 7% to €3.6 million in Albania. As we expected, prescription
pharmaceuticals constituted the mass of sales total. Ultop (omeprazole), Atoris (atorvastatin), and Nolpaza (pantoprazole)
generated strongest prescription pharmaceutical sales. In Montenegro, sales totalled €2 million, up 6%. Overall country
sales were driven by prescription pharmaceuticals, in particular Nolpaza (pantoprazole), Lorista (losartan), and Roswera
(rosuvastatin). In 2021, we launched several medicines in the country, most notably Sobycor (bisoprolol); Naklofen Duo
(diclofenac); Nalgesin Relief (naproxen); and Vitamin D3 Krka (cholecalciferol). In Greece, we started promoting our own
products and in the first year generated product sales totalling €0.55 million. Strongest sales were made by prescription
pharmaceuticals, above all Pitavador (pitavastatin); Rosuvador (rosuvastatin); Co-Valsareta
(valsartan/hydrochlorothiazide); and Zoletad (lansoprazole).
Region East Europe
Region East Europe remained our leading sales region in 2021, with €547.8 million in sales, up 6% year on year. The two
key regional markets contributed most to the result. We also recorded growth in all other regional markets, except in
Armenia and Tajikistan.
The Russian Federation remained our leading regional and largest individual market. Sales reached €332.9 million, or
€6 million more than in 2020, accounting for just shy of 2% growth. Growth denominated in the Russian rouble was 9%.
We were the leading provider of generic prescription pharmaceuticals in the pharmacy segment.
The leading product group was prescription pharmaceuticals, which constituted 83% of overall sales and remained at the
2020 level. Our medicines that recorded strongest sales were: Lorista (losartan); Valsacor (valsartan); Lorista H/HD
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84
(losartan/hydrochlorothiazide); Nolpaza (pantoprazole); Atoris (atorvastatin); Co-Perineva (perindopril/indapamide);
Roxera (rosuvastatin); Vamloset (valsartan/amlodipine); Valsacor H/HD (valsartan/hydrochlorothiazide); and Co-Dalneva
(perindopril/amlodipine/indapamide). We successfully started marketing two new products, Telmista AM
(telmisartan/amlodipine) and Roxatenz (rosuvastatin/perindopril/indapamide). We are the leading provider of prescription
pharmaceuticals for the treatment of cardiovascular diseases in the Russian Federation.
Non-prescription products generated sales total of €38.4 million, up 19% on 2020. Septolete Total
(benzydamine/cetylpyridinium chloride), products sold under the Herbion brand, and Nalgesin (naproxen) were at the
forefront. We also recorded solid sales of Panatus (butamirate), Flebaven (diosmin/hesperidin), and Sleepzone
(doxylamine).
Sales of animal health products were valued at €18.2 million, up 2%. Doxatib (doxycycline), Milprazon
(milbemycin/praziquantel), and Enroxil (enrofloxacin) generated strongest sales.
We have been increasing the production capacity of our subsidiary Krka-Rus, which manufactures more than 75% of Krka
products on demand in the Russian Federation.
Krka Group Market Position in the Russian Federation
We ranked third among foreign providers of generic medicines holding a 1.7% market share.
We were the leading provider of prescription pharmaceuticals for the treatment of cardiovascular diseases.
We were the leading provider of generic prescription pharmaceuticals in the pharmacy segment.
We were the leading provider of:
Angiotensin II receptor antagonists, also in combinations, accounting for more than a 35% market share;
Statins, accounting for more than a 20% market share.
We were among the leading providers of:
ACE inhibitors and ACE-based combinations, accounting for approximately a 20% market share;
Proton pump inhibitors, accounting for approximately a 15% market share;
Atypical antipsychotics, accounting for approximately a 15% market share;
Platelet aggregation inhibitors (ADP receptor antagonists), accounting for more than a 10% market share.
We were the leading provider of medicines containing: atorvastatin; enalapril, including the combination with hydrochlorothiazide;
losartan, including the losartan-based combinations with amlodipine and hydrochlorothiazide; naproxen; norfloxacin; olanzapine;
orlistat; pantoprazole; and valsartan, including combinations with amlodipine and hydrochlorothiazide.
We were the leading provider of generic medicines containing escitalopram; esomeprazole; ivabradine; clopidogrel; perindopril,
including all perindopril-based combinations with amlodipine and indapamide; ramipril; rosuvastatin; telmisartan; and valsartan in
combination with amlodipine and hydrochlorothiazide.
In Ukraine, also our key market, sales of pharmaceuticals stagnated over the past few years. We, however, recorded
sales growth again in 2021. Value of the domestic currency spurred market growth in terms of value in the euro, even
though sales volume presented a drop. Sales volume increased by 11%, generating total sales of €96.4 million, up 12%
on 2020. We ranked second among foreign providers of generic medicines holding a 2.5% market share. Prescription
pharmaceuticals were the leading product group and presented 11% growth primarily owing to: Dexamethason
(dexamethasone); Co-Amlessa (perindopril/amlodipine/indapamide); Co-Prenessa (perindopril/indapamide); Nolpaza
(pantoprazole); and Valsacor (valsartan). Sales of non-prescription products increased by 23%. The Herbion brand
products, Nalgesin (naproxen), and the Septolete brand products achieved the highest sales. Sales of animal health
products increased by 2% compared to 2020.
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Krka Group Market Position in Ukraine
We ranked second among foreign providers of generic medicines holding a 2.5% market share.
We were the leading provider of:
Parenteral corticosteroids, accounting for more than a 35% market share;
Statins, accounting for more than a 35% market share;
Angiotensin-II antagonists, also in combinations, accounting for more than a 30% market share;
ACE inhibitors, also ACE-based combinations with diuretics, accounting for more than a 20% market share.
We were among the leading providers of:
Proton pump inhibitors, accounting for approximately a 15% market share;
Antimicrobials (oral fluoroquinolones), accounting for approximately a 15% market share;
Macrolide and pyranoside antibiotics, accounting for approximately a 10% market share.
We were the leading provider of medicines containing: atorvastatin; dexamethasone; enalapril in combination with
hydrochlorothiazide; ginkgo leaf extract; carvedilol; clarithromycin; naproxen; pantoprazole; perindopril in combination with
indapamide; rosuvastatin; simvastatin; and valsartan.
We were the leading provider of generic medicines containing betamethasone; perindopril; perindopril in combination with
amlodipine; and perindopril in combination with amlodipine and indapamide.
Subregion East Europe B
In Subregion East Europe B, which includes Belarus, Mongolia, Armenia, and Azerbaijan, our product sales reached
€43.7 million, up 20%. In Belarus, Mongolia, and Azerbaijan our product sales saw two-digit growth.
Sales in Belarus totalled €20.1 million, up 14% on 2020. We increased our market share by above-average growth
dynamics in terms of value and volume and retained second place among foreign providers of generic medicines.
Co-Amlessa (perindopril/amlodipine/indapamide), Nolpaza (pantoprazole), and Lorista H/HD
(losartan/hydrochlorothiazide) accounted for the mass of prescription pharmaceuticals, our key product group. We
launched Kventiax (quetiapine); Telmista H (telmisartan/hydrochlorothiazide); Telmista (telmisartan); and Elicea
(escitalopram). In the non-prescription product range, the Septolete and Herbion brand products sold best. Sales of our
animal health products generated €0.6 million.
In Mongolia, we recorded €12.6 million sales total and 48% year-on-year growth, maintaining the position of the leading
foreign provider of medicines. Growth of prescription pharmaceuticals was driven essentially by a sharp rise in sales of
cardiovascular agents. Lorista (losartan) and Nolpaza (pantoprazole) surpassed sales of €1 million. Of our most new
products, Vamloset (valsartan/amlodipine) and Emanera (esomeprazole) were most notable, recording high sales
increases. In 2021, we started marketing Co-Vamloset (valsartan/amlodipine/hydrochlorothiazide), Pregabalin
(pregabalin), and a non-prescription product Septolete Total honey-and-lemon flavour lozenges. Non-prescription product
sales were driven by Bilobil (ginkgo leaf extract), the Duovit brand products, and Nalgesin (naproxen).
In Azerbaijan, our product sales reached €6.5 million, up 13% on 2020, and placed us among the leading generic
manufacturers in the country, holding a 2.9%-market share. Sales of prescription pharmaceuticals, our leading product
group, climbed by 12%, while non-prescription products lagged behind 2020 sales figures. Sales of animal health products
totalled €0.2 million.
In Armenia, we generated €4.4 million by product sales, a 2% drop on 2020 primarily due to a sharp decrease in prices.
By increasing our market share to 4.2%, we ranked first among providers of generic medicines in the country. Prescription
pharmaceuticals generated the major proportion, or 87% of sales, above all Co-Amlessa
(perindopril/amlodipine/indapamide), Captopril (captopril), and Dexamethasone (dexamethasone). We recorded an 11%
increase in sales of non-prescription products. Sales of non-prescription products were driven by products from the
Septolete and Herbion brands.
Subregion East Europe K
Product sales in Kazakhstan, Moldova, and Kyrgyzstan were valued at €32.5 million, up 5% year on year. We recorded
growth in all markets of the subregion.
In Kazakhstan, product sales generated €15.9 million, up 3% on 2020, despite the high exposure to currency risk as
prices for our products are registered in national currency. Denominated in national currency, we achieved 14% sales
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growth. Prescription pharmaceuticals accounted for 68% of country sales, the same as in 2020. Sales were driven by:
Nolpaza (pantoprazole); Enap (enalapril); Atoris (atorvastatin); Valodip (valsartan/amlodipine); and Valsacor (valsartan).
Of prescription pharmaceuticals, we started marketing Co-Valodip (valsartan/amlodipine/hydrochlorothiazide). Sales of
non-prescription products amounted to €4.2 million, up 5%. Products sold under the Herbion, Septolete, and Duovit brands
recorded the strongest sales. We successfully launched Herbion Ivy lozenges. Animal health products generated
€0.9 million in sales, up 65%.
Product sales in Moldova generated €11.5 million, or 8% more than in 2020. We maintained the high market share and
remained the leading provider of prescription pharmaceuticals, accounting for 77% of overall country sales, up 9%. Lorista
(losartan), Dexamethason (dexamethasone), and Rawel (indapamide) generated the bulk of sales total. We started
marketing two new products, Dekenor (dexketoprofen) and Mirzaten (mirtazapine). Sales of non-prescription products
amounted to €2.4 million, up 7%. The leading non-prescription products were Septanazal (xylometazoline/dexpanthenol),
Septolete Total (benzydamine/cetylpyridinium chloride), and the Herbion brand products. Sales of our animal health
products generated €0.3 million.
In Kyrgyzstan, our sales were affected by government regulations for improving accessibility of therapy, above all
regulation of medicine prices in the compulsory health insurance reimbursement list and reimbursement list for the
treatment of the COVID-19 infections, and release of medicine imports. We generated €5.1 million by product sales and
recorded a 2% increase, winning us a 3.6% market share, which placed us second among providers of generic
pharmaceuticals. Prescription pharmaceuticals accounted for the major (74%) share of total sales. Lorista (losartan), Atoris
(atorvastatin), and Nolpaza (pantoprazole) generated strongest sales. Of non-prescription products, sales were driven by
Septolete, Herbion, and Pikovit brand products. We successfully launched Herbion Ivy lozenges.
Subregion East Europe U
Our Subregion East Europe U, composed of Uzbekistan, Georgia, Tajikistan and Turkmenistan, generated €42.3 million
by product sales, up 15%. While sales advanced in Uzbekistan, Georgia, and Turkmenistan, they presented a drop in
Tajikistan.
Product sales in Uzbekistan totalled €31.2 million, up 18% on 2020. We ranked second among the most important
providers of medicines in the country and were the leading provider of medicines for the treatment of cardiovascular
diseases. Of our prescription pharmaceuticals, Amlessa (perindopril/amlodipine), Lorista (losartan), and Nolpaza
(pantoprazole) generated the strongest sales. Key non-prescription products were those marketed under the Septolete
and Pikovit brands.
Our product sales amounted to €7 million in Georgia, a 14% year-on-year increase. Our 4.4% market share ranked us
fifth among all providers of medicines in the country. Prescription pharmaceuticals were key in terms of sales, above all
Lorista H/HD (losartan/hydrochlorothiazide), Co-Amlessa (perindopril/amlodipine/indapamide), and Atoris (atorvastatin).
Key non-prescription products were Nalgesin (naproxen), and the Panzynorm and Herbion product brands.
In Tajikistan, sales reached €2.2 million, an 8% year-on-year drop. Pikovit, a non-prescription product, remained our best-
selling product in the country. Nolpaza (pantoprazole) and Co-Amlessa (perindopril/amlodipine/indapamide) were our new
products that contributed to sales growth the most.
In Turkmenistan, product sales amounted to €1.8 million, recording a 2% year-on-year increase. Nolpaza (pantoprazole)
and Amlessa (perindopril/amlodipine) from our leading product group of prescription pharmaceuticals, and the Pikovit and
Herbion brand products of non-prescription products generated the strongest sales.
Region Central Europe
Region Central Europe product sales totalled €351.5 million, up 3%. We recorded sales growth in all regional markets. In
terms of value, growth was most significant in Poland and in relative terms in Latvia.
In Poland, the largest regional market and our key market, product sales reached €166.7 million, up 2% on 2020. We
placed third among foreign providers of generic medicines. Sales were driven by prescription pharmaceuticals, most
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notably pharmaceuticals from the reimbursement list. Our new medicines placed on the market in the past years also
contributed significantly to sales.
We focused on medicines for the treatment of cardiovascular diseases. Despite market pressures, sartan sales remained
at the 2020 level, maintaining our leading position among providers of products from the sartan family. Our most notable
new medicines launched in the recent years were Valtricom (valsartan/amlodipine/hydrochlorothiazide), the first generic
medicine put on the reimbursement list at the end of 2020, and Co-Roswera (rosuvastatin/ezetimibe), whose sales more
than doubled from 2020. Through sales of our lipid lowering agents, notably Atoris (atorvastatin) and Roswera
(rosuvastatin), we maintained the position of the leading provider of medicines despite sharp competition and price
pressure. Owing to Doreta (tramadol/paracetamol), which accounted for approximately 60% market share, we were the
leading provider of this combination for pain relief. We should also mention the more than 20% increase in sales of central
nervous system agents, where Dulsevia (duloxetine) was a significant contributor. We retained the leading position among
all providers regarding prescription pharmaceuticals from the reimbursement list for patients aged 75 years and older, as
we had more medicines on the reimbursement list than any other producer.
Sales of non-prescription products edged down compared to 2020. The leading non-prescription products were those of
the Septolete brand, followed by Bilobil (ginkgo leaf extract). Nolpaza (pantoprazole) from the same product group
advanced by 10%. Sales of animal health products also edged down on 2020. Generating the strongest sales, Milprazon
(milbemycin/praziquantel) grew by 6% and Floron (florfenicol) by 11%, respectively.
Krka Group Market Position in Poland
We ranked third among foreign providers of generic medicines, holding a 2.3% market share.
We were the leading provider of:
Angiotensin II receptor antagonists, also in combinations, accounting for approximately a 40% market share;
Statins, accounting for approximately a 35% market share;
SSRI and SNRI antidepressants, accounting for more than a 10% market share.
We were among the leading providers of:
Oral corticosteroids, accounting for approximately a 25% market share;
Sulphonamide antidiabetics, accounting for approximately a 20% market share;
Proton pump inhibitors, accounting for approximately a 15% market share;
Aminosalicylates for bowel disease, accounting for approximately a 15% market share;
ACE inhibitors and ACE-based combinations, accounting for more than 10% market share;
Antimicrobials (fluoroquinolones), accounting for more than a 10% market share;
Antiparkinsonians, accounting for approximately a 10% market share.
We were the leading provider of medicines containing: atorvastatin; celecoxib; duloxetine; esomeprazole; candesartan, including
candesartan in combination with hydrochlorothiazide; lansoprazole; losartan, including losartan in combination with
hydrochlorothiazide; norfloxacin; rabeprazole; ropinirole; rosuvastatin; sulfasalazine; tramadol in combination with paracetamol;
telmisartan in combination with amlodipine; and valsartan, including valsartan in combination with hydrochlorothiazide.
We were the leading provider of generic medicines containing active ingredients gliclazide; ivabradine; and perindopril, including
all combinations with amlodipine and indapamide.
Hungary, another key market of Krka, generated sales of €50.3 million, up 1% year on year, placing the country second
among our regional markets. We ranked second among primarily foreign providers of generic medicines in the country,
holding a 1.8% market share. Prescription pharmaceuticals contributed most to sales, in particular: Co-Prenessa
(perindopril/indapamide); Roxera (rosuvastatin); Valsacor (valsartan); Emanera (esomeprazole); Atoris (atorvastatin); and
Zyllt (clopidogrel).
Sales of non-prescription products generated €3.4 million, up 31% on 2020. Sales were driven by Bilobil (ginkgo leaf
extract), Venter (sucralfate), and Flebaven (diosmin). Our animal health product sales saw a decrease. Milprazon
(milbemycin/praziquantel) and Fypryst (fipronil) generated the strongest sales.
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Krka Group Market Position in Hungary
We ranked second among primarily foreign providers of generic medicines, holding a 1.8% market share.
We were the leading provider of:
SNRI antidepressants, accounting for approximately a 40% market share;
Angiotensin II receptor antagonists, also in combination with diuretics, accounting for more than a 35% market share;
Platelet aggregation inhibitors (ADP receptor antagonists), accounting for approximately a 35% market share;
Mono-component thiazide diuretics and analogues, with a market share of over 25%;
Antimicrobials (oral fluoroquinolones), accounting for approximately a 25% market share;
We were among the leading providers of:
ACE inhibitors and ACE-based combinations with diuretics, accounting for approximately a 20% market share;
Statins, accounting for more than a 15% market share;
Antiparkinsonians, accounting for more than a 15% market share;
Proton pump inhibitors, accounting for approximately a 15% market share;
Cerebral and peripheral vasotherapeutics, accounting for more than a 10% market share;
Sulphonamide antidiabetics, accounting for more than a 10% market share;
Macrolide and pyranoside antibiotics, accounting for a 10% market share;
We were the leading provider of medicines containing: amlodipine in combination with telmisartan; dexamethasone; indapamide;
ginkgo leaf extract; clarithromycin; clopidogrel; mirtazapine; pramipexole; rasagiline; and valsartan, including valsartan in
combination with hydrochlorothiazide.
We were the leading provider of generic medicines containing aripiprazole, gliclazide, and tadalafil.
In the Czech Republic, also one of our key markets, sales of €48 million increased by 5% on the 2020 figure. We ranked
fourth among foreign providers of generic medicines, holding a 1.4% market share. Prescription pharmaceuticals
maintained the leading position, above all: Lexaurin (bromazepam); Atoris (atorvastatin); Sorvasta (rosuvastatin); Nolpaza
(pantoprazole); Tonanda (perindopril/amlodipine/indapamide); Doreta (tramadol/paracetamol), Asentra (sertraline),
Kventiax (quetiapine), Elicea (escitalopram); and Prenewel (perindopril/indapamide).
Sales of non-prescription products decreased by 3%. In addition to Nalgesin S (naproxen), Bisacodyl (bisacodyl) and
Septolete brand products sold best. Sales of animal health products decreased by 14%. The leading products were Dehinel
and Fypryst (fipronil).
Krka Group Market Position in the Czech Republic
We ranked fourth among foreign providers of generic medicines, holding a 1.4% market share.
We were the leading provider of:
Sulphonamide antidiabetics, accounting for approximately a 30% market share;
Mono-component products used in the treatment of benign hypertrophy of the prostate, accounting for more than a 15%
market share;
We were among the leading providers of:
Anxiolytics, accounting for more than a 30% market share;
Angiotensin II receptor antagonists, also combinations with diuretics, accounting for approximately a 25% market share;
Statins, accounting for more than a 20% market share;
Proton pump inhibitors, accounting for approximately a 20% market share;
SSRI and SNRI antidepressants, accounting for more than a 15% market share;
ACE inhibitors and ACE-based combinations with diuretics, accounting for approximately a 15% market share.
We were the leading provider of medicines containing: esomeprazole; gliclazide; lansoprazole; valsartan, including valsartan in
combination with hydrochlorothiazide; and ziprasidone.
We were the leading provider of generic medicines containing: aripiprazole; escitalopram; levocetirizine; pantoprazole; perindopril,
including all perindopril-based combinations with amlodipine and indapamide; sulfasalazine; tadalafil; and tamsulosin.
In Slovakia, another key market, which ranked fourth among the regional markets, product sales totalled €40.3 million,
up 5%. Prescription pharmaceuticals were the leading product group in terms of sales, above all: Co-Prenessa
(perindopril/indapamide); Nolpaza (pantoprazole); Atoris (atorvastatin); Co-Amlessa (perindopril/amlodipine/indapamide);
Prenessa (perindopril); and Lexaurin (bromazepam). Year on year, sales of non-prescription products went up by 8%.
Best-selling products were Nalgesin S (naproxen) and Flebaven (diosmin). We also recorded 8% growth in animal health
products, with Enroxil (enrofloxacin) and Fypryst (fipronil) at the forefront.
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Krka Group Market Position in Slovakia
We ranked third among all providers of generic pharmaceuticals, holding a 2.7% market share.
We were the leading provider of:
Proton pump inhibitors, accounting for approximately a 40% market share;
Angiotensin II receptor antagonists, also in combination with diuretics, accounting for approximately a 40% market share;
Antimicrobials (fluoroquinolones), accounting for more than a 35% market share;
Statins, accounting for more than a 30% market share;
Antidementives, accounting for more than a 25% market share.
We were among the leading providers of:
Sulphonamide antidiabetics, accounting for approximately a 25% market share;
ACE inhibitors and ACE-based combinations with diuretics, accounting for approximately a 25% market share;
Anxiolytics, accounting for approximately a 25% market share;
Antidepressants and mood stabilizers, accounting for approximately a 20% market share.
We were the leading provider of medicines containing: atorvastatin, dexamethasone; duloxetine; escitalopram; indapamide;
carvedilol; quetiapine; paliperidone; pantoprazole; pramipexole; tramadol in combination with paracetamol; venlafaxine; valsartan,
including valsartan in combination with hydrochlorothiazide.
We were the leading provider of generic medicines containing active ingredients gliclazide and perindopril, including all
perindopril-based combinations with amlodipine and indapamide.
Sales in Lithuania totalled €21.5 million, up 4% on 2020. Prescription pharmaceuticals, above all: Captopril (captopril);
Nolpaza (pantoprazole); Roswera (rosuvastatin); Atoris (atorvastatin); and Valsacombi (valsartan/hydrochlorothiazide)
constituted the major part of overall sales. Sales of non-prescription products jumped by 35%. Key products were
Septabene (benzydamine/cetylpyridinium chloride) and Nalgesin S (naproxen). Animal health product sales of €1.5 million
were 2% beneath the 2020 figures.
In Latvia, sales reached €15 million in 2021, a 6% year-on-year rise. By this attainment, Krka strengthened its leading
position among providers of generic medicines in the country. As expected, prescription pharmaceuticals accounted for
the major part of sales total, above all Co-Amlessa (perindopril/amlodipine/indapamide); Sorvasta (rosuvastatin); Prenewel
(perindopril/indapamide); and Nolpaza (naproxen). Sales of non-prescription products generated €1.4 million, the same
as in 2020. The leading products were Nalgedol (naproxen) and Septanazal (xylometazoline/dexpanthenol). Animal health
product sales decreased by 14%.
In Estonia, sales totalled €9.8 million, slightly more than in 2020. Prescription pharmaceuticals again contributed most to
total sales, above all: Co-Prenessa (perindopril/indapamide); Roswera (rosuvastatin); Co-Dalnessa
(perindopril/amlodipine/indapamide); Atoris (atorvastatin); and Prenessa (perindopril). Non-prescription product sales
advanced by 7% on 2020. Septolete Omni (benzydamine/cetylpyridinium chloride) and Nalgesin S (naproxen) remained
the leading product in terms of sales. Animal health product sales decreased by 19%.
Region West Europe
The markets of Region West Europe are collectively regarded as one of our key markets. Regional sales amounted to
€305.2 million in 2021, an 11% year-on-year decrease. Germany, the Scandinavian countries, France, and Italy led in
terms of sales. Sales through our subsidiaries amounted to €234 million, a 7% drop on 2020 primarily due to an increased
price pressure exerted by competitors and fewer product launches. We generated 23% of regional sales through unrelated
parties.
Sales generated by prescription pharmaceuticals, our leading product group, decreased from 2020 and accounted for 87%
of overall sales. Medicines containing esomeprazole, candesartan, valsartan, clopidogrel, and venlafaxine were at the
forefront. We remained one of the leading sartan providers on regional markets of western Europe.
Animal health products recorded a 27% increase, and accounted for a good 11% of total sales. Sales through related
parties reached 28% growth in 2021, accounting for more than 50% of total sales of animal health products in Region West
Europe. Sales were driven by a combination of milbemycin and praziquantel, products containing fipronil, and
tulathromycin-based products.
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Non-prescription products grew by 4% and accounted for slightly less than 2% of total sales. Paracetamol-based products,
the Septolete brand products, and diosmin-based products were best-selling non-prescription products.
In Germany, our most important regional market, sales totalled €80.3 million, down 12% on 2020. Sales through our
subsidiary TAD Pharma amounted to €76.5 million. Our most important products in terms of sales were medicines for the
treatment of cardiovascular diseases and for the gastrointestinal tract and metabolism, followed by medicines for the
treatment of the central nervous system. In 2021, we strengthened our position as the leading provider of sartans in terms
of sales volume. In 2021, medicines containing candesartan, valsartan, ramipril, and esomeprazole recorded strongest
sales.
In the Scandinavian countries, sales totalled €49.1 million. Our product sales were most substantial in Sweden, followed
by Finland, Norway, Denmark, and Iceland. Sales through our subsidiaries Krka Sverige and Krka Finland fell by 19%
and 3%, respectively. Overall sales through subsidiaries reached 98%. Sales were driven by medicines containing
esomeprazole, losartan, candesartan, venlafaxine, and sertraline. In Norway, we retained the leading position by many
medicines, above all those containing esomeprazole, pantoprazole, losartan, valsartan, candesartan, enalapril, and
venlafaxine.
Sales in France totalled €37.6 million, similar to 2020. Sales through unrelated parties accounted for more than 60%.
Medicines that sold best contained esomeprazole, clopidogrel, and gliclazide, and a combination of milbemycin and
praziquantel – an animal health product. Sales through our subsidiary Krka France recorded a 26% year-on-year rise in
terms of value. The majority of sales were generated by prescription pharmaceuticals, most notably those containing
tadalafil, emtricitabine in combination with tenofovir, and dasatinib. In the non-prescription product group, medicines
containing paracetamol stood out and were the second best-selling product of the subsidiary also in 2021. We should also
mention strong sales of our animal health products for protecting companion animals against parasites, above all the
combination of milbemycin and praziquantel.
In Italy, year-on-year sales in terms of value slipped by 11% to €30.7 million. Products marketed under our own brand
names decreased by 4% and accounted for 71% of sales. However, sales of our animal health products increased. The
leading prescription pharmaceuticals were products containing pantoprazole, clopidogrel, esomeprazole, paliperidone,
and gliclazide.
In Portugal, sales totalled €23.1 million, a 6% drop on 2020. Sales of products under our own brand names went up
by 11% and accounted for 77% of our total sales in the country. All product groups contributed to the rise. Prescription
pharmaceuticals recorded the highest absolute growth maintaining the 6% generic market share. Of leading prescription
pharmaceuticals, we should mention esomeprazole products; the single-pill combination of rosuvastatin and ezetimibe;
the single-pill combination of perindopril and indapamide; and an olanzapine product.
In Spain, year-on-year sales in terms of value slipped by 37% to €22.6 million. While termination of tender sales in
Andalusia adversely affected our prescription pharmaceutical sales, we strengthened sales of our products from the animal
health and non-prescription product ranges. Medicines containing donepezil, tulathromycin, pramipexole, galantamine,
and esomeprazole generated strongest sales.
In the Benelux countries, sales amounted to €17.3 million, a 4% year-on-year rise. Strongest sales were generated by
products sold under our own brands, as their sales climbed by over 30% from 2020. Sales of medicines containing
valsartan, esomeprazole, and a combination of milbemycin and praziquantel were the highest.
Sales in the United Kingdom advanced by 9% compared to the year before and reached €14 million. Medicines containing
esomeprazole and duloxetine generated strongest sales. Our subsidiary Krka UK increased sales by 64% compared
to 2020, accounting for 48% of our overall sales in the country.
In Ireland, we made €11.6 million by product sales and exceeded the 2020 sales by 13%. Sales through our subsidiary
Krka Pharma Dublin went up by 12% and accounted for 86% of total sales in the country. We were one of the leading
providers of generic medicines containing esomeprazole; tadalafil; venlafaxine; candesartan; valsartan; aripiprazole;
indapamide; and duloxetine.
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In Austria, our sales grew by 6% to €10.5 million. Medicines containing pregabalin, duloxetine, and valsartan were
heading in terms of sales. The proportion of sales through our subsidiary Krka Pharma Wien grew by 7% and accounted
for 95%.
In other European countries, we sold most products through unrelated parties. Sales in 2021 reached €8.4 million,
similar to 2020.
Region Overseas Markets
Region Overseas Markets generated sales of €53.7 million, an 18% year-on-year rise. All three sales offices recorded
sales growth. Prescription pharmaceuticals contributed to the increase the most. We primarily marketed them under our
own brands, and they constituted over 90% of total regional sales.
Year-on-year sales in the Middle East countries increased by 42% to €24.2 million, primarily due to increased sales to
Iran, which remained our largest regional market. We recorded the highest relative growth in the United Arab Emirates,
where we expect high sales growth rates also in the future. In the Middle East countries, our most saleable products
included: Asentra (sertraline); Zyllt (clopidogrel); Nolpaza (pantoprazole); Valsacor (valsartan); and Yasnal (donepezil).
Product sales in the Far East and Africa markets reached €28 million, up 3% on 2020. Products containing pregabalin;
esomeprazole; gliclazide; saw palmetto extract; and lansoprazole generated the strongest sales. In Vietnam, which
remained our largest individual and the second-largest market in the region, sales declined by 8% as the country's borders
were closed for a long time due to a high number of infections during the COVID-19 pandemic. After winning the tender
for pregabalin in China, we achieved the highest increase in value and 170% relative sales growth. We also recorded high
growth rates in Sudan and Ghana.
Our Americas sales office remained focused on the countries of Central America, where overall product sales reached
€1.4 million, up 1% on 2020. Our medicines in high demand were Valsacor (valsartan); Valsaden
(valsartan/hydrochlorothiazide); Yasnal (donepezil); and Vizarsin (sildenafil).
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Product
*
and Service Groups
24
* Products marketed under different product brand names or the Krka trademark in individual markets are marked with an asterisk. Brand names are
listed at the end of this section.
In 2021, sales of prescription pharmaceuticals accounted for 83.7% of total sales, followed by non-prescription products with 8.8%,
animal health products with 5.2%, and health resorts and tourist services with 2.3%.
Sales revenue of the Krka Group increased by 2% in 2021. Sales of prescription pharmaceuticals increased by 0.4%, non-prescription
products by 11%, animal health products by 7%, and health resorts and tourist services by 22.6%.
2021 Krka Group Sales by Product Group
Krka Group and Krka Sales by Region by Product and Service Group
Krka Group
Krka
€ thousand
2021
2020
Index
2021/20
2021
2020
Index
2021/20
Human health
1,442,566
1,424,292
101
1,135,800
1,149,667
99
– Prescription pharmaceuticals
1,305,316
1,300,640
100
1,017,273
1,039,105
98
– Non-prescription products
137,250
123,652
111
118,527
110,562
107
Animal health products
81,257
75,913
107
75,694
72,344
105
Health resort sand tourist services
36,465
29,754
123
Total
1,560,288
1,529,959
102
1,211,494
1,222,011
99
2021
2020
€ thousand
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Human health
368,010
380,236
334,098
360,222
432,600
320,574
325,240
345,878
– Prescription pharmaceuticals
340,921
348,208
298,556
317,631
389,389
302,291
299,184
309,776
– Non-prescription products
27,089
32,028
35,542
42,591
43,211
18,283
26,056
36,102
Animal health products
21,656
23,304
19,619
16,678
22,221
16,459
17,139
20,094
Health resorts and tourist
services
4,857
8,483
13,029
10,096
6,908
3,085
12,339
7,422
Total
394,523
412,023
366,746
386,996
461,729
340,118
354,718
373,394
24
GRI GS 102-2, 102-6, 102-10
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2021 Sales of Main Products*
* Sales of leading products are presented by leading active ingredient. Combination medicines that incorporate this active ingredient are also
included.
New Products
In 2021, sales of new products, i.e. products launched in individual markets in the past five years, accounted for 25% of
the Krka Group overall sales, or 1 percentage point down on the year before. The COVID-19 pandemic significantly slowed
down the launch of new products in 2021 also.
In 2021, the following new products were most important in terms of absolute sales growth: Co-Roswera*
(rosuvastatin/ezetimibe), first marketed in 2019; Efavemten* (efavirenz/emtricitabine/tenofovir), first marketed in 2018; and
Emtenovo* (emtricitabine/tenofovir), first marketed in 2017. Our non-prescription product Flebaven*, which we started
marketing in 2018, was another new product that recorded highest sales growth.
In 2021, we launched several new products containing new generic active ingredients and their combinations, and added
new pharmaceutical forms or pack sizes to the existing range, and placed them on new markets.
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Share of New Products* in Krka Group Sales
*The share of new products includes products launched on individual markets in the past five years.
New Products in 2021
Prescription Pharmaceuticals
Pain relief
Algominal (metamizole)
Doreta SR (tramadol/paracetamol)
Blood and blood-forming organs
Atixarso (ticagrelor)
Oncology
Pemetrexed Krka (pemetrexed)
Anastrozole Krka (anastrozole)
Prescription Pharmaceuticals
In 2021, the Krka Group sales of prescription pharmaceuticals amounted to €1,305.3 million, up 0.4% year on year.
Ukraine, Poland and the Czech Republic contributed to sales growth the most. The COVID-19 pandemic also impacted
our 2021 sales. In certain countries, the use of medicines was still low, new products were few, and they were getting
recognised slowly. Our established brands of prescription pharmaceuticals generated healthy sales from key therapeutic
areas that achieved considerable market shares.
Top-ranking 2021 therapeutic classes of prescription pharmaceuticals included medicines for the treatment of
cardiovascular diseases, the central nervous system, and the gastrointestinal tract.
We market our prescription pharmaceuticals under our brands in most European countries through our marketing-and-
sales network. We have one of the most robust marketing-and-sales networks of all pharmaceutical companies in
countries, where our presence is long standing. We have been managing sales on most markets of Region West Europe
through our network. We use it for communicating with the expert community, especially physicians and pharmacists.
In 2021, we started marketing prescription pharmaceuticals through our marketing-and-sales network in Greece.
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Prescription Pharmaceuticals Sales by 10 Major Markets
Revenue since 2017 is presented in compliance with the IFRS 15.
Prescription Pharmaceuticals Sales by Therapeutic Classes
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Cardiovascular System
Sartans (Angiotensin II Receptor Antagonists)
2021 highlights
We have been the leading producer of sartans in Regions Slovenia, Central, East, and South-East Europe for several
consecutive years. We held more than a 30% market share there last year.
Krka made almost one in three sartans prescribed in that region.
We sold more than 3.5 billion sartan-based tablets.
In Germany, physicians most often prescribed our medicines of all generic valsartan varieties.
Sartans and sartan-based combinations
We market 20 sartan-based products. The range comprises six different sartans.
Our product portfolio includes single-pill combinations of sartans with a diuretic, a calcium channel blocker, and a statin.
We are the only pharmaceutical provider in Europe that markets a sartan in combination with a statin.
Our sartans are available almost in 60 markets across the world.
Sartans
Combinations
containing
a diuretic
Combinations
containing a calcium
channel blocker
Combinations
containing a diuretic
and a calcium channel
blocker
Combinations
containing a statin
valsartan (Valsacor*)
valsartan/
hydrochlorothiazide
(Valsacombi*)
valsartan/amlodipine
(Wamlox*)
valsartan/amlodipine/
hydrochlorothiazide
(Valtricom*)
valsartan/rosuvastatin
(Valarox*)
losartan (Lorista*)
losartan/
hydrochlorothiazide
(Lorista H*)
losartan/amlodipine
(Tenloris*)
telmisartan (Tolura*)
telmisartan/
hydrochlorothiazide
(Tolucombi*)
telmisartan/amlodipine
(Teldipin*)
candesartan (Karbis*)
candesartan/
hydrochlorothiazide
(Karbicombi*)
candesartan/amlodipine
(Camlocor*)
olmesartan (Olimestra*)
olmesartan/
hydrochlorothiazide
(Co-Olimestra)
olmesartan/amlodipine
(Olssa*)
olmesartan/amlodipine/
hydrochlorothiazide
(Olsitri*)
irbesartan (Ifirmasta*)
irbesartan/
hydrochlorothiazide
(Ifirmacombi*)
Our valsartan products retained first place among all Krka products in terms of sales also in 2021. We sold more than
1.3 billion valsartan-based tablets. This product group consisted of five medicines: Valsacor* (valsartan); Valsacombi*
(valsartan/hydrochlorothiazide); Wamlox* (valsartan/amlodipine); Valtricom* (valsartan/amlodipine/hydrochlorothiazide);
and Valarox* (valsartan/rosuvastatin). In Regions Slovenia, Central, East, and South-East Europe, we remained the
leading producer of all valsartan-based medicines and held a high, almost 45%, market share. Two out of three patients
on valsartan therapy took our medicines in this region, which added up close to 4 million patients. Most patients treated
by a generic variety of valsartan in Germany used our medicines. Valarox* is indicated for the treatment of lipitension and
is the only single-pill combination of a sartan and a statin in Europe. In 2021, we launched our valsartan products on new
markets. We started marketing: valsartan and valsartan in combination with hydrochlorothiazide in Greece; Wamlox* in
Hungary and as the first generic provider in Kosovo; Valtricom* in Ireland, Kosovo, Mongolia, Kazakhstan, and as the first
generic provider in Uzbekistan.
Losartan-based products are second on the list of our sartans in terms of sales and included: Lorista* (losartan);
Lorista H* (losartan/hydrochlorothiazide); and Tenloris* (losartan/amlodipine). They ranked third of all Krka products. In
terms of absolute sales growth in 2021, losartan-based medicines ranked first. We sold more than 1.4 billion losartan-
based tablets. In Regions Slovenia, Central, East, and South-East Europe, we retained more than a 40% market share
and were the leading producer of losartan medicines. In Uzbekistan, Moldova, Kyrgyzstan, and Georgia, Lorista* (losartan)
and losartan in combinations were the leaders among all sartans. In Germany, we became the leading generic
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manufacturer of losartan and losartan in combination with hydrochlorothiazide. We remained the only provider of losartan
in combination with amlodipine in the country.
Candesartan ranked third among our sartans as regards sales and included: Karbis* (candesartan); Karbicombi*
(candesartan/hydrochlorothiazide); and Camlocor* (candesartan/amlodipine), our newest candesartan combination,
which we started marketing in 2020. In 2021, we started marketing Karbis* and Karbicombi* in Latvia. In Europe, we were
among the leading generic producers of candesartan and candesartan-based combinations. We surpassed all competitors
in Germany, Poland, Hungary, and certain other countries.
In Regions Slovenia, Central, East, and South-East Europe, we were the leading generic producer of telmisartan and
telmisartan-based combinations. In 2021, we increased its market share to almost 18%. We were the leading producer of
telmisartan-based products in Latvia and Croatia. Our range comprised: Tolura* (telmisartan); Tolucombi*
(telmisartan/hydrochlorothiazide); and Teldipin* (telmisartan/amlodipine). In 2021, we started marketing Tolura* and
Tolucombi* in Belarus.
Olimestra* (olmesartan) and olmesartan combinations generated strongest sales in Region West Europe. In Germany,
we were among the leading generic producers of olmesartan and olmesartan-based combinations. Olsitri*
(olmesartan/amlodipine/hydrochlorothiazide) is our newest triple combination, which we launched in 2020. Last year, we
started marketing it in Belgium, and as the first generic provider in Lithuania, Latvia, and Estonia.
Angiotensin-Converting Enzyme (ACE) Inhibitors
2021 highlights
We were the leading generic producer of ACE inhibitors in Regions Slovenia, Central, East, and South-East Europe.
We were the leading generic producer of perindopril-based products in Europe.
We sold more than 1.5 billion perindopril tablets.
We were the only producer in Europe that marketed triple combinations of perindopril/amlodipine/rosuvastatin and
perindopril/indapamide/rosuvastatin.
Angiotensin-converting enzyme inhibitors and ACE combinations
We market 15 medicines from the ACE-inhibitor class based on five different angiotensin-converting enzyme inhibitors.
We market four ACE-inhibitor combinations with a diuretic, three with a calcium channel blocker, one with active ingredients of
all three classes, and two combinations containing a statin.
We are a generic pharmaceutical company with the most comprehensive perindopril-based product range in Europe.
Angiotensin-
converting enzyme
(ACE) inhibitors
Combinations
containing a diuretic
Combinations
containing a calcium
channel blocker
Combinations
containing a diuretic
and a calcium channel
blocker
Combinations
containing a statin
perindopril (Prenessa*)
perindopril/indapamide
(Co-Prenessa*)
perindopril/amlodipine
(Amlessa*)
perindopril/amlodipine/
indapamide
(Co-Amlessa*)
perindopril/indapamide/
rosuvastatin (Roxiper*)
perindopril/amlodipine/
rosuvastatin
(Roxampex)
enalapril (Enap)
enalapril/
hydrochlorothiazide
(Enap-H*)
enalapril/lercanidipine
(Elernap*)
ramipril (Ampril*)
ramipril/
hydrochlorothiazide
(Ampril HL*)
ramipril/amlodipine
(Rameam*)
lisinopril (Laaven*)
cilazapril (Cazaprol)
cilazapril/
hydrochlorothiazide
(Cazacombi)
Our most important medicines of that class were perindopril-based products and in terms of sales ranked second of all
Krka products. They ranked second for absolute sales growth. The perindopril product group is one of our five product
groups that in 2021 surpassed the milestone of 1 billion tablets sold. Our perindopril portfolio is the most complex of any
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98
generic pharmaceutical company in Europe and includes 6 medicines in 25 strengths. It comprises: Prenessa*
(perindopril); Co-Prenessa* (perindopril/indapamide); Amlessa* (perindopril/amlodipine); Co-Amlessa*
(perindopril/amlodipine/indapamide); Roxiper* (perindopril/indapamide/rosuvastatin); and Roxampex
(perindopril/amlodipine/rosuvastatin). Roxiper* and Roxampex are used to treat lipitension, i.e. coexisting hypertension
and hyperlipidemia. They combine three active ingredients in a single pill, two antihypertensives and a statin. We are the
only provider of these combinations in Europe. In 2021, we started marketing Roxampex in Slovenia and Roxiper* in
Ukraine. We also placed other combinations on new markets. We started marketing Co-Prenessa* in Uzbekistan,
Amlessa* as the first generic producer in Latvia, and the lowest strength of Amlessa* for the initial treatment of hypertension
as the first generic producer in Poland. We are the leading generic producer of perindopril-based products in Europe.
In 2021, we consolidated our position of the leading generic producer of perindopril and perindopril-based combinations
in Regions Slovenia, Central, East and South-East Europe, as our market share climbed to almost 25%.
In terms of sales, Enap (enalapril) and enalapril combinations remained one of our leading medicines also in 2021, even
though promotion focused primarily on our new angiotensin-converting enzyme inhibitors. We are the leading manufacturer
of medicines containing enalapril and hold more than a 30% market share in the region. We also rank among the leading
manufacturers of those products in Germany.
Our ACE-inhibitor range also comprises Ampril* (ramipril); ramipril combinations with hydrochlorothiazide; and Rameam*
(ramipril/amlodipine), the combination containing a calcium channel blocker, which is among the leading generic
combinations of this kind in Germany.
Other Antihypertensives
Altogether, we supply almost 50 antihypertensives in more than 150 strengths. Our most important antihypertensives are
ACE-inhibitors and sartans, including their combinations with diuretics and calcium channel blockers. Our product portfolio
also includes Tenox* (amlodipine), a calcium channel blocker; Rawel SR (indapamide), a diuretic; and several adrenergic
receptor blockers: Coryol (carvedilol), Bloxazoc* (metoprolol), Niperten* (bisoprolol), Nolibeta* (nebivolol); and
Sobycombi* (bisoprolol/amlodipine), a single-pill combination that we market as the only generic provider in Poland,
Hungary, and Bulgaria. In 2021, we were one of Germany's leading generic producers of carvedilol. We started marketing
Sobycombi* in Azerbaijan, and Nolibeta* in Italy.
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Statins and Other Hypolipemics
2021 highlights
As in previous years, we remained the leading generic producer of hypolipemics in Regions Slovenia, Central, East, and
South-East Europe, holding more than a 25% market share.
The leading statins in the region were Atoris* and Roswera*.
One in four patients on statin therapy in this region took Krka statins.
Hypolipemics and single-pill combinations
We market 12 medicines based on five different statins and ezetimibe.
The portfolio consists of single-pill combinations with other hypolipemics, and single-pill statin-based combinations with
antihypertensives.
We market the broadest range of atorvastatin strengths and remain the only manufacturer of 30 mg and 60 mg tablets in many
markets.
Statins and other
hypolipemics
Combinations of
hypolipemics
Combinations containing a
calcium channel blocker
Combinations containing
other antihypertensives
rosuvastatin (Roswera*)
rosuvastatin/ezetimibe
(Co-Roswera*)
perindopril/indapamide/
rosuvastatin (Roxiper*)
perindopril/amlodipine/
rosuvastatin (Roxampex*)
rosuvastatin/valsartan
(Valarox*)
atorvastatin (Atoris*)
atorvastatin, amlodipin
(Atordapin*)
simvastatin (Vasilip)
simvastatin, ezetimib
(Ezesimin*)
lovastatin (Holetar)
pitavastatin (Pitavador*)
ezetimibe (Ezoleta*)
rosuvastatin/ezetimibe (Co-
Roswera*)
ezetimibe/simvastatin
(Ezesimin*)
Atoris (atorvastatin) is our most important statin and ranks among our five top-selling medicines. It is one of Krka’s five
products that in 2021 surpassed the milestone of 1 billion tablets sold. In Regions Slovenia, Central, East, and South-East
Europe, it held almost a 15% market share and remained the leading statin-based product. When prescribing statins,
physicians in the Russian Federation, Poland, and several other countries, most often prescribed Atoris*. In 2021, we
started marketing it in Greece. We market the broadest range of atorvastatin strengths and are the only provider of 30 mg
and 60 mg tablets in many countries.
Roswera* (rosuvastatin) is our second most important statin. It ranked among our ten top-selling products and three
leading products, recording the highest absolute sales growth. Year on year, the sales went up by more than 15%. In
Regions Slovenia, Central, East, and South-East Europe, Roswera* was the leading rosuvastatin, of all statins preceded
only by Atoris*. Of statins, Roswera* further increased its market share in 2021, presenting the highest sales growth of all
competing products in the region. We also started marketing it in Greece.
Pitavador* (pitavastatin) is our latest statin, first placed on the market in 2020. In 2021, we launched it in Greece as the
first generic provider.
Ezoleta* (ezetimibe), which is not a statin, supplements our hypolipemic portfolio. In Slovenia, Serbia, and the Baltic states,
it remained the leading ezetimibe product in 2021. Our portfolio also included two single-pill combinations of ezetimibe and
statin, Co-Roswera* (rosuvastatin/ezetimibe) and Ezesimin* (ezetimibe/simvastatin). In 2021, we launched Co-Roswera*
in Armenia. We started marketing the 40 mg/10 mg strength in Poland and Latvia as the only producer. Also, in Slovenia
and Croatia, we were the sole provider of that strength.
Statins are incorporated in single-pill lipitension medicines, which combine hyperlipidemic and antihypertensive agents.
Our lipitension medicines are: Valarox* (valsartan/rosuvastatin), a single-pill combination of statin and sartan; and two
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single-pill combinations of statin and perindopril: Roxiper* (perindopril/indapamide/rosuvastatin); and Roxampex
(perindopril/amlodipine/rosuvastatin).
Other Cardiovascular Agents
Bravadin* (ivabradine) reduces the increased heart rate and is indicated for the treatment of stable angina pectoris and
chronic heart failure. In Regions Slovenia, Central, East, and South-East Europe, its market share increased, strengthening
its position as the leading generic ivabradine variety. We recorded strong sales also in Germany, where we were one of
the leading generic manufacturers of ivabradine.
Apleria* (eplerenone) is one of the new aldosterone receptor antagonists. It is used in combination with other medicines
to treat heart failure. Last year, we placed it on the market in the Russian Federation and Estonia.
Central Nervous System
Antidepressants
2021 highlights
We were the leading generic producer of antidepressants in Regions Slovenia, Central, East, and South-East Europe.
Of all competing products, physicians there most frequently selected our antidepressant.
Antidepressants
We market six advanced antidepressants from different groups.
We are the only producer in Germany that makes available the 90 mg strength of duloxetine.
duloxetine (Dulsevia*)
agomelatine (Lamegom*)
escitalopram (Elicea*)
venlafaxine (Alventa*)
sertraline (Asentra*)
mirtazapine (Mirzaten)
Dulsevia* (duloxetine) is one of our most important antidepressants. It ranked first of all duloxetine products in Romania,
the Russian Federation, Poland, Ireland, and several other countries. It was one of the leading generic varieties in
Germany, where we were the only provider of 90 mg strength of duloxetine. Dulsevia* ranked first of all duloxetine products
throughout our Regions Slovenia, Central, East, and South-East Europe, accounting for over a 30% market share.
In that region, another two antidepressants are the leading generic varieties, Elicea* (escitalopram) and Asentra*
(sertraline), while Alventa* (venlafaxine) and Lamegom* (agomelatine) rank among the leading generic varieties.
Mirzaten (mirtazapine) is the leader of all mirtazapine products. In 2021, we placed Elicea* on market in Belarus, and
Mirzaten in Moldova. Elicea* (escitalopram) was first of all escitalopram products in Serbia, Croatia, and Slovakia. In
Slovenia, Romania, and several other markets, Mirzaten and Alventa were the leaders. In the Russian Federation, we
were the leading generic producer of antidepressants. In Slovenia, Estonia, and Croatia, we outperformed all
antidepressant manufacturers, holding more than a 15% market share.
Antipsychotics
2021 highlights
We were the leading generic producer of antipsychotics in Regions Slovenia, Central, East, and South-East Europe.
We were the leading generic producer of paliperidone in Europe.
Atypical antipsychotics
We market six atypical antipsychotics, including all five leading oral agents of this class in Europe:
aripiprazole (Aryzalera*)
paliperidone (Parnido*)
olanzapine (Zalasta*)
risperidone (Torendo*)
quetiapine (Kventiax*)
ziprasidone (Zypsilan*)
Kventiax* (quetiapine) is our flagship antipsychotic. It is available in tablets and prolonged-release tablets, all together in
ten strengths. Holding more than a 40% market share, it was the leading quetiapine in Slovenia, Latvia, and Slovakia.
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Throughout Regions Slovenia, Central, East, and South-East Europe, we were the leading producer of quetiapine, holding
a nearly 15% market share.
In that region, also our other two atypical antipsychotics, Aryzalera* (aripiprazole) and Zypsilan* (ziprasidone) were the
leading generic varieties, while Zalasta* (olanzapine) placed among the leading products. In the Russian Federation,
Portugal, and Latvia, Zalasta* was the leading of all olanzapine products.
Parnido* (paliperidone) is one of our newest antipsychotics, which we started marketing in 2018 as the only generic
producer in Europe. It is the only generic variety of paliperidone tablets in Region West Europe and several other markets.
In 2021, we remained the leading generic producer of paliperidone in that pharmaceutical form in Europe.
Anti-Parkinson Agents
Our portfolio comprises three medicines for the treatment of Parkinson's disease: Oprymea (pramipexole); Rolpryna SR*
(ropinirole); and Rasagea* (rasagiline). In Regions Slovenia, Central, East, and South-East Europe, we were the leading
generic producer of medicines for the disease. In Hungary, we surpassed all competitors, holding more than a 15% market
share.
Oprymea (pramipexole), our flagship medicine in this class, recorded the most substantial sales in Region West Europe.
It was one of the leading generic pramipexole varieties in Germany, while in Romania, Poland, Portugal, and several other
markets, Oprymea outperformed all pramipexole products. In Poland, Romania, and certain other markets, our variety
outperformed all other ropinirole products, and in Hungary, all rasagiline products. Our products from this group were the
leading generic varieties in Regions Slovenia, Central, East, and South-East Europe.
Anti-Alzheimer Agents
Four oral agents are used as therapy for Alzheimer’s disease, and all four are also part of our product portfolio: Yasnal*
(donepezil); Marixino* (memantine); Galsyo* (galantamine); and Nimvastid (rivastigmine). They are available as tablets
and capsules. Yasnal* and Nimvastid are also available in orodispersible tablets. In Regions Slovenia, Central, East, and
South-East Europe, we were the only producer supplying rivastigmine in that pharmaceutical form. In 2021, we ranked
among the leading generic manufacturers of medicines for treating Alzheimer’s disease in the region. In Slovakia and
Lithuania, we were the leading provider of those medicines, holding over a 25% market share. In Lithuania, we were the
leading generic provider of memantine, while in Slovenia and Slovakia, we were the leading producer of donepezil and
memantine.
Gastrointestinal Tract
Proton Pump Inhibitors
2021 highlights
We have been the leading manufacturer of proton pump inhibitors for more than a decade in Regions Slovenia, Central, East,
and South-East Europe.
Of all competitors, we recorded the highest absolute growth.
We sold more than one billion tablets of Nolpaza*.
Proton pump inhibitors
We have been marketing proton pump inhibitors for more than 30 years.
We were the first company in Europe to present a range of five medicines in this class.
Our proton pump inhibitors are available in more than 60 countries worldwide.
pantoprazol (Nolpaza*)
rabeprazol (Gelbra*)
esomeprazol (Emanera*)
omeprazol (Ultop)
lansoprazol (Lanzul*)
Nolpaza* (pantoprazole) is our flagship proton pump inhibitor. It ranked among the top five Krka products in terms of sales.
In 2021, it was also among the five leading medicines as regards absolute sales growth. More than 1 billion tablets were
sold. In Regions Slovenia, Central, East and South-East Europe, Nolpaza* was the leading proton pump inhibitor,
accounting for over a 12% market share. It achieved large market shares among pantoprazoles. In many markets,
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Nolpaza* held more than a 50% market share among pantoprazoles, and in the Russian Federation, more than 80%.
Pantoprazole is also marketed as a non-prescription medicine.
Our second most important medicinal product in this class was Emanera*(esomeprazole), also one of Krka’s leading
products. In Regions Slovenia, Central, East, and South-East Europe, Emanera* was the leading generic variety of
esomeprazole. Physicians in the region most often prescribed our product of all esomeprazole products, in Ireland most
often of all proton pump inhibitors. Emanera* was the leader of all esomeprazole products in ten regional markets,
accounting for more than a 50% market share in seven markets. In Germany, we were the leading generic producer of
esomeprazole.
Other Medicines for Acid-Related Disorders
Ulcavis* (bismuth) is indicated for the treatment of gastritis. In combination with antibiotics and proton pump inhibitors, it
is also indicated for removal of Helicobacter pylori bacteria. In Regions Slovenia, Central, East, and South-East Europe, it
was the leading generic variety and the only bismuth-based medicine in many markets. In particular in Region East Europe,
it is also available as a non-prescription product.
Pain Relief
2021 highlights
We were among the leading generic producers of the tramadol/paracetamol combination in Europe.
In Regions Slovenia, Central, East and South-East Europe, this combination therapy headed all competing products.
We started marketing Doreta SR* (tramadol/paracetamol) prolonged-release tablets and Algominal (metamizole).
Pain relief
We have a broad range of medications for relieving various types and intensities of pain.
We market non-steroidal anti-inflammatory and antirheumatic medicines (NSAIDs), opioids and opioid-based combinations,
medicines for alleviating neuropathic pain, and other analgesics.
Our non-prescription products complement the range of prescription analgesics.
Non-steroidal anti-
inflammatory and
antirheumatic drugs
(NSAIDs)
Opioids and opioid-based
combinations
Other analgesics
Other agents for treating
neuropathic pain
naproxen (Nalgesin*)
tramadol (Tadol)
tramadol/paracetamol
(Doreta*, Doreta* SR●)
metamizole (Algominal)●
pregabalin (Pragiola*)
diclofenac (Naklofen Duo*)
oxycodone/naloxone (Adolax*)
duloxetine (Dulsevia*)
dexketoprofen (Dekenor)
etoricoxib (Roticox*)
celecoxib (Aclexa*)
● New in 2021
Doreta* (tramadol/paracetamol) is our flagship analgesic that was among top ten Krka’s medicines in terms of sales. In
Regions Slovenia, Central, East, and South-East Europe, it was the leading combination of tramadol and paracetamol,
accounting for almost a 50% market share. In 2021, we further increased that market share. We recorded strong Doreta
sales also in Region West Europe, where we were among the leading producers of that combination. In Ireland, our product
was the leading generic variety, while in Germany it outperformed all tramadol/paracetamol products, accounting for over
a 65% market share. We market two strengths of Doreta*. In Hungary and Bulgaria, we are the only provider of the
tramadol/paracetamol 75 mg/650 mg combination. In 2021, we were the only producer in Europe to start marketing the
tramadol/paracetamol prolonged-release tablets. We made Doreta SR available in seven countries: the Czech Republic,
Hungary, Poland, Portugal, Slovakia, Romania, and Slovenia.
Naklofen Duo* (diclofenac) and Nalgesin* (naproxen) are non-steroidal anti-inflammatory and antirheumatic medicines.
In Regions Slovenia, Central, East, and South-East Europe, Nalgesin* was the leading naproxen-based medicine,
accounting for over a 60% market share, which further increased in 2021. It was among the most frequently prescribed
non-steroidal antirheumatic medicines in several markets, and it took first place in Slovenia. We also market Nalgesin* as
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a non-prescription product. Dekenor (dexketoprofen) belongs to the same product group. In 2021, we made it available in
Italy, Spain, and Moldova.
Roticox* (etoricoxib) is a non-steroidal anti-inflammatory and antirheumatic medicine from the class of coxibs. It was the
leading generic etoricoxib variety in Regions Slovenia, Central, East, and South-Eastern Europe. In 2021, its market share
further increased. We were one of the leading producers of etoricoxib in Germany and the leading producer of all etoricoxib
varieties in Hungary, Uzbekistan and certain other markets. Aclexa* (celecoxib) belongs to the class of coxibs. It was the
leading generic celecoxib variety in that region in 2021. In Poland, the Czech Republic, Slovakia, and Estonia, it was the
leading celecoxib.
In 2021, we added a new analgesic with antipyretic and spasmolytic properties Algominal (metamizole) tablets to our
portfolio of analgesics. We launched it in Slovenia.
Agents also indicated for neuropathic pain therapy are Dulsevia* (duloxetine), an antidepressant, and an antiepileptic
Pragiola* (pregabalin). In Slovakia, Ireland, Austria, and certain other countries, we ranked among the leading generic
producers of pregabalin with our Pragiola*. In Estonia, it was the leading pregabalin product, accounting for more than
a 50% market share. In 2021, we started marketing Pragiola* in Azerbaijan.
Blood and Blood-Forming Organs
Zyllt* (clopidogrel) is our most important medicine for treating diseases of blood and blood-forming organs in terms of
sales. We market it in more than 40 countries. In 2021, it remained the leading generic variety of clopidogrel in the Russian
Federation and certain other markets. It was the leading clopidogrel product in Hungary and Kyrgyzstan. We have been
among the leading generic producers of clopidogrel in Regions Slovenia, Central, East, and South-East Europe for several
consecutive years.
Our latest medicine for treating blood and blood-forming organs is Eliskardia* (prasugrel). We started marketing it in 2019,
and in 2021 also made it available in Croatia. Our prasugrel was the leading generic variety in the Czech Republic and
Slovenia. In Slovakia, our prasugrel surpassed all prasugrel products.
Xerdoxo (rivaroxaban) is one of the most advanced anticoagulants, which we made available in Europe as one of the first
generic producers in 2020. In 2021, we launched it in Malta, Serbia, Bosnia and Herzegovina, and as the first generic
producer in North Macedonia.
In 2021, we added Atixarso (ticagrelor) to our product range of this therapeutic class. Ticagrelor is a reversible platelet
aggregation inhibitor indicated in patients with complex cardiovascular conditions. It decreases the risk of cardiovascular
events, such as myocardial infarction and stroke. In combination with acetylsalicylic acid, it is used to prevent
atherothrombotic events. We launched it in Croatia, and intend to start marketing it also on other markets.
Antidiabetics
Our most important medicine in this class was sulphonylurea Gliclada* (gliclazide). In Regions Slovenia, Central, East,
and South-East Europe, it was the leading generic variety of gliclazide, and we were the leading generic producer of
sulfonylureas. We were the only producer in the region that supplied three strengths of gliclazide modified-release tablets:
30 mg, 60 mg, and 90 mg. Gliclada* outstripped all gliclazide products in the Czech Republic, Slovenia, and Latvia.
Glypvilo (vildagliptin), an antidiabetic agent, is our first dipeptidyl peptidase-4 (DPP-4) inhibitor. We marketed it in three
countries last year but intend to launch it on many more markets in the future. We intend to add other agents of this and
other product groups to our range of antidiabetics.
We market another antidiabetic agent, Enyglid* (repaglinide), from the glinide class.
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Antiinfectives for Systemic Use
Antibacterials for Systemic Use
Our portfolio of antibiotics comprises medicines from various classes: macrolides, β-lactam antibiotics, fluoroquinolones,
and other antibiotics.
In Regions Slovenia, Central, East, and South-East Europe, we were one of the leading generic producers of macrolide
antibiotics. Fromilid (clarithromycin) is a macrolide antibiotic and our most important medicine of that therapeutic class. It
has been the leading generic variety of clarithromycin in the region for years. It was the leading clarithromycin product in
Ukraine, Slovenia, Hungary, and several other markets. Azibiot (azithromycin) is from the same class. In Slovenia and
Latvia it was the leading generic variety of azithromycin, and the leader of all azithromycin products in Moldova.
Our range of ß-lactam antibiotics comprises Furocef*(cefuroxime) and Betaklav* (amoxicillin/clavulanic acid) and our
fluoroquinolone range comprises four antibiotics: Levalox* (levofloxacin); Moloxin* (moxifloxacin); Ciprinol
(ciprofloxacin); and Nolicin (norfloxacin). Moloxin* was the leading generic variety of moxifloxacin in Hungary, Portugal,
and Ukraine, while in Poland it was at the head of all moxifloxacin products. We started marketing Levalox* in the Russian
Federation last year. Also, last year, we maintained the leading position among the producers of fluoroquinolones in
Regions Slovenia, Central, East, and South-East Europe.
HIV Infection and Other Antivirals
We market four medicines for the treatment of HIV infection: Emtenovo* (emtricitabine/tenofovir); Efavemten*
(efavirenz/emtricitabine/tenofovir); Darunasta* (darunavir); and Atazam* (atazanavir). Our antiviral range also includes
Entecavir Krka* (entecavir), indicated for chronic hepatitis B therapy. Our Region West Europe recorded the strongest
sales of medicines from this class. Last year, Emtenovo* and Efavemten* were among the leading generic varieties in
Germany. We surpassed all competing products with our double single-pill combination emtricitabine/tenofovir in Slovakia,
Slovenia, and Lithuania; with a triple single-combination in Austria; and with our darunavir in Slovakia.
Urologicals
Our most important urinary tract medicines are those used to treat benign prostatic hyperplasia, erectile dysfunction, and
urinary incontinence.
We market five medicines used for benign prostatic hyperplasia therapy: Tanyz* (tamsulosin); Dutrys* (dutasteride); and
Finpros* (finasteride); Sidarso* (silodosin); and Tadusta* (dutasteride/tamsulosin). The latter two are our newest
products, first launched in 2020. In 2021, we were the leading generic producer of a dutasteride/tamsulosin combination
in Regions Slovenia, Central, East, and South-East Europe. In Latvia, Tadusta* ranked first of all dutasteride/tamsulosin
products. In Slovenia and the Czech Republic, Tanyz* was the leading generic variety of tamsulosin.
Vizarsin* (sildenafil), Tadilecto* (tadalafil), and Viavardis* (vardenafil) compose our range of medicines for erectile
dysfunction. In Regions Slovenia, Central, East, and South-East Europe, we were one of the leading generic producers of
tadalafil, and the leading producer in Estonia.
Our range of urologicals also includes Asolfena* (solifenacin) and Loxentia* (duloxetine) for treating urinary incontinence.
Oncology
Over the past few years, we started marketing 12 oncology agents. Last year, we added two agents to our oncology
portfolio, Pemetrexed Krka (pemetrexed) and Anastrozole Krka (anastrozole). Pemetrexed Krka (pemetrexed) powder
for solution for infusion is indicated for treating patients with metastatic non-small cell lung cancer. We launched it in
Slovenia and intend to place it on other markets as well in the future. Anastrozole Krka is indicated for the treatment of
breast cancer. We started marketing it in France.
Among the most recent additions to the oncology range are Dasatilen* (dasatinib) and Erlotev* (erlotinib), first launched
in 2020. Last year, we placed erlotinib on the markets of Poland and Hungary. In Slovenia and Hungary, we became the
leading generic provider of erlotinib, and one of the leading providers in Poland. We market Dasatilen* primarily in countries
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of Western Europe. In Germany and Sweden, our dasatinib was the leading generic variety last year, and we were the
only generic provider of dasatinib in Slovenia and Slovakia.
We placed Gefitad* (gefitinib) on market in Lithuania. We were the only generic provider of gefitinib in Slovenia. Gefitad*
was one of the leading gefitinib varieties in Germany. We also market Meaxin* (imatinib). Last year, it was the leading
imatinib product in Latvia and Bosnia and Herzegovina, and one of the leading generic varieties of imatinib in Slovenia,
Serbia, Bulgaria, and Poland. Krka’s oncology portfolio is supplemented by Ecansya* (capecitabine); Lortanda (letrozole);
and Escepran* (exemestane), etc.
Other Medicines
The portfolio of oncology medicines acting directly on cancer cells is also supplemented by certain complementary
medicines. Dexamethasone Krka can be used in oncology, haematology, and other therapeutic areas. It plays an
essential role in treating COVID-19 infections and, as a result, has been in high demand over the past two years. It is
available in tablets and solution for injection. We started marketing it in Greece last year and also placed the solution for
injection on the market in Hungary, and 4 mg tablets in Bosnia and Herzegovina. In Germany, Spain and many other
markets, Krka is the only producer that markets 20 mg and 40 mg dexamethasone tablets. In these markets and throughout
Regions Slovenia, Central, East, and South-East Europe, we were the leading producer of dexamethasone.
Febuxodor* (febuxostat) is indicated for treating gout and high levels of uric acid in the blood in initial chemotherapy for
leukaemia. We started marketing it in 2019, and in 2021 we made it available in Italy and Mongolia. Cinacabet (cinacalcet)
regulates parathyroid hormone levels and is used in patients with kidney disease on dialysis therapy, parathyroid gland
cancer, or with primary hyperparathyroidism.
Non-Prescription Products
In 2021, the Krka Group sales of non-prescription products totalled €137.3 million, an 11% year-on-year increase. The
Russian Federation, Ukraine, and Uzbekistan saw the strongest sales increase. Last year on the back of the COVID-19
pandemic and the related measures, sales of non-prescription products dropped. Coughs and colds resurged in the second
half of 2021, prompting an increase in cough-and-cold product sales, our most important group of non-prescription
products.
We market non-prescription products through our marketing-and-sales network in most countries of Regions Central, East,
and South-East Europe.
Septolete, Herbion*, Nalgesin*, and Bilobil* are our most important non-prescription product brands in terms of sales.
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Non-Prescription Product Sales by 10 Major Markets
Revenue since 2017 is presented in compliance with the IFRS 15.
2021 Non-Prescription Product Sales by Therapeutic Class
Septolete* from the cough-and-cold product group was our leading non-prescription product brand last year. Septolete
ranked among the 15 leading Krka products in sales and was the leading non-prescription product brand in terms of
absolute sales growth. Septolete Total* (benzydamine/cetylpyridinium chloride) generated most sales and is available in
spray and lozenges. We market eucalyptus, elder-and-lemon, and honey-and-lemon flavoured lozenges. In 2021, we
extended marketing various flavours of Septolete Total* to new markets. We made elder-and-lemon flavoured lozenges
available in Montenegro, and honey-and-lemon in Mongolia and Spain. In Slovenia, Lithuania, Belarus, and Uzbekistan,
Septolete Total* was the best-selling non-prescription product in the category of products with an effect on the pharynx.
The product accounted for more than a 20% market share in Slovenia and Uzbekistan.
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Herbion*, our second most important non-prescription product brand, also ranked among the 15 leading Krka products.
Its sales climbed by more than 15% on 2020. Herbion was one of the leading non-prescription products in terms of absolute
sales growth. Herbal cough syrups for various types of cough are marketed under the Herbion brand. Herbion Cowslip
Syrup and Herbion Ivy Syrup facilitate expectoration, while Herbion Plantain Syrup relieves dry, irritating coughs.
Herbion* Iceland Moss Syrup also relieves sore throat and hoarseness, and relieves dry, irritating cough. Herbion Ivy
Lozenges acts much like the syrup and helps expectoration. This pharmaceutical form is especially suitable for adults.
In 2021, we started marketing lozenges in Ukraine, Kazakhstan, and other countries. We were the first to provide lozenges
containing ivy leaf extract in the Russian Federation, Belarus, and Moldova. In Regions Slovenia, Central, East, and South-
East Europe, Herbion was one of the three leading cough-and-cold brands and remained the leading natural syrup in 2021.
The nasal decongestant Septanazal* (xylometazoline/dexpanthenol) is also among our non-prescription products for
cough and cold. It is available as spray for adults and spray for children. In Slovenia and Latvia, it was one of the leading
sprays with that composition, and ranked first of all competing products in Moldova, holding an over 20% market share.
Nalgesin* is our third most important non-prescription product brand. Nalgesin (naproxen) is an analgesic, which is also
available as a prescription pharmaceutical. In 2021, Nalgesin was a non-prescription brand that recorded the highest
absolute growth. For several successive years, Nalgesin* has been a leading variety of naproxen in Regions Slovenia,
Central, East, and South-East Europe, holding a 30% market share. Its market share accounted for 25% in Slovenia,
making Nalgesin the leading non-prescription NSAID.
Bilobil*, another best-selling non-prescription product, belongs to the group of products improving cerebral and peripheral
circulation. It contains ginkgo extract and is indicated for slowing the progression of cognitive decline. We have been
marketing it for more than 30 years. In Regions Slovenia, Central, East, and South-East Europe, it was the third ginkgo-
based product in terms of sales volume. In Romania, Ukraine, and certain other markets it was the leading ginkgo-based
product.
Flebaven* (diosmin) belongs to the group of vasoprotectives. It is used to treat chronic venous insufficiency, and acute
haemorrhoidal syndrome. In certain countries, it is available on prescription as well. In 2021, its sales went up by more
than 50%. The rise was the sharpest on our largest market of the Russian Federation. We placed 1 000 mg tablets on that
market, which was a new strength.
Pikovit and Duovit are our brands of vitamins and minerals. Duovit products are intended for adults, and Pikovit products
for children. We recorded strong sales of Pikovit, especially in Region West Europe where it was one of the leading brands
of vitamins and minerals for children. Pikovit was the market leader in its product class in Uzbekistan, Kyrgyzstan, and
Moldova.
Vitamin D3 Krka (cholecalciferol) is one of our new non-prescription products. It was first launched in 2020. It is indicated
for the treatment and prevention of vitamin D deficiency, and as adjunctive therapy in the specific treatment of
osteoporosis. As vitamin D3 stimulates immune system function, our product was in high demand on certain markets
during the COVID-19 pandemic. In 2021, we started marketing Vitamin D3 Krka on nine markets, also in the Russian
Federation, France, and Italy. Vitamin D3 Krka is the only vitamin D3 in tablets available on prescription or as a non-
prescription product in Slovenia.
Our food supplement Magnezij Krka 300 is available in water-soluble granules. It ranked first of all magnesium-based
products in pharmacies and accounted for more than a 35% market share. We also started marketing it in Saudi Arabia.
Noctiben Mea (doxylamine) is one of the new non-prescription product brands of Krka. It is indicated for adults with
occasional insomnia. It is one of the leading non-prescription products in the category of medicines for the treatment of
insomnia in Slovenia and its market share grew also in 2021.
Animal Health Products
In 2021, the Krka Group sales of animal health products amounted to €81.3 million, a 7% year-on-year climb. The largest
contributors to sales growth were the United Kingdom, France, Spain, and the Russian Federation.
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In Regions Slovenia, Central, East, and South-East Europe and most markets of Region West Europe, we use our
marketing-and-sales network for selling our animal health products. On other markets of Regions West Europe and
Overseas Markets, we market them through our partners.
The combination of milbemycin and praziquantel (Milprazon*) was our best-selling animal health product in 2021. It was
followed by products containing fipronil (Fypryst*, Fypryst* Combo); enrofloxacin (Enroxil*); florfenicol (Floron); and
pyrantel/praziquantel (Dehinel*, Dehinel* Plus).
Animal Health Product Sales by 10 Major Markets
Revenue since 2017 is presented in compliance with the IFRS 15.
2021 Animal Health Product Sales by Therapeutic Class
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We produce animal health products for farm animals and companion animals. Sales growth relies primarily on companion
animal products, which accounts for over 50% of animal health products.
Our most important companion animal product is the antiparasitic Milprazon* (milbemycin/praziquantel), which is also our
leading animal health product in terms of sales. Last year, its sales increased almost by one third, placing the product
among the leading Krka products for absolute sales growth. We recorded the strongest Milprazon sales in Region West
Europe, where its sales climbed by more than 30% on 2020. Milprazon* is a broad-spectrum wormer available in tablets
of four strengths.
Spot-on solutions account for a significant proportion of the companion animal product range. Our most important
companion animal brand and second most important animal health product brand is Fypryst*. It is composed of Fypryst
(fipronil) and a fixed-dose combination Fypryst* Combo (fipronil/S-methoprene). The brand products generated strongest
sales in the United Kingdom and other markets of our Region West Europe. This antiparasitic is available in spot-on
solution and cutaneous spray.
Selehold* (selamectin) spot-on solution is another antiparasitic agent for the treatment of companion animals. It is used
to treat and prevent infestations with endo- and ectoparasites. We started marketing it in 2019. In 2021, we placed it on
the market in Italy and as the first generic provider in Armenia and North Macedonia. Selehold* sales increased by more
than 50%. It was one of our top ten animal health products and one of the top three in terms of absolute sales growth.
Our second endectocide is Prinocate* (imidacloprid/moxidectin), launched in 2020. In 2021, we started marketing it in
Italy and as the first generic provider in Ukraine. We recorded the strongest Prinocate sales in Region West Europe, above
all in the United Kingdom. Prinocate* is available as a spot-on solution.
We also supply another antiparasitic agent, Ataxxa (imidacloprid/permethrin) spot-on solution. This combination is used
to treat infestations with ectoparasites in dogs. In 2021, we launched Ataxxa in the Russian Federation. This was the only
competitor to the product already available in the country. It also remains the only competitor to the products available on
other markets that sell Ataxxa.
Our portfolio of antiparasitic agents for companion animals includes the Dehinel* brand products. This is one of our leading
animal health brands in terms of sales. We market Dehinel Plus* (febantel/pyrantel/praziquantel) for small dogs and
Dehinel Plus* XL for large dogs. Our dog range also includes flavoured tablets Dehinel Plus* Flavour, while Dehinel*
(pyrantel/praziquantel) is intended for cats. In 2021, we placed tablets for cats on the market in Romania and Georgia, and
Dehinel Plus* XL for dogs in Romania, Ukraine, and Armenia.
Rycarfa (carprofen), available in tablets and solution for injection, is an analgesic from our companion animal product
range. In 2021, its sales increased by almost 30%.
Antimicrobials and parasiticides are an important part of our animal health product range for farm animals.
Our leading antibiotic and one of our leading animal health products in terms of sales is Enroxil* (enrofloxacin). Antibiotics
Floron* (florfenicol), Doxatib (doxycycline), and Tuloxxin (tulathromycin) rank among our ten best-selling animal health
products. In 2021, we started marketing Tuloxxin as the first generic provider in Ukraine. Our antimicrobials also include
Trisulfon (sulfamonomethoxine/trimethoprim), and Amatib (amoxicillin). In 2021, Doxatib and Enroxil* ranked among our
top animal health products for absolute sales growth. Our most important antiparasitic products for farm animals are
Toltarox* (toltrazuril) and Flimabend* (flubendazole).
Catobevit (butafosfan/cyanocobalamin) solution for injection is one of our new animal health products. It is indicated as
supportive therapy for various metabolic or reproductive disorders in farm and companion animals. We began marketing
it in 2019, and in 2021 made it available in Ukraine.
Ecocid* S ranks among our top ten animal health products. Last year, we successfully marketed it for prevention against
African swine fever.
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Health Resorts and Tourist Services
In the first quarter of 2021, business at Terme Krka was restricted because of preventive measures for curbing the spread
of COVID-19, hence the health resort units Terme Dolenjske Toplice, Terme Šmarješke Toplice and Talaso Strunjan only
provided medical rehabilitation services. Demand for other services picked up when restrictions were lifted. Throughout
the year, domestic guests prevailed, while foreign guests accounted for 7%. The annual occupancy rate at our hotels
averaged 60%. Overall, we recorded 314,408 overnight stays and €36.5 million in revenue, up 23% from 2020. Healthcare
services accounted for one-third of total revenue.
Products Marketed Under Different Brands in Individual Markets
APIs
Brands
Prescription Pharmaceuticals
agomelatine
Lamegom, Agomaval
amlodipine
Tenox, Hipres, Alneta
amlodipine/atorvastatin
Atordapin, Atorcombo
amlodipine/valsartan
Wamlox, Vamloset, Valodip, Amlo-Valsacor
amlodipine/valsartan/hydrochlorothiazide
Valtricom, Valsamtrio, Co-Vamloset
amoxicillin/clavulanic acid
Betaklav, Hiconcil Combi
aripiprazole
Aryzalera, Aripipan, Arisppa, Zylaxera
atorvastatin
Atoris, Atoridor
bismuth
Ulcavis, Ulcamed
bisoprolol
Niperten, Sobycor, Sobyc, Zonsiloc
bisoprolol/amlodipine
Sobycombi, Niperten Combi, Bisodipin
candesartan
Karbis, Candecor, Canocord
candesartan/amlodipine
Camlocor, Candecam
candesartan/hydrochlorothiazide
Karbicombi, Cancombino, Canocombi
capecitabine
Ecansya, Cansata
cefuroxime
Furocef, Ricefan
celecoxib
Aclexa, Dilaxa
clopidogrel
Zyllt, Kardogrel
diclofenac
Naklofen Duo, Naklofen
donepezil
Yasnal, Yasnoro
duloxetine
Dulsevia, Duloxalta, Dulovesic, Loxentia
dutasteride
Dutrys, Dutascar, Dortilla
dutasteride/tamsulosin
Tadusta, Dutastam, Dutamyz, Tadustix
enalapril/hydrochlorothiazide
Enap-H, Enap-HL, Enap-HL 20
enalapril/lercanidipine
Elernap, Elyrno, EnaCanpin
eplerenone
Apleria, Enplerasa
escitalopram
Elicea, Ecytara, Escitalex, Anxila
esomeprazole
Emanera, Emozul, Escadra
etoricoxib
Roticox, Bericox, Etoxib, Etoriax
exemestane
Escepran, Etadron
ezetimibe
Ezoleta, Ezetad
ezetimibe/simvastatin
Ezesimin, Vasitimb
finasteride
Finpros, Finascar TAD
galantamine
Galsya SR, Galnora
gliclazide
Gliclada, Glyclada
imatinib
Meaxin, Neopax, Meapax, Itivas, Yntam
irbesartan
Ifirmasta, Irabel, Firmasta, Iracor, Irbecor
irbesartan/hydrochlorothiazide
Ifirmacombi, Co-Irabel, Firmasta H, Firmasta HD, Irbecor Comp
ivabradine
Bravadin, Bixebra, Brivecor, Ivabalan
lansoprazole
Lanzul, Lansoptol
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APIs
Brands
Prescription Pharmaceuticals
letrozole
Lortanda, Likarda
levofloxacin
Levalox, Levnibiot, Leviaben, Levaxela
lisinopril
Laaven, Zonixem
lisinopril/hydrochlorothiazide
Laaven-HL, Zonixem-HL, Laaven-HL 20, Zonixem-HL 20, Laaven-HD, Zonixem-
HD
losartan
Lorista, Lavestra
losartan/amlodipine
Tenloris, Alortia, Lortenza, Losamlo
losartan/hydrochlorothiazide
Lorista H, Lavestra H, Lorista HL, Lavestra HL, Lorista HD, Lavestra HD
memantine
Marixino, Memando, Maruxa, Memaxa, Mentixa, Maryzola
metoprolol
Bloxazoc, Metazero
moxifloxacin
Moloxin, Moflaxa, Moxibiot, Moflaxya
naproxen
Nalgesin, Analgesin, Naldorex
olanzapine
Zalasta, Zolrix
olmesartan
Olimestra, Olmecor
olmesartan/amlodipine
Olssa, Olmeamlo, Olmira
olmesartan/amlodipine/hydrochlorothiazide
Olsitri, OlmeAmlo HCT
oxycodone/naloxone
Adolax, Oxycaloxon, Oxynador
paliperidone
Parnido, Inpalix
pantoprazole
Nolpaza, Appryo
perindopril
Prenessa, Perineva
perindopril/amlodipine
Amlessa, Dalnessa, Tonarssa, Dalneva
perindopril/amlodipine/indapamide
Co-Amlessa, Co-Dalnessa, Co-Dalneva, Amlewel, Dalnecombi, Tonanda
perindopril/indapamide
Co-Prenessa, Co-Perineva, Prenewel
perindopril/indapamide/rosuvastatin
Roxiper, Triemma
prasugrel
Eliskardia, Prasillt, Sigrada
pregabalin
Pragiola, Pregabador, Pregabio
quetiapine
Kventiax, Quentiax
rabeprazole
Gelbra, Zulbex
ramipril
Ampril, Amprilan
ramipril/amlodipine
Rameam, Ramidipin
ramipril/hydrochlorothiazide
Ampril HL, Amprilan HL, Ampril HD, Amprilan HD
rasagiline
Rasagea, Ralago, Raglysa
repaglinide
Enyglid, Repodiab
risperidone
Torendo, Rorendo
ropinirole
Rolpryna SR, Ralnea SR
rosuvastatin
Roswera, Rosuvador, Roxera, Sorvasta
rosuvastatin/amlodipine
Rosudapin, Rosmela
rosuvastatin/ezetimibe
Co-Roswera, Coroswera, Sorvasta Plus
sertraline
Asentra, Sertrone, Sertra TAD
sildenafil
Vizarsin, Sildegra
silodosin
Sidarso, Silbesan
solifenacin
Asolfena, Solifemin
tadalafil
Tadilecto, Tadagis
tamsulosin
Tanyz, Tadin
telmisartan
Tolura, Telmista
telmisartan/amlodipine
Telassmo, Tamloset, Teldipin
telmisartan/hydrochlorothiazide
Tolucombi, Telmista H
tramadol/paracetamol
Doreta, Tramabian
valsartan
Valsacor, Valsareta
valsartan/hydrochlorothiazide
Valsacombi, Co-Valsacor, Valsacor H, Valsacor HD, Valsaden, Janartan, Co-
Valsareta
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APIs
Brands
Prescription Pharmaceuticals
valsartan/rosuvastatin
Valarox, Ravalsyo
vardenafil
Viavardis, Vardegin
venlafaxine
Alventa, Olwexya
ziprasidone
Zypsilan, Zypsila, Ypsila
Non-Prescription Products
benzydamine/cetylpyridinium chloride
Septolete Total, Septabene, Septolete Extra, Septolete Omni, Septolete Ultra,
Septolete Duo, Septafar
diosmin; diosmin/hesperidin
Flebaven, Fladios, Flebazol, Flabien
doxylamine
Noctiben Mea, Sleepzone, Calmesan
ginkgo leaf extract
Bilobil, Gingonin
Iceland moss extract
Herbion Iceland Moss, Herbisland
ivy leaf extract
Herbion Ivy Syrup, Herbihelix
magnesium citrate
Magnezij Krka 300, Magnesol B2
naproxen
Nalgesin S, Analgesin, Nalgedol, Ilgesin, Nalgesin Dolo, Nalgesin Mini,
Nalgesin Relief
vitamins for children
Pikovit, Divakid
xylometazoline/dexpanthenol
Septanazal, Septanasal
Animal Health Products
enrofloxacin
Enroxil, Enrox, Enroxal
febantel/pyrantel/praziquantel
Dehinel Plus, Anthelmin Plus
fipronil
Fypryst, Amflee, Fyperix
fipronil/S-methoprene
Fypryst Combo, Amflee Combo, Fyperix Combo
florfenicol
Floron, Fenflor
flubendazole
Flimabend, Flimabo
imidacloprid/moxidectin
Prinocate, Imoxicate
milbemycin/praziquantel
Milprazon, Milquantel
pyrantel/praziquantel
Dehinel, Anthelmin
selamectin
Selehold, Selafort, Selames
toltrazuril
Toltarox, Tolzesya, Bovicox
biocide
Ecocid, Oxicid
Research and Development
Research and development is part of our vertically integrated business model and key element in designing and upholding
a competitive portfolio of products. Vertical integration and connectivity of development and production know-how and
processes are essential advantages of our development strategy. As we manage the entire process, we can introduce
quality, effective, safe, and competitive products to the markets, continuously maintain their market position and ensure
their long-term and stable availability for end-users.
By following trends and scientific achievements in various areas of expertise, particularly medicine, pharmaceutical
industry, and chemistry, we can respond quickly and appropriately to development challenges, marketing requirements,
potentials, and opportunities. Increasingly complex regulatory requirements force us to introduce new, additional and
improved approaches and methods in the development and conduct new studies, which we constantly upgrade. We also
cooperate with external partners, including specialised companies, educational and R&D institutions, and in this way
constantly upgrade our own knowledge and improve development results.
To develop value added medicines and place them on markets on time, we adopt rational approaches to research and
development and set optimal patent strategies. We use the vertically integrated model to manage patent, development,
legislative, production, and marketing requirements and risks. By managing the entire process, we can research, develop,
evaluate, authorise, and manufacture in-house active pharmaceutical ingredients (APIs), and finished products.
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The adopted development strategy and project approach help us manage products in all phases of their life cycles, provide
scientific objectives and control timelines and costs. R&D results and understanding of markets and legislative
requirements enable us to prepare complex registration documentation and obtain marketing authorisations on time. Our
registration procedures are time- and cost-efficient.
Quality is an imperative for our products from early development stages onward to make it an integral part of each our
product from the start. We also ensure compliance of all development activities with all established quality systems. We
continuously enhance and upgrade all those systems, and improve standard procedures and good practices. Audits and
inspections are regularly conducted by regulatory authorities in order to review compliance with the relevant standards.
When entering new, technologically complex areas – for example peptides and similar biological medicines, we cooperate
with other companies and institutions. At the same time we conduct our own development studies in finished product
development. We consult regulatory authorities to validate key development steps. We assess potential business
cooperation in various therapeutic areas, in particular medicines for the treatment of diabetes.
We introduce new products and maintain their competitiveness in more than 70 countries.
Investments and Accomplishments
25
Krka allocates 10% of annual revenue to research and development. Rapid scientific and technological progress and
increasing market complexity require constant investing in know-how and the latest equipment. They are essential for
innovative approaches and timely introduction of new products while maintaining top quality and competitiveness in all
markets.
R&D processes involve comprehensive and complex technological, analytical, preclinical, and clinical studies and
procedures that enable us to manufacture innovative dosage forms in new therapeutic areas.
Studies, in most cases bioequivalence studies, demonstrate the safety and efficacy of all new products. We always conduct
clinical trials in line with the applicable legal requirements, good practice guidelines, the Helsinki Declaration, and
Regulation (EU) 2016/679 (General Data Protection Regulation). Regular inspections, conducted by regulatory authorities,
confirm that safety of the participants, transparency, ethics and high quality of research are ensured.
Krka respects the intellectual property of its competitors; therefore, innovative R&D solutions drive the development of new
products. The implementation of solid dispersion technology helped us to circumvent many patents successfully and made
it possible to develop new products. In addition to innovative technological approaches, we also develop innovative
complex dosage forms with added value, for example, modified-release forms, dispersible tablets, and bilayer tablets.
In 2021, we filed twelve patent applications for new product solutions.
Also in 2021, we invested in laboratory equipment and knowledge of physico-chemical analytics and cell tests to develop
analytical methods related to complex products, including peptides.
We took a big step forward in terms of digitalisation as we transferred a huge amount of technological and analytical R&D
raw data into the electronic system. As a result, we can include, and more importantly, scientifically analyse a larger
quantity of information and dig deeper in our research work. We also continued digitalising information and data on project-
and-regulatory processes and linking them to manufacturing processes.
We took an important step in robotisation of analytical processes. This improved the repeatability of performance,
operation, and execution, while in the next phase, we also plan on optimising costs. Last year, we obtained initial regulatory
approval of analytical procedure by automated sample preparation.
Over several years, our in-depth R&D work on nitrosamine impurities made us one of the few pharmaceutical companies
that could guarantee uninterrupted supplies of safe and quality sartan products. At the end of 2020, the European
Medicines Agency (EMA) published a referral procedure for sartans requiring nitrosamine impurities limits to be included
25
GRI GS 103-1, 103-2, 103-3
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in analytical specifications of finished products. We, therefore, developed and validated analytical methods for content of
nitrosamine impurities for all sartan-containing products and clearly proved their high quality.
We conducted extensive development studies on established products, adjusted development activities, coupled
development and manufacturing operations, and learnt about regulatory and marketing requirements to enter a new
strategic market – China. We obtained marketing authorisations for our first product in China in 2020, and for another three
in 2021.
The achievements of our researchers were noticed by the wider community. Last year we received prestigious awards for
chemical synthesis of active ingredients and for developing finished dosage forms. We received several awards for
innovation: eight regional awards from the Chamber of Commerce of Dolenjska and Bela Krajina and two national awards
from the Slovenian Chamber of Commerce and Industry.
The Chamber of Commerce of Dolenjska and Bela Krajina awarded our researchers for innovative solutions in developing
several products. We received gold awards for the following innovations:
Bilayer tablet containing the combination of candesartan and amlodipine for the treatment of hypertension;
Pitavastatin-based solid dosage form for lowering cholesterol;
Fixed-dose combination of olmesartan, amlodipine, and hydrochlorothiazide in solid dosage form for the treatment
of hypertension; and
Solid dosage form containing vitamin D3.
Silver awards were received for the following innovations:
Erlotinib-based solid dosage form for the treatment of non-small cell lung or pancreatic cancer;
Optimisation of duloxetine hydrochloride finalisation as regards processability and flexibility on an industrial scale;
Optimisation of API ezetimibe production and its transfer from pilot to industrial scale; and
Synthesis of silodosin with reduced oxidation impurity content.
We received two national silver awards from the Slovenian Chamber of Commerce and Industry for innovations in the
development of dosage forms and technologies for finished products:
Candesartan and amlodipine in bilayer tablets for the treatment of hypertension; and
Fixed-dose combination of olmesartan, amlodipine, and hydrochlorothiazide in solid dosage form for the treatment
of hypertension.
Protecting Our Know-How and Industrial Property
In 2021, we filed twelve patent applications for new technological solutions we had developed and evaluated as inventions
at the global ranking level. Based on priority applications from 2020, we submitted four international patent applications.
We were granted three patents in various countries. Over 200 valid patents protect Krka’s technological solutions.
We filed 42 applications for Krka trademarks in Slovenia. We also filed 29 international and 27 national trademark
applications. In total, we have registered more than 1,100 trademarks in various countries.
In addition to protecting our own know-how, inventions, and trademarks, the strategy for achieving the most economical
and at the same time acceptable technological solutions with respect to patent protection includes recourse to available
legal measures (nullity or opposition proceedings against the grant of invalid patents or defending Krka’s patent rights).
This contributes to a high-level legal security.
New Products and Marketing Authorisations of the Krka Group
In 2021, we further extended the portfolio of Krka products by obtaining marketing authorisations for 16 new and revised
products. We develop and obtain marketing authorisations for our new and revised products to supplement our key product
groups and intensify the expansion of our new therapeutic areas, i.e. oncology, antithrombotic agents, and a very important
therapeutic category of diabetes. Besides this, we also continue entering new markets. We continue adding new products
to our non-prescription and animal health portfolios.
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We completed more than 200 registration procedures and obtained more than 1,000 new marketing authorisations on new
markets. Thanks to this approach, we can launch value added, quality and affordable medicines for contemporary
treatment, saving patients and healthcare systems money in various markets.
We obtained marketing authorisations for several prescription pharmaceuticals:
Products containing new active ingredients included Aboxoma (apixaban), also marketed as Abidalo;
Abiraterone Krka (abiraterone); Sunitinib Krka (sunitinib); and Apeneta (tapentadol), also marketed as Adoben;
A new fixed-dose combination of vildagliptin and metformin, Vimetso, also marketed as Vildakombi;
Products based on a new perindopril salt, i.e. Neoprenessa (perindopril arginine) tablets, in markets also available
as Prenessa NEO, Prenessa-AS, or Perineva; and a fixed-dose combination of perindopril arginine and
indapamide, Neoprenewel, also marketed Co-Prenessa Neo, or Co-Prenessa-AS;
Products containing established active ingredients in a new dosage form of dispersible tablets, i.e. Doreta
(tramadol/paracetamol); and Hiconcil (amoxicillin);
Products for which we carried out new market-based studies: atorvastatin, rosuvastatin, and losartan in China;
and lenalidomide in the Russian Federation;
Ezoleta (ezetimibe) containing an optimised in-house active ingredient.
We added to our animal health portfolio with a fixed-dose combination Cladaxxa (amoxicillin/clavulanic acid) from our
antibiotic range, marketed also as Twinox; and a new formulation of the fixed-dose combination Milprazon
(milbemycin/praziquantel) for dogs, also marketed as Amcofen, Mektix, or Milgusto.
As we are committed to the highest quality and safety levels possible, we continuously monitor, evaluate, and upgrade
established products and adapt them to the latest findings and requirements. In 2021, we filed marketing authorisation
documents for over 36,000 variations.
In compliance with EMA requirements, we included new analytical methods for nitrosamine impurities in registration
dossiers for all sartan-based finished products, drew up documents for more than 3,000 variations, and submitted them to
regulatory bodies in all EU member states that market our sartan-based products.
We adapted to the requirements of the latest edition of the Russian Pharmacopoiea (GF 14) and filed documents for
variations of over 300 products registered in the Russian Federation.
We continued to review and update the dossiers for our established products in compliance with the new product
registration legislation effective in the Eurasian Economic Union (EAEU). In 2021, we surpassed our goal and submitted
revised dossiers for more than one-third of all our products registered in the EAEU.
Prescription Pharmaceuticals
In 2021, we were granted marketing authorisations for 14 new prescription pharmaceuticals.
We were granted more than 500 new marketing authorisations in EU Member States.
We developed and obtained marketing authorisations for Aboxoma (apixaban) film-coated tablets, also marketed as
Abidalo, a medicine from an important therapeutic area of antithrombotic agents. It is used for the prevention of
atherothrombotic events in adults with cardiovascular diseases. API synthesis and formulation development are the results
of our know-how. The API and finished product are manufactured at our production plants. By connecting all development
and manufacturing processes, we ensure continuous supply of this advanced antithrombotic agent.
A product based on new arginine salt of Krka’s key API perindopril was added to our group of cardiovascular products.
Two perindopril arginine-based products were approved: monotherapy Neoprenessa (perindopril arginine) tablets, on
markets also available as Prenessa NEO, Prenessa-AS, or Perineva; and a fixed-dose combination Neoprenewel, also
marketed as Co-Prenessa Neo, or Co-Prenessa-AS (perindopril arginine/indapamide) tablets. Perindopril arginine
product is developed and produced according to our vertical integration model. It is a result of our know-how and is
manufactured in Krka’s-own facilities. Managing all processes from development to marketing enables us to respond
quickly and ensure a product's availability on markets.
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Marketing authorisations were granted for the cholesterol lowering agent Ezoleta (ezetimibe) containing an optimised
active ingredient. Based on new scientific studies, we improved the process of API synthesis. We manufacture the API at
our premises.
We continued obtaining new marketing authorisations for our products in China. We completed registration documentation
for several products by adding results of additional research and clinical trials performed in compliance with the
requirements of the Chinese regulatory authorities. We obtained marketing authorisations for three cardiovascular agents,
atorvastatin, rosuvastatin, and losartan, all in tablets.
We are rapidly entering the area of antidiabetics, which is expected to become one of our major therapeutic areas. We
extended our portfolio with a new fixed-dose combination Vimetso (vildagliptin/metformin) film-coated tablets, marketed
also as Vildakombi. The two active ingredients exert synergistic action, regulate blood sugar levels, and help increase
postprandial insulin levels in adult patients with type 2 diabetes. The product is made according to the vertically integrated
production model and incorporates vildagliptin, an in-house developed and manufactured API. The formulation is non-
infringing. By controlling development and manufacturing processes in-house, we will ensure uninterrupted supplies of the
finished product to our markets.
We added Apeneta (tapentadol) prolonged-release tablets, also marketed as Adoben, to our analgesic range. Tapentadol
is an opioid analgesic and is used to treat various types of severe chronic pain in adults. The medicine is produced
according to the vertically integrated production model and is the result of in-house API synthesis and dosage form
development. We obtained marketing authorisations for the product via Decentralised Procedure (DCP) as the first generic
manufacturer. We manufacture the medicine in our own production facilities to provide for uninterrupted finished product
market supply and availability of therapy.
Another result of our development is the approval of our analgesic combination Doreta (tramadol/paracetamol) dispersible
tablets, a new dosage form. This opioid analgesic plays an important role in treating moderate to severe pain. Dispersible
tablets can be taken whole or dissolved in water. The new dosage form ensures quick dissolution, is palatable and easier
to take for the patient.
We obtained marketing authorisations for the first time for two oncology agents, Abiraterone Krka (abiraterone) film-
coated tablets and Sunitinib Krka (sunitinib) hard capsules. Sunitinib is indicated for the treatment of tumours of the
stomach, pancreas, and kidneys, while abiraterone is used for the treatment of prostate cancer. We manufacture
Abiraterone Krka at our state-of-the-art production plant in Jastrebarsko (Croatia), which is dedicated to producing
products containing highly active APIs.
In the Russian Federation, we obtained marketing authorisation for our oncology agent Lenalidomide (lenalidomide) hard
capsules, indicated for various types of blood cancer. Its key indication is maintenance treatment of multiple myeloma in
adult patients. The registration documentation was based on new scientific studies and the availability of this medicine in
the Russian Federation was ensured by setting up an additional manufacturing site in the Russian Federation.
Our established antibiotic Hiconcil (amoxicillin) was approved in a new dosage form, dispersible tablets. It is indicated for
the treatment of bacterial infections in adults and children. The product can be taken whole or dissolved in water, making
administration easier for the patient.
In the Region East Europe, we were granted nearly 100 new marketing authorisations. We entered regional markets with
value added medicines. In Moldova, we were granted marketing authorisations for our antithrombotic agent Rivaroxia
(rivaroxaban) film-coated tablets. We obtained marketing authorisations under the product registration procedure applied
by the EAEU for Tadalafil Krka (tadalafil) film-coated tablets in the Russian Federation and extended our range of
medicines for the treatment of erectile dysfunction.
In Belarus, we obtained marketing authorisations under the shortened procedure for Rivestar (rivastigmine) capsules and
for Elicea (escitalopram) film-coated tablets; Duloxenta (duloxetine) hard gastro-resistant capsules; Kventiax
(quetiapine) film-coated tablets; and Zalasta (olanzapine) tablets. With this we prepared the grounds for this important
therapeutic area of diseases of the central nervous system in the region.
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In the Region South-East Europe, 50 new marketing authorisations were granted. The following medicines from two
important therapeutic areas containing advanced APIs stood out: an antithrombotic agent Xerdoxo (rivaroxaban) in the
form of film-coated tablets; and two agents from the promising group of antidiabetics, Maysiglu (sitagliptin) film-coated
tablets and the fixed-dose combination Maymetsi (sitagliptin/metformin) film-coated tablets.
We obtained more than 60 marketing authorisations in our Region Overseas Markets. We make value added medicines
from various therapeutic areas available to patients in many countries in the region. Among others, our antidementia agent
Memando (memantine) film-coated tablets and antipsychotic Aryzalera (aripiprazole) tablets were approved in Saudi
Arabia. We obtained our first marketing authorisations in the United Arab Emirates for prescription pharmaceuticals as
follows: two cardiovascular agents, Valsacor (valsartan) tablets and Valsaden (valsartan/hydrochlorothiazide) tablets; an
antidiabetic agent Gliclada (gliclazide) prolonged-release tablets; and Vizarsin (sildenafil) orodispersible tablets for the
treatment of erectile dysfunction.
We continued obtaining the Certificates of Suitability to the monographs of the European Pharmacopoeia (CEP) based on
our own API manufacturing process for a hypolipemic rosuvastatin and rabeprazole for the treatment of stomach problems.
We adopted changed legislation on APIs and obtained CEPs for key Krka’s APIs: perindopril erbumine, telmisartan, and
clopidogrel. We achieve the highest quality of API synthesis in all our production facilities by undertaking extra R&D and
registration activities. In this way, we can provide a continuous supply of our finished products.
New MAs for Established Medicinal Products
Therapeutic
areas (ATC)
Brand or registered
name
APIs
Dosage form
Country
Cardiovascular system
Co-Vamloset
Valtricom
amlodipine/valsartan/hydr
ochlorothiazide
film-coated tablets
Azerbaijan, Mongolia, Albania,
Kosovo, United Arab Emirates
Roxiper, Roxatenz-Inda
perindopril/indapamide/ro
suvastatin
film-coated tablets
Montenegro, Belarus
Roxampex
perindopril/
amlodipine/
rosuvastatin
film-coated tablets
Croatia, Georgia, Ukraine
Teldipin
telmisartan/amlodipine
tablets
North Macedonia
Tolucombi
telmisartan/hydrochloroth
iazide
tablets
North Macedonia
Sorvitimb, Co-Roxera
ezetimibe/rosuvastatin
film-coated tablets
Georgia, Azerbaijan
Wamlox
amlodipine/
valsartan
film-coated tablets
Kosovo, Iraq
Valsaden
valsartan/hydrochlorothia
zide
film-coated tablets
United Arab Emirates
Niperten Combi
bisoprolol/amlodipine
tablets
Azerbaijan
Olelom HCT
olmesartan/hydrochloroth
iazide
film-coated tablets
Greece
Candesartan HCT
candesartan/hydrochlorot
hiazide
tablets
Iraq
telmisartan
telmisartan
tablets
Russian Federation
Valsacor
valsartan
film-coated tablets
United Arab Emirates
Candesartan TAD
candesartan
tablets
Iraq
Metazero
metoprolol
prolonged-release tablets
Greece
Apleria
eplerenone
film-coated tablets
Ukraine
Amiokordin
amiodarone
tablets
Azerbaijan
Simvastatin Krka
simvastatin
film-coated tablets
Iceland
Olelom
olmesartan
film-coated tablets
Greece
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Therapeutic
areas (ATC)
Brand or registered
name
APIs
Dosage form
Country
Antithrombotics
Xerdoxo, Rivaroxia
rivaroxaban
film-coated tablets
Bosnia and Herzegovina,
Kosovo; Moldova
Eliskardia
prasugrel
film-coated tablets
Bosnia and Herzegovina
Central nervous system
Aryzalera
aripiprazole
tablets
Saudi Arabia
Memando
memantine
film-coated tablets
Saudi Arabia
Pregabalin Krka
pregabalin
hard capsules
Mongolia, Iraq
Elicea
escitalopram
film-coated tablets
Belarus
Alventa
venlafaxine
prolonged-release hard
capsules
Armenia
Parnido
paliperidone
prolonged-release tablets
Greece
Agomaval
agomelatine
film-coated tablets
Malta
Rivestar
rivastigmine
capsules
Belarus
Kventiax
quetiapine
film-coated tablets
Belarus
Duloxenta
duloxetine
gastro-resistant capsules
Belarus
Zalasta
olanzapine
tablets
Belarus
Antineoplastic agents
Pemetrexed Krka
pemetrexed
powder for solution for
infusion
North Macedonia
Erlotinib Krka
erlotinib
film-coated tablets
Ukraine
Corticosteroids for systemic use
Dexamethasone Krka
dexamethasone
tablets;
solution for injection
Russian Federation, Serbia, Iraq
Musculoskeletal system
Dekenor, Deksiaks
dexketoprofen
solution for injection, film-
coated tablets
Russian Federation, Azerbaijan,
Moldova, Kyrgyzstan, Ukraine
Etoxib, Etoriax
etoricoxib
film-coated tablets
Ukraine, Mongolia, Kazakhstan
Tramadol
tramadol
prolonged-release tablets
Albania
Naklofen
diclofenac
solution for injection
Sudan
Antidiabetics
Maysiglu
sitagliptin
film-coated tablets
Serbia, Bosnia and Herzegovina,
North Macedonia
Maymetsi
sitagliptin/metformin
film-coated tablets
Serbia
Gliclada
gliclazide
prolonged-release tablets
United Arab Emirates
Antibacterials for systemic use
Ciprinol
ciprofloxacin
film-coated tablets
Malta
Fromilid
clarithromycin
film-coated tablets
Malta
Antivirals for systemic use (HIV)
Efavirenz/Emtricitabine/
Tenofovir Krka
efavirenz/emtricitabine/te
nofovir
film-coated tablets
Azerbaijan
Alimentary tract and metabolism
Nolpaza
pantoprazole
powder for solution for
injection
Tajikistan
Emanera
esomeprazole
gastro-resistant capsules
Malta, Iraq
Bismuth Krka
bismuth
film-coated tablets
Greece
Erectile dysfunction
Vizarsin
sildenafil
film-coated tablets,
orodispersible tablets
Armenia, United Arab Emirates
Tadalafil Krka
tadalafil
film-coated tablets
Russian Federation
Vardenafil Krka
vardenafil
film-coated tablets
Kazakhstan
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Therapeutic
areas (ATC)
Brand or registered
name
APIs
Dosage form
Country
Benign prostatic hyperplasia
Twinpros
dutasteride/tamsulosin
hard capsules
Serbia
Sidarso
silodosin
hard capsules
Serbia
Urologicals
Asolfena
solifenacin
film-coated tablets
Lebanon
Antihistamines for systemic use
Letizen
cetirizine
film-coated tablets
Iraq
Cezera
levocetirizine
film-coated tablets
Iraq
Dasselta
desloratadine
film-coated tablets
Iraq
Non-Prescription Products
In 2021, we obtained marketing authorisations on new markets for our key non-prescription product brands. We obtained
more than 80 marketing authorisations and notifications.
We obtained marketing authorisations for Vitamin D3 Krka (cholecalciferol) tablets in Armenia, Kosovo, Bosnia and
Herzegovina, Bulgaria and Ukraine, and received notifications in Italy, France, Croatia, Montenegro, and Serbia. In
Slovenia, we submitted an application for the status of a prescription product for packages of 90 tablets.
We obtained new marketing authorisations for the renewed formulation of our established product
B- Complex (thiamine/riboflavin/pyridoxine/cyanocobalamin/calcium pantothenate/nicotinamide) film-coated tablets in
Croatia, Serbia, and Albania.
We obtained new marketing authorisations for the Septolete brand products. Septolete Total
(benzydamine/cetylpyridinium chloride) honey-and-lemon flavour lozenges were approved in Denmark, Iceland, Spain,
Montenegro, Albania, Mongolia, and the United Arab Emirates. We obtained a marketing authorisation for Septolete Total
(benzydamine/cetylpyridinium chloride) elder-and-lemon flavoured lozenges in Montenegro. Septolete Total
(benzydamine/cetylpyridinium chloride) spray was approved for marketing in Germany, Iceland, and Denmark. Approvals
were granted in Spain and Malta for Septanazal (xylometazoline/dexpanthenol) nasal spray, marketed also as
Septanasal.
Of the Herbion brand products, we obtained new marketing authorisations for Herbion Ivy (ivy leaf dry extract) lozenges
and syrup. Syrup was approved for marketing as a food supplement under the product registration procedure applied by
the EAEU in Armenia, the Russian Federation, Belarus, Kazakhstan, and Kyrgyzstan. Syrup was also approved for
marketing in Montenegro. Lozenges were approved for marketing as a non-prescription product in Georgia, Armenia,
Turkmenistan, and Albania.
According to the changed legislative requirements for medical devices, we revised the dossier for requalification. In the
EU Member States, we obtained the certificate for Herbisland (ivy leaf dry extract) syrup as a class IIa medical device.
In the Czech Republic, we confirmed amendments in the status of two established products by registration procedures
switching them from prescription pharmaceuticals to non-prescription products in small packages. They are Flebazol
(diosmin) 500 mg film-coated tablets to treat symptoms of chronic venous insufficiency and Dasmini (desloratadine) film-
coated tablets for relieving symptoms associated with allergic rhinitis and urticaria. They come in the form of film-coated
tablets.
As the first generic manufacturer in Spain, we obtained a marketing authorisation for Emanera (esomeprazole) 20 mg
gastro-resistant capsules as a non-prescription product. We also obtained marketing authorisations for our esomeprazole-
based products as non-prescription products in Bulgaria (Emanera Kontrol), Estonia (Escadra Control), Lithuania
(Escadra), and Hungary (Emozul Control).
We also increased the number of marketing authorisations in Region East Europe markets. In Azerbaijan, we obtained
marketing authorisations for KontrDiar (nifuroxazide) capsules for treating acute bacterial diarrhoea. We revised the
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dossiers for Pikovit and Pikovit Forte vitamin tablets to switch their status from the food supplement category to non-
prescription products.
Region South-East Europe expanded marketing opportunities by obtaining marketing authorisations for Nalgesin
(naproxen) 220 mg film-coated tablets, and dietary supplement notifications for mineral-and-vitamin products Duovit for
Women and Duovit for Men film-coated tablets, and hair care product Fitoval capsules.
Region Overseas Markets expanded marketing opportunities by approvals for Novolax (bisacodyl) film-coated tablets,
and the Septolete, Bilobil and Pikovit brand products.
Animal Health Products
We obtained marketing authorisations for our two new animal health products. We extended indications and marketing
opportunities for our key animal health product brands and in various countries obtained almost 180 new marketing
authorisations.
We added a new fixed-dose combination Cladaxxa (amoxicillin/clavulanic acid), chewable tablets in three strengths to our
range of products for companion animals. The product is indicated for the treatment of bacterial infections of the skin,
gums, respiratory tract, urinary tract, and intestines in cats and dogs. We obtained marketing authorisations for the
medicine for the first time in EU Member States and North Macedonia.
Registration procedures were concluded for our new formulation of the fixed-dose combination of milbemycin and
praziquantel in film-coated tablets for dogs, on various markets available as Milprazon Chewable, Milprazon Plus,
Amcofen, Mektix Chewable, Milgusto Chewable. The improved palatability enhances voluntary uptake, reaching over
80% in dogs. This fixed-dose combination is intestinal parasite dewormer. Thanks to its systemic mechanism of action, it
at the same time prevents infestations with heartworms and eyeworms.
New indications of Ataxxa (imidacloprid/permethrin), our spot-on solution for treating and preventing flea and tick
infestations in dogs, were approved. Single treatment provides repellent activity against I. ricinus ticks, and protects pets
from sand flies and A. aegypti mosquitoes.
We introduced Selafort on new markets, available also as Selehold, (selamectin) 60 mg/ml spot-on solution for cats and
small dogs and 120 mg/ml spot-on solution for dogs. Selamectin is a contemporary medicine effective against external
parasites, including mange, fleas, lice, and internal gastrointestinal parasites, heartworms, and eyeworms. It is approved
for the treatment of mixed infestations in dogs and cats. We obtained marketing authorisations in the Russian Federation
and North Macedonia.
In Ukraine, we were granted marketing authorisations for Prinocate (imidacloprid/ moxidectin) 100 mg/25 mg/ml spot-on
solution for dogs in four filling sizes and 100 mg/10 mg/ml spot-on solutions for cats and ferrets in two filling sizes. This
medicine is effective against external parasites such as mange, fleas, and lice and against internal gastrointestinal
parasites, heartworms, lungworms, and eyeworms. It is used to treat mixed infestations in dogs, cats, and ferrets.
We obtained marketing authorisations for Rycarfa (carprofen) tablets in three strengths for dogs and a solution for injection
for dogs and cats in North Macedonia. Tablets are indicated for relieving pain and inflammation in chronic arthritis in dogs,
while solutions for injection are indicated for postoperative pain relief in dogs and cats.
In the United Kingdom, we obtained marketing authorisations for the febantel/pyrantel/praziquantel fixed-dose combination
tablets for treating gastrointestinal infestations in dogs.
We are introducing companion animal products also in countries of Region Overseas Markets. In Egypt, we obtained
marketing authorisations for Fypryst (fipronil) spot-on solution and spray used to prevent and treat tick and flea infestations
in dogs.
We introduced our products for farm animals on new markets. In Ukraine, we obtained marketing authorisations for
Catobevit (butafosfan/ cyanocobalamin) solution for injection indicated for the treatment and prevention of metabolic or
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reproductive disorders in cattle, and Tuloxxin (tulathromycin) solution for injection for the treatment of respiratory
infections in cattle. An additional strength of Tuloxxin (tulathromycin) solution for injection indicated for respiratory tract
infections in pigs was approved in Serbia.
In the Russian Federation, we obtained a marketing authorisation for Solvimin Se powder for oral solution indicated for
pigs, cattle, and poultry. This mixture of vitamins and minerals (including selenium) is indicated as a supportive therapy to
enhance the immune system in farm animals and improve their development and growth.
Krka-owned additional production capacities ensured the accessibility of our animal health products. For several animal
health products, a regulatory approval was granted for our production plant in Jastrebarsko, Croatia. We adapted the plant
to the requirements for the production of tablets for veterinary use, introduced certain automated working processes, and
increased capacities. The new plant ensures high quality and safety of animal health products, including Dehinel
(pyrantel/praziquantel), Milprazon (milbemycin/praziquantel), Rycarfa (carprofen), Marfloxin (marbofloxacin), and
Enroxil (enrofloxacin).
Terme Krka
When developing services, programmes, and activities at Terme Krka, we are always mindful of our guests' health and
well-being. We primarily focus on medical rehabilitation, medical wellness, and programmes for maintaining health and
strengthening the immune system.
In 2021, we developed programmes for long COVID reconvalescents. Our healthcare teams designed programmes to
include specialist heart and respiratory treatment, various therapies, and a healthy diet. The three health resorts offer
specialised programmes. Talaso Strunjan focuses on respiratory and climatic therapy, Terme Šmarješke Toplice offers
specialist cardiology treatment, and Terme Dolenjske Toplice also focuses on psychological support.
In Terme Šmarješke Toplice, we developed a new programme for increasing the immune system dubbed
ImmunoRebalance. It ensures active relaxation, strengthening the immune system and revitalisation for our guests in
peaceful and clean surroundings, harmonisation through natural methods, restitution of vitamins and minerals by
wholesome and ecologically produced food, strengthening the immune system, and professional support for bringing life
in balance. The programme offers excellent active relaxation and recovery after daily stress caused by many stressors,
including electronic ones. We provide our guests with professional guidance to improve important behavioural patterns in
a relaxed way, comprising exercise, diet, relationship with self, etc. European Spas Association (ESPA) conferred an
award on Terme Krka for the programme of the most innovative healthcare programme in Europe in 2021, the
ESPA Innovation Award.
Production and Supply Chain
The key objective of the production and supply chain is to satisfy market demand by providing sufficient quantities of quality
products in a timely and cost-effective manner. To meet this objective, we rapidly respond to changing market demands,
continuously improve processes to reduce lead time along the entire supply chain, and integrate supply processes in all
Krka Group subsidiaries and other contractual production sites.
We comply with new product manufacturing requirements and relevant laws by promptly introducing advanced
technological processes in the production of active pharmaceutical ingredients and finished products. We have been
increasing production capacities and improving the cost-effectiveness of processes in Slovenia and in our subsidiaries
abroad. By controlling all stages of a product life cycle, we can adapt to challenges in markets more easily and effectively.
We effectively integrate research and development with API and pharmaceutical production, which allows us to quickly
and smoothly transfer new products from development to regular production. We accelerated technological problem
solving, optimised technological processes, and ensured uninterrupted production.
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The COVID-19 pandemic continued to pose major challenges. However, sound organisation of work, the prompt
introduction of numerous preventive measures and our focus on key tasks and products helped us keep our capacities at
pre-pandemic levels.
Planning
By implementing continuous process improvements, we considerably reduced the average lead time from an order to
delivery and, consequently, increased our responsiveness and process flexibility throughout the supply chain. We continue
to optimise inventories of raw materials and finished products.
By optimal use of available resources in the controlling company and subsidiaries and through cooperation with
contractors, we manufactured and packed 16.2 billion tablets and other pharmaceutical forms in 2021. We continued our
long-term trend in volume growth of more than 5% a year. Actual product manufacturing was in line with planned market
needs.
Finished Product Manufacturing
The number of our bulk and finished products rose due to the increasing number of products and production sites, changing
market requirements, requirements for package labelling in national languages, and other demands. Careful planning and
efficient production allowed us to fulfil diverse customer demands.
We continuously improved post-registration procedures for preparing packaging materials and technological documents
for production in Slovenia, our subsidiaries abroad and at contract manufacturers to ensure timely provision of products
and a prompt response to sales requirements.
We continued to upgrade the IT support for process management, monitoring and control, standardisation of production
processes, and optimisation of the production documentation system and process controls. In 2021, we increased the use
of production documentation in e-format and improved process digitalisation.
Supply Process
26
We mainly use self-produced raw materials for our products but also buy some in the market. In 2021, the number of raw
material manufacturers further decreased, primarily due to environmental and financial reasons and those related to good
manufacturing practices. Raw material shortage and disruption of transport routes also affected our business. Despite the
26
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unstable situation, significant lack of incoming materials, lower manufacturing output at our partners, and transport issues
during the COVID-19 pandemic, we provided enough raw materials for uninterrupted production of finished products at
the same prices. We improved the transparency of purchasing raw and packaging materials and upgraded the system for
managing purchase agreements and coordinating raw material specifications with suppliers.
We continued introducing alternative sources of active pharmaceutical ingredients, excipients, and packaging materials of
equal quality at better prices. This helped mitigate risks posed by changing circumstances that affect supply.
We improved integration of our subsidiaries and optimised purchasing processes. We also improved established
partnerships with suppliers.
Purchase and transport agreements concluded with our suppliers and contractors require them to comply with national
and international laws and regulations. We work with 76 suppliers with an ISO 45001 certification and 202 suppliers
certified to ISO 14001 and regularly audit them. We conduct approximately 145 audits a year.
Production of Active Pharmaceutical Ingredients
A high level of vertical integration in the production process generates high added value. Vertical integration means that
we produce and technologically control a large proportion of the active ingredients that we incorporate into our finished
products at various production sites in Slovenia and abroad. In doing so, we reduce the dependency on external suppliers
in this key supply chain segment.
We improve the cost-effectiveness of the production of key intermediates and raw materials by optimising production
processes at all production sites. We transferred additional technologies (products) to increase capacity at our Sinteza 1
Plant in Krško in Slovenia and, in turn, considerably expanded capacity to produce active ingredients for our vertically
integrated products. We plan to expand our capacities even further. Intensive production of active ingredients and
intermediates continued at our own production sites in Novo mesto and Krško in Slovenia. Production plans for 2021 were
implemented.
Production of Pharmaceutical Products
We have been introducing additional equipment and advanced high-tech solutions into pharmaceutical production. The
Notol 2 Plant started operating at the end of 2015 and was upgraded in 2021 with several packaging lines. We also ordered
the equipment needed to render the plant fully operational. The plant utilises cutting-edge technology, high level of automation
and robotisation supported by advanced computerised systems. This approach helps us reinforce our competitive edge on
demanding global markets. In 2021, over 30% of total Krka Group products were manufactured at the Notol 2 Plant.
We also increased production in our production and distribution centre in the Russian Federation, equipped it with new
production machinery, and made a transfer of new technologies and products essential for the Russian market. This further
consolidated our position as a local manufacturer. The plant in the Russian Federation manufactures approximately 80% of
all our products intended for the Russian market.
In addition to significant investments in new equipment and technology, which provide additional production capacities, we
modernised existing machines and production lines. Upgrades and refurbishments resulted in adequate production process
cost-effectiveness and augmented the level of digitalisation. Production documentation in e-format was introduced to add to
automation and paperless operations.
We promptly responded to a fluid situation in the pharmaceutical market and a changing demand for pharmaceutical products.
We supplied our products in line with our customers’ expectations and in compliance with increasing regulatory requirements.
We were able to meet the challenges by optimising technologies, increasing product batch sizes and launching new products.
At the same time, we maintained a high level of quality standards required by laws, regulations and inspections, and upgraded
process management in terms of environmental care and health and safety at work.
In order to respond more quickly to the rising demand for our products, strengthen our presence in international markets, and
reduce risks in the production process, we continued with activities related to transfers of production technologies to
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contractual partners and expanded the network of contract manufacturers. We completed the transfer of several products to
Ningbo Krka Menovo, our joint venture established together with our Chinese partner. In 2021, several products intended for
our traditional markets were in regular production and the first product to be sold in China was launched.
To raise awareness and the quality of work, we upgraded the training centre in Pharmaceutical Production, where our
employees acquire skills for working with equipment used in all key production processes. Participants learn through the
experience and expertise of their mentors, selected from the most successful Krka employees, and modern methods for
knowledge transfer, i.e. video lessons and training in a real-life work setting. The system proved very useful, as the introduction
process is faster and more efficient, while the quality of regular work improves. It was initially intended for new employees
only but is now used for other groups of employees that can benefit from it.
Warehousing and Transport
We improved warehouse capacity utilisation through process optimisation, new computer system options, and inventory
optimisation in conjunction with other organisational units. The new multipurpose warehouse served its purpose well.
We increased the number of environmentally friendly cargo vehicles to distribute our products and cut operating costs. We
augmented sea transport and continued to use rail transport in compliance with temperature-control requirements. In 2021,
transport was hindered, so we looked for new transport options and efficiently transported products by road. Road transport
is an alternative to the established transport routes. We effectively arranged all necessary means of transport to accommodate
increasing sales volumes.
We are approved as an authorised economic operator (AEO) in customs clearance procedures. This allows for a faster flow
of goods and facilitates obtaining authorisations for simplified declaration procedures.
We are a registered exporter according to the Registered Exporter system (REX).
Suppliers
27
Our long-term relations with business partners, including suppliers of equipment, raw and base materials, contractors, and
partners, are based on mutual respect, trust, honesty, integrity, and fairness.
At all stages of the purchasing process, employees must comply with the procedures defined in internal guidelines,
international agreements, and local regulations. Roles and responsibilities in purchasing activities ranging from the
identification of user needs, tender preparation, and selection of suppliers to contracting and placing orders are precisely
specified.
In line with our long-term objectives, sustainability goals, and main principles, we select potential suppliers by considering
their:
Previous performance at Krka;
References in implementing similar projects with other clients;
Technical facilities;
Number of key employees and respective qualifications; and
Financial stability and relation to sub-suppliers or sub-contractors.
We conduct supplier audits in accordance with quality standards and Krka guidelines, and take into consideration suppliers’
prices, quality, delivery terms, reliability, regulatory compliance, compliance with our guidelines, and their social responsibility.
We follow the policy and practice of addressing local suppliers and contractors especially when – besides acceptable prices
– responsiveness, flexibility and frequent or constant involvement of suppliers and contractors in investment and service
processes also matter. In 2021, spending on suppliers of goods and services in Slovenia accounted for 16% of total Krka
procurement budget.
28
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GRI GS 102-9, 103-1, 103-2, 103-3
28
GRI GS 204-1
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Investments
29
In 2021, the Krka Group allocated €66.4 million to investments, of that €49.4 million to the controlling company, and
€17.0 million to subsidiaries. We primarily invested in our production and development plants to enlarge facilities and
upgrade technologies, quality management, and our production-and-distribution centres worldwide.
In Slovenia and the Russian Federation, we made multiple investments in new production equipment and upgraded
systems and instruments, increasing our production capacities and improving quality. Lengthy procedures for obtaining
permits in the two countries stalled funding; hence 2021 investments were lower than planned. Due to the high demand
for certain products, we had to increase their production and postpone reconstruction of the Solid Dosage Products plant.
The slow-down in investments was partly caused by lack of electronic components on the global markets, postponing the
delivery of certain machines and equipment to 2022.
We place a strong emphasis on the values of sustainable development and take into account environmental standards,
indirect, and direct environmental impacts in all investment projects. The approved equipment complies with the best
available technology for environmental protection and energy efficiency, and guarantees safe and efficient operations.
2017–2021 Krka Group Investments
In 2021, in order to ensure product quality, we streamlined the major part of investments to the production of finished
products, increasing and upgrading facilities for development, research, and analysis. This provides for coordinated
functioning of our research and development, production and control, which embody the essential advantages of our
vertically integrated business model. Investments accounted for 4.2% of sales revenue generated in 2021.
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GRI GS 102-10
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Structure of 2021 Krka Group Investments
Notol 2 Plant
The Notol 2 plant, our state-of-the-art facility for manufacturing solid dosage forms in Ločna (Novo mesto, Slovenia), has
been in operation for several years now. The growing need for production capacities has incited us to acquire additional
technological equipment. In 2019, we started equipping a new packaging facility. We installed several highly automated
and robotised packaging lines. We plan to install the remaining two packaging lines in 2022. This will make the facility fully
technologically equipped. Its full manufacturing capacity is expected to reach 5 billion tablets and its full packaging capacity
8 billion tablets per year. The investment is estimated at €41 million.
In 2021, we allocated €8.5 million to equip the new packaging facility and purchase production equipment.
Production and Capacity Upgrades
After 20 years of continued operations, we intend to upgrade water supply systems and automated washing systems of
the oldest section of the Notol plant in compliance with cGMP guidelines. The investment is estimated at €3.1 million. Also,
we plan to renovate the format tool washing room, replace and overhaul the worn-out packaging lines in the same plant
to ensure the uninterrupted performance of the packaging room in the next 20 years. The investment is estimated at
€38.2 million.
In the Solid Dosage Form Products plant (Novo mesto, Slovenia), we are investing €26 million in additional capacities for
compression mixture preparation and granulation in the tablet compression process, and in logistic capacities.
We are finishing several investments totalling €8.2 million to upgrade and increase the capacities for research,
development and analyses in our development-and-control laboratories.
We renovated the temporary storage room of the warehousing section of the Ljutomer (Slovenia) manufacturing plant in
compliance with the standards of good warehousing practice and health and safety at work. We apportioned €2 million to
the investment. We also plan to increase the production capacities for granulation and packaging. The investment is
estimated at €13 million.
At our Slovenian Beta Šentjernej plant, we upgraded the systems and equipment in compliance with ATEX standards. We
intend to install another mixer to increase the production capacity for the preparation of dry granules. The total value of
investments is estimated at €2.6 million.
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In Ločna (Novo mesto, Slovenia), we intend to replace the one-storey house by a six-storey building called Paviljon 3. The
multiple-purpose building will house an extension for our microbiology laboratory and additional rooms for several
organisational units. Project documentation for this €18.6 million investment has been completed, and construction works
are expected to start in spring 2022 after the construction permit is obtained.
Increasing API Development and Production Capacities
We plan to build new facilities for developing and producing active pharmaceutical ingredients (APIs) in Krško, Slovenia.
The designs for execution have been drawn up. In June 2021, we obtained the integral building permit for Sinteza 2, and
laboratories for chemical analyses (Kemijsko-analitski center in Slovene). The permit entered into force at the end of
July 2021. We are still waiting for the final IED OVD environmental protection permit, which must be obtained before
construction can start. The Sinteza 2 plant will be our second plant for API production in Krško. We plan to build other
small technology and infrastructure facilities required for uninterrupted production processes. The investment estimated at
€163 million pursues our strategy of vertical integration. This means that our product is made in-house from its
development to production.
Energy Supply Projects
As our production capacities increase, so do our energy demands. Investment in production capacities for compressed air
and construction of new utility lines for energy supplies to manufacturing facilities are drawing to an end. We allocated
€2.5 million for energy infrastructure extension at our Novo mesto production facility.
Investments Outside Slovenia
The Krka-Rus plant in the industrial zone of Istra, a town north-west of Moscow, is one of the key investments in Krka
subsidiaries abroad. The plant manufactures more than 75% of products we sell in the Russian Federation, giving us the
status of a domestic producer in the country. By the end of 2021, we technologically equipped the Krka-Rus 2 production
plant. In 2020, we transferred new technologies to the plant and gradually started producing new products vital for the
Russian market.
In summer 2021, we started refurbishing the high-bay warehouse at the Krka-Rus 1 plant to revamp it into production and
laboratory rooms. We intend to invest €35 million in increasing the factory production capacity to 3.5 billion tablets per
year. In 2021, our investment amounted to €5.6 million.
We continued to purchase manufacturing and quality control equipment for our joint venture Ningbo Krka Menovo in China.
The joint venture manufactures products for markets outside China, and in January 2021 also started manufacturing the
first product intended for the Chinese market.
New Projects
Project designs are being drafted for three substantial investments in new solid dosage form production. In 2021, we
started preparing project documents for the construction of a new plant in the Russian Federation. Project designs for the
2 Solid Dosage Products plant (Slovene abbreviation: OTO 2) and packaging centre in Novo mesto (Slovenia) are in the
course of preparation.
Terme Krka
We finished refurbishing Mihevc holiday houses, the four accommodation facilities in Strunjan, Slovenia. The refurbishment
of 40 accommodation units and construction of a new sewer system totalled €1.5 million. We also began a thorough
renovation of the accommodation facility at the Laguna Hotel in Strunjan after the end of the summer season. The
reconstruction of the building is still in progress. We are refurbishing the restaurant and the reception room, and converting
six rooms above the restaurant into apartments and the conference hall into an accommodation facility of a high price
range.
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We thoroughly renovated 48 hotel rooms in Šmarješke Toplice health resort (Slovenia), including the triple glazing of the
exterior windows. We adjusted 19 bathrooms at the Šmarjeta Hotel to the needs of our guests from the rehabilitation
programme making them more comfortable.
We replaced the roof and renovated the façade, giving the exterior of stables near the Struga castle (Slovenia) a new look.
This gives the building complex by the golf course a new appearance. We are also planning to renovate the building
interior.
In 2021, the subsidiary Terme Krka allocated a total of €2.1 million to investments.
Integrated Management System and Quality
30
Our fundamental strategy in terms of quality is to ensure quality by continuously improving our products, processes and
services. To this end, we pursue effective performance of the integrated management system (IMS) and quality system in
compliance with the principles of good pharmaceutical practices (GxP) and regulations governing quality in the
pharmaceutical industry. We maintain flexibility, respond quickly to new developments, market needs and legal
requirements, improve our processes, make investments, and implement advanced work systems and proper control
methods to meet various client requirements. In addition, we demonstrate the continued suitability of processes to deliver
on goals. We, therefore, address quality-related risks and opportunities in all processes systematically. We aim to achieve
sustainable development. Careful planning, employee quality culture and continuous development of our processes and
services allow us to meet the requirements of our internal and external clients and pave the way for further improvements.
Management System and Quality
Various aspects of our operations are managed uniformly with our integrated management system (IMS) to achieve optimal
business targets. The IMS shapes our attitude to quality, environment, health and safety at work, food safety, medical
device safety, information security, and business continuity. The IMS complies with ISO 9001, GxP and HACCP principles,
Regulation (EU) 2017/745 (Medical Device Regulation, MDR) and ISO 14001, ISO 45001, ISO/IEC 27001, and
ISO 22301. In 2021, we again upgraded our management systems in line with the relevant legislation and guidelines.
Testament to the management system's compliance is the renewal of good pharmaceutical practice certificates. We also
renewed other management system certificates (ISO 9001, ISO 14001, ISO/IEC 27001, ISO 45001, MDR, and HACCP).
To ensure the credibility of our IMS and strengthen partner trust, the IMS is regularly certified by SIQ (Slovenian Institute
of Quality and Metrology). It has demonstrated its compliance with regulatory and legal requirements during inspections
and audits.
The IMS is supported by a centralised information and document management system, which we regularly upgrade
through digitalisation and other measures to ensure that data in documents and electronic records are credible, easily
accessible and protected and to provide for transparency as regards our processes and products. We use this approach
to conduct analyses, observe trends, ensure sound support for improving process efficiency and product quality, and fulfil
all requirements. Our data management system is built on ethical principles of personal integrity, staff responsibility to
diligently perform their work, and framework quality guidelines, operating procedures and IT system and organisational
process controls.
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Integrated Management System
Continuous improvements dictated by standards, quality guidelines, and the PDCA (Plan-Do-Check-Act) approach are the
driving force of progress and upgrades in all areas of Krka Group operations. We systematically manage processes from
purchasing, research and development, production of active ingredients and finished products, distribution, marketing and
sales to monitoring customer satisfaction by observing vertical integration of quality. Customer satisfaction and sustained
business success remain our key objectives going forward.
Management and Quality System Controls
The quality assurance system is supervised by certification bodies and domestic and foreign inspections, internal audits
and audits by our partners.
Because we manufacture various medicines marketed in various countries, we are supervised by several competent
authorities and institutions. In Slovenia, the Agency for Medicinal Products and Medical Devices of the Republic of Slovenia
(JAZMP) supervises medicinal products and medical devices, while the Health Inspectorate of the Republic of Slovenia
(ZIRS) monitors our self-medication products and food supplements. The Chemical Office of the Republic of Slovenia
controls biocidal products, compliance with good laboratory practice principles in studies on mutagenicity, chemical clinical
trials, and toxicity of medicines for human and veterinary use, biocides and feed additives. The Administration of the
Republic of Slovenia for Food Safety, Veterinary Sector and Plant Protection (UVHVVR) controls feed additives, food and
wood packaging materials. The Metrology Institute of the Republic of Slovenia (MIRS) conducts inspections of measuring
devices in use and available on the market and prepacked products.
In 2021, the number of inspections and audits remained roughly the same as the year before. The JAZMP regularly
inspects medicinal product and API manufacturing processes, clinical trials, and pharmacovigilance. The body carried out:
Two verifications of new API manufacturing processes at a production plant;
One verification of new rooms for physico-chemical laboratories;
Regular inspections of:
- Production of sterile, semi-liquid, solid, and liquid dosage forms; and
- Laboratories for quality control and development of analytical procedures.
Regular inspections help us maintain the validity of GMP certificates, which confirm that the manufacture of medicines and
APIs complies with the GMP principles and guidelines applicable to medicines and APIs. We were awarded the GLP
certificate following a successful periodic review.
As our medicines are also marketed in non-EU states, we were inspected by certain regulatory authorities from those
countries. Following successful inspections by the Russian State Institute of Drugs and Good Practices (SID&GP) in 2021,
we were granted a new Russian GMP certificate for our Bršljin Department, namely for the production of medicines for
human use. At the same time, we successfully passed a veterinary inspection conducted by the Russian State Centre for
Animal Feed and Drug Standardization and Quality (VGNKI) on behalf of the Eurasian Economic Union (EAEU). Following
that inspection, we obtained a GMP certificate that allows us to register and market animal health products throughout the
GXP
ISO 9001
ISO 14001
ISO 22301
MDR
ISO 45001
ISO/IEC
27001
HACCP
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EAEU. The pharmacovigilance system and interconnections between global and local processes successfully passed a
regular inspection conducted by the UK's Veterinary Medicines Directorate.
Our experts took part in European, Russian, and Chinese inspections conducted at our subsidiaries and main contractors.
The control over operations and quality management in product manufacture and testing of active pharmaceutical
ingredients, bulk products, and finished products, and clinical trial monitoring contribute significantly to integrated quality
management, product safety and efficacy, and risk management control in all areas.
In 2021, we satisfied requirements set down in the new Federal Law No. 449 governing the import of medicines to the
Russian market. Quality audits showed that all our products were compliant, with no deviations identified.
In 2021, Ningbo Krka Menovo continued with regulatory activities to obtain marketing authorisations for products in China.
The company was granted its first regulatory approval at the end of 2020. In line with new Chinese legislation, active
ingredient and finished product manufacturers must pass a GMP inspection to obtain a marketing authorisation. Krka
employees took part in all inspections. All inspections were successful.
Last year, our medicines were subject to 158 controls and analytical tests carried out by agencies from Slovenia, Croatia,
Poland, Germany, France, Belgium, Austria, the Czech Republic, Slovakia, Bulgaria, and Spain. We passed all controls
confirming our pharmaceutical products' quality, safety, and efficacy.
Inspections and Audits in the Krka Group
Food safety, safety of wood packaging materials, and fulfilment of HACCP requirements were subject to four inspections
conducted by the Administration of the Republic of Slovenia for Food Safety, Veterinary Sector and Plant Protection
(UVHVVR). We passed all inspections.
Successful inspections and relevant GMP certificates enable us to maintain the marketing authorisation status of our
products and submit marketing authorisation applications for new products, meaning uninterrupted access to our products
in various markets.
Our partners conduct audits every year to verify good manufacturing practice compliance, the suitability of the
pharmacovigilance system, and contract compliance. In 2021, Krka was subject to seven audits and passed all of them.
Their findings confirm that we meet our partners' requirements.
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We passed all inspections and audits, eliminated all instances of non-compliance within the deadlines, and implemented
suitable corrective actions. In the past two years, no breaches or deviations related to health and safety were identified
that could lead to penalties or warnings or be related to voluntary commitments.
Also in 2021, we continued auditing quality management systems at our GxP partners, i.e. suppliers and contractual
partners, in compliance with GMP. We focused on legislative requirements for good manufacturing practice and other
good practices, environmental protection, human resource management, and social responsibility. We implemented
measures to reduce the risk to an acceptable level based on findings regarding quality assurance, safety, and efficacy of
products and raw materials manufactured by our partners. Suitable quality and timely delivery of products and raw
materials manufactured by partners allow for optimal production process planning.
Due to the COVID-19 pandemic, related travel restrictions and personal distancing, we conducted several audits online.
Despite all this, the number of audits remained approximately the same as in the past.
Audits at Suppliers and Contractual Partners
Quality Assurance Processes
The baselines for establishing and developing the quality system are laid out in the umbrella document on quality - Krka
Group's Quality Policy – in line with legislation, good practices and standards. We monitor all new developments and
systematically roll them out accross all processes and management systems. The document outlines a uniform quality
policy for all Krka Group subsidiaries. Krka has introduced six key processes to implement its policies and deliver on
strategic objectives:
Company management;
Pharmaceutical research, development and production;
API research, development, production and supply;
Marketing;
Sales; and
Engineering and technical services.
Quality management processes are integrated into corporate management processes and facilitate the implementation of
the general rules of all process operations. We are committed to continuously upgrading the quality system to increase
process efficiency, quality, and competitiveness of products and services. Therefore, it is vital that our employees are
aware of the importance of the quality system, undergo continuous training, and constantly upgrade their knowledge in
quality management. They cooperate with experts from various fields to identify opportunities for improvements and
introduce new developments into processes. We promote a high level of awareness of the importance of quality in all
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processes. We encourage and solicit new innovative approaches in various publications and on our corporate intranet and
incorporate them into work procedures.
The EU and the Russian Federation adopted laws to prevent the entry into the legal supply chain of falsified medicinal
products in consideration of good manufacturing practices. According to Commission Delegated Regulation (EU)
2016/161, the EU requires the placing of safety features consisting of a unique identifier (serialisation) and an anti-
tampering device (ATD) on the packaging of medicines for human use, and the unique identifiers to be reported to the
European Medicines Verification System via the European Hub (EU Hub). This allows medicines throughout the supply
chain to be identified and verified for authenticity. In addition to the unique identifiers, laws in the Russian Federation
require records of individual packaging units in a transport box or aggregation to be kept, the introduction of the 'Crypto
Code', and reporting serialisation and aggregation data to the Russian governmental "Markirovka" information system
called. The Krka Group successfully harmonised its products with all legislative requirements regarding safety features on
9 February 2019 in the EU and on 1 January 2020 in the Russian Federation. We supply properly furnished medicines to
our customers and end-users, and the reporting system works well. Also in 2021, we recorded no market alerts concerning
incorrect labelling or reporting on serialisation and/or aggregation data.
Quality is integrated at the earliest stages of research and development to produce a high-quality, safe and effective
product. We promptly incorporate legislative amendments in our work processes to follow good practices from the product
development phase onwards. When producing medicines for clinical trials, we use new tools and apply extensive expertise
to ensure the level of patient and volunteer safety required by law. We employ new technologies in product development
to gain a competitive edge on the market and increase the acceptance of our medicines among patients and their
adherence.
We set up a system for ensuring the quality of clinical trials, the safety of the patients, and the quality of the
pharmacovigilance system to prevent any harm due to adverse reactions in end users of our medicines. We ensure quality
through:
Highly qualified personnel who comply with all applicable laws and guidelines;
Internal rules;
Use of adequate equipment and computer systems;
Risk management;
Careful selection of contractual partners;
Clinical study performance monitoring;
Reporting on patient safety and safety of all other participants in clinical trials; and
The deviation investigation system.
Organisational units within Krka manage clinical trials and pharmacovigilance on the group level, while our subsidiaries
and representative offices manage country-level activities.
We ensure the safety of medicinal products for use in human and veterinary medicine through the pharmacovigilance
system, by complying with the requirements of the EU and third countries, and through the internal quality assurance
system. We carefully record and medically review all adverse events claimed to be related to our medicines in all countries
where we hold marketing authorisations and clinical trials. We regularly analyse data and assess the benefit-risk ratio for
our medicines used in therapy. We incorporate new findings important for the safe administration of medicines in product
information leaflets, or take other risk mitigation steps. We present data and findings to regulatory authorities.
We have a quality management system for active ingredients, excipients, packaging materials, and finished products,
which complies with good manufacturing practice standards. We ensure the compliance of inputs and active ingredients
through registration documents for the chemical and pharmaceutical production of finished medicines for use in human
and veterinary medicine. We continually upgrade input quality control. In 2021, we introduced the Raman spectroscopy to
identify inputs without opening their packaging. We continuously make an effort to minimise non-compliant inputs, meaning
we recorded hardly any complaints regarding input batches over the past five years.
In 2021, various medicines agencies comprehensively tested all relevant products for possible contamination by genotoxic
nitrosamine impurities at all marketing authorisation holders. Owing to adequate quality, safety and efficacy, the situation,
especially with the delivery of antihypertensives (sartans), represented a business opportunity for the Krka Group rather
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than a setback suffered by many of our competitors. We used all available production capacities and valid marketing
authorisations to seize the opportunity.
The European Medicines Agency (EMA) requested all marketing authorisation holders to test all their medicines on the
market for possible nitrosamine impurities and prepare an evaluation by the end of March 2021. We have redoubled the
preparation of underlying documents and evaluations of our medicines by taking advantage of our vertically integrated
production model (covering all stages from the purchase of raw materials used in API production to finished products and
their testing and market release) and by employing our know-how, qualified experts, and experience in vertical integration
of quality in all our processes. Although all products we place on the market are safe, we had to apply for marketing
authorisation variations for all medicines that contain sartans, which we did within the deadlines. Our communication with
regulatory authorities following the detection of genotoxic impurities in medicines produced by many other producers was
appropriate and effective.
We produce strategically important active ingredients following technological procedures resulting from our research and
development. They are produced at our chemical production plants or by our contractual partners and are subject to quality
assurance processes which we further improved in 2021. We successfully adapted to changes caused by the COVID-19
pandemic without impacting the quality of active ingredients. The reliability of supply remained unchanged throughout the
year despite the challenging situation. In 2021, we commenced preparations to increase API production capacity in Krško.
Qualifications and validations of investment and computer projects, technological and laboratory equipment, utilities, air-
conditioning systems, technological procedures, cleaning processes, calibrations and maintenance processes ensure
suitable conditions in production and control processes. Over the past five years, we recorded a linear growth trend in the
equipment and systems, increasing the number of qualifications. Process and packaging validations ensure the
compliance of technological procedures applied in bulk product manufacturing and finished product packaging. Validations
also confirm the suitability of transport conditions. Improvements help us deliver on annual plans and goals and are
reaffirmed by permanent controls by internal and external auditors and inspectors.
Before a new investment project is launched or a reconstructed building is made operational by quality approval, the
compliance of the new or reconstructed building is verified against all applicable good manufacturing practice
requirements. In certain instances, JAZMP must verify new investments and major reconstruction projects before being
green-lighted. In 2021, we verified the quality of project implementation in production plants for finished products,
warehouses, and control laboratories. The high number of quality certificates illustrates a commitment to investment in
new plants and departments, new or reconstructed rooms, new production and laboratory equipment, etc. The two largest
projects completed that were granted quality approval for project implementation were moving the small-batch production
within the Notol 2 Plant, and laboratories for physico-chemical analytics from RKC 1 to RKC 4 (RKC stands for Research
and Control Centre). We had to obtain JAZMP verification to make them operational.
We place a huge emphasis on data integrity by ensuring compliance with regulatory requirements for data completeness,
persistence, availability, legibility, accuracy, origin and descriptiveness throughout the prescribed data retention period.
We pursue the principle of data integrity in development, production, control, distribution, product quality assurance, and
pharmacovigilance. Considerable attention is given to the development and implementation of information systems and
introduction and management of laboratory and production equipment. We ensure source data integrity through validations
and qualifications of equipment, change control and the management of any process deviations.
Medicines on the market must satisfy quality, safety and efficacy requirements. We control the quality of finished, batch,
intermediate products, and inptus, i.e. excipients, APIs, and packaging materials. We also continually monitor the stability
of marketed products and APIs and guarantee their high quality, safety and efficacy throughout their shelf lives. The
number of samples analysed annually correspond to the production plans, which depend on market demand.
We use validated or verified analytical methods and calibrated or qualified laboratory equipment in analyses. This ensures
the correctness and credibility of results, which are confirmed through internal verification procedures. We manage
documents in accordance with good documentation practice guidelines and internal regulations, which provide for data
integrity throughout their retention or archiving periods. Constant employee training and monitoring set quality indicators
guarantee that analyses are done correctly. This leads to continual improvement and optimisation of work processes in
line with legislative requirements and our stakeholders' demands.
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Analysed Samples
We control production processes, active ingredients, and finished pharmaceutical products. We also control the critical
stages of the production process and examine and assess documents for every product batch separately to confirm that
our medicines are manufactured in compliance with the prescribed procedures and good manufacturing practice
guidelines. We continuously make improvements to the production of non-sterile solid, liquid, and sterile dosage forms.
Employees who carry out control and supervision undergo job-related training frequently. We discuss the findings with
heads of production departments and take corrective and preventive actions together. We periodically check the
effectiveness of the adopted actions. During the COVID-19 pandemic, we introduced various disinfection procedures for
rooms, air-conditioning systems and surfaces.
All organisational units involved in the production, control and distribution of our products cooperate closely on quality
assurance processes. A well-organised structure adds to process efficiency. We continuously monitor the quality of our
products. We confirm the quality of our processes and products according to the latest standards and guidelines for
pharmaceutical production by using the most advanced statistical tools and reporting systems. We develop product control
strategies that include quality attributes for ensuring adequate and reproducible quality of our products. We assess trends
in quality attributes of incoming raw materials and products to identify any potential quality-related risks. We conduct
stability studies to confirm the quality of our products until their expiry date. We evaluate our work performance by regularly
monitoring quality indicators. The ultimate indicator is the response of our customers, i.e. patients, healthcare
professionals, distributors, and partners, which we follow closely. The indicator confirms that our quality system is effective
and ensures high product quality, which is still rising.
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Complaints to Released Batches Ratio
We closely look into each complaint, opinion or suggestion related to quality, thoroughly investigate each case and respond
to the customer as soon as possible. The ratio of batches with complaints lodged over several years as a total of all
released batches is marginal and shows no upward trend despite rising production volumes.
Over the past five years, we recorded very few recalls. In most cases, the decision to reall was ours. Even though there
was no significant impact on quality, safety and efficacy, we opted for recalls because we are aware of the importance of
the integrity of our medicines. We cooperate with the JAZMP and other national regulatory bodies in the event of a recall.
In 2021, we carried out four recalls. The Danish Medicines Agency requested one recall because of inconsistent wording
on the packaging. The recall ensued from stringent Danish legislation. Although we believe that our recall system is
effective, we occasionally test it by simulating a recall.
Qualified persons for the release of medicinal products authorised by the JAZMP confirm the quality, safety and efficacy
of each product batch before it is released to the market. Then certificates and batch documents for customers are issued.
In view of sales and production requirements, we carefully plan and coordinate activities for the timely release of inputs,
bulk products, and finished products. We regularly make improvements to the planning process and actively engage in the
project to overhaul product supply planning.
We constantly monitor the quality of our products on the market, collect and evaluate data on the safety of a medicine
throughout its life cycle, prior to and after obtaining the marketing authorisation, and during its daily use. We continuously
manage risks and provide the correct information to healthcare providers and users of our medicines.
Quality System Objectives
Documents on the level of the Krka Group, i.e. the Quality Policy, guidelines and instructions, set out key provisions for
quality, safety and efficacy of medicines and processes. This ensures standardised processes, knowledge transfer, and
uniform criteria across our subsidiaries. Every subsidiary draws up internal documents in accordance with Krkg Group
umbrella documents and in consideration of national legislation.
A key objective of the IMS is the satisfaction of our customers with Krka products and services. Our quality system
addresses our customers' demands and expectations in line with legislative requirements and guidelines on good
manufacturing practice. We continuously monitor indirect indicators to gauge customer satisfaction with our products and
further improve processes.
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We regularly update quality assurance contracts and conduct annual product quality reviews to ensure customer
satisfaction with our products and services. Successfully completed inspections and audits of product manufacturing for
compliance with good manufacturing practice standards and registration documents are also a testament to partner
satisfaction.
Our Quality Committee periodically reviews all major processes against our IMS and performance criteria and proposes
strategic guidelines for developing them further. Quality is measured against five criteria: quality-related costs, complaints,
deviations, response times, and inspection and audit findings. The Quality Committee checks every year whether they
have been attained and approves the objectives for the next year. The objectives have always been met. We conduct
monthly reviews of quality indicators for Krka's key processes that affect the quality, safety and efficacy of products to
check whether objectives are fulfilled and whether any additional improvements are necessary. In 2021 six such reviews
were carried out.
We conduct monthly reviews of quality indicators in our subsidiaries also. We analyse the objectives and their achievement
every quarter and prepare guidelines for the next period. We report on quality indicators to the Quality Committee twice a
year. We regularly monitor monthly reviews of quality indicators at our key contractual partners.
Krka places a strong emphasis on environmental protection and health and safety at work (also by considering the
requirements of ISO 14001, ISO 45001, and Responsible Care Guidelines) and on open and fair public relations. We
regularly report to and inform the public of improvements. We periodically upgrade the environmental management system
and the system for health and safety at work to further improve their efficiency. The right to use the 'Responsible Care'
logo every year is recognition of our sound safety at work and environmental protection record.
Quality starts with the daily performance of each organisational unit, process, product, and employee. There is always
room for improvement, so we continuously promote quality (also in relation to efficiency, safety, economising, knowledge,
useful proposals, and the environment), for example, by publishing a series of professional and motivational articles on
our internal portal Krkanet, in our in-house magazine Utrip, and our weekly bulletin Bilten. In doing so, we keep our
employees informed and raise their awareness about changes to IMS and the impact of quality work on the results of the
Krka Group.
Our standing objective is to improve the agility of our operations, in particular, understanding changes, cooperation and
consultation, adaptation to market requirements and needs, coordinated and coherent work of organisational units, and
integration and streamlining of management and quality systems in the processes of all Krka Group companies. Against
that background, we upgrade systems and pursue their optimisation. We also share information, introduce new
developments, and assist subsidiaries, where we regularly audit their quality systems.
The steady growth of production volumes, new product launches and timely implementation of legislative amendments
require us to promptly upgrade and control our capacities and make improvements to manufacture and place larger
volumes of products and batches on the market and ensure their manufacture to both regulatory and Krka's requirements.
Quality issues are also crucial concerning expansion to new markets. We have to understand, implement, and adapt to
regulatory requirements on the new markets and ensure our processes are adjusted accordingly.
Information Security and Personal Data Protection Systems
Our information security management system (ISMS) is ISO/IEC 27001 certified. We successfully completed its
recertification audit in 2021. We regularly assess risks related to information sources. The ISMS is regularly reviewed by
way of self-inspections, audits, and external security inspections. In 2021 we implemented measures required by the
external security inspection in 2020, conducted a security inspection and implemented the recommendations. We
employed state of the art technologies to protect our systems from external attacks. All Krka subsidiaries actively pursue
the guidelines of the controlling Company set out in the Information Security Policy.
We reviewed certain personal data processing elements and redesigned them to comply with the latest practices of
supervisory bodies in Slovenia, EU Member States, and non-EU states. For example, regular personal data updates in
databases maintained by all Krka subsidiaries in the EU, processing geolocation data for certain employee groups, and
the use of cookies on websites. We established and rolled out an internal General Data Protection Regulation (GDPR)
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compliance system. We aim to minimise the risk of violations and ensure compliance with applicable legislation and
practice.
Key elements for successful implementation of the ISMS include regular and continuous training of our employees and
raising their awareness. We updated all relevant rules, particularly those on safe communication practices and data
protection in the latest tools, and informed all employees accordingly. In 2021, we focused on raising awareness of all
Krka Group employees about phishing attacks through the use of simulated attacks to mimic real-life situations.
We maintain a high uptime of critical systems, including the business system, production system, documentation system,
e-mail, control systems, etc. The expected minimum availability of critical systems is 99.5%. Krka has implemented various
measures and duplicated its data centre to support system availability and data safety. Together with the main data centre,
they ensure a high level of redundancy, meeting the requirements of high-level availability and data safety. Backups are
made in real-time for all computer systems, applications and databases at a remote location outside Novo mesto.
Annual Availability of Critical Systems
Annual availability (%)
2021
2020
2019
2018
2017
Production system
99.9
99.9
99.9
99.9
99.9
Documentation system
100.0
100.0
99.6
99.8
99.9
E-mail
99.9
99.9
99.9
99.3
99.8
Business system
100.0
100.0
99.9
99.9
99.9
Business Continuity Management System
The purpose of the business continuity management system (BCMS) is to prepare and implement measures and
procedures for uninterrupted production and sales of our flagship products in the event of major incidents and disasters.
BCMS operates according to the adopted strategy and policy, and makes improvements in line with ISO 22301 - the
Business Continuity Management Standard. In 2020, we supplemented the strategy with steps to be taken in the event of
an epidemic outbreak and pursued them throughout 2021 due to the COVID-19 pandemic. Essential parts of the BCMS
include procedures for optimising our resilience to damaging incidents, procedures for incident management, and business
continuity plans for crisis management. The BCMS forms an integral part of comprehensive risk management in the
Company. We are also introducing it in our subsidiaries that are engaged in production. We regularly control the system
through internal audits and inspections.
In 2021, we checked the implementation of the BCMS strategy and focused in particular on the reliability of external
resources at our remote plants. We arranged regular drills and comprehensive training courses to verify the feasibility and
efficiency of planned business continuity measures in all critical processes. This honed the skills of employees tasked with
taking charge of emergencies and leading activities to contain damage and rapidly get processes back online. We made
the requisite improvements to business continuity plans or confirmed the suitability of planned measures following training
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SUSTAINABLE DEVELOPMENT
Environmental, social and corporate governance (ESG) is a signifcant element of Krka’s ability for long-term value
creation and effective implementation of business strategy. Sustainability governance, achievement of sustainability
goals, and transparent reporting are becoming increasingly important for Krka Group stakeholders. Hence, they are
gradually and comprehensively finding their way into our business strategy and operations.
We carefully plan the development of our products and all processes that affect lives and the environment in which we
operate. We build the trust of our patients and partners through our know-how, professional and ethical approach, and
high-quality standards in all spheres of our operations. Sustainable development principles guide us in our efforts to further
improve our performance regarding nature conservation, health and safety, and to co-design our social environment.
The needs of our stakeholders and the social environment and the impacts of our business are addressed through a
constant, proactive dialogue. In 2021, we conducted a materiality assessment for our company and updated the list
of our key stakeholders. They were considered when identifying key ESG topics of the Krka Group and defining their
boundaries. Information on this aspect is also available in the ‘Krka Group Development Strategy’ section. Key
stakeholders and sustainability issues are detailed below.
An interdisciplinary sustainability project team outlined key ESG topics, which were then assessed in a comprehensive
and open process involving other business functions beyond the ESG team. We gathered information on the concerns of
our stakeholders through various forms of interaction, such as surveys on stakeholders’ needs, questions received from
the stakeholders and topics discussed with them, media analyses, and identification of increasingly important stakeholders’
concerns. We used the information in in-depth discussions with representatives from seven stakeholder groups to verify
their understanding, assessment of ESG topics, and the scope of expected disclosures. In addition to determining key
stakeholders, we identified 22 material ESG topics of the Krka Group and divided them into seven groups. The
Management Board of Krka considered and approved all the above-mentioned aspects. The results are presented in the
Krka Group materiality matrix below.
31
The process allowed us to improve reporting on our impacts on the environment, society and economy. The annual report
fully considers indicators of GRI (Global Reporting Initiative) Standards and introduces indicators of SASB (Sustainability
Accounting Standards Board) Standards for pharmaceutical industry. They are disclosed in relevant sections of the Annual
Report, as indicated in footnotes and the GRI content index. They are complemented by management approaches, which
will be aligned in the process with updated policies on key topics, strategic objectives and indicators. We also identified
major sustainable development goals of the United Nations that we help to achieve through our operations. Goal 3 ‘Good
health and well-being’ is the most important one because our core business can contribute to it significantly.
Main Sustainable Development Goals from the Perspective of the Krka Group
31
GRI GS 102-46
2021 Annual Report – Sustainable Development
139
About the Report
Relevant departments prepare the contents of the comprehensive Annual Report, while Finance, Corporate Performance
Management and Public Relations are responsible for preparing the Report. GRI sustainability indicators generally apply
to Krka d. d., Novo mesto (also referred to as Krka or the Company). If they apply to all subsidiaries of the Krka Group,
reference to the Group is made in the text. The indicators will be upgraded and further applied to other subsidiaries of the
Group. The reporting period covers one calendar year. There have been no significant changes in data from the previous
reports, and any specific changes and deviations are clarified in relevant sections of the Annual Report.
32
Any questions regarding the Annual Report can be sent to letno.porocilo@krka.biz.
33
Key Stakeholder Groups and Approach to Stakeholder Engagement
34
Stakeholder group
Engagement modality
Patients
Responsible, professional communication about products through various media,
including social networks and digital channels
Health professionals, healthcare
providers and direct customers
Long-term partnerships
Annual online survey on satisfaction with core aspects of business operations
(general satisfaction, satisfaction with products, sales personnel, order
processing and fulfilment, and complaint procedures)
Suggestions for improvement
Regular information on products provided in print and electronic forms
Direct contacts through medical representatives in 40 countries
Organisation and support for professional and educational meetings
Advanced digital content for the professional community
Feedback and opinion obtained through daily contact and market research
Employees, prospective
employees, and trade union
organisations
International conferences for employees (on various topics)
Measuring organisational climate
Works Council
Worker assemblies
Regulatory agencies/bodies and
government organisations
Long-term cooperation and provision of reliable documents
Educational and scientific
research institutions
Cooperation with secondary schools, universities and scientific institutes
Cooperation under the Krka Prizes Fund for young researchers
Shareholders, financial
institutions and other capital
market stakeholders
Meetings with investors at the Krka headquarters
Meetings between financial analysts and Krka management
Participation in investor conferences
Roadshows in financial centres around the world
Conference calls with financial analysts after releasing business results
Regular annual general meetings
Communication with financial media
Strategic partners and suppliers
Participation in tenders and competitions
Working meetings
Auditing
Local communities and non-
governmental organisations
Identification of needs of local and social environments through various
activities related to donations and sponsorships, annual meetings for clubs and
associations, and Krka’s Week of Charity and Volunteering
Open dialogue and exchange of views with residents (inclusion of
environmental goal planning and sustainable environmental protection)
Cooperation with environmental organisations
32
GRI GS 102-48, 102-49
33
GRI GS 102-53
34
GRI GS 102-40, 102-42, 102-43, 102-44
2021 Annual Report – Sustainable Development
140
Stakeholder group
Engagement modality
Media
Transparent information on business operations and events in press releases
and responses to media inquiries
Press conferences and meetings with media representatives
Information on websites
Professional associations and
interest groups
Work with specialised development institutions and companies
Involvement in the development of professional, scientific and regulatory
environments by participating in various professional and industry associations in
Slovenia, the European Union, and other markets
Material ESG Topics and Their Seven Groups
35
Topic groups
Topics
Product quality and patient safety
Safety, quality and efficacy of products and APIs
Uninterrupted supply of medicines
Integrated quality management system
Product labelling
Anti-counterfeiting
Talent attraction and retention
Recruitment, development and talent management
Employee diversity, inclusion and participation
Health and safety at work
Flexible working
Accessible healthcare
Product portfolio
Affordable medicines
R&D for affordable healthcare
Cost-effective business operations and efficient registration procedures
Expert support for health professionals
Initiatives to raise awareness of healthy lifestyles and identification of widespread
diseases
Good leadership and governance
practices
Resilient and flexible vertically integrated business model
Legislative and regulatory compliance
Management diversity, independence and competence
Performance-based remuneration
Data privacy, integrity and protection
Prosperous business operations and financial strength
Innovative technologies
Cyber security
Compliance, integrity and
transparency
Ethics in clinical trials, R&D, production and business practices
Anti-corruption
Transparent and accessible reporting
Fair marketing and sales practices
Human rights
Supply chain business practices
Planet and climate change
Management of direct and indirect carbon emissions
Waste management
Efficient use of energy and natural resources
Management of hazardous materials
Economic impact and taxes
Contribution to local community development
Tax policy
Tax transparency
35
GRI GS 102-47
2021 Annual Report – Sustainable Development
141
Double Materiality Matrix of the Krka Group
The figure presents identified main groups of ESG topics of the Krka Group on the left and the most crucial individual material ESG topics on the right. The topics are ranked from high
to very high by their significance and assigned the colour of the relevant group of topics.
2021 Annual Report – Sustainable Development
142
Employees
Employees are the key to our success; therefore, we maintain a working environment where they can develop
professionally and personally. We encourage employees to cooperate, exchange relevant information and be creative. We
foster an environment in which the goals and needs of individuals may be linked to company’s objectives and contribute
to the development of skills, competencies and careers of our employees. Special attention is paid to attracting, identifying,
and developing young talent to ensure that the company remains successful in the future. The trend of new employments
continued in 2021, as we recruited more than 1,500 new employees. We intensified educational activities and increased
the number of hours of training per employee. The health and safety of our employees remained among our top priorities.
The workplace injury rate slightly increased, yet the injuries were mainly minor.
The Krka Group operates in diverse cultural settings. To that end we foster a common culture of mutual trust, respect,
cooperation and teamwork, lifelong learning, and responsible and efficient work. We ensure equal opportunities to our
employees regardless of their gender, race, religion, sexual orientation, nationality or other cultural differences. We respect
human rights as enshrined in internationally recognised principles and guidelines, including the United Nations' Universal
Declaration of Human Rights. We abide by all legal regulations and standards related to human rights in all countries
where we operate. We are bound by high ethical standards, hence all employees receive training on Krka’s Code of
Conduct. The Code defines the principles and rules for ethical conduct, good business practice and standards of conduct,
which are binding for all employees of the Company and its subsidiaries. Clear rules and procedures ensure a quick
response to any identified inappropriate conduct in interpersonal relations and prevent any forms of mobbing.
36
The progress reported below mainly refers to the Company. Common guidelines, management approach and policies as
well as good practices are being transferred to work processes of the Krka Group subsidiaries. This increases the scope
of compiled data, which is expected to expand in the future.
Organisational Climate
Highly dedicated and engaged employees shape a positive working environment and organisational climate and thus
contribute to business results. We regularly gauge the organisational climate in the Company to learn how our employees
feel about their work at the Company. Analyses of the findings are helpful in preparing improvements, which contribute to
an efficient and creative environment. The most recent organisational climate survey confirmed that Krka employees feel
loyal to the Company and are eager to achieve the set goals. Our employees acknowledged Krka’s corporate social
responsibility and adherence to high ethical standards.
Key Data about Employees
37
31 Dec 2021
Number of employees
11,511 of which 54.2% in Slovenia
Number of agency workers
948 (7.6% of total personnel)
Employees covered by collective bargaining agreements
62%
Average age
38.7 years
Female employees
60%
Female employees in management positions
49%
Permanent employees
89% (women 88% and men 89%)
36
GRI GS 103-1, 103-2, 103-3
37
GRI GS 102-7, 102-8, 102-41, 405-1
2021 Annual Report – Sustainable Development
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2021 Employment Index
Index 2021/20
Krka in Slovenia
100
Krka’s representative offices abroad
105
Company
101
Subsidiaries abroad
97
Terme Krka
94
Krka Group
99
Agency workers
99
We hired 1,522 new employees in 2021, accounting for 12% of total Krka Group headcount. Employee turnover of the
Krka Group was 12%.
2021 New Employee Hires by Age Group, Gender and Region
38
Rate of new employee hires
Age groups
Under 30 years old
49%
30–50 years old
49%
Over 50 years old
2%
Gender
Male
37%
Female
63%
Region
Slovenia (including Terme Krka)
22%
South-East Europe
8%
East Europe
46%
Central Europe
15%
West Europe
9%
Overseas Markets
0%
Employee Structure by Region as at 31 December 2021
39
38
GRI GS 401-1
39
GRI GS 405-1
2021 Annual Report – Sustainable Development
144
Educational Structure
One of the pillars of Krka’s human resource policy is the improvement of the educational structure of its employees. We
are aware that only a high level of qualification of our experts allows us to respond to the demands of a highly competitive
market quickly and effectively. The Krka Group employs 5,882 people with at least university-level qualifications,
accounting for 51% of all Krka employees. Of that number, 207 employees hold a doctoral degree and 391 employees a
master’s degree or specialisation.
Krka Group Employees by Education Level at the End of 2021
Higher professional, university degree or higher (level VII or higher)
66%
Vocational college degree (level VI)
3%
Secondary school education (level V)
22%
Other (less than level V)
9%
Employee Education and Development
40
We provide planned and systematic development and continuous education programmes to our employees where they
can upskill in various fields, develop professionally and personally, and advance their career.
Our competence-based system for various work areas helps us determine development requirements that inform our
knowledge development and upskilling programmes. Competencies are a good starting point for recruiting new employees
and for designing training and skills development programmes and their evaluation. Our employees participate in
continuing educational and training programmes in various specialised fields such as management, quality management,
modern information technologies, personal growth, and foreign languages, especially English and Russian. They learn
about the most recent and significant developments at higher-education institutions, institutes and other organisations in
Slovenia and abroad. In 2021, 456 Krka employees were part-time students, of whom 55 were pursuing postgraduate
studies to obtain a specialisation, master's, or doctoral degree.
An important tool enabling effective leadership, identification of potentials, motivation and development of employees is
the Krka appraisal interview. Managers and employees use it to review objectives defined in the previous appraisal
period, discuss the main tasks and expectations relating to work and employee development, and plan their future work
and training.
41
We are the only company in Slovenia to offer six national vocational qualification programmes for the pharmaceutical
industry. These programmes are available also to employees of pharmacies and other pharmaceutical companies.
In 2021, as many as 104 Krka employees successfully completed the training programme (level IV). In total,
1,827 certificates have been awarded since 2004: 1,685 to Krka employees and 142 to employees of other companies
and pharmacies.
42
Krka has almost 70 in-house trainers in its marketing-and-sales network. Their task is to implement Krka strategy and
ensure that good practices are transferred in the market. Trainers support employees and managers at regular training
sessions and individually in the field.
The combination of traditional forms of training and e-learning and e-testing has been particularly important given Krka’s
widely dispersed organisation. It proved helpful during the COVID-19 pandemic because we could continue our training
processes.
40
GRI GS 103-1, 103-2, 103-3
41
GRI GS 404-3
42
GRI GS 203-2
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We place a considerable emphasis on preparing training programmes on people management, conflict resolution, and
effective and respectful communication. Quality comprises a significant proportion of our educational activities. In 2021,
we recorded 90,988 hours of training on quality.
2021 Key Data on Employee Education in the Krka Group
43
2021
Average training hours per employee
39
Proportion of revenue allocated for education
0.33%
Average cost of training per employee
€452
Hours of training on human rights
4,289
Proportion of employees trained on human rights
67%
We offer scholarships to those students who demonstrate talent and high competence during their studies. We
systematically work with them to provide them with the opportunity to gain experience and to identify potential new hires
for the company. These students learn about Krka and the company’s working processes during their internship, where
they can also develop and prove their skills and competencies. We assist students and junior researchers with their theses
on various topics. Our employees run courses in undergraduate and master’s study programmes and help design their
content. In 2021, Krka had 99 scholarship students, 18 of whom graduated and started work at Krka. We also work with
secondary schools and faculties in providing obligatory work placements.
Key and Promising Employees
We identify and systematically train key and promising employees early in their careers. We provide training, mentoring
and coaching to prepare them for the most challenging and pivotal roles.
Promising employees with less than one year of service at Krka whose proactive approach, determination and the ability
to cooperate are particularly evident during the selection process or at the beginning of their career at Krka are invited to
a workshop. Here we test their abilities in various individual and group task settings. We observe them to identify their
motivation, insight and capacity to cooperate. We also use this method to select candidates for challenging roles and for
internal transfers of employees to other roles.
To support their individual development, we offer identified key and promising employees and young talents several
programmes tailored to their needs and the nature of their work. The need to train key and promising employees and
develop well-trained leaders encouraged us to start our own leadership programme. We run four programmes for
different levels of leadership: the Krka International Leadership School, the Krka Operational Leadership School, the basic
level leadership programme, and the HDM Academy specially designed for heads of district managers. The programmes
are complemented by coaching and action learning that contribute to the development of leaders.
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Key and Promising Employees
We also provide an international programme for expert and project teams focused on communication skills, teamwork and
project work, learning about and exchanging Krka’s good practices, establishing links between employees from various
backgrounds, and employees’ personal development. New employees who have just started in their jobs and employees
who take on roles carrying greater responsibility learn about their tasks through mentoring. A special form of mentorship
at an international level is used to systematically develop promising employees.
Rewarding and Motivation
We systematically recognise good work and encourage employees to perform well through various reward and recognition
systems. We encourage dedication and praise excellence and loyalty. Various reward and recognition systems cover all
our employees.
Our best employees receive recognitions and awards for their work at the Krka Awards Day, our traditional and most
important event dedicated to Krka employees. We select and award the best employees and the best managers in
organisational units and the Krka Group as a whole, the best employees in the sales-and-marketing network, and the best
employees in regulatory affairs and other fields. Our most loyal employees receive long-service awards and special
recognition awards. In 2021, we conferred the awards at several hybrid events due to circumstances at that time.
Encouraging Innovation
The inventive work system leads to continuous improvement of the quality system and hence the integrated management
system and generates savings through useful proposals and improvements. The corporate campaign Your Effectiveness
Counts encourages our employees to strive continuously to improve the quality of their work. We try to inspire them to
resolve issues related to economy, production, logistics, technology, engineering, administration, environment, business,
information science, quality, and health and safety at work. Useful proposals that are easy to implement, and complex
improvements with notable effects, matter.
We encourage inventive work by quarterly awards, by a token award with a thank you letter from the President of the
Management Board and CEO, presentation of proposers on Krkanet and in our bulletin Bilten, interviews in the Utrip
internal magazine, an annual meeting of proposers, and awards and recognitions that the best employees receive for
inventive work on Krka Awards Day. In 2021, as many as 452 useful proposals and improvements were submitted, and
we awarded 450 proposals put forward by 393 employees. Their contributions were presented in a video clip because
of the situation at that time.
Selection process
Key and promising employees – 13% of all Krka Group employees
Annual review of key and promising
Young talent
Expert and project teams
Leadership School
basic level
Mentoring
Coaching
Leadership School
operational level
Krka International Leadership
School
Potential identification
List of potentials identified
Key and promising
employee development
programmes
HDM Academy
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Digitalisation in Human Resources
Modern technologies add to the simplicity and integrity of human resource processes and ensure that IT systems support
them. In 2021, we continued to optimise and digitalise our human resource processes, mainly those that are uniform in
the entire Krka Group.
We constantly upgrade our human resource information system to take account of business-related and legal
requirements. We also introduce new solutions. We digitalised the onboarding process for new employees and upgraded
our time management system, which now includes a solution for submitting and approving absence, arrival and departure
requests. The new system is being phased in at all organisational units. We completed the digitalisation of the system of
rewarding the most successful employees in our markets abroad and introduced the e-recruitment system at our
subsidiaries in Germany and the Russian Federation.
Health and Safety at Work
44
We ensure a safe and healthy work environment for all our employees and contractors of Krka . The latest developments
in health and safety at work and fire prevention are incorporated into every new project and technology.
The Management Board adopted the policy on health and safety at work in line with Krka’s strategic goals. The
implemented system complies with the ISO 45001 standard and is fully incorporated into Krka’s integrated management
system. External auditors verify its performance every year. We also conduct internal audits of the system to improve its
efficiency constantly. At the Company level, we have a health and safety at work team responsible for preparing and
implementing key objectives and programmes approved by the Management Board. The group regularly reports on the
implementation of set goals to the Management Board. Health and safety at work workgroups operate in organisational
units and production sites and comprise, among others, an authorised certified HSW officer having relevant competencies
from Safety and Health.
Workers Covered by ISO 45001 System
We conduct periodic risk assessments for all workplaces using our own methodology. We assess the probability of
incidents, their consequences, and the probability of health implications for every work position. Specific safety measures
are in place to maintain the risks at acceptable levels and ensure continued long-term improvement in the working
environment.
44
GRI GS 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7
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Risk assessments are also conducted for all new technological procedures in API research and development and
pharmaceutical research and development, and any changes to these procedures. In order to ensure continued long-term
improvement in the working environment, risks are assessed periodically and protective measures are taken to reduce
them to acceptable levels. The assessment methodology is based on identifying different risks related to each
technological procedure. We identify hazards for each technological phase and determine a safety measure strategy to
prevent exposure of employees who perform a certain technological procedure. We continually verify the suitability and
appropriateness of technical and organisational measures and personal protective equipment by conducting relevant
measurements during technological operations.
We organise regular occupational health and safety training to ensure process continuity, which is mandatory for all
employees. They are conducted during working hours and fully compensated by Krka. Related information is published in
internal media and accessible to all employees. The programme and duration of training depend on risk assessments and
identification of hazards workers are or might be exposed to. We provide training for high-risk positions at least every two
years. It is delivered by internal authorised certified health and safety officers and mentors responsible for introducing
correct and safe working practices to employees. We conduct written and/or oral exams to verify the level of acquired
knowledge and skills. All training courses are provided in languages that employees easily understand.
Training effectiveness is evaluated in regular safety audits in all organisational units and production sites. We gather
information also through managing safety incidents, near misses and accidents and take all necessary systematic
corrective and preventive actions if any deviations are identified.
Workplace accident and safety incident management complies with internal instructions for handling dangerous events
and workplace accidents. All employees, agency workers and student workers are informed about the instructions.
Contractors at Krka receive a summary of key information from internal documents on safety.
We promote healthy lifestyles for our employees and raise awareness of the importance of health and safety at work. Care
for health is the shared responsibility of all employees, managers, professional services, and occupational medicine
doctors. The Works Council and both trade unions are also incorporated into the system.
We foster awareness of promoting health for a quality life through our Health Promotion Plan, which we update every year
and publish on Krkanet. Health promotion planning is a dynamic process because all employees, agency workers and
student workers can contribute by presenting their proposals and initiatives. They also voluntarily participate in sporting
activities organised by Trim Klub Krka, healthy diet campaigns, satisfaction surveys, and other activities. Certain Krka
departments or external providers conduct them during work hours or outside regular work hours.
To prevent the spread of viral infections, we updated the risk assessment and adopted many sanitary, health and
organisational measures to prevent the introduction and spread of infectious diseases in our company and to ensure
uninterrupted work processes.
Various activities that help reduce sick leave have been in place in the Krka Group for several years. In 2021, the sick
leave rate was 6.9%, up 1.2 percentage points compared to 2020. The increase can be attributed to the COVID-19
pandemic, which resulted in an increased number of sick days and childcare leave days. In 2021, there were 5.3% of Krka
employees on parental leave, which they can take in compliance with their national legislation.
45
There are 5% of Krka employees with a registered disability. We adjusted their workplaces to enable them to do their
jobs in accordance with laws and regulations governing persons with disabilities. We apply various preventive measures
to reduce the risk of additional health issues and disabilities. Employees who can no longer work in their current positions
are included in appropriate re-qualification programmes.
We measure the occurrence of workplace accidents using the LTIFR (Lost Time Injury Frequency Rate) indicator, which
refers to the number of workplace accidents with three or more days’ absence from work per one million hours worked.
In 2021, the LTIFR reached 3.41, up 4.3% on 2020. There were no fatalities or workplace accidents requiring absence of
45
GRI GS 401-3
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6 months or more. All accidents were minor and involved hits, cuts and slips. There were no cases of work-related ill-
health. 67% of accidents involved men, and 33% involved women with no significant age group representation.
46
LTIFR Indicator by Year for Krka Employees and Agency Workers
47
The Fire Safety Unit and the Industrial Fire Brigade are mobilised if any incident occurs. In 2021, we recorded no major
safety incidents that might cause a fire or a major spillage of hazardous chemicals or have an impact on manufacturing
processes. We conducted 49 fire drills, five of which were full scale. We worked hand-in-hand with the Novo Mesto
Professional Fire and Rescue Brigade, local external fire services, and emergency medical service teams. We assessed
and presented the risks and realistic emergency scenarios and their impact on the stability and continuity of business
operations in Krka. We also tested the coordination and efficiency of internal and external intervention teams and Krka
first aid and medical teams.
46
GRI GS 403-9
47
GRI GS 403-9
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Number of Drills and Simulations for Emergency Situations
Systems of health and safety at work in our subsidiaries abroad conform to relevant national laws; however, we have been
gradually streamlining them by introducing internal instructions, safety documents and policy on health and safety at work.
Communicating with Employees
We promote open, regular, responsible, and ethical communication between employees and the management team,
contributing to a productive working environment. This helps increase a sense of belonging and builds a culture of mutual
trust and respect and responsible and efficient work.
The members of the Works Council represent all organisational units and are a link between employees and the
management team. Employees can put their initiatives and questions forward through their Council representatives, the
President of the Works Council, or the Worker Director. At annual worker assemblies, the President of the Management
Board, Management Board members and representatives of the Works Council inform employees about operating results
of the year past, plans for the current year, development strategy, and other news. Employees can set questions and give
proposals.
If employees wish to talk to the President of the Management Board, they can do so by sending e-mail or making an
appointment to see him in person.
Internal corporate communication takes place simultaneously through various internal media and tools. Employees
receive information regularly via the Bilten, our internal weekly bulletin, and our internal web portal Krkanet. The Utrip is
our monthly magazine, which brings news about the Krka Group, encourages teamwork, loyalty, and highlights Krka’s
values, vision and mission. Our employees also receive the latest information via e-mail address Krkaš.si, information
screens, and notice boards at manufacturing and other sites. Over the past few years, videos have become an important
communication channel for online events, announcements and instructions. We have also expanded our corporate
communication tools by creating official Krka profiles on Instagram, LinkedIn and YouTube. We use them to post corporate
content for our employees and members of the external public.
Employees also learn about important corporate guidelines in communication campaigns and at various internal events.
The campaign Your Effectiveness Counts encourages employees to find ways to be more effective at work, and Krka’s
Mobility Plan promotes the use of alternative and less environmentally harmful means of transport.
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When COVID-19 was declared a pandemic, we coordinated communication in our subsidiaries and representative
offices. We asked them to closely follow and apply measures to prevent the spread of COVID-19 and legislation in force
in their respective countries.
Internal communication tools abroad include local issues of the Utrip (Puls), Bilten (Bulletin), Krkanet and e-mailings about
local and important corporate news and campaigns. Employees in key markets use intranet websites (Krkanet) in national
languages, and our marketing and sales staff also receives M-Bulletin, another Krka newsletter in electronic form.
Employees learn news important to all Krka Group employees by e-mail and on Krkanet. Communication with employees
in minor markets is the responsibility of directors of subsidiaries and representative offices abroad, while marketing
communication managers are responsible for good communication practices in key markets.
Patients and Other Customers
We are closely connected to healthcare systems because we develop and produce high-quality, innovative generic
medicines. Our high-quality, safe and effective medicines for the treatment and prevention of the most common diseases
of modern time are used to treat more than 50 million patients around the globe. Our guiding principle is caring for their
health.
We differentiate two groups of users of our products: the group made up of patients and other end users, and the group
made up of health professionals, healthcare providers and direct customers. Their trust is the result of the long-term
relationship we nourish by responsible and professional communication and provision of all necessary information about
our products in compliance with the relevant legislation.
48
Patients and Other End Users
The quality of active ingredients, excipients, incoming materials and finished products is laboratory tested using state-of-
the-art and validated analytical methods, devices and procedures. All our prescription pharmaceuticals and non-
prescription products are tested and compliant with all regulations. We market only products that have been approved and
comply with relevant requirements and regulations.
Detailed information about Krka products is regularly published on our product, corporate, and thematic web pages in
more than 30 languages. We are developing digital media and tools that help users alleviate symptoms in certain
therapeutic areas. We also create digital content to promote healthy lifestyles. We are constantly optimising digital
communication channels and improving information to fully and accurately address the concerns and needs of our end
users. All our product information complies with relevant regulations and is pre-approved by the responsible regulatory
body in each country, i.e. the public agency for medicinal products. No incidents of non-compliance concerning product
information and labelling were identified in 2021.
49
Advertising of pharmaceutical products is subject to strict regulation and control. No complaints about non-compliance of
marketing activities with regulations and ethical standards were received in 2021.
50
We implement health protection, safety, and patient and other end-user protection systems according to clear guidelines
incorporated into our operations. Our risk management system related to these aspects complies with legal requirements
and regulations.
Our system for collecting information about risks to the health of patients or public health related to prescription
pharmaceuticals and non-prescription products, scientific data evaluation, assessment of potentials for risk reduction and
prevention, and the adoption of measures for the safe use of medicines complies with European legislation and
regulations in other countries where Krka holds marketing authorisations.
48
GRI GS 103-1, 103-2, 103-3
49
GRI GS 417-1, 417-2
50
GRI GS 417-3
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Our e-Health portal featuring various articles on health is an important source of diverse, verified and credible information
in Slovenia.
Health Professionals, Healthcare Providers and Direct Customers
We cooperate with various institutions, health insurance companies and other bodies dealing with medicinal and
other Krka products at all stages of product development, production, sales and marketing. We follow all prescribed
procedures and ensure our documents are up to date and reliable. To this end, we carry out our procedures properly and
make sure our documentation is systematically organised, transparent and complete.
Our professional, scientific and regulatory environment is changing, and we take an active part in these changes. We
engage in various professional and industry associations in Slovenia, the European Union and other countries.
Every year, we conduct satisfaction surveys among direct customers, i.e. distributors, pharmacy chains, hospitals, and
other pharmaceutical companies. Online opinion polls help us determine customer satisfaction with our products, sales
personnel, order processing, complaint procedures, and general level of satisfaction. After a thorough analysis of
responses, we can identify challenges and opportunities for improvement and set measurable goals, adopt relevant
actions, and monitor their performance at the next survey.
In 2021, as many as 86% of our customers responded to the survey. The satisfaction index rose from a sound 89% in
2020 to 92%, reinforcing a high level of customer satisfaction in recent years. Satisfaction scores improved in most survey
sections. We achieved above-average satisfaction rates in sales staff response to customer needs and in all aspects of
order processing and fulfilment, which the respondents attached the highest importance to.
51
Indirect customers or health professionals comprise doctors, veterinarians and pharmacists, who prescribe,
recommend, and dispense our products and represent a crucial link with patients and other end users. We regularly inform
them about our products, enabling them to make an informed decision about which product is most suitable for their
patients and users. We are in direct contact with them through our medical representatives in 42 countries and provide
them information in printed or electronic form. Whenever we communicate with health professionals, we act responsibly
and in accordance with the applicable laws and other regulations on business operations, including regulations on product
marketing and personal data protection. We comply with good business practices, recommendations of the Medicines for
Europe, and an ethical code of promotion.
We contribute to the professional development of doctors, pharmacists and veterinarians. We organise and support
professional and educational meetings where they can upgrade their knowledge, learn about new guidelines, exchange
opinions and experience, and establish contacts. Meetings take place in various countries where Krka is present. In 2021,
we mainly organised online or hybrid meetings, and only a few took place in person.
As a response to our stakeholder needs, we intensified educational activities and prepared added-value tools and contents
that contribute to effective disease detection and facilitate communication with patients. Doctors and pharmacists can
access educational information on our thematic web pages, which we constantly upgrade.
Our medical representatives regularly undergo professional training so they can inform health professionals about the
latest treatment guidelines and provide accurate and current information about therapeutic classes and our products. We
make sure that they have appropriate communication skills, are familiar with and follow legal and other regulations and
standards of work. Special emphasis is given to compliance with ethical standards.
Feedback and opinions obtained through daily contact and independent market research are important. IQVIA data for
Poland, our second-largest market, indicated that medical specialists from 18 specialist areas of medicine and general
practitioners placed us among the most visible companies, with cardiologists ranking us the most visible. Proxima
Research data for the Russian Federation, our major market, and Ukraine showed that general practitioners ranked us
first and cardiologists second in terms of visibility. We also ranked first among general practitioners and second among
cardiologists in both countries in terms of frequency of prescribing.
51
GRI GS 102-43, 102-44
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We recognise the major importance of clinically proven medicines and monitor their efficacy, safety, and quality during
registration procedures and after obtaining relevant marketing authorisations. To that end, we conduct many
bioequivalence studies and researches in pre-authorisation phases and support post-authorisation clinical studies. We are
one of the few generic pharmaceutical companies whose products have had clinical efficacy demonstrated in post-
authorisation clinical studies. Physicians participate in the studies as investigators, which significantly contributes to
understanding and advancing treatment.
We ensure high quality, transparency and ethics in clinical research by complying with legal regulations, good clinical
practice guidelines and the Helsinki Declaration. Patients can only be included in a study after expressing their willingness
to freely and voluntarily participate in the study. Investigators inform them about the course of the study and any risks
involved. Our main concerns are patient safety, privacy, and data confidentiality. We pursue them in line with Regulation
(EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free
movement of such data. We identified no privacy or confidentiality breaches. We apply good pharmacovigilance practices
in monitoring and reporting adverse events and publish results of interventional clinical studies in the EU Clinical Trials
Register to support transparency of clinical trials.
52
More than 350,000 patients from 27 countries have so far participated in over 150 post-authorisation clinical studies with
our key medicinal products from the main therapeutic classes. In 2021, we completed BLOSSOM, the international
randomised interventional clinical study with pregabalin (Pragiola*) and duloxetine (Dulsevia*). The study took place in five
countries and included 254 patients with painful diabetic peripheral neuropathy. Statistical data processing is expected
in 2022. Study data will allow us to assess the efficacy and safety of both medicines and their impact on pain, quality of
life, symptoms of depression, cognitive function, quality of sleep at night, and daily somnolence. In 2021, a regulatory body
of a participating state inspected the conduct of the BLOSSOM clinical study and concluded that good clinical practice
guidelines had been applied, and identified no deficiencies.
53
An international interventional clinical study is being designed to investigate the efficacy and safety of
telmisartan/amlodipine (Teldipin*) and telmisartan/indapamide combinations in patients with high blood pressure levels.
Krka also supports studies on medicines in regular clinical practice aimed at monitoring the efficacy and safety of Krka
medicines in daily use. The studies are conducted with medicines from various therapeutic classes. In 2021, 37 non-
interventional and epidemiological studies were conducted in 21 countries. Five of them were international. The most
significant was the study conducted in a laboratory of the Institute of Microbiology and Immunology of the Faculty of
Medicine in Ljubljana, Slovenia. The study demonstrated the virucidal effect of throat lozenges with a fixed combination of
cetylpyridinium chloride and benzydamine hydrochloride (Septolete Total*) on SARS-CoV-2, influenza A virus and human
betacoronavirus.
* Products marketed under different product brand names in individual markets are marked with an asterisk and listed on pages 115–117. Products
can also be marketed under the corporate trademark in individual markets.
Corporate Social Responsibility
We aim to develop long-term partnerships that foster an integrated and responsible social development, scientific
research, intergenerational and interdisciplinary cooperation, adherence to diversity principles, and healthy
lifestyles. We are aware of our impacts related to sustainability topics, as we are an international pharmaceutical group
and one of the largest companies in Slovenia. Our strategic guidelines require us to conduct our day-to-day business in
line with social responsibility principles and consider social needs. In 2021, our commitment to fostering long-term
relations was reflected in important anniversaries, most notably the 50th Krka Prizes.
52
GRI GS 103-1, 103-2, 103-3, 418-1
53
GRI GS 419-1
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We support projects related to health and the quality of life by allocating sponsorships and donations. We build partnerships
through sports, culture, healthcare, science, education, and humanitarian actions and contribute to protecting the natural
environment in line with the set criteria. We identify the needs of our partners through regular contacts, long-term
sponsorships, annual meetings with sponsorship recipients, and the process of preparing new sponsorship and donation
contracts. Our sponsorship and donation committee examines all sponsorship and donation applications. In 2021, we
fulfilled all agreed sponsorship and donation obligations as much as possible given the circumstances caused by the
pandemic.
54
We allocated 0.18% of our sales revenue to sponsorship and donations and helped more than 400 institutions,
associations, and organisations achieve their goals.
55
We allocated 0.09% of sales revenue for donations alone,
representing 50% of the total amount for sponsorships and donations.
As many as 17 sports and cultural clubs and associations appeared under the Krka banner, and Krka supported another
seven clubs and associations as their main sponsor. Three outstanding young people were given the Talent-of-the-Year
Award and 14 young individuals received recognition for their achievements. For the first time, we expressed our
appreciation to ten representatives of clubs, associations and institutions for their invaluable contribution and long-term
success, dedication and creativity, commitment to cooperation, respect, and tolerance, active role in sharing their
knowledge and values with young people, and active promotion of the sponsor.
Encouraging New Scientific Discoveries
56
Krka Prizes are an incentive for young researchers to engage in research and development. Over the past 51 years, we
awarded 2,981 Krka Prizes. The Krka Prizes Council has played a prominent role in making research work popular among
students, pupils and mentors in educational institutions. In 2021, we marked the 50th anniversary of Krka Prizes with a
special ceremony. The President of the Republic of Slovenia Borut Pahor conferred the state Order of Merit to Krka for its
Krka Prizes, which have been encouraging scientific achievements, particularly among the young, for half a century.
In two calls for secondary school research papers and graduate and postgraduate research papers in 2021, as many as
173 pupils and students handed in 166 research papers. We announced the recipients of Krka Prizes at an online
ceremony and held an online symposium where students and pupils presented the best research papers. Five Krka Grand
Prizes, 25 Krka Prizes, and 44 special commendations were presented to graduate and postgraduate students for their
research work. Among the recipients, 31 held doctoral degrees. We also awarded 40 recognitions to students for
presenting research papers of exceptional quality. With the help of their supervisors and co-supervisors, 86 pupils from
17 Slovenian secondary schools prepared 52 research papers. For the fifth year in a row, we awarded a special plaque to
one supervisor for his long-standing encouragement and successful supervision of pupils.
We are also engaged in projects run by various educational and scientific institutions designed to upgrade infrastructure
and to provide scholarships, above-standard educational activities, research work, and participation at national and
international competitions. In 2021, we supported projects at two primary schools and contributed to school funds for
talented pupils. Our contribution to the Janez Drnovšek Scholarship Fund, named after a prominent Slovenian politician,
also showed our support for the Fund’s activities for the fourth consecutive time.
Krka is a long-time sponsor of the Slovene Science Foundation. In 2021, the Foundation organised the 23rd Slovene
Science Festival, which took place online and attracted participants from around the world. Our donation was used by the
Faculty of Arts of the University of Ljubljana to acquire the collection of major works for scholars and students Oxford
Scholarly Editions Online. We contributed to scientific and research work of the Faculty of Health Sciences of the University
of Ljubljana and supported an international conference on nuclear magnetic resonance in Europe, which brought together
academic professionals and active practitioners in versatile NMR spectroscopy. Our involvement in the project added to
our successful long-term collaboration with the Slovenian NMR Centre. We also supported FEBS 2021, a virtual congress
organised by the Federation of European Biochemical Societies, which aims to promote biochemistry, molecular biology,
and related research areas in Europe and neighbouring regions.
54
GRI GS 103-1, 103-2, 103-3
55
GRI GS 201-1
56
GRI GS 203-1, 203-2
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Charity and Volunteering
We have been fostering the spirit of volunteering ever since Krka was established. All our charity and volunteering actions
were united under Krka’s Week of Charity and Volunteering in 2012. Since then, the campaign has brought together more
than 8,300 Krka employees. Due to the poor epidemiological situation, we had to cancel it in 2021.
Krka’s management encourages Krka employees to participate in volunteering activities by supporting sponsorship boards
of non-profit institutions and providing supplies.
We have supported the Novo mesto Dragotin Kette Primary School for children with special needs since 1974; since 1977
through our sponsorship board. In 2021, the school used Krka’s donation to lay out and plant the garden and the park. We
have been sponsoring the running of several occupational activity centres and retirement homes. We have supported the
retirement home in Novo mesto for 40 years. To mark its 40th anniversary, we attended a special celebration and prepared
a special publication. Our donation was used to set up a room for relaxation, physical and occupational therapy.
We have been conferring the Volunteer of the Year Award since 2012 to acknowledge volunteer work of our colleagues.
In 2021, we also thanked 145 Krka employees who donated blood 10 to 80 times. Our employees donated 933 litres of
blood just during Krka’s Week of Charity and Volunteering in eight years. Sound awareness of the importance of blood
donation is reflected in the fact that on average, more than 1,000 Krka employees donate blood twice a year and many
new blood donors join the cause every year.
Support for Health Care Institutions
Modern medicinal devices facilitate the work of healthcare professionals and ensure a high level of service. Therefore, we
donated towards the construction of new premises of the Emergency Department of the Community Health Centre in
Ljutomer in Slovenia, the purchase of new equipment for the Centre, and the acquisition of ten electrically operated hospital
beds for General Hospital in Brežice in Slovenia. We donated to the purchase of 50 bedside ultrasound machines featuring
a tablet computer. They were provided to 38 health centres across Slovenia. The donation also included necessary
trainings on the use of the machines.
Support for Patient Associations and Societies
Healthcare associations and societies contribute to an improved quality of treatment and patient safety. We have supported
them in their effort to raise awareness of how to prevent or delay certain diseases or to teach patients how to live their
lives to the fullest.
Among others, we supported two projects, which significantly raise awareness and provide support to patients. Both are
related to our key therapeutic areas. What Does Your Heart Beat for? was a campaign run by the Slovenian Hypertension
Society and the Slovenian Society of Cardiology, while Neuropathic Pain was a project managed by the Slovenian
Association for Pain Management.
We supported the celebration of the 160th anniversary of the Slovenian Medical Association, one of the oldest medical
organisations in Central European countries. The event featured a professional programme on academic medicine in
Slovenia and the importance of medical texts in Slovene.
Support for Nature Protection Projects
We cultivated our traditional partnership with Krka Beekeepers’ Association, which was established in 1979. In 2021, we
supported the set up of a new beehive of the Beekeepers’ Association in the Trebelno-Mokronog municipality in Slovenia.
The beehive will be used as a training centre for Association members and pupils of the beekeeping course at the primary
school in Trebelno.
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Partnership in Sports
We promote many sporting activities, which contribute to a healthy lifestyle. We support primarily local clubs and
associations encouraging young people to take up recreational or professional sports. Our long-term partners in sports
are Krka Athletic Club Novo mesto, Gymnastics Society Novo mesto, Golf Club Grad Otočec, Krka Bowling Society Novo
mesto, Adria Mobil Cycling Club Novo mesto, Krka Equestrian Club - Grm Novo mesto, Krka Basketball Club, Krka Men’s
Volleyball Club Novo mesto, Krka Men’s Handball Club, Krka Table Tennis Club Novo mesto, Krka Football Club, TPV
Volley Club Novo mesto, Krka Mountaineering Society Novo mesto, Krka Rog Ski Society, Krka Chess Society Novo
mesto, Krka Otočec Tennis Club, Krka Women’s Basketball Club Novo mesto, and Krka Women’s Handball Club.
Through our campaign Caring for Your Health – Together We Scale the Heights we carried out maintenance work on
signposted hiking trails and contributed to safety in the Slovenian mountains together with the Alpine Association of
Slovenia.
Our sponsorship of the Ski Flying World Championship in Planica was an acknowledgement of the 36-year-long
collaboration. We also supported the Women FIS Ski Jumping World Cup in Ljubno in Slovenia, events organised by the
Slovenian Tennis Association and the Slovenian Gymnastics Federation, and the biggest amateur cycling event in
Slovenia, Maraton Franja BTC City.
We donated funds to purchase sports equipment to schools and other organisations that promote a healthy lifestyle.
Krka Retirees Society has been active since 2000. We have supported the Society in organising recreational and sporting
activities, such as trips, hikes, visits to cultural and professional events, sports and recreational gatherings, social events,
creative workshops, and other events.
Dedicated to Culture
Culture has been an essential part of our employees’ lives. That incited us 67 years ago to support various cultural genres
and activities that make an important contribution to wider society.
The importance of reading culture in Krka is reflected in Krka’s book collection and our contributions to book publishing.
In 2021, we contributed to the publication of 17 books. We staged the Krka Cultural Evening at the church constituting the
Galerija Božidarja Jakca gallery in Kostanjevica na Krki for the fifteenth year running.
Krka’s Culture and Arts Society, established 50 years ago, adapted its activities to the COVID-19 pandemic. Certain events
were organised in their traditional form, while others had to be replaced or moved online. The Society arranged 19
exhibitions in Novo mesto and Ljubljana. Krka Theatre Club organised five online meetings with actors, and Krka’s mixed
choir practised regularly and performed at two important occasions. Krka Octet was established at the year-end. Instead
of the traditional Dolenjska Book Fair, Krka’s Culture and Arts Society arranged an exhibition on the history of the Book
Fair and new best-selling books. Over the last five decades, the Society has organised more than 850 exhibitions,
550 Krka’s mixed choir performances, 233 Theatre Club meetings, 42 Book Fairs, numerous workshops, and gatherings
of culture and art enthusiasts of different generations.
We also supported other cultural societies and events, among them the Galerija Božidarja Jakca gallery in Kostanjevica
na Krki, Pihalni orkester Krka brass band, the Novo Mesto Anton Podbevšek Teater theatre, the Cankarjev dom cultural
and congress centre, the Slovenian Reading Badge Society, a literary contest for pupils and students from Slovenia and
the neighbouring countries, the Slavic Society of Dolenjska and Bela krajina, the Europe Readr digital platform, the 53rd
international PEN Writers’ Meeting organised by the Slovene PEN Centre, the Cankar Award for the best original literary
work, and the Tone Pavček Fund, which fosters the Russian language and culture in primary and secondary schools in
Slovenia.
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Support for Non-Governmental Organisations
57
Every year, we support several non-profit, non-governmental and non-political organisations.
In January, we donated €25,000 to the Slovenian Red Cross for the restoration of damaged buildings and to help local
people after a severe earthquake in Petrinja, Glina and Sisak in Croatia. We also made a donation of our non-prescription
products worth €3,000. Employees of Krka Croatia and those from Marketing and Sales in Slovenia contributed funds to
purchase a container home.
We made a substantial donation to Sonček – the Cerebral Palsy Association of Slovenia (in the Dolenjska and Bela Krajina
regions) to purchase new premises. The Polžek Society for Children with Special Needs received our donation to purchase
a mobile home adapted to carry out a therapeutic swimming programme.
In collaboration with the local Association of Friends of Youth Mojca in Novo mesto, we gave presents to more than
2,500 children. Santa Claus visited children from three municipalities in the Dolenjska region and children of Krka
employees at a special event, which took place at the main square in Novo mesto due to COVID-19 restrictions.
We frequently respond to the Red Cross and Karitas charities' calls for donations. Krka has been the main sponsor of the
People in Need Fund of the Regional Branch of Red Cross in Novo mesto for several years. We worked together with
humanitarian organisations and made several substantial donations to help six families in need. Our executive managers
also made a contribution to the Regional Branch of Red Cross in Novo mesto to help three children from Novo mesto who
lost their parents. In 2021, we continued our association with the Chain of Good People project launched by the Association
of Friends of Youth Ljubljana Moste-Polje. The funds collected as part of this humanitarian programme are intended for
families in need in Slovenia. We have been sponsoring the running of Novo mesto Occupational Activity Centre through
various projects. The residents of the Centre prepared New Year gifts for Krka employees and our business partners also
in 2021.
We provided material and financial support to firefighting departments. In 2021, we supported 15 fire departments and
firefighting agencies in Slovenia by contributing towards the purchase of new fire engines, equipment, and the renovation
of fire stations.
In June, the Krka Volunteer Industrial Fire Service marked its 50th anniversary and received an Order of Merit in
Firefighting from the Slovenian Firefighters Association. The Krka Volunteer Industrial Fire Service has a record number
of 346 members with a strong female participation in their ranks. The all-male fire crew has achieved remarkable results
at various national and international firefighting competitions. The all-female firefighting team has also taken top spots in
firefighting competitions in Slovenia. To celebrate the 50th anniversary, the Krka Volunteer Industrial Fire Service members
compiled their inspiring stories and the milestones of the Service into a book titled For the Safety of the Plant and its
Workers.
We continued to support the Elderly for the Elderly programme in the Dolenjska and Bela Krajina regions. Members of
pensioner's organisations and senior volunteers visit all senior citizens in their region to see their living conditions and
cater for their needs.
Social Responsibility Projects
If you need further information on social responsibility projects, please e-mail us to druzbena.odgovornost@krka.biz or
contact us by regular post at Krka, tovarna zdravil, d. d., Novo mesto, Public Relations, Šmarješka cesta 6, 8501 Novo
mesto, Slovenia.
57
GRI GS 201-1, 203-1
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158
Natural Environment
Krka made further progress in environmentally sound management and climate change mitigation in 2021. To that end,
we downsized certain pack units, introduced power supply from renewable energy sources, improved our separate waste
collection system, established a waste management system for certain waste streams based on circular economy
principles, and reduced water consumption.
2021 Environmental Milestones
The quantity of waste for disposal in landfills was reduced by 1,143 tonnes.
Indirect CO
2
emissions of Krka in Slovenia were reduced by 45,000 tonnes. The impact of the reduction is comparable to planting
170,000 trees.
The quantity of packaging materials was reduced by 18 tonnes thanks to downsized pack units.
Consumption of river water for cooling tower supply was reduced by 8% and replaced by clean rinse-water from production and
rainwater.
Drinking water consumption was reduced by 6%.
River water consumption was reduced by 13%.
A total of 495 tonnes of waste composites were handed over for processing, from which the contractor recovered 180 tonnes of
aluminium and 270 tonnes of plastic.
In 2021, all our energy consumers in Slovenia switched to zero-carbon energy sources and contributed to reducing indirect
CO
2
emissions. Many energy efficiency projects generated energy savings of 2,583 MWh, while the specific use of energy
by production volume remained at 2020 levels. Despite an increase in production volume, we reduced the total quantity of
waste by 1,143 tonnes and the quantity of waste disposed at landfills by 3.5% (or 28 tonnes). The quantity of recyclable
waste increased by 2.3%. The quantity of separately collected waste composites increased by 13.7%. They were sent to
a waste processing plant, which recovered 180 tonnes of aluminium and 270 tonnes of plastic for further processing. By
downsizing pack units, we reduced the consumption of packaging materials by 18 tonnes and proportionally reduced the
quantity of waste packaging and purchase costs. Year on year, drinking water consumption and river water consumption
decreased by 6% to 643,965 m
3
and by 13% to 817,059 m
3
respectively. Total wastewater generated dropped by 8.8%
compared to 2020, while total environmental load units (ELUs) for wastewater treatment increased by 9.5%. All water
monitoring results at all sites in Slovenia were compliant with the requirements of environmental protection permits. We
follow the guidelines on environmentally sound management in the entire Krka Group.
We strive to reduce the environmental impacts of our operations by finding sustainable solutions. Our updated 2022–
2026 business strategy, adopted in 2021, restates the close connection between our operations and sustainable
development. Responsible environmental management adds to our long-term competitiveness and helps us achieve strict
environmental standards. Our stakeholders also rely on us to mitigate environmental risks. Krka established its
comprehensive environmental management system under the ISO 14001 standard 20 years ago. The Environmental
Management System (EMS) certificate binds us to reduce all our impacts on the environment constantly. We also follow
the revised edition of the ISO 14001:2015 standard. We have therefore integrated environmental care in the earliest
development stages and projects. Successful audits confirm that we have made improvements in all areas that impact the
environment.
All employees are included in the comprehensive environmental management system detailed in our internal
document on the environmental management system. Employees of Environmental Protection carry our tasks at the
operational level. The system's goals are: (i) a high level of environmental protection throughout the lifecycle of a product;
(ii) constant reduction of our environmental impact; (iii) compliance; and (iv) attainment of the corporate environmental
objectives. The best effects can be achieved at the start of a process. In our case, these are the product development
stage (through selection of raw materials with lower environmental burden), and production. We manage by best available
techniques (BAT) waste that remains after certain processes and must not be reused according to strict requirements
applicable to the pharmaceutical industry. We apply the precautionary principle when a risk assessment, a hazard
assessment for the water environment, or a feasibility study shows that new technology, production process or a product
might lead to a significant environmental burden. If a risk of this kind is determined for a product in the pre-development
phase, the product is discontinued. For products in the development phase, we consider options to replace substances
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159
posing major environmental hazards, while for products in the production phase, we adopt additional measures to mitigate
their environmental impacts. We collect and analyse data about the environmental management system by various
methodological tools. We use all available resources, such as monitoring results for our processes or activities that can
significantly impact the environment, findings of self-inspections and audits, internal audits, security checks, inspections,
customer claims, and risk analyses. They confirm the suitability and efficiency of the system and indicate opportunities for
improvement.
58
We report environmental data to our management, national authorities (reports on monitoring environmental emissions
submitted to the Slovenian Environment Agency (ARSO)), the Association of Chemical Industries at the Chamber of
Commerce and Industry of Slovenia (Responsible Care Reports – RC), and other stakeholders. Environmental data in the
Annual Report are compiled according to GRI Standards and will be further aligned with the Standards in the future.
We remain committed to:
Include environmental awareness in the earliest stages of development activities and projects;
Use water, fuels and energy, raw materials, and other resources sparingly;
Reduce or prevent the environmental impact throughout the lifecycle of products by employing the best available
technologies and other measures;
Replace (wherever possible) hazardous substances used in technologies with less hazardous ones;
Reduce risks of incidents and improve measures undertaken in any such events;
Control environmental impacts regularly;
Increase environmental awareness of employees through education and training;
Inform employees and other interested parties about the present state and achievements related to the
environmental management;
Comply regularly with legal and other requirements adopted by Krka;
Raise environmental awareness of contractual partners as much as possible;
Set environmental objectives and programmes systematically to improve the current state of the environment; and
Implement the applicable environmental policy in Krka’s subsidiaries abroad.
All our activities comply with the requirements of the Environmental Protection Act and implementing regulations (on
emissions into the air, water, noise, waste, light pollution, electromagnetic radiation, transport of hazardous substances,
soil pollution, etc.), which we regularly and closely follow. They serve as the basis for environmental protection permits
issued for individual production sites. We regularly account for environmental taxes and submit them to competent
institutions in conformity with environmental legislation. Environmental legislation composes an extensive part of the
European acquis, and we have collected a compendium for our own use listing 21 legal areas. They are revised at least
two times each year. All lists are published on our internal web pages. The Committee for Monitoring Environmental
Aspects periodically reviews compliance with legal and other requirements adopted by Krka. It appoints responsible
persons and sets deadlines to implement any additional activities that could be required due to legal amendments. The
Committee is also responsible for periodic identification of environmental aspects. These include impacts of our products
and services throughout their lifecycles. A management review deals with the achievement of goals and the implementation
of programmes. Environmental Protection and the Committee assess identified environmental risks within environmental
planning. Environmental risks are also integrated in business continuity, quality, and risk assessments of contractual
partners.
59
We control compliance with legislation and environmental protection permits by regular monitoring of air and water
emissions, noise, and electromagnetic radiation, waste assessments, and regular checks of reservoirs and equipment.
Any deviations from legal threshold values are managed in compliance with internal standards, and we introduce
necessary corrective measures to ensure compliance of our operations with the existing legislation. No deviations were
identified in 2021.
60
In 2021, the Inspectorate of the Republic of Slovenia for the Environment inspected our production plants in Ločna, Krško,
and Bršljin in Slovenia. The Inspectorate issued a decision that required us to set up measurement points at the cooling
58
GRI GS 102-11
59
GRI GS 103-1, 103-2, 103-3
60
GRI GS 103-1, 103-2, 103-3
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160
wastewater outlet into the Krka River at our production site in Ločna. All works to comply with the decision were completed
within the set deadline. The remaining findings by the Inspectorate confirmed that Krka’s operations comply with relevant
legislative requirements. The Inspectorate issued a decision in 2019 ordering us an intervention for wastewater treatment
at our Krško plant. We have been implementing the remedial actions within our Sinteza 2 project. The procedure to obtain
an environmental permit is underway. In 2021, we received a complaint from a nearby resident of our Ljutomer plant
regarding noise level. We examined the complaint, took appropriate measures, and replied to the complainant in writing.
We carried out further and more extensive noise measurements and regular noise monitoring. They showed that noise
levels in the plant's immediate vicinity were significantly below the legal thresholds. No non-compliances were found in
environmental audits. Their findings show that Krka complies with the requirements of ISO 14001 and constantly improves
the environmental protection situation.
61
In 2021, we prepared extensive documentation for our Ločna site and applied at the Slovenian Ministry of the Environment
and Spatial Planning for an environmental protection permit for a low environmental risk facility. The project complies with
the Seveso III Directive on the prevention and control of major-accident hazards involving dangerous substances,
especially chemicals. The permit is expected in 2022.
Environmental Protection Costs
Continuous improvement in environmental protection requires technical and organisational measures as well as
considerable financial assets. Over the last five years, we have allocated more than €40 million to environmental
protection, of that €11.6 million in 2021. Direct costs amounted to €6.3 million and included costs of wastewater discharge
and treatment, waste management, waste air treatment, noise reduction, monitoring costs, environmental taxes and other
direct costs of environmental protection. We invested €5.3 million in equipment and technology for environmental
protection to further reduce environmental impacts.
Use of Natural Resources
Depletion of natural resources has become evident in our lifetime, revealing our planet's physical limits and its vulnerability.
We understand that dependence of the economic growth on the use of natural resources must end. We at Krka encounter
challenges responsibly by striving to use natural resources sustainably to a maximum effect. To this end, we have launched
several projects and activities involving all our employees.
Water
62
Access to clean drinking water is essential for the pharmaceutical industry because it is used as a raw material in preparing
pharmaceutical water, which must meet strict chemical and microbiological quality requirements. Therefore, water is a
crucial aspect of environmental protection, and we consistently plan, monitor and control it. We encourage employees to
drink tap water wherever the working process allows it. Tap water is considered potable from a health care standpoint and
a much better alternative to bottled water, which increases the amount of waste.
We devote much effort to preserving the quality of water bodies at our production sites. Water systems at Krka are
managed in compliance with good manufacturing practice (GMP) and the HACCP requirements. Water quality parameters
are within prescribed limits and change with seasonal variations and precipitation. We closely monitor any changes to
ensure optimum operation of facilities for preparing pharmaceutical water. Wastewater that comes from rinsing the
machines for preparing pharmaceutical water and does not contain chemicals is reused in the preparation of water for
energy supply. Two separate supply systems deliver water to the central distribution system and ensure that
pharmaceutical water is continuously supplied to production. If the water supply is disrupted, the system reduces the
quantity of water from the public network. Instead, pre-prepared pharmaceutical water flows into the system from reservoirs
designed to cover the drinking water shortage.
61
GRI GS 307-1, 413-1
62
GRI GS 103-1, 103-2, 103-3, 303-1
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161
Drinking and River Water Use
Our main water sources are:
Drinking water from the municipal utility services; and
River water.
Drinking water consumption is monitored by a computerised control system, which records the total flow rate and total
consumption at the plant input and main user points. We can immediately identify any increase or deviation in drinking
water consumption and investigate the underlying reasons. We comply with stringent requirements of pharmacopoeias
regarding water preparation in the pharmaceutical industry. We strictly use drinking water of officially controlled quality
from the municipal water supply utility. Water is additionally purified depending on its purported use, most commonly using
sophisticated membrane technologies. Correct preventive maintenance, machine operation monitoring, and technological
improvements ensure consistent water quality, extended the useful life of the equipment, decreased water and chemical
consumption, and reduced waste generation.
In 2021, drinking water consumption in Krka in Slovenia decreased by 6% compared to the previous year thanks to
proper management and maintenance of water preparation and distribution systems, active water consumption monitoring,
and prompt interventions in case of water leaks.
River water consumption declined by 13% compared to 2020. Approximately 50% of total river water is used for cooling
through various heat exchangers, especially in API production, while the rest is used for preparing technological waters to
meet the demands of energy supply and production. We have been replacing adequately treated river water used in cooling
towers by rainwater and clean rinsing water from production. We plan to use all rainwater in cooling towers in 2022 as
well.
Drinking and River Water Use
63
Energy
Our main energy resources are:
Natural gas;
Electric power; and
Fuel oil as back-up fuel.
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GRI GS 303-3, 303-5
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162
The electric power supply comes from the public utility electricity grid, from in-house generators powered by renewable
sources such as the solar power station, and from the cogeneration plant operating on natural gas.
Energy Management System
64
Energy management strategy is incorporated into Krka’s integrated management system and drafted in accordance with
the principles of ISO 50001 Energy Management System. The strategy is a part of the corporate strategy and comprises
activities and actions for achieving cost-related and environmental objectives. The Committee for Monitoring
Environmental Aspects is responsible for periodic identification of energy-related aspects in accordance with ISO 14001
and internal rules. In this way, we manage and refine our processes based on sustainable development and circular
economy principles to maintain a high level of environmental protection.
Energy management system incorporates:
Energy operators in production plants in Slovenia and abroad;
A corporate energy manager, who supervises and coordinates the work of energy operators; and
All employees, who are committed to efficient and rational energy use pursuant to the environmental policy.
Regular energy audits are also a part of the system. In 2021, we completed the comprehensive energy audit of all
production sites in Slovenia and adopted various measures in line with the action plan.
The energy management control system is the key information tool for supporting the energy management system and
supplementing the computer system for monitoring and control. In 2021, measurements were added to the system to
increase the transparency of mass and energy flows in the company. We upgraded it with new tools. We updated the
energy management control system to allow for advanced analyses and evaluation of the achievement of set
environmental goals.
Multi-Year Survey of Implemented Measures and Their Effects on Energy Management
65
In accounting for an average simple payback period, only measures taken exclusively for economic viability were
considered.
64
GRI GS 103-1, 103-2, 103-3
65
GRI GS 302-4
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163
Specific Use of Energy
66
Specific use of energy portrays production costs in consideration of the physical volume of production. Specific use of
energy as regards production costs remained at the 2020 levels.
Specific Use of Energy by Production Costs
The specific use of energy in correlation to the physical production volume remained stable year over year thanks to many
activities geared towards efficient energy use, energy efficiency investment, and energy-efficient maintenance.
Specific Use of Energy by Production Volume
66
GRI GS 302-3
2021 Annual Report – Sustainable Development
164
Energy Efficiency Projects
We have been dealing with specific use of energy for years and constantly optimising our specific water and energy
consumption. Systematic measures and investments have returned average electricity and natural gas savings of
more than 50 GWh per year in recent years. This means we have reduced our CO
2
emissions by more than
17,000 tonnes. In 2021, all energy efficiency projects generated savings of 2,583 MWh and reduced our CO
2
emissions
by 454 tonnes. We started devising a new regenerative thermal oxidation system at our Ločna Plant in Novo mesto, which
will allow us to use waste heat from flue gas. This will help us achieve natural gas savings of 1,100 MWh or reduce our
CO
2
emissions by 190 tonnes. The project is due for completion in 2022.
Replacement of Liquefied Petroleum Gas with Natural Gas at Šentjernej
In 2021, we connected our plant in Šentjernej to the natural gas distribution system. Natural gas is considered a reliable,
safe and affordable power source as it generates on average 25% savings compared to liquefied petroleum gas. The
quantity of dust particles as well as NO
x
and SO
x
emissions are much lower than those from liquefied petroleum gas. The
entire site in Šentjernej was supplied with natural gas in 2021.
Optimisation of Air-Conditioning System Operation
Air-conditioning (HVAC) systems impact approximately 60% of end use of energy at Krka and must be used as efficiently
as possible. The following projects were delivered in 2021:
Upgrade of the system for targeted monitoring of energy media consumption in individual buildings at the Ločna
site in Novo mesto. The system will improve the overview of the energy balance of each building and help us
identify anomalies and improve our energy efficiency system;
Replacement of the existing air dehumidification system with drying wheels with a glycol cooling system –1/3 °C
at our site in Ljutomer, Slovenia. The replacement will generate annual natural gas savings of 1,935 MWh and
consequently reduce annual CO
2
emissions by 454 tonnes.
Improved Reliability of the 8-Bar Compressed Air Supply at Ločna (Novo mesto)
At the Notol 2 compressor station at Ločna, we started installing an additional high-pressure compressor to achieve more
reliable and efficient supply of 8-bar compressed air. We will also increase the capacity of the existing connection between
compressor stations to improve the supply reliability further. This will save more than 200 MWh of electricity each year.
Replacement of FLUO Lighting with LED Lights
We have been gradually replacing FLUO lights with LED lights. We upgraded the lighting system in two warehouses at
Ločna and Gotna vas sites in Novo mesto. The upgrade improved illumination of rooms and work surfaces. The project
will generate 112 MWh electricity savings per year.
Recovery of Waste Heat
We make constant efforts to maximise the recovery of heat generated as a by-product in various processes. We use waste
heat from the compressed air station, flue gases from steam boilers, vapours from the steam boiler system, and condensed
heat from cooling units and cogeneration to prepare heating water. Because of this, preparation of heating water requires
54% (or 24 GWh) less natural gas.
Biodiversity
67
Biodiversity balances the functioning of all ecosystems and human life on Earth and should be maintained. Biodiversity in
Slovenia is among the greatest in the European Union. Slovenia covers only 0.004% of the Earth's total surface area but
is home to more than one percent of all known species and more than two percent of terrestrial species.
All Krka production sites comply with and implement all guidelines and requirements of the European and national
legislation on biodiversity to preserve the ecological, biotic and landscape features of the natural world. We inform
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GRI GS 103-1, 103-2, 103-3, 304-2, 304-4
2021 Annual Report – Sustainable Development
165
employees about the importance of biodiversity at internal training courses because every person can significantly help
improve the present state.
Krka industrial buildings are concentrated in the area around the Krka River. The area is important as it is a natural habitat
of several water and riparian plant and animal species, especially fish, amphibians and birds. As such, it is defined as an
ecologically important area (EIA) and protected as a Natura 2000 site. According to the Nature Conservation Act, an EIA
is an important contributor to biodiversity, while Natura 2000 demonstrates our commitment to preserving natural heritage
important for Slovenia and Europe. Responsibilities are clearly defined in the European Birds Directive and the Habitats
Directive. The Krka River is a habitat for several threatened species. These include fish species such as the asp, huchen,
and cactus roach, the thick-shelled river mussel, the olm, as well as the European otter and beaver.
Systematic biodiversity evaluation of watercourses as ecosystems in Slovenia has not been established yet. Therefore,
we observe various publications and reports issued by the Slovenian Environment Agency, the Institute of the Republic of
Slovenia for Nature Conservation, the Statistical Office of the Republic of Slovenia, and other professional institutions.
In 2021, the European Environment Agency (EEA) issued a new 2013–2018 assessment of biodiversity and nature in
compliance with the EU Birds and Habitats Directives. Based on the reported and assessed data about species living in
habitats of Slovenia, the report found that biodiversity in 2013–2018 remained stable compared to the previous reporting
period.
All Krka industrial buildings are concentrated within their respective sites and do not sprawl into ecologically sensitive
areas. We comply with the strictest environmental requirements for the existing buildings and newly planned ones. The
river water catchment and discharge of treated wastewater from our wastewater treatment plant do not threaten the
preservation of water and riparian areas or the conditions for connecting these areas.
The areas of our Ljutomer and Krško plants are not included in the Natura 2000 network. Nevertheless, all wastewater is
treated appropriately at the municipal wastewater treatment plant in Ljutomer and the Vipap wastewater treatment plant in
Krško so that we do not endanger biodiversity with our emissions.
Transport
We use all means of transport in our logistic processes. We use most modern vehicles for road transport with
environmentally sound engines. We supply products to distant markets by sea or by air. Transport is organised through
our in-house transport department. We use our own vehicles or employ contractual carriers. Our products are mostly
transported to European and Asian markets.
In 2021, we continued to transport goods from Shanghai in China to Novo mesto in Slovenia by road, because road
transport proved to be a good alternative to air transport. Transport went unhindered despite the COVID-19 restrictions
and air and maritime transport difficulties.
We organised transport for almost 11,000 shipments of finished products, raw materials and packaging materials. Total
mileage by our own vehicles surpassed 2 million km, and fuel consumption totalled 576,000 litres. We continued to
modernise our fleet of vehicles and organised training for vehicle operators.
We closely follow and comply with the requirements of the laws governing the transport of pharmaceutical products and
pay special attention to duly informing all our contractual carriers and their drivers about the requirements and other
specificities. Last year, the competent national bodies for transport control found no violations of the legislation.
Krka's fleet comprises 19 vehicles and is regularly renewed. In 2021, we ordered three new vehicles (truck and trailer
combinations). Their supply is planned for 2022. All vehicles satisfy relevant requirements regarding drivers, safety, and
environmental standards. New vehicles are equipped with state-of-the-art accessories (e.g. adaptive cruise control
systems, ESP/ESC emergency braking, traction control system, and blind-spot detection system) that enhance traffic
safety.
We select our transport contractors carefully and encourage them to use modern vehicles that comply with the highest
environmental standards. Their fleet includes vehicles running on liquefied natural gas.
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We have seven electric vehicles in our personal carpool and plan to add another two electric vehicles and one hybrid
vehicle in 2022. Based on our vehicle acquisition strategy, we plan to replace 20 used diesel and petrol vehicles with
electric ones by 2025. We have eight charging stations at two sites. When possible, we substitute business travel with
teleconferencing or video conferencing to minimise fuel consumption and air pollution.
For the sixth consecutive year, we participated in the European Mobility Week with our Krka Car-Free Day campaign to
promote sustainable mobility activities. We included them in Krka's Mobility Plan, which encourages the use of alternative
and less environmentally harmful ways of commuting. In 2021, the campaign ran in 15 subsidiaries. This proves that
sustainable mobility is becoming a habit of Krka employees. Green mobility should be safe, which is why we regularly
adopt health and safety recommendations and measures and raise awareness among our employees of how important it
is to follow them at the workplace and on the way to work. We arranged additional bike parking areas to encourage our
employees to cycle to work.
Emissions
Waste Water
68
Wastewater treatment protects surface and groundwater from organic and microbiological pollution and fouling by nitric
and phosphorus substances. Therefore, one of our top environmental protection priorities is ensuring the most
comprehensive and effective treatment. We use various physical, chemical and biological processes to remove pollutants
from wastewater. We comply with the Decree on the Emission of Substances and Heat in the Discharge of Wastewater
from Installations for the Production of Pharmaceutical Products and Active Substances, which serves as the basis for
environmental protection permits issued for individual Krka production sites. At all our sites, an authorised contractor
carries out wastewater monitoring. Its frequency and scope are defined in individual permits.
We reduce industrial wastewater quantities and pollution at all stages of the production process. We consider
requirements of environmental protection permits and legislative requirements already at the development stage of a
product and opt for technologies that use the lowest quantities of water possible. Advanced water preparation technologies,
closed cooling systems, and other methods are used for saving water in production. Whenever possible, we use raw
materials and excipients that are less harmful to water in technological processes and minimise the quantity of detergents
used in washing procedures in production. At all our production sites, wastewater is treated in compliance with all legislative
parameters for effluents before discharging into rivers. Wastewater in Ločna, Novo mesto, is treated at our advanced in-
house industrial wastewater treatment plant using the best available technologies to meet the requirements. Wastewater
from dislocated plants is treated at highly efficient municipal wastewater treatment plants.
Our plant in Ločna generates industrial, municipal and cooling wastewater. We treat industrial and municipal wastewater
at the in-house biological wastewater treatment plant. Over the past few years, it was upgraded and technology
professionally managed, so the quality of effluents is high and in compliance with all legal requirements. In 2021, we
treated 778,818 m
3
of wastewater. Organic pollution expressed by chemical oxygen demand was cleaned in 92.7%, while
removal of organic pollution expressed by biochemical oxygen demand within 5 days reached 98.9%. We generated
406,307 m
3
of cooling water that was not polluted and was discharged into the Krka River through a cooling-and-rainwater
discharge system.
Our plant in Bršljin generates industrial and municipal wastewaters, which are discharged by the public sewerage system
and treated at the municipal wastewater treatment plant in Novo mesto. In 2021, we generated a total of 16,004 m
3
of
wastewater.
Our plant in Šentjernej generates industrial and municipal wastewaters. Effluents are discharged by the public sewerage
system and treated at the common municipal wastewater treatment plant in Šentjernej. In 2021, we generated a total of
13,274 m
3
of wastewater.
68
GRI GS 303-2, 303-4
2021 Annual Report – Sustainable Development
167
Our plant in Ljutomer generates industrial, municipal, and cooling wastewaters. Effluents are discharged by the public
sewerage system and treated at the common municipal wastewater treatment plant in Ljutomer. In 2021, we generated a
total of 27,674 m
3
of wastewater.
Our plant in Krško generates industrial, municipal and energy supply wastewater. Effluents are discharged by the public
sewerage system and treated at the Vipap wastewater treatment plant in Krško. In 2021, we generated a total of 24,417 m
3
of wastewater. Construction of an in-house water treatment plant is planned at the site and we have already prepared
project design documents. The project is at its final stage of obtaining a final environmental protection permit. Construction
work can start only after obtaining the permit.
Total environmental load units (ELU) increased by 130 ELU or 9.5% compared to 2020 due to higher wastewater load
at wastewater treatment plants. Water monitoring results at all sites in Slovenia were compliant with the requirements
of environmental protection permits.
Study findings show that the proportion of active pharmaceutical ingredients discharged into water from the pharmaceutical
industry is lower than the proportion of these substances released into the water by end users. Nevertheless, we
supplemented this well-managed aspect of wastewater treatment with hazard assessments for the water environment for
individual active pharmaceutical ingredients and other substances. Hazard assessment for the water environment is a part
of a broad risk assessment. The method of treating wastewater, any additional measures and the procedure for handling
waste are prescribed according to the calculated risks based on physico-chemical, ecotoxicological and toxicological data
for each active pharmaceutical ingredient and data on the familiar water environment. We regularly control and update the
calculations and use most recent research findings and other credible technical information in wastewater and waste
management. Complex analytical methods for monitoring wastewater residue concentrations were developed with our
external partners for several active pharmaceutical ingredients that present an increased environmental risk.
Wastewater Management
Environmental load units (ELU) represent the prescribed mathematical calculation of pollution from all wastewater outlets
in Slovenia (Ločna, Šentjernej, Bršljin, Ljutomer, and Krško). The calculation takes into account the annual wastewater
rate of discharge; organic pollution; nitrogen, phosphorous, and suspended solids load; and the impact of wastewater
treatment.
2021 Annual Report – Sustainable Development
168
Waste
69
Waste management in Krka complies with the waste management plan, which considers legal requirements and sets out
technical and organisational measures and waste management goals. We consider extended producer responsibility in
common plans for managing waste medicines and packaging waste to ensure collection and appropriate processing of
packaging materials and safe disposal of unused medicines by end users.
We comply with the legally prescribed waste management classification and consider the commitment to reduce
environmental impacts, as set out in the environmental standard. The most important step in waste management is to
prevent waste generation. This is achieved by downsizing pack units, improved technological procedures and production
development, use of recovered solvents, pallet reuse, and many other measures. By downsizing pack units, we reduced
the consumption of packaging materials by 18 tonnes and proportionally reduced the quantity of waste packaging
and purchase costs in 2021.
Waste is an important source of raw materials and energy, so special attention is paid to separating waste at source, i.e.
at the point where it is generated, and to preparing it for reuse. In doing so, we contribute to the circular economy. We
have set up a separate waste collection system. All employees take part in the process. Our system relies on advanced
equipment for separated collection, pressing and waste transportation. In 2021, we collected 495 tonnes of waste
composites, accounting for a 14% increase compared to 2020. We handed them over to an authorised waste
processing company, which recovered 180 tonnes of aluminium and 270 tonnes of plastic for further processing.
We achieved the set goals by constantly improving the waste management system and increasing the quantity of
separately collected waste materials. We reduced the amount of waste disposed at landfills by 28 tonnes compared to
2020 despite an increase in production.
Risks related to the reception and removal of certain types of waste in Slovenia persisted in 2021. We diversified our waste
management channels and extended cooperation to several waste collection and removal companies in Slovenia and
abroad to manage the risks.
Good results can only be achieved if all employees work responsibly. To accomplish this, we provided our employees with
regular waste management training.
Recyclable Waste
70
69
GRI GS 103-1, 103-2, 103-3, 306-1, 306-2
70
GRI GS 306-4
2021 Annual Report – Sustainable Development
169
Waste for Biological Processing
71
Waste Disposed at Landfills
71
GRI GS 306-4
2021 Annual Report – Sustainable Development
170
Waste for Incineration
72
Noise
According to the European Environment Agency (EEA) estimate, 20% of the European population is exposed to long-term
health-damaging noise levels. Noise is, therefore, a key aspect of environmental protection in Slovenia. Despite its versatile
activities, the industry is among minor noise polluters. We minimise noise emissions by suitable equipment, installing the
equipment in closed rooms, setting up noise barriers, fitting cargo vehicles with electrical cooling units, and moving cargo
vehicle docks to the inner areas of the production sites. In compliance with the regulation on environmental noise
indicators, we measure noise levels every three years and when an alteration is made that could increase them. We
implement all necessary measures to ensure that results comply with legal requirements. Results of monitoring conducted
by an authorised contractor in 2021 at all our sites in Slovenia confirm this.
Air Emissions
73
Air pollution by sulphur dioxide, nitrogen oxide, carbon monoxide, ozone and particulate matter greatly impacts our health
and quality of life. Reduction of air emissions is, therefore, our environmental protection priority. We comply with the EU
actions to implement the European Green Deal, legal requirements, and the strict requirements for the pharmaceutical
industry to prevent any cross-contamination. We reduce air emissions with treatment systems fitted to all outlets that
constitute a potential source of pollution. We use effective de-dusting systems, filters, wet-type filtration systems,
condenser columns, and thermal oxidisers to keep air emissions below the legal threshold or the levels allowed for by the
best available technology.
We remove organic compounds from waste air by advanced thermal oxidisers. In 2020, the third thermal oxidiser was
installed at our production site in Ločna. In 2021 at our plant in Krško, we replaced an obsolete thermal oxidiser with an
advanced high-capacity thermal oxidiser and upgraded the waste-air distribution system. The device will be started up in
2022.
Slovenia still has the problem of harmful and, at times, excessive air pollution with PM
10
particles and certain other
pollutants, for example, PM
2.5
particles, nitrogen dioxide, ozone, and benzo(a)pyrene, which cause many health issues. At
Krka, absolute air filtration is applied to all airborne particle emissions to remove all particulate matter, or at least over
99.7% of all particles. Our air emissions are not polluted by particulate matter and do not increase air pollution with PM
10
particles.
72
GRI GS 306-5
73
GRI GS 103-1, 103-2, 103-3
2021 Annual Report – Sustainable Development
171
Air Emissions
74
We generate direct CO
2
emissions (Scope 1 under the Greenhouse Gas (GHG) Protocol) by using fuels and emitting
ozone-depleting substances from our cooling devices, and indirect emissions by exploiting electric power from the public
utility electricity grid. Even though production increased, direct CO
2
emissions remained at similar levels as in 2020.
In 2021, all our energy consumers in Slovenia switched to zero-carbon energy sources. We made great progress in
reducing our carbon footprint and neutralised indirect CO
2
emissions (Scope 2 under the GHG Protocol). Over the past
few years, average indirect CO
2
emissions amounted to approximately 45,000 tCO
2
. We aim to reduce further total CO
2
emissions (Scope 1 and Scope 2 under the GHG Protocol) and maximise the carbon neutrality of our processes.
75
As our production site in Ločna is included in the EU emissions trading scheme, we report on our emissions to the Ministry
of the Environment and Spatial Planning in accordance with the relevant legislation.
Electromagnetic Radiation (EMR)
Electromagnetic radiation is universally present in our living environment. However, extended electric power grids and
appliances also emit high-level electromagnetic radiation harmful to living organisms. We constantly follow relevant
legislation and carry out required measurements.
At our central site in Ločna, Novo mesto, we have identified sources of high- and low-frequency electromagnetic radiation.
They include base stations for cell phones, signal amplifier systems inside buildings, transformer stations and power
sources used in production, and medium-voltage power lines and connections. The results of initial measurements indicate
that radiation burdens of identified sources were below thresholds set by laws.
We also comply with laws on electromagnetic radiation at our other production and business sites in Slovenia, even though
there are no mobile phone base stations there, making them less intense energy-wise.
Light Pollution
Parking areas, traffic routes (i.e. roads and pedestrian areas), transport and warehousing facilities at our production and
business sites in Slovenia are lit with outdoor lighting. Our signboards and billboards are also illuminated. The astronomical
clock regulates the automatic switching on and off of outdoor lighting, sign boards, and billboards. We separately measure
electric power consumption for outdoor lighting at our major sites.
74
GRI GS 305-1, 305-2
75
GRI GS 305-5
2021 Annual Report – Sustainable Development
172
We are aware of the impact of light pollution. To address it, we responsibly started upgrading outdoor lighting six years
ago and have essentially reduced total rated electric power over that time. In Ločna, Novo mesto, we replaced old lamps
in 2015 and 2016, and recorded a 47% decrease in rated power. In 2021, total rated power for all sites in Slovenia
amounted to 25 kW or 17% less than in 2014 in Ločna alone.
Environmental Protection at Krka’s Subsidiaries
We incorporate the responsibility to our natural environment in various activities of our subsidiaries abroad, where we
coordinate the environmental management systems according to the ‘function-for-function’ principle.
We transfer good environmental protection guidelines and practices to all subsidiaries by permanent cooperation,
information exchange, and investment, and consider national legislation in the process. We have set up efficient separate
waste collection systems, and handed waste over exclusively to authorised waste collection and treatment companies.
Wastewater generated in the production of highly potent active ingredients at our plant in Jastrebarsko, Croatia, is treated
at the in-house wastewater treatment plant using advanced oxidation processes (AOP) with a 99.9% degradation of active
substances. Wastewater at Krka-Rus in the Russian Federation is treated at the in-house wastewater membrane biological
wastewater treatment plant. Conceptual design for ramping up production capacities was prepared in 2021. The project
includes an upgrade of the wastewater treatment plant. Wastewater from other production plants and companies is
discharged to modern municipal wastewater treatment plants.
We install highly efficient absolute filtration devices on units emitting particulate matter to reduce emissions. We transfer
good practices in the rational use of energy and water to subsidiaries. We upgraded the energy management system in
our subsidiary Krka-Rus in the Russian Federation by additional energy flow metres and implemented data in Krka’s
energy management control system. We also launched the project on the installation of another glycol cooling tower to
increase the capacity of the existing free cooling system and provide redundancy for critical components of the cooling
system during the winter.
Environmental Communication
We know that each employee can contribute to good environmental protection results. We, therefore, encourage them to
constantly upgrade their knowledge and handle the environment with a high level of awareness. Our internal
communication campaign Your Care for the Environment Counts promotes energy savings, print savings and separate
waste collection.
In 2021, two articles on environmental protection were published in our internal magazine, the Utrip, while several notices
and advice on environmental issues were published in our internal bulletin, the Bilten, and on internal web pages. We
publish posts on environmental topics to mark Earth Day, World Water Day, and Earth Hour each year.
Responsible environmental management is included in the induction seminar for newly recruited employees and in
the national vocational qualification programmes. We included courses on comprehensive environmental
management in the Catalogue of Training Programmes and courses on waste, wastewater, noise, air emissions, and light
pollution. In 2021, 393 employees attended environment-related training courses. We transferred all environment-related
content online as a response to the pandemic.
We inform the public about our environmental activities via public announcements in the media and at various seminars,
symposia and round tables. We actively engage in drafting environmental legislation and are co-founders and active
members of the Environment and Energy Section of the Dolenjska and Bela Krajina Chamber of Commerce and Industry.
We work hand in hand with professional and scientific organisations in Slovenia and abroad.
Improvement of the environment also depends on good relationships with the stakeholders in the social environment,
especially with our immediate neighbours, because we impact their living space and the quality of life. Every other year,
we organise a traditional meeting for local residents. We provide them with information on our activities, performance, and
plans related to environmental protection. These meetings help us maintain an open dialogue and exchange opinions. We
learn what the locals think and consider this when planning environmental goals and programmes. The most recent
2021 Annual Report – Sustainable Development
173
meeting took place in 2019. The COVID-19 pandemic prevented us from organising the traditional meeting in 2021.
Instead, we prepared an informative booklet Utrip okolja.
We have a formal complaint system in place. If members of the local community or our stakeholders have a complaint, a
question or a suggestion related to environmental protection, they can send it to us via the system. Publicly available
information on environmental protection and contact details are published on www.krka.si.
2021 Annual Report – Sustainable Development
174
Krka's Sustainable Development Indicators
2021
2020
2019
2018
2017
ENVIRONMENTAL DATA
Water consumption (total)
m
3
1,461,024
1,623,046
1,399,303
1,341,333
1,588,474
Drinking water
m
3
643,965
684,950
613,919
655,837
644,577
River water
m
3
817,059
938,096
785,384
685,496
943,897
Energy (total)
GJ
1
953,366
969,833
956,577
961,319
935,484
Electric power
GJ
330,453
344,957
356,610
344,983
330,274
Natural gas
GJ
601,041
604,287
580,048
595,739
588,121
Liquid petroleum gas
GJ
17,750
20,564
19,409
20,214
17,029
Fuel oil (extra light)
GJ
4,122
26
510
383
60
Generated electric power –
alternative sources (total)
GJ
53,337
48,294
39,482
46,909
46,014
Solar power plant
GJ
266
280
252
223
258
Cogeneration
GJ
53,071
48,014
39,230
46,686
45,756
Energy intensity
Specific use of energy
MJ/€
1.55
1.55
1.60
1.80
1.83
Specific use of energy
TJ/billion units
74.8
74.8
79.4
83.6
82.8
Wastewater (total)
76
m
3
1,266,494
1,388,829
1,225,003
1,150,578
1,376,629
Cooling water
m
3
407,807
517,090
392,490
298,137
509,091
Industrial wastewater
m
3
858,687
871,739
832,513
852,441
867,538
– Suspended solids load
t
11.8
10.3
23.9
16.1
24.3
– Biochemical oxygen demand
t
3.1
7.0
6.9
5.0
5.8
– Chemical oxygen demand
t
41.4
42.1
57.5
38.4
43.6
– Nitrogen
t
5.1
2.9
4.9
4.8
3.9
– Phosphorus
t
0.7
0.6
0.7
0.6
0.6
Environmental load units (ELU)
2
ELU
1,371
1,241
1,737
1,286
1,359
Waste (total)
t
11,369
12,512
11,091
10,312
11,541
Hazardous waste (total)
t
6,480
7,329
6,047
5,491
5,879
Solid waste
t
808
889
789
670
718
Liquid waste
t
5,672
6,440
5,258
4,821
5,161
Non-hazardous waste (subtotal)
t
4,889
5,183
5,044
4,821
5,662
Disposal at landfills (subtotal)
t
763
791
802
824
905
Composites (energy use and processing)
t
495
427
489
371
246
Biomass (composting)
t
1,231
1,618
1,308
1,187
1,971
Recycling waste (total)
t
2,381
2,327
2,422
2,422
2,524
– Paper
t
1,243
1,273
1,221
1,191
1,097
– Plastics
t
421
380
401
432
392
– Glass
t
110
135
136
125
132
– Metal
t
186
150
239
201
193
– Wood
t
421
389
425
473
710
Electric and electronic equipment
t
19
20
23
17
16
76
GRI GS 306-3
2021 Annual Report – Sustainable Development
175
2021
2020
2019
2018
2017
ENVIRONMENTAL DATA
Air emissions
77
Energy related CO
2
– direct
t CO
2
-eq
3
35,046
34,709
33,332
34,242
33,603
Energy related CO
2
– indirect
t CO
2
-eq
3
0
45,707
47,251
45,710
43,761
Energy related SO
2
t
1
1
1
1
1
Energy related NO
x
t
28
27.9
26.8
27.6
27
Ozone-depleting substances and fluorinated
greenhouse gases
t CO
2
-eq
1,277
2,501
1,744
1,954
2,267
Compliance
Extraordinary events related to environment
0
0
0
3
0
Environmental protection (total)
€ thousand
11,599
10,056
7,672
6,738
6,585
Environmental protection costs
€ thousand
6,258
6,357
5,517
5,107
4,882
Investments in environmental programmes
€ thousand
5,301
3,699
2,155
1,631
1,703
SOCIETY
Number of employees
6,228
6,191
5,907
5,496
5,020
Slovenia
5,690
5,679
5,386
4,995
4,514
Representative offices abroad
538
512
521
501
506
Health and safety
4
Number of accidents
27
21
27
18
27
Lost time injury frequency rate (LTIFR)
2.4
2.3
2.8
1.9
3.3
Proportion of disabled employees
%
5.0
4.9
5.3
5.4
5.5
Education and training
Number of education and training hours
hour/employee
27
32
41
42
42
Education and training costs
€/employee
603
667
897
881
862
1
The calculation of GJ was based on net calorific values published on the website of the Slovenian Environment Agency.
2
Environmental load units (ELU) indicate the annual load on the environment due to the discharge of waste water at a particular pollution source.
The calculation takes into account the average annual value of an individual parameter, which is assigned the appropriate factor, and the annual
wastewater rate of discharge at a particular outlet (The Rules on Initial Measurements and Operational Monitoring of Wastewater; Official Gazette of
the Republic of Slovenia No. 94/14, as amended, No. 98/15).
3
The calculation of tonnes of CO
2
was based on the emission factors published on the website of the Slovenian Environment Agency.
77
GRI GS 305-7
2021 Annual Report – Sustainable Development
176
GRI GS (Global Standards) Content Index
This report has been prepared in accordance with the GRI Standards: Core option
GENERAL DISCLOSURES
GRI standard
Disclosure
Page
Chapter
Notes
GRI 101: Foundation 2016
GRI 102: General disclosures 2016
Organizational Profile
102-1
Name of the organization
8
At a Glance
102-2
Activities, brands, products, and services
92–112
Product and Service Groups
102-3
Location of headquarters
8
At a Glance
102-4
Location of operations
11
Krka in Global Markets
102-5
Ownership and legal form
8
70
At a Glance
Share Trading and Shareholding
102-6
Markets served
79
92–112
Sales by Region
Product and Service Groups
102-7
Scale of the organization
7
79
142
Financial Highlights of the Krka
Group
Sales by Region
Employees
102-8
Information on employees and other workers
142
Employees
102-9
Supply chain
122
124
Supply Process
Suppliers
102-10
Significant changes to the organization and its
supply chain
7
70
92–112
125
Financial Highlights of the Krka
Group
Share Trading and Shareholding
Product and Service Groups
Investments
102-11
Precautionary Principle or approach
159
Natural Environment
102-12
External initiatives
28
28
Contributions and Other
Financial Commitments
Human Rights in Business
Operations
102-13
Membership of associations
28
Contributions and Other
Financial Commitments
Strategy
102-14
Statement from senior decision-maker
3–6
Statement by the President of the
Management Board
Ethics and integrity
102-16
Values, principles, standards, and norms of
behavior
26
39
Corporate Compliance
Krka Group Development
Strategy
Governance
102-18
Governance structure
15–25
Corporate Governance
Statement
2021 Annual Report – Sustainable Development
177
GENERAL DISCLOSURES
GRI standard
Disclosure
Page
Chapter
Notes
Stakeholder engagement
102-40
List of stakeholder groups
139–140
Sustainable Development
102-41
Collective bargaining agreements
142
Employees
102-42
Identifying and selecting stakeholders
139–140
Sustainable Development
102-43
Approach to stakeholder engagement
71
139–140
152
Communication with Investors
Sustainable Development
Health Professionals, Healthcare
Providers and Direct Customers
102-44
Key topics and concerns raised
71
139–140
152
Communication with Investors
Sustainable Development
Health Professionals, Healthcare
Providers and Direct Customers
Reporting practice
102-45
Entities included in the consolidated financial
statements
243
Finacial Report,
Profile of the Krka Group
102-46
Defining report content and topic Boundaries
43
138
Krka Group Development
Strategy
Sustainable Development
102-47
List of material topics
140
Sustainable Development
102-48
Restatements of information
139
Sustainable Development
102-49
Changes in reporting
139
Sustainable Development
102-50
Reporting period
Calendar year:
from 1 January to
31 December
102-51
Date of most recent report
15 April 2021
102-52
Reporting cycle
Annually
102-53
Contact point for questions regarding the report
139
Sustainable Development, About
the Annual Report
102-54
Claims of reporting in accordance with the GRI
Standards
GRI Content Index
102-55
GRI content index
173
102-56
External assurance
Krka has not yet
decided on an
external
verification of
GRI reporting.
2021 Annual Report – Sustainable Development
178
SPECIFIC STANDARD DISCLOSURES
Management
Approach and
disclosures
Material topics
Page
Chapter
Limitations/notes
ECONOMY
GRI 201: Economic performance
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
39–42
Krka Group Development
Strategy
201-1
Direct economic value generated and distributed
7
154, 157
212
Financial Highlights of the Krka
Group
Corporate Social Responsibility
Financial Report, Employee
benefits
GRI 203: Indirect Economic Impacts 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
151
Corporate Social Responsibility
203-1
Infrastructure investments and services supported
152–154
Corporate Social Responsibility
203-2
Significant indirect economic impacts
143
152
Employee Education and
Development
Corporate Social Responsibility
GRI 205: Anti-Corruption 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
26
Corporate Compliance
205-1
Operations assessed for risks related to
corruption
27
Integrity Plan
205-2
Communication and training about anti-corruption
policies and procedures
26
Corporate Compliance
Data capturing
does not include
the number of
hours.
205-3
Confirmed incidents of corruption and actions
taken
26
Corporate Compliance
Data capturing
includes reported
suspected
incidents.
GRI 206: Anti-Competitive Behavior 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
113
Investments and
Accomplishments
206-1
Legal actions for anti-competitive behavior, anti-
trust, and monopoly practices
226
Financial Report,Trade payables
207: Tax 2019
207-1
Approach to tax
29
Internal Controls and Risk
Management Relating to Financial
and Tax Reporting
207-2
Tax governance, control, and risk management
29
Internal Controls and Risk
Management Relating to Financial
and Tax Reporting
207-3
Stakeholder engagement and management of
concerns related to tax
29
Internal Controls and Risk
Management Relating to Financial
and Tax Reporting
207-4
Country-by-country reporting
74
Business Performance
Data capturing
includes effective
tax rate.
2021 Annual Report – Sustainable Development
179
SPECIFIC STANDARD DISCLOSURES
Management
Approach and
disclosures
Material topics
Page
Chapter
Limitations/notes
ENVIRONMENT
GRI 302: Energy 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
159
162
Natural Environment
Energy
302-3
Energy intensity
163
Specific Use of Energy
302-4
Reduction of energy consumption
162
Specific Use of Energy
GRI 303: Water and Effluents 2018
103-1
103-2
103-3
303-1
Interactions with water as a shared resource
160
Water
303-2
Management of water discharge-related impacts
166
Emissions, Wastewater
303-3
Water withdrawal
161
Drinking and River Water Use
303-4
Water discharge
166
Emissions, Wastewater
303-5
Water consumption
161
Drinking and River Water Use
GRI 304: Biodiversity 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
164
Biodiversity
304-2
Significant impacts of activities, products, and
services on biodiversity
164
Biodiversity
304-4
IUCN Red List species and national conservation
list species with habitats in areas affected by
operations
164
Biodiversity
GRI 305: Emissions 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
170
Air emissions
305-1
Direct (Scope 1) GHG emissions
171
Air emissions
305-2
Energy indirect (Scope 2) GHG emissions
171
Air emissions
305-5
Reduction of GHG emissions
171
Air emissions
305-7
Nitrogen oxides (NOX), sulfur oxides (SOX), and
other significant air emissions
175
Krka's Sustainable Development
Indicators
GRI 306: Waste 2020
103-1
103-2
103-3
306-1
Waste generation and significant waste-related
impacts
168
Waste
306-2
Management of significant waste-related impacts
168
Waste
306-3
Waste generated
174
Krka's Sustainable Development
Indicators
306-4
Waste diverted from disposal
168
Waste
306-5
Waste directed to disposal
170
Waste
GRI 307: Environmental Compliance 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
160
Natural Environment
307-1
Non-compliance with environmental laws and
regulations
160
Natural Environment
2021 Annual Report – Sustainable Development
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SPECIFIC STANDARD DISCLOSURES
Management
Approach and
disclosures
Material topics
Page
Chapter
Limitations/notes
SOCIAL
GRI 401: Employment 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
142
Employees
401-1
New employee hires and employee turnover
143
Employees
Data capturing
includes employee
turnover at the
Krka Group level.
401-3
Parental leave
148
Health and Safety at Work
Data capturing
includes the share
of employees who
took parental
leave.
GRI 403: Occupational Health and Safety 2018
403-1
Occupational health and safety management
system
147–150
Health and Safety at Work
403-2
Hazard identification, risk assessment, and
incident investigation
147–150
Health and Safety at Work
403-3
Occupational health services
147–150
Health and Safety at Work
403-4
Worker participation, consultation, and
communication on occupational health and safety
147–150
Health and Safety at Work
403-5
Worker training on occupational health and safety
147–150
Health and Safety at Work
403-6
Promotion of worker health
147–150
Health and Safety at Work
403-7
Prevention and mitigation of occupational health
and safety impacts directly linked by business
relationships
147–150
Health and Safety at Work
403-9
Work-related injuries
149
Health and Safety at Work
GRI 404: Training and Education 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
144
Employee Education and
Development
404-1
Average hours of training per year per employee
145
Employee Education and
Development
Data capturing
does not include
breakdown by
gender and
employee
category.
404-3
Percentage of employees receiving regular
performance and career development reviews
144
Employee Education and
Development
GRI 405: Diversity and Equal Opportunity 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
142
Employees
405-1
Diversity of governance bodies and employees
31
33
142, 143
Composition of the Supervisory
Board of Krka as at
31 December 2021
Composition of the Board of
Management of Krka as at
31 December 2021
Employees
Data capturing
includes
categorisation by
gender and
education.
2021 Annual Report – Sustainable Development
181
SPECIFIC STANDARD DISCLOSURES
Management
Approach and
disclosures
Material topics
Page
Chapter
Limitations/notes
GRI 406: Non-Discrimination 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
28
Management Approach to
Non-Discrimination
406-1
Incidents of discrimination and corrective actions
taken
28
Management Approach to
Non-Discrimination
GRI 412: Human Rights Assessment 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
28
Human Rights in Business
Operations
412-2
Employee training on human rights policies or
procedures
145
Employee Education and
Development
412-3
Significant investment agreements and contracts
that include human rights clauses or that
underwent human rights screening
28
Human Rights in Business
Operations
GRI 413: Local Communities 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
160
Natural Environment
413-1
Operations with local community engagement,
impact assessments, and development programs
160
Natural Environment
GRI 414: Supplier Social Assessment 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
122
Supply Process
414-1
New suppliers that were screened using social
criteria
122
Supply Process
Data capturing
includes the
number of
assessments by
all criteria.
GRI 415: Public Policy 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
28
Contributions and Other Financial
Commitments
415-1
Political contributions
28
Contributions and Other Financial
Commitments
GRI 416: Customer Health and Safety 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
128–129
Integrated Management System
and Quality
416-2
Incidents of non-compliance concerning the
health and safety impacts of products and
services
128–129
Integrated Management System
and Quality
GRI 417: Marketing and Labeling 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
151
Patients and Other Customers
417-1
Requirements for product and service
information and labeling
151
Patients and Other End Users
417-2
Incidents of non-compliance concerning product
and service information and labeling
151
Patients and Other End Users
417-3
Incidents of non-compliance concerning
marketing communications
151
Patients and Other End Users
2021 Annual Report – Sustainable Development
182
SPECIFIC STANDARD DISCLOSURES
Management
Approach and
disclosures
Material topics
Page
Chapter
Limitations/notes
GRI 418: Customer Privacy 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
153
Health Professionals, Healthcare
Providers and Direct Customers
418-1
Substantiated complaints concerning breaches
of customer privacy and losses of customer data
153
Health Professionals, Healthcare
Providers and Direct Customers
GRI 419: Socioeconomic Compliance 2016
103-1
103-2
103-3
Explanation of the material topic and its
Boundaries
153
Health Professionals, Healthcare
Providers and Direct Customers
419-1
Non-compliance with laws and regulations in the
social and economic area
153
Health Professionals, Healthcare
Providers and Direct Customers
2021 Annual Report – Financial Report
183
FINANCIAL REPORT
2021 Annual Report – Financial Report
184
Contents
Introduction to Financial Statements .......................................................................................................... 185
Statement of Compliance ............................................................................................................................. 186
Consolidated Financial Statements of the Krka Group ............................................................................. 187
Consolidated Statement of Financial Position ............................................................................................................ 187
Consolidated Income Statement ................................................................................................................................ 188
Consolidated Statement of Other Comprehensive Income ........................................................................................ 188
Consolidated Statement of Changes in Equity ........................................................................................................... 189
Consolidated Statement of Cash Flows ..................................................................................................................... 191
Notes to the Consolidated Financial Statements ........................................................................................................ 192
Independent Auditor's Report ..................................................................................................................................... 246
Financial statements of Krka, d. d., Novo mesto ........................................................................................ 252
Statement of Financial Position .................................................................................................................................. 252
Income Statement ...................................................................................................................................................... 253
Statement of Other Comprehensive Income .............................................................................................................. 253
Statement of Changes in Equity ................................................................................................................................. 254
Statement of Cash Flows ........................................................................................................................................... 256
Notes to the Financial Statements .............................................................................................................................. 257
Independent Auditor's Report ..................................................................................................................................... 315
Enclosure 1 .................................................................................................................................................... 321
2021 Annual Report – Financial Report
185
Introduction to Financial Statements
The financial statements consist of two separate sections.
The first section illustrates the consolidated financial statements and related Notes of the Krka Group, whereas the second
section encompasses the financial statements and related Notes of Krka, d. d., Novo mesto (hereinafter referred to as:
“the Company”). The financial statements have been prepared in compliance with the International Financial Reporting
Standards (hereinafter referred to as: “IFRS”) as adopted by the European Union, which is in compliance with the resolution
adopted at the 11
th
Annual General Meeting held on 6/7/2006.
The financial statements of the Company and the Krka Group are presented in euros, rounded to the nearest thousand.
They are an integral part of the 2021 Annual Report, which is published via the SEOnet electronic announcement system
of the Ljubljana Stock Exchange, the ESPI system of the Warsaw Stock Exchange, and on the Krka website
(https://www.krka.biz/en/for-investors/financial-reports/).
Each section of the financial statements was audited by ERNST & YOUNG Revizija, poslovno svetovanje, d. o. o., and
two separate reports as individual sections have been prepared accordingly.
The Statement of Compliance presented below includes an acknowledgement of the Management Board's responsibility
for all financial statements of both the Company and the Krka Group.
2021 Annual Report – Financial Report
186
Statement of Compliance
The Management Board of Krka, d. d., Novo mesto is responsible for the preparation of the Annual Report of the Company
and of the Krka Group including the financial statements in a manner that gives the interested public a true and fair view
of the financial position and the results of operations of the Company and its subsidiaries in 2021.
The Management Board hereby acknowledges as follows:
The financial statements of the Company and its subsidiaries have been prepared on a going concern basis.
The selected accounting policies are applied consistently and any changes in accounting policies have been
reported.
The accounting estimates have been prepared in a fair and reasonable manner and are in compliance with the
principles of prudence and due diligence.
The financial statements and the Notes thereto for the Company and the Krka Group have been prepared in
accordance with the applicable legislation and the IFRS, as adopted by the European Union.
The Management Board is responsible for taking the measures required to preserve the assets of the Company and the
Krka Group and to prevent and detect fraud and other forms of misconduct.
The tax authorities may, at any time within a period of five years after the end of the year for which tax assessment was
due, carry out the audit of the Company operations, which may lead to assessment of additional tax liabilities, default
interest, and penalties with regard to corporate income tax or other taxes and levies. The Management Board is not aware
of any circumstances that may result in a significant tax liability.
Novo mesto, 28 March 2022
Jože Colarič
President of the Management Board and CEO
dr. Aleš Rotar
Member of the Management Board
dr. Vinko Zupančič
Member of the Management Board
David Bratož
Member of the Management Board
Milena Kastelic
Member of the Management Board – Worker Director
2021 Annual Report – Financial Report of the Krka Group
187
Consolidated Financial Statements of the Krka Group
Consolidated Statement of Financial Position
€ thousand
Notes
31 Dec 2021
31 Dec 2020
Index
2021/20
Assets
Property, plant and equipment
12
96
Intangible assets
13
97
Loans
14
262
Investments
15
1,045
Deferred tax assets
16
96
Other non-current assets
99
Total non-current assets
109
Assets held for sale
100
Inventories
17
100
Contract assets
74
Trade receivables
18
122
Other receivables
18
106
Loans
14
351
Investments
15
1,636
Cash and cash equivalents
19
51
Total current assets
117
Total assets
114
Equity
Share capital
20
100
Treasury shares
20
-114,541
-99,279
115
Reserves
20
140
Retained earnings
20
108
Total equity holders of the controlling company
109
Non-controlling interests
20
164
Total equity
110
Liabilities
Provisions
22
94
Deferred revenue
23
88
Trade payables
24
100
Lease liabilities
28
96
Deferred tax liabilities
16
98
Total non-current liabilities
94
Trade payables
24
121
Lease liabilities
28
127
Income tax payables
45
Contract liabilities
25
117
Other current liabilities
26
241
Total current liabilities
147
Total liabilities
128
Total equity and liabilities
114
The accompanying Notes are an integral part of the consolidated financial statements and should be read in conjunction with them.
2021 Annual Report – Financial Report of the Krka Group
188
Consolidated Income Statement
€ thousand
Notes
2021
2020
Index
2021/20
Revenue
102
– Revenue from contracts with customers
5
102
– Other revenue
108
Cost of goods sold
-674,594
-623,616
108
Gross profit
98
Other operating income
6
108
Selling and distribution expenses
-305,870
-291,203
105
– Of that net impairments and write-offs of receivables
-1,048
R&D expenses
-154,559
-153,447
101
General and administrative expenses
-87,367
-86,426
101
Operating profit
91
Financial income
10
85
Financial expenses
10
-12,082
-75,011
16
Net financial result
-51,752
Profit before tax
107
Income tax
11
-54,267
-50,043
108
Net profit
107
Attributable to:
– Equity holders of the controlling company
106
– Non-controlling interests
-1,064
-2,046
52
Basic earnings per share (€)
21
107
Diluted earnings per share (€)
21
107
The accompanying Notes are an integral part of the consolidated financial statements and should be read in conjunction with them.
Consolidated Statement of Other Comprehensive Income
€ thousand
Notes
2021
2020
Index
2021/20
Net profit
107
Other comprehensive income for the year
Other comprehensive income reclassified to profit or loss at
a future date
Translation reserve
20
-43,726
Net other comprehensive income reclassified to profit or
loss at a future date
-43,726
Other comprehensive income that will not be reclassified to
profit or loss at a future date
Change in fair value of financial assets
736
Restatement of post-employment benefits
22
-11,271
Deferred tax effect
-1,622
Net other comprehensive income that will not be
reclassified to profit or loss at a future date
-9,659
Total other comprehensive income of the year (net of tax)
-53,385
Total comprehensive income of the year (net of tax)
141
Attributable to:
– Equity holders of the controlling company
140
– Non-controlling interests
-2,125
The accompanying Notes are an integral part of the consolidated financial statements and should be read in conjunction with them.
2021 Annual Report – Financial Report of the Krka Group
189
Consolidated Statement of Changes in Equity
€ thousand
Share
capital
Treasury
shares
Reserves
Retained earnings
Total equity
holders of
the
controlling
company
Non-
controlling
interests
Total
equity
Reserves
for
treasury
shares
Share
premium
Legal
reserves
Statutory
reserves
Fair
value
reserve
Translation
reserve
Other
profit
reserves
Retained
earnings
Profit
for the
year
At 1 Jan 2021
-99,279
-35,059
-111,512
Net profit
-1,064
Total other comprehensive income
of the year (net of tax)
-2,404
Total comprehensive income of the
year (net of tax)
-2,404
Total transactions with owners,
recognised in equity
Formation of other profit reserves
under the resolution of the AGM
-90,812
Transfer of previous period’s profit
to retained earnings
-265,490
Repurchase of treasury shares
-15,262
-15,262
-15,262
Formation of reserves for treasury
shares
-15,262
Dividends paid
-155,896
-155,896
-155,896
Acquisition of non-controlling interests
Total transactions with owners,
recognised in equity
-15,262
-280,752
-171,158
-165,958
At 31 Dec 2021
-114,541
-22,077
-98,274
The accompanying Notes are an integral part of the consolidated financial statements and should be read in conjunction with them.
2021 Annual Report – Financial Report of the Krka Group
190
€ thousand
Share
capital
Treasury
shares
Reserves
Retained earnings
Total equity
holders of
the
controlling
company
Non-
controlling
interests
Total
equity
Reserves
for
treasury
shares
Share
premium
Legal
reserves
Statutory
reserves
Fair
value
reserve
Translation
reserve
Other
profit
reserves
Retained
earnings
Profit
for the
year
At 1 Jan 2020
-73,774
-26,925
-67,865
Net profit
-2,046
Total other comprehensive income
of the year (net of tax)
-8,134
-43,647
-1,525
-53,306
-79
-53,385
Total comprehensive income
of the year (net of tax)
-8,134
-43,647
-1,525
-2,125
Transactions with owners,
recognised in equity
Formation of other profit reserves
under the resolution of the AGM
-68,798
Transfer of previous period's profits to
retained earnings
-223,847
Repurchase of treasury shares
-25,505
-25,505
-25,505
Formation of reserves for treasury
shares
-25,505
Acquisition of a stake in Farma GRS
-109
-4
Dividends paid
-133,274
-133,274
-133,274
Acquisition of non-controlling interests
Total transactions with owners,
recognised in equity
-25,505
-249,352
-158,674
-151,268
At 31 Dec 2020
-99,279
-35,059
-111,512
The accompanying Notes are an integral part of the consolidated financial statements and should be read in conjunction with them.
2021 Annual Report – Financial Report of the Krka Group
191
Consolidated Statement of Cash Flows
€ thousand
Notes
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit
Adjustments for:
– Amortisation/Depreciation
12, 13
– Foreign exchange differences
-19,263
– Investment income
-5,699
-24,076
– Investment expenses
– Interest expenses and other financial expenses
– Financial income
-39
-142
– Income tax
11
Operating profit before changes in net current assets
Change in trade receivables
-83,704
Change in inventories
17
-2,017
-32,112
Change in trade payables
24
-33,681
Change in provisions
-2,647
Change in deferred revenue
-929
-905
Change in other current liabilities
-892
Income tax paid
-64,329
-53,600
Net cash flow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Dividends received
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
12
-65,914
-74,806
Purchase of intangible assets
13
-6,213
-6,017
Acquisition of subsidiaries and a share of minority interests net of financial
assets acquired
-5
Net payments for non-current loans
-25,235
-4,558
Net payments for current loans
-137,277
-22,857
Net payments for non-current investments
-92,114
-554
Net payments for current investments
-42,513
-6,801
Net payments for/proceeds from derivatives
-8,457
Net cash flow from investing activities
-372,637
-109,594
CASH FLOWS FROM FINANCING ACTIVITY
Interest paid
-366
-247
Net payments for current borrowings
-3
Lease liabilities paid
28
-3,515
-3,086
Dividends and other profit shares paid
29
-155,907
-133,283
Repurchase of treasury shares
29
-15,262
-25,505
Proceeds from payment of non-controlling interests
Net cash flow from financing activities
-169,850
-154,609
Net decrease/increase in cash and cash equivalents
-156,390
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate fluctuations on cash held
-1,655
Closing balance of cash and cash equivalents
The accompanying Notes are an integral part of the consolidated financial statements and should be read in conjunction with them.
2021 Annual Report – Financial Report of the Krka Group
192
Notes to the Consolidated Financial Statements
8501 Novo mesto, Slovenia . The Company was registered at the District Court of Novo mesto on 13 July 1989, registration
No. 1/00097/00. Company registration No.: 5043611000.
The consolidated financial statements for the year ended 31 December 2021 refer to the Krka Group consisting of the
controlling company and its subsidiaries in Slovenia and abroad. A list of subsidiaries, members of the Group, is included
in Note 32 Profile of the Krka Group.
pharmaceuticals, non-prescription products), animal health products, and health resorts and tourist services.
1. Basis of preparation
Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(‘IFRS’), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (‘IFRIC’)
adopted by the European Union, and in compliance with the Companies Act (ZGD-1).
The consolidated financial statements were approved by the Krka Management Board on 28 March 2022.
Basis of measurement
The financial statements have been prepared on the historical cost basis, with the exception of derivatives, financial
instruments at fair value through profit or loss and financial instruments at fair value through other comprehensive income
(OCI) for which fair value was used. Methods applied in the measurement of fair value are presented in Note 2 Fair Value.
Functional and reporting currency
The consolidated financial statements are presented in the euro, which is Krka’s functional currency. All financial
information presented in the euro has been rounded to the nearest thousand.
Use of estimates and judgements
The preparation of financial statements requires the Management Board of the controlling company to make judgements,
estimates and assumptions that affect the carrying amounts of assets and liabilities of the Krka Group, as well as the
reported income and expenses for the period.
Management estimates include among others: determination of the useful life and residual value of property, plant and
equipment, as well as intangible assets; revenue from contracts with customers, allowances made for inventories and
receivables; assumptions material to the actuarial calculation of defined employee benefits; assumptions used in the
calculation of provisions for lawsuits, as well as assumptions and estimates relating to impairment of goodwill and
TAD Pharma trademark, the assumptions and estimates for the impairment testing of the Terme Krka cash-generating
unit, and the estimate of the lease term and the interest rate used. Regardless of the fact that the Management Board of
the managing company duly considers all factors that may impact the preparation of these assumptions, the actual
consequences of business events may differ from those estimates. In the process of making accounting estimates,
management makes judgements while considering potential changes in the business environment, new business events,
new and additional information that may be available, as well as experience. Until 31 December 2012, the Krka Group
2021 Annual Report – Financial Report of the Krka Group
193
recognised the TAD Pharma trademark as an item of intangible assets with indefinite useful life, determining its assessed
recoverable amount at each reporting date. As from 1 January 2013, the TAD Pharma trademark is recognised as an
intangible asset with finite useful life. Krka annually verifies the need for impairment of the trademark and goodwill that
arose on the takeover of TAD Pharma.
Key estimates and assumptions as at the day of the statement of financial position that are associated with future
operations and which could result in significant adjustment of the book values of assets and liabilities are presented below.
Information on significant estimates about uncertainty and critical judgements in applying accounting policies that have the
most significant effect on the amounts recognised in the financial statements is presented in the following notes:
Note 12 ‘Impairment testing of non-financial assets’
The controlling company checks for each cash generating unit whether there are any indicators of impairment at
least once a year. The recoverable amount of non-financial assets determined as the present value of future cash
flows is based on an estimate of expected cash flows from the cash generating unit and on determination of the
appropriate discount rate.
Note 5 ‘Revenue from contracts with customers’
Revenue from contracts with customers is recognised when control of the goods and services is transferred to the
customer at an amount that reflects the consideration to which the Krka Group expects to be entitled in exchange
for those goods or services, while considering specific terms and conditions of an individual contract. In assessing
variable compensation, the Krka Group specifically addresses returns, while considering specific terms and
conditions of an individual contract for the sale of products and services to customers, statutory provisions and
business practices in a given environment. When assessing variable compensation, the Krka Group applies either
the expected value method or the most likely amount method, whichever better predicts the amount of consideration
to which the Krka Group will be entitled.
Given the large number of contracts with customers, the Krka Group determined the expected value method as the
most appropriate for estimating variable consideration for the sale of products with a right of return. To estimate the
variable consideration for expected future volume rebates on the quantity of products purchased, the Krka Group
identified a combination of the most likely amount method and the expected value method as the most appropriate.
The method that best predicts the amount of variable consideration is primarily driven by the number of volume
thresholds contained in the contract, legal provisions and business practices in various environments. The most
likely amount method is best suited for contracts with a single-volume threshold, and the expected value method
for contracts with more than one volume threshold.
Prior to including any variable consideration in the transaction price, the Krka Group assesses whether there is a
constraint on variable consideration. Based on past experience, business forecasts, and current economic
conditions, the Krka Group has determined that there are no constraints on variable consideration.
The Krka Group is a seller of products that may be subject to payment terms in excess of one year in certain
markets. Krka recognises financial income and expenses on these sales using the appropriate discount rate.
Note 13 ‘Impairment testing of the TAD Pharma trademark and the associated goodwill’
The criteria used in goodwill impairment testing are verified at least once a year by the controlling entity. Determining
the present value of future cash flows requires the controlling company's Management Board to assess estimated
future cash flows from each cash-generating unit as well as to determine the appropriate discount rate and other
significant assumptions explained in Note.
2021 Annual Report – Financial Report of the Krka Group
194
Note 18 ‘Impairment testing of receivables’
On the financial statement preparation (quarterly and annually), individual companies in the Krka Group recognise
allowances (impairment) of those receivables for which it is assumed that will not be settled in full or not at all.
Allowances are recognised using uniform methodology applicable to the Krka Group and in consideration of the
probability or assessed probability of receivable settlement by the debtors. The methodology includes quantitative
and qualitative criteria grouped into the following four sets: an analysis of the existing business dealings with the
customer, an analysis of the customer's financial statements, a qualitative assessment of the customer by the sales
personnel, and an assessment of the customer's country risk. Hence, allowances of receivables due from individual
customer are calculated by means of an algorithm that includes all the above criteria.
Note 22 ‘Post-employment benefits’
Defined post-employment benefit obligations include the present value of termination benefits on retirement. They
are recognised on the basis of the actuarial calculation using assumptions and estimates effective at the time of
the calculation, and which may, as a result of future changes, differ from actual assumptions applicable at that
future time. This applies primarily to determination of a discount rate, assessment of employee turnover, mortality
assessment, and assessment of an increase in salaries. Due to the complexity of the actuarial calculation and the
long-term nature of the item, defined benefit obligations are sensitive to changes in the above estimates and
assessments.
Note 22 ‘Provisions for lawsuits and contingent liabilities’
Lawsuits and claims may be brought against individual companies in the Krka Group for alleged breaches of
intellectual property (patent rights or competition law) and those referring to other civil law areas. A provision is
recognised when a Group company has present obligations (legal or constructive) as a result of past events, a
reliable estimate can be made of the amount of obligation, and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation. Contingent liabilities are not recognised in the financial
statements as their actual existence will be confirmed only upon the occurrence or non-occurrence of one or more
uncertain future events not entirely within the control of the Group. The Management Board of the controlling
company continually assesses contingent liabilities to determine whether an outflow of resources embodying
economic benefits has become probable. If this is the case, a provision is recognised in the financial statements of
the period in which the change in probability occurs.
Note 25 ‘Current liabilities from contracts with customers’
The Krka Group accrues contractually agreed discounts in its financial statements when, based on the annual
sales, individual customers gain the right to discount recognition in the next financial year, i.e. when contractually
agreed terms and conditions of discounts are fulfilled. The assessed rate of discount depends on the facts known
at the time of the financial statement preparation, past experience in trading with individual customers, and other
relevant facts.
Notes 28 ‘Leases’
The controlling company recognises leases based on measurement of lease liabilities and thus its determination of
the lease term, its incremental borrowing rate if the implicit interest rate is not readily determinable, and its
assessment at contract inception whether a contract is, or contains, a lease.
At contract inception, the Krka Group assesses whether a contract is, or contains a lease. That is, if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
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As a lessee, the Krka Group determines the lease term as the period during which the lease cannot be terminated,
inclusive of:
a) The period for which the option to extend the lease applies if it is reasonably certain that the lessee will
exercise that option; and
b) The period for which the option to terminate the lease applies if it is reasonably certain that the lessee will not
exercise that option.
The Group considers all relevant facts, circumstances, and past practices that provide an economic incentive for
the Krka Group not to exercise the option of contract extension or termination.
The Group reassesses the lease term upon occurrence of any significant event or a material change in the
circumstances it controls that affect its decision to exercise the option of contract extension or termination.
The Krka Group uses its incremental borrowing rate when the implicit interest rate in the lease cannot be
determined. The assessed borrowing rate is based on the estimated bond yield if the Krka Group were to incur debt
on the financial markets, depending on the maturity of the contract.
2. Significant accounting policies
The Krka Group applied the same accounting policies in all periods presented in the accompanying consolidated financial
statements.
Accounting policies applied by subsidiaries have been changed where necessary and adjusted with policies applied by
the Group.
The accounting policies and the calculation methods used are the same as for the last annual reporting, except for the
newly adopted standards and interpretations. which are noted below and were applied if relevant events occurred in the
Group in the reporting period.
New standards and interpretations effective from 1 January 2021
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform – Phase two
The International Accounting Standards Board (IASB) published phase two of the Interest Rate Benchmark Reform,
namely the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, which concludes its work to respond to the
effects of Interbank Offered Rates (IBOR). The amendments introduce a temporary exemption for reporting the financial
effects of replacing the interbank offered rates (IBOR) with an alternative nearly risk-free interest rate (RFR). They provide
a practical expedient to companies when accounting for modification in the basis for determining the contractual cash flows
of a financial asset and liability, where an entity is required to adjust the effective interest rate that is equivalent to the
fluctuation of the market interest rates. In addition, they provide entities with certain relief from discontinuing hedge
accounting, including a temporary exemption from the requirement of differentiation for hedging relationships in which an
alternative interest rate reference has been specified as a non-contractually determined risk component.
Amendments to IFRS 7 – Financial Instruments
Ammedments require entities to make appropriate disclosures to enable the financial statement users to understand the
effect of the interest rate benchmark reform on their financial instruments and risk management strategy. The entity must
apply the amendments retrospectively, without restatement of prior period data. The management has assessed the
impact of the amendments and believes they had no significant impact on the consolidated financial statements of the
Krka Group.
Amendments to IFRS 16 Leases – COVID-19-Related Rent Concessions after 30 June 2021
The amendments are effective for annual periods beginning on or after 1 April 2021 and must be applied retrospectively,
with early application permitted even in financial statements that were not authorised for issue at the date of the
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amendments. In March 2021, the IASB amended the conditions for applying the practical expedient in IFRS 16, which
allows a lessee not to treat lease rent adjustments that arise as a direct result of the COVID-19 pandemic under the
guidance in the standard IFRS 16. An entity may obtain practical expedient relief from the treatment of a rent concession
where the individual rent reduction affects only payments that would have been originally due on or before 30 June 2022,
and provided that all the conditions for applying the practical expedient are met. The Krka Group applied the amendments
on 1 June 2020. The management has assessed the impact of the amendments and believes they had no significant
impact on the consolidated financial statements of the Krka Group.
Basis for consolidation
Subsidiaries
Subsidiaries are entities controlled by the controlling company. Control exists when the controlling company has the power
to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,
potential voting rights that are currently exercisable or exchangeable are taken into account. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until the date that
control ceases.
To account for a merger of a subsidiary controlled by the controlling company, the difference between the investment and
the net value of the merged assets is recognised in the controlling company's separate financial statements within the
same capital category as was recognised in the Group's consolidated financial statements prior to the merger.
Transactions eliminated on consolidation
Intragroup balances and transactions, and any unrealised gains and losses arising from intragroup transactions, are
eliminated in preparing the consolidated financial statements of the Krka Group. Unrealised losses are eliminated in the
same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Changes within the Group
Farma GRS, d. o. o., was established as a partnership between companies operating in the pharmaceutical and
pharmaceutical-processing activities. It was involved in developing new pharmaceutical products, new technological
products for pharmaceutical production and contributed to a more energy-efficient, environmentally friendly and enhanced
business efficiency of pharmaceutical production. Pursuant to the agreement on the purchase of business stakes, in
February 2020 controlling company Krka, d. d. , Novo mesto acquired a 100% stake in Farma GRS, d. o. o. In
October 2020, Farma GRS, d. o. o. merged with the Company, with 30 June 2020 as the effective date of the merger. The
merger of Farma GRS, d. o. o. did not have any impact on the financial statements of the Krka Group since the controlling
company, Krka, d. d., Novo mesto was its sole owner. The difference between the net value of the merged assets of
€38,183,327 and the investment of €1,004,410 was recognised in the controlling company's separate financial statements
within the same capital category as in the Group's consolidated financial statements prior to the merger. Consequently, on
2 October 2020, Farma GRS, d. o. o. was removed from the court register. The key reason for the merger of the acquiree
with the acquirer is in addition to the rationalisation of processes, the simplification of operations and business processes.
More detailed presentation of the effects of the merger are disclosed in Notes to the separate financial statements of the
controlling company Krka for the previous year.
Foreign currencies
Foreign currency transactions
Transactions and balances in foreign currencies are translated to the respective functional currencies of Krka Group
entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies
at the reporting date are translated to the functional currency at the prevailing exchange rate at that date. Non-monetary
assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional
currency at the exchange rate at the date when the fair value was determined. Foreign currency differences are recognised
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in profit or loss, except for differences arising on the translation of equity instruments, which are recognised directly in
other comprehensive income. Non-cash items measured at historical cost in foreign currency are translated to the
functional currency by applying the exchange rate valid at the date of the transaction.
Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are
translated to the euro at exchange rates prevailing at the reporting date. The income and expenses of foreign operations
are translated to the euro at the average annual exchange rate, which in view of transaction dynamics is closest to the
exchange rate ruling at the date of the transaction. Foreign exchange differences arising on translation are recognised
directly in other comprehensive income as a translation reserve. When a foreign operation is disposed of, in part or in full,
the relevant amount in the translation reserve is transferred to profit or loss.
Operating profit
Operating profit comprises profit before tax and financial items. Financial items include interest on bank balances, deposits,
investments held for sale, interest paid on borrowings, profit or loss from the sale of financial assets at fair value through
other comprehensive income, and foreign exchange gains or losses from the translation of all monetary assets and
liabilities to foreign currency.
Fair value
A number of the Krka Group's accounting policies and disclosures require the determination of fair value for both, financial
and non-financial assets and liabilities.
Fair value is the amount for which an asset could be sold or a liability exchanged in a regular transaction between market
participants. All assets and liabilities measured and disclosed at their fair value in financial statements are classified in the
fair value hierarchy on the basis of lowest level of input data significant for measurements of total fair value:
• Level 1 – market value (unadjusted) from the active market for similar assets and liabilities;
• Level 2 – valuation model, which is not classified in level 1, is valued directly or indirectly on the basis of comparable
market data;
• Level 3 – valuation model which is not based on the market data.
Fair values have been determined for measurement and/or disclosure purposes based on the methods presented below.
Where applicable, further information about the assumptions made in determining fair values is disclosed in the
Notes specific to that asset or liability of the Krka Group.
Investments in equity and debt securities
The fair value of financial assets at fair value through profit or loss and at fair value through OCI is determined by reference
to their quoted closing bid price. For investment in debt securities at amortised cost, for reporting purposes the fair value
is calculated on the basis of the closing rate, which is increased by accrued interest on the reporting date.
Trade and other receivables
Fair value of trade and other receivables is estimated at the present value of future cash flows discounted at the market
rate of interest effective at the reporting date.
Financial liabilities
Fair value is determined based on the present value of future principal and interest payments discounted at the market
rate of interest prevailing at the reporting date.
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Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial assets
Financial assets of the Krka Group include cash and cash equivalents, receivables and loans and investments.
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial assets’ contractual cash flow
characteristics and the Group's business model for managing them. With the exception of trade receivables that do not
contain a significant financing component or for which the Group has applied the practical expedient, the Group initially
measures a financial asset at fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has
applied the practical expedient are measured at the transaction price determined under IFRS 15. Refer to the accounting
policies in section ‘Revenue from contracts with customers’.
In order for financial assets to be classified and measured at amortised cost or fair value through OCI, they need to give
rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at an instrument level.
The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate
cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling
the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the marketplace (regular way trades) are recognised on the trade date, i.e. the date that the Group commits
to purchase or sell the asset.
The Krka Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire or when
it transfers the rights to the contractual cash flows from the financial asset in a transaction that transfers all the risks and
rewards of ownership of the financial asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified into four categories:
Financial assets at amortised cost (debt instruments);
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments);
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments);
Financial assets at fair value through profit or loss.
Financial assets at amortised cost (debt instruments)
Cash and cash equivalents comprise cash, bank deposits up to three months, and other current, highly realisable
investments with an original maturity of three months or less. The latter can be easily converted into known amounts of
cash and for which the risk of changes in value is insignificant. The cash flows derived from these assets are solely
payments of the principal and interest are therefore classified as financial assets at amortised cost.
According to the SSPI test, loans issued by the Group are classified as financial assets at amortised cost, since the cash
flows derived from these assets are solely payments of principal and interest on the principal amount outstanding.
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Krka's investments in debt securities, which include only low credit risk government bonds, are classified as financial
assets at amortised cost.
The Group's financial assets at amortised cost also include trade receivables.
After initial recognition, these investments are measured using the effective interest method and are subject to impairment.
Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets at fair value through OCI (debt instruments)
The Krka Group classifies its investments in debt securities as financial assets at fair value through OCI.
Subsequent to initial recognition, they are measured at fair value. Interest income, foreign exchange differences, and
impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for
financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition,
the cumulative fair value change recognised in OCI is recycled to profit or loss.
Financial assets at fair value through OCI (equity instruments)
The Krka Group classifies its investments in equity securities as financial assets at fair value through OCI. The Company
elected to classify irrevocably its listed and non-listed investments in this category.
Subsequent to initial recognition, they are measured at fair value. Changes in fair value are recognised directly in other
comprehensive income. When an investment is derecognised, the cumulative gain or loss in equity is not transferred to
profit or loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated
upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair
value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in
the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they
are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal
and interest are classified and measured at fair value through profit or loss, irrespective of the business model.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net
changes in fair value recognised in the statement of profit or loss.
Impairment of financial assets is described in the Impairment – financial assets section.
Financial liabilities
Financial liabilities consist mainly of loans, payables to suppliers and other liabilities. Lease liabilities and employee
benefits are treated separately (see accounting policies in the Leases and Employee Benefits sections). All other financial
liabilities are initially recognised on the trade date or when the Krka Group becomes a contracting party in relation to the
instrument. On initial recognition, the Krka Group classifies non-derivative financial liabilities as subsequently measured
at amortised cost and derivative financial liabilities as at fair value through profit or loss. After initial recognition, financial
liabilities arising from loans are measured using the effective interest method. Gains and losses are recognised in profit or
loss when these liabilities are discharged or modified. The Krka Group derecognises a financial liability if the obligations
set out in the contract are fulfilled, cancelled or expired.
Property, plant and equipment
The items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses
(refer to the accounting policy ‘Impairment’).
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Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other directly attributable cost of making the asset ready for its intended
use, and (if applicable) costs of dismantling and removing the items and restoring the site on which they are located, as
well as capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is
capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined as the difference between
proceeds from disposal and the carrying amount of property, plant and equipment and are recognised within ‘Other
operating income’ or ‘Other operating expenses’ in profit or loss.
As of 1 January 2009, costs of borrowings that may be directly attributable to the acquisition, construction or production of
an asset under construction, are also part of the cost of an item of property, plant and equipment of the Krka Group. If
borrowings raised are not earmarked and they cannot be attributed directly to the acquisition of an asset under
construction, the pro-rata amount of costs is capitalised only when borrowing costs exceed 10% of the value of all
investments of the accounting period. The pro-rata amount of costs is calculated using the capitalisation rate as the
weighted average costs of borrowings that have not been settled in the accounting period. The pro-rata amount of costs
increases the cost of significant assets under construction, i.e. assets that account for more than 10% of total investments
in the period and the construction of which extends over a period of more than 6 months.
Subsequent expenditure
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it
is probable that the future economic benefits embodied within the part will flow to the Krka Group and its cost can be
measured reliably. The carrying amount of the replaced part is derecognised. All other costs are recognised in profit or
loss as an expense when incurred.
Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each item of property,
plant and equipment or its individual parts. Land and assets being acquired are not depreciated.
The estimated useful lives are as follows:
For buildings 15 to 60 years,
For plant and equipment 2 to 20 years,
For furniture 5 years,
For computer hardware 4 to 6 years, and
For means of transportation 5 to 15 years.
Leases
At contract inception, the Krka Group assesses whether a contract is, or contains a lease. That is, if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration.
The Krka Group determines the lease term as the period during which the lease cannot be terminated, inclusive of:
a) The period for which the option to extend the lease applies if it is reasonably certain that the lessee will exercise
that option; and
b) The period for which the option to terminate the lease applies if it is reasonably certain that the lessee will not
exercise that option.
The Krka Group as a lessee
The Krka Group applied a single measurement and recognition approach for all leases, except for current leases and
leases of low-value assets. In respect of those, the Krka Group applies a practical expedient of the standard and recognises
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lease liabilities as expenses on a straight-line basis over the lease term. The practical expedient applies to leases with a
lease term of less than 1 year and leases of assets valued at less than €5,000.
The Group recognises right-of-use assets and lease liabilities at the commencement date of the lease (i.e. the date the
underlying asset is available for use).
Right-of-use assets
Right-of-use assets are measured at cost less any accumulated depreciation and impairment losses and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received,
as well as an assessment of costs that will be incurred in dismantling or removing the leased asset, restoring the site to its
original condition, or returning the asset to a condition as required in the lease terms.
The right-of-use assets are depreciated on a straight-line basis over the shorter of the estimated lease term or the
estimated useful lives of the assets.
Lease liabilities
At the commencement date of the lease, the Krka Group recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid by the Krka Group under residual value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by the Krka Group and payments of penalties for terminating
the lease if the lease term reflects the Krka Group exercising the option to terminate. Variable lease payments that do not
depend on an index or a rate are recognised in profit or loss as expenses in the period in which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate based on estimated
bond returns if it were to incur debt on the financial markets, while considering their maturity if the interest rate implicit in
the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made.
The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in
the lease payments (e.g. changes to future payments resulting from a change in an index or rate used to determine such
lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Krka Group as a lessor
Leases in which the Krka Group does not transfer substantially all the risks and rewards incidental to ownership of an
asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease
terms and is included in revenue in the statement of profit or loss. Initial direct costs incurred in negotiating and arranging
an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same
basis as rental income.
Intangible assets
Goodwill
Goodwill, which arose on the acquisition of the subsidiary, represents the excess of the cost of the acquisition over the
Krka Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree.
Goodwill is measured at cost less accumulated impairment losses.
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Trademark
Until 31 December 2012, the Krka Group recognised the TAD Pharma trademark as an item of intangible assets with
indefinite useful life, determining its assessed recoverable amount at each reporting date. As from 1 January 2013, the
TAD Pharma trademark is recognised as an intangible asset with finite useful life of 50 years. Krka annually verifies the
need for impairment of the trademark and goodwill that arose on the acquisition of TAD Pharma.
Research and development
All costs referring to the research and development work within the Krka Group are recognised in profit or loss as incurred.
Other intangible assets
Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less
accumulated amortisation and accumulated impairment losses (refer to the accounting policy ‘Impairment’).
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset
to which it relates. All other expenditure, including expenditure on internally generated goodwill and trademarks, is
recognised in profit or loss as incurred.
Amortisation
Amortisation is recognised on a straight-line basis over the estimated useful lives of intangible assets (except of goodwill)
from the date that they are available for use.
The estimated useful lives of software, licences and other rights range from 2 to 10 years, and 50 years for TAD Pharma
trademark.
Inventories
In the statement of financial position, inventories are measured at the lower of cost and net realisable value. Net realisable
value is the estimated selling price at the reporting date less selling expenses and other potential administrative expenses,
which are usually associated with the sale. The Krka Group reviews the net realisable value of inventories once a year at
the financial position date. If the carrying amount of inventories exceeds their net realisable value, inventories are impaired.
An inventory unit of raw materials and materials, auxiliary and packaging materials is valued at cost including all direct
costs of purchase. Inventories of material are carried at moving average prices. Inventories of finished products and work
in progress are carried at standard cost, which in addition to direct cost of material includes also cost of production, such
as: direct labour cost, direct cost of depreciation, direct cost of services, energy, maintenance, and quality management.
Fixed price variances are determined in accordance with the current valuation of inventories using production costs. A
quantity unit of merchandise is valued at cost including cost of purchase, import duties, and all costs directly attributable
to the acquisition decreased by discounts. Inventories of merchandise are carried at moving average prices.
Impairments
Financial assets
The Group recognises an allowance for the expected credit losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements
that are integral to the contractual terms.
Expected credit losses are recognised in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are
possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant
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increase in credit risk since the initial recognition, a loss allowance is required for credit losses expected over the remaining
life of the exposure, irrespective of the timing of the default (a lifetime ECL).
Impairments of receivables and assets from contracts
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Trade receivables
that do not contain a significant financing component or for which the Krka Group has applied the practical expedient
(contracts agreed for a period of one year or less) are measured at the transaction price determined under IFRS 15 less
any impairment losses.
Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on a lifetime
ECL at each reporting date. The Group has established a provision matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and the economic environment. Allowances are
recognised using uniform methodology applicable to the Krka Group and in consideration of the probability or assessed
probability of receivable settlement by the debtors.
Impairment of investments
For investments that include government bonds measured at amortised cost, the Group measures expected credit losses
annually. If there has been a significant increase in credit risk since recognition, the Group recognises an allowance over
the life of the expected credit loss.
Non-financial assets
The carrying amounts of the Group’s non-financial assets are reassessed at each reporting date to determine whether
there is any indication of impairment. If such indications exist, the asset’s recoverable amount is assessed.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated
recoverable amount. Impairment loss is recognised in profit or loss. Impairment losses recognised in respect of cash-
generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce
the carrying amount of the other assets in the unit (group of units) on a pro-rata basis of the asset’s carrying amount.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For
the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. For the
purpose of impairment testing, the goodwill acquired in a business combination is allocated to cash-generating units that
are expected to benefit from the synergies of the combination.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in
previous periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount of
the asset. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised
in the previous periods.
Share capital
Repurchase of treasury shares
When treasury shares recognised as a part of share equity are repurchased, the amount of the consideration paid,
including directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as
treasury shares and are presented as a deduction from total equity.
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Dividends
Dividends are recognised in the Krka Group’s consolidated financial statements in the period in which they are declared
by the Annual General Meeting.
Current employee benefits
Current employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is
provided.
Non-current employee benefits
Provisions for post-employment benefits and other non-current employee benefits
Pursuant to the local legislation of countries where the controlling company and subsidiaries are located, the Krka Group
is liable to pay to its employees’ anniversary bonuses and termination benefits upon retirement. Provisions are set aside
for these obligations.
Provisions are determined by discounting, at the reporting date, the estimated future benefits in respect of retirement
benefits and anniversary bonuses paid to employees in those countries where this legal obligation exists. The obligation
is calculated by estimating the costs of retirement benefits upon retirement and the costs of all expected anniversary
bonuses until retirement. The calculation is performed using the projected unit credit method. Employee benefit costs, as
well as cost of interest, are recognised in profit or loss, whereas restatement of post-employment benefits or unrealised
actuarial profit or loss is recognised in other comprehensive income.
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions for disputes
The Group discloses provisions for lawsuits referring to alleged patent infringements. The eligibility of provisions formed
in terms of a favourable or unfavourable outcome of the lawsuit is assessed on an annual basis. The amounts of provisions
are defined on the basis of the noted amount of the indemnification claim, or on the basis of anticipated potential amount,
if the indemnification claim is not yet disclosed.
Revenue from contracts with customers
The Krka Group is engaged in the development, production, marketing and sale of human health products (prescription
pharmaceuticals, non-prescription products), animal health products, and health resorts and tourist services. Revenue
from contracts with customers is recognised when control of the goods and services is transferred to the customer at an
amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services
while considering specific terms and conditions of an individual contract.
Transfer of control over those goods and services depends on terms and conditions of the contract. In general, control is
transferred when goods are accepted by the customer or services are rendered. The normal credit term ranges from 30 to
120 days.
The Group considers whether there are other promises in the contract that are separate performance obligations to which
a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of products, the
Group considers the effects of variable consideration and the existence of significant financing components.
2021 Annual Report – Financial Report of the Krka Group
205
Variable consideration
If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it
will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated
at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of
cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is
subsequently resolved. Some contracts for the sale of products provide customers with a right of return, bonuses, and
volume rebates. The rights of return, bonuses, and volume rebates give rise to variable consideration.
Rights of return
Certain contracts provide a customer with a right to return goods that are past the expiry date. The Group uses the expected
value method to estimate the goods that will not be returned because this method best predicts the amount of variable
consideration to which the Group will be entitled. The requirements of IFRS 15 on constraining estimates of variable
consideration are also applied in order to determine the amount of variable consideration that can be included in the
transaction price. For the goods expected to be returned instead of revenue, the Group recognises a refund liability. A
right-of-return asset (and corresponding adjustment to cost of products sold) is also recognised for the right to recover
products from a customer.
Bonuses and volume rebates
The Group provides retrospective bonuses and volume rebates to certain customers once the quantity or value of products
or services purchased during the period exceeds a threshold specified in the contract. Rebates are offset against amounts
payable by the customer. To estimate the variable consideration for the expected future rebates, the Group considers the
terms and conditions of the contract, including criteria and elements that provide the basis for the recognition of bonuses
and volume rebates.
For valuation, Krka Group uses the most probable value method or the expected value method. The method chosen, which
best predicts the value of the rebates and volume discounts, is based on the number of thresholds in the contract.
In addition to discounts available to end customers, the Krka Group also grants discounts for public procurement to
countries, ministries, or insurance companies in individual countries, based on the agreed tender conditions or contractual
provisions and the actual sales orders realised.
Disclosures about the use of estimates and judgements in estimating variable consideration are provided in the Basis of
preparation of the financial statements section.
Significant financing component
In some cases, the Group receives current advances from its customers. Using the practical expedient in IFRS 15.63, the
Group does not adjust the promised amount of consideration for the effects of a significant financing component if it
expects, at contract inception, that the period between the transfer of the promised goods or services to the customer and
when the customer pays for those goods or services will be one year or less.
Contract balances
Contract assets
A contract asset is the right to an amount of consideration in exchange for goods or services transferred to the customer.
If the Group transfers goods or services to a customer before the customer pays consideration or payment is due, a
contract asset is recognised for the earned consideration that is conditional. Once the transaction is completed and the
customer is confirmed, the contract assets are reclassified as trade receivables.
Trade receivables
A receivable represents the Group's right to an amount of consideration that is unconditional, i.e. only the passage of time
is required before payment of consideration is due. Refer to the accounting policy ‘Recognition of financial instruments’.
2021 Annual Report – Financial Report of the Krka Group
206
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the goods
or services are transferred to the customer, a contract liability is recognised when the payment is made, or the payment is
due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
Right-of-return assets
Right-of-return assets represent the Group's right to recover the goods expected to be returned by customers.
The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods,
including any potential decreases in the value of returned goods. The Group regularly updates the measurement of the
asset recorded for any revisions to its expected level of returns, as well as any additional decreases in the value of the
returned products.
Refund liabilities
A refund liability is the obligation to refund some or all of the consideration received (or receivable from the customer). The
refund liability arises from bonuses and volume discounts. It is measured at the amount the Group ultimately expects it will
have to return to the customer.
The Group updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end of
each reporting period. Refer to above accounting policy on variable consideration.
Government grants
Revenue from government grants is initially recognised when there is reasonable assurance that the grant will be received
and that the Group will comply with the attached conditions. Revenue that compensates the expenses incurred is
recognised in profit or loss on a systematic basis in the same periods in which the costs are recognised. Revenue that
compensates an entity for the cost of an asset is recognised in profit or loss on a systematic basis over the useful life of
the asset.
Financial income and expenses
Financial income comprises interest income on funds invested, dividend income, gains on the disposal of financial assets,
changes in the fair value of financial assets at fair value through profit or loss, foreign exchange gains and gains on hedging
instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the
effective interest method. Dividend income is recognised on the date that the shareholder's right to receive payment is
established, which in the case of quoted securities is the ex-dividend date.
Financial expenses comprise interest expense on borrowings, foreign exchange losses, changes in the fair value of
financial assets at fair value through profit or loss, impairment losses recognised on financial assets, and losses on hedging
instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective
interest method, except those that are attributable to property, plant and equipment under construction.
Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the
extent that it relates to items recognised directly in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date,
and any adjustment to tax payable in respect of previous financial years.
2021 Annual Report – Financial Report of the Krka Group
207
Deferred tax is recognised using the balance sheet liability approach providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating
to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the
foreseeable future. Also, deferred tax is not recognised for taxable temporary differences arising on the initial recognition
of goodwill. The amount of deferred tax is based on the expected manner of settling the carrying amount of assets and
liabilities using tax rates enacted at the reporting date. Deferred tax assets are offset against deferred tax liabilities when
an entity has a legal right to offset current assets and liabilities, and deferred tax assets and liabilities relate to the same
taxable entity and the same tax authority.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which
the deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
Earnings per share
The Krka Group presents basic earnings per share (EPS) data. EPS is calculated by dividing the profit or loss attributable
to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the
period. Diluted EPS equals the basic EPS, as all shares of the Krka Group belong to the same class of ordinary no-par
value shares.
Segment reporting
An operating segment is a distinguishable component of the Group that is engaged in providing products or services within
a particular geographically defined economic environment. Segments are different in terms of risks and returns. The Krka
Group's segment reporting is based on the Group's internal reporting system applied by the controlling company's
management in the decision-making process.
The segments include: the EU (all countries of the European Union), South-Eastern Europe (Serbia, Bosnia and
Herzegovina, North Macedonia, Montenegro, Kosovo, and Albania), Eastern Europe (Russian Federation and other former
Soviet Union countries excluding the Baltic countries), as well as Other (countries not included in any of the above
segments).
Revenues generated by individual segments of the Krka Group are presented in terms of customers’ geographical location.
The data are calculated on the basis of revenue and expenses, assets and liabilities directly attributable to each Krka
Group market. Eliminations relate to transactions between the controlling company and subsidiaries and to transactions
between subsidiaries themselves.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and
intangible assets.
Amendments to standards and interpretations issued but not yet effective
The following new and amended standards have not come into effect by the date of the financial statements and will be
applied in future periods. The Krka Group will apply the new and revised standards and interpretations when they become
effective. The Krka Group did not apply any amended standards or interpretations prior to their effective date.
Amendments to IFRS 10 – Consolidated Financial Statements and IAS 28 – Investments in Associates and Joint
Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in
dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main
2021 Annual Report – Financial Report of the Krka Group
208
consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (whether
it is housed in a subsidiary or not). A partial gain or loss is recognised by an entity when a transaction involves assets that
do not constitute the entity’s business, even if these assets are housed in a subsidiary. In December 2015, the IASB
postponed the effective date of this standard indefinitely pending the outcome of its research project on the equity method
of accounting. The amendments have so far not been endorsed by the EU. The management has assessed the impact of
the amendments and believes they will have no significant impact on the consolidated financial statements of the Krka
Group.
Amendments to IAS 1 – Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current
The amendments were initially effective for annual periods beginning on or after 1 January 2022. Early adoption was
permitted. In response to the COVID-19 pandemic, the IASB has deferred the effective date by one year, i.e. by
1 January 2023, to provide companies with more time to implement any changes to the classification of liabilities resulting
from the amendments. The amendments help promoting consistency in applying the requirements by helping entities
determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should
be classified as current or non-current. The amendments affect the presentation of liabilities in the statement of financial
position; however, they do not change existing requirements around measurement or timing of recognition of any asset,
liability, income or expenses, nor the information that entities disclose about those items. Also, the amendments clarify the
classification requirements for debt which may be settled by an entity issuing own equity instruments.
In November 2021, the IASB published an Exposure Draft (ED) that clarifies how an entity treats liabilities that are subject
to commitments that are due to be fulfilled at a date after the reporting period.
In particular, the Board proposes a limited scope of amendments to IAS 1 that effectively repeal the 2020 amendments
that require an entity to classify the liabilities to which the commitments are linked as current liabilities that it is not required
to meet until within the next twelve months after the reporting period if it is not meeting them at the end of the reporting
period.
Instead, the proposed amendments require an entity to present separately and make additional disclosures about any
non-current liabilities, to which the commitments are linked that it is not required to meet until within the next twelve months
after the reporting period if it is not meeting them at the end of the reporting period.
The proposed amendments are effective for annual periods beginning on or after 1 January 2024 and, in accordance with
the requirements of IAS 8, an entity shall apply them retrospectively. Early adoption is permitted. At the same time, the
Management Board has proposed to postpone the entry into force of the amendments from 2020, which means that
companies do not need to change their existing practices before the proposed amendments enter into force. The EU has
not yet endorsed the updates to the standard and the drafts for public consultation. The management has assessed the
impact of the amendments and believes they will have no significant impact on the consolidated financial statements of
the Krka Group.
Amendments to IFRS 3 – Business Combinations, IAS 16 – Property, Plant and Equipment, IAS 37 – Provisions,
Contingent Liabilities and Contingent Assets, as well as Annual Improvements 2018–2020
The amendments are effective for annual periods beginning on or after 1 January 2022. Early adoption is permitted. The
IASB has issued narrow-scope amendments to the IFRS standards as follows:
IFRS 3 Business Combinations (Amendments), updated reference to IFRS 3, Conceptual Framework for Financial
Reporting without changing the accounting requirements for business combinations.
IAS 16 Property, Plant and Equipment (Amendments) prohibit a company from deducting from the cost of property,
plant and equipment amounts received from selling items produced while the company is preparing the asset for
its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendments) specify which costs a company
includes in determining the cost of fulfilling a contract for the purpose of assessing whether a contract is onerous.
Annual Improvements 2018–2020 make minor amendments to IFRS 1 First-time Adoption of International Financial
Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying
IFRS 16 – Leases.
2021 Annual Report – Financial Report of the Krka Group
209
The management has assessed the impact of the amendments and believes they will have no significant impact on the
consolidated financial statements of the Krka Group.
Amendments to IAS 1 – Presentation of Financial Statements and Note 2 to IFRS – Disclosure of Accounting Policies
The amendments are effective for annual periods beginning on or after 1 January 2023. Early adoption is permitted. The
amendments provide guidance for assessing materiality in the disclosure of accounting policies and replace the
requirement to disclose “significant” accounting policies with a requirement to disclose “material” accounting policies. At
the same time, the Note provides guidance and illustrative examples to assist in applying the concept of materiality in
assessing disclosures about accounting policies. The amendment has so far not been endorsed by the EU. The
management has assessed the impact of the amendments and believes they will have no significant impact on the
consolidated financial statements of the Krka Group.
Amendments to IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors Definition of accounting
estimates
The amendments are effective for annual periods beginning on or after 1 January 2023. Early adoption is permitted. They
address changes in accounting policies and accounting estimates at the beginning of the period or subsequently and
define accounting estimates as monetary amounts in the financial statements that have measurement uncertainty
associated with them. They also explain what changes in accounting estimates are and how they differ from changes in
accounting policies and corrections of errors. The amendment has so far not been endorsed by the EU. The management
has assessed the impact of the amendments and believes they will have no significant impact on the consolidated financial
statements of the Krka Group.
Amendments to IAS 12 – Income Taxes: Deferred Tax related to Assets and Liabilities from a single transaction
The amendments are effective for annual periods beginning on or after 1 January 2023. Early adoption is permitted. In
May 2021, the IASB issued amendments to IAS 12 to restrict the application of the initial recognition exemption under IAS
12 and to specify how an entity should account for deferred tax on certain transactions, such as leases and
decommissioning liabilities. Under the amendments, the exemption does not apply to transactions for which the taxable
amount at initial recognition is equal to the amount of deductible temporary differences. The exception applies only if, on
recognition of the leased asset and the related liability (or the liability in connection with the decommissioning and
decommissioning of a component of the asset), the taxable amount is not equal to the amount of the deductible temporary
differences. The amendment has so far not been endorsed by the EU. The management has assessed the impact of the
amendments and believes they will have no impact on the consolidated financial statements of the Krka Group.
2021 Annual Report – Financial Report of the Krka Group
210
4. Segment reporting
The Krka Group reports in terms of certain geographical segments. Revenues generated by individual segments are presented in terms of customers’ geographical location. The data
are calculated on the basis of revenue and expenses, assets and liabilities directly attributable to each Krka Group market. Eliminations relate to transactions between the controlling
company and subsidiaries and to transactions between subsidiaries themselves.
Segment reporting
European Union
South-Eastern Europe
Eastern Europe
Other
Eliminations
Total
€ thousand
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Revenue from external customers
851,210
866,521
88,481
82,447
547,916
517,348
78,195
68,625
0
0
1,565,802
1,534,941
– Revenue from contracts with customers
848,023
863,524
88,481
82,447
547,781
517,242
77,981
68,461
0
0
1,562,266
1,531,674
– Other revenue
3,187
2,997
0
0
135
106
214
164
0
0
3,536
3,267
Sales between Group companies
204,426
250,981
50,877
47,746
252,938
301,391
5,172
3,879
-513,413
-603,997
0
0
Other operating income
11,005
10,161
46
96
307
238
18
0
0
0
11,376
10,495
Operating costs
-713,409
-717,723
-61,607
-55,605
-386,483
-327,483
-60,891
-53,881
0
0
-1,222,390
-1,154,692
Operating expenses to Group companies
-344,147
-376,183
-55,573
-51,996
-558,710
-599,288
-17,227
-10,982
975,657
1,038,449
0
0
Operating profit
148,806
158,959
26,920
26,938
161,740
190,103
17,322
14,744
0
0
354,788
390,744
Interest income
249
152
4
0
216
1,926
351
70
0
0
820
2,148
Interest income from Group companies
278
414
-1
-1
2
4
1
7
-280
-424
0
0
Interest expenses
-366
-169
-11
-15
-113
-132
-5
-3
0
0
-495
-319
Interest expense to Group companies
-264
-308
0
0
0
-8
0
-1
264
317
0
0
Net financial result
-1,104
-5,933
-155
-191
5,891
-44,879
2,997
-749
0
0
7,629
-51,752
Income tax
-26,730
-20,560
-3,963
-3,182
-21,634
-24,751
-1,940
-1,550
0
0
-54,267
-50,043
Net profit
120,972
132,466
22,802
23,565
145,997
120,473
18,379
12,445
0
0
308,150
288,949
Investments
54,623
67,672
363
131
10,619
6,652
781
2,158
0
0
66,386
76,613
Depreciation of property, plant and equipment
71,657
72,765
2,004
1,982
22,586
24,690
2,442
2,232
0
0
98,689
101,669
Depreciation of the right-of-use assets
2,502
2,116
105
107
600
587
66
120
0
0
3,273
2,930
Amortisation
4,261
4,461
351
322
1,989
2,055
274
251
0
0
6,875
7,089
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
Total assets
1,957,545
1,743,793
56,344
49,641
484,051
404,474
39,743
37,634
0
0
2,537,683
2,235,542
Goodwill
42,644
42,644
0
0
0
0
0
0
0
0
42,644
42,644
Trademark
34,918
35,788
0
0
0
0
0
0
0
0
34,918
35,788
Total liabilities
405,218
338,453
23,401
15,444
151,208
110,326
38,771
19,507
0
0
618,598
483,730
2021 Annual Report – Financial Report of the Krka Group
211
5. Revenue from contracts with customers
Breakdown of revenue from contracts with customers
€ thousand
2021
2020
Revenue from contracts with customers (products)
1,523,823
1,500,205
Revenue from contracts with customers (health resorts and tourist services)
36,465
29,754
Revenue from contracts with customers (materials)
1,978
1,715
Total revenue from contracts with customers
1,562,266
1,531,674
Revenue from contracts with customers by region
€ thousand
2021
2020
Slovenia
56,415
55,384
South-East Europe
209,166
199,406
East Europe
547,778
517,231
Central Europe
351,501
341,463
West Europe
305,246
341,057
Overseas Markets
53,717
45,664
Total
1,523,823
1,500,205
Revenue from contracts with customers by product groups
€ thousand
2021
2020
Prescription pharmaceuticals
1,305,316
1,300,640
Non-prescription products
137,250
123,652
Animal health products
81,257
75,913
Total
1,523,823
1,500,205
All revenues from contracts with customers of health resorts and tourist services are generated in Slovenia.
Contract balances
Trade receivables are described in Note 18 Trade and other receivables, while liabilities recognised from contracts
with customers in Note 25 Current liabilities from contracts with customers. Contract assets are reported in the consolidated
statement of financial position. The Group recognised assets from contracts with customers in the amount of
€437 thousand (2020: €524 thousand) and liabilities from contracts in the amount of €7,766 thousand (2020: €4,229
thousand).
thousand).
Right-of-return assets and liabilities
The Krka Group recognised right-of-return assets within the amount of €777 thousand (€1,120 thousand) and right-of-
return liabilities within the amount of €116,965 thousand (2020: €102,071 thousand).
Performance obligations
The Krka Group is engaged in the development, production, marketing and sale of human health products (prescription
pharmaceuticals, non-prescription products), animal health products, and health resorts and tourist services. Revenue
from contracts with customers is recognised when control of the goods and services is transferred to the customer at an
amount that reflects the consideration to which Krka expects to be entitled in exchange for those goods or services, while
considering specific terms and conditions of an individual contract.
2021 Annual Report – Financial Report of the Krka Group
212
Transfers of risks and rewards depend on terms and conditions of an individual contract. Generally, the transfer occurs
when the customer accepts the goods in accordance with INCOTERMS 2020 or when the relevant services are performed.
Payment terms vary from region to region (distribution channels), while the normal credit term ranges from 30 to 120 days.
At the year-end, the Krka Group incurred no costs on acquisition or fulfilment of contracts with customers.
6. Other operating income
€ thousand
2021
2020
Reversal of non-current provisions
5,116
2,290
Deferred revenue reversal
1,229
1,286
Gains on sale of property, plant and equipment and intangible assets
1,161
959
Other operating income
3,870
5,960
Total other operating income
11,376
10,495
Detailed information on reversal of non-current provisions is included in Note 22 Provisions.
Other operating income includes €618 thousand (2021: €2,817 thousand) of State grants aimed at curbing the COVID-19
pandemic. State grants are unconditional and as such are recognised in the 2021 financial statements in the full amount.
7. Costs by nature
€ thousand
2021
2020
Cost of goods and materials
394,891
370,142
Cost of services
229,106
219,594
Employee benefits
441,476
438,412
Amortisation and depreciation
108,837
111,688
Inventory write-offs and allowances (net)
20,738
23,019
Receivable impairments and write-offs (net)
1,048
-3,206
Formation of provisions for lawsuits
563
50
Other operating expenses
34,716
34,479
Total costs
1,231,375
1,194,178
Change in the value of inventories of finished products and work in progress
-8,985
-39,486
Total
1,222,390
1,154,692
8. Employee benefits
78
€ thousand
2021
2020
Gross wages and salaries and continued pay
339,342
336,920
Social security contributions
25,003
24,822
Pension insurance contributions
46,601
45,972
Payroll tax
784
847
Post-employment benefits and other non-current employee benefits
7,799
8,285
Other employee benefits
21,947
21,566
Total employee benefits
441,476
438,412
Post-employment benefits and other non-current employee benefits are detailed in Note 22 Provisions. Other employee
benefits include primarily vacation bonuses and commuting allowances.
78
GRI GS 201-1
2021 Annual Report – Financial Report of the Krka Group
213
9. Other operating expenses
€ thousand
2021
2020
Grants and assistance for humanitarian and other purposes
1,548
1,456
Environmental protection expenditures
5,161
5,019
Other taxes and levies
21,264
22,886
Loss on sale and write-offs of property, plant and equipment and intangible assets
2,754
1,503
Other operating expenses
3,989
3,615
Total other operating expenses
34,716
34,479
Other levies include €17,320 thousand of various taxes and levies paid on pharmaceuticals and fees paid to associates in
individual foreign countries for pursuing promotional activities (2020: €19,244 thousand).
10. Financial income and expenses
€ thousand
2021
2020
Net foreign exchange differences
15,145
0
Interest income
820
2,148
Derivatives income
2,968
20,319
– Realised revenue
2,002
17,212
– Fair value change
966
3,107
Income from dividends
691
650
Other financial income
87
142
Total financial income
19,711
23,259
Net foreign exchange differences
0
-58,563
Interest expenses
-495
-319
– Interest paid
-199
-30
– Interest expenses on lease liabilities
-296
-289
Derivatives expenses
-10,459
-14,443
– Incurred expenses
-10,459
-14,443
Other financial expenses
-1,128
-1,686
Total financial expenses
-12,082
-75,011
Net financial result
7,629
-51,752
The net financial result in 2021 was better mainly due to a better result of €73,708 thousand in the net foreign exchange
result. In 2021, Krka continued its policy of partial hedging against rouble-related risk and the US dollar with financial
instruments. The most significant impact was the exchange rate of the rouble (final exchange rate on 31 December 2021
€1 = RUB 85.3004 and on 31 December 2020 €1 = RUB 91.4671).
Detailed information on the risk of changes in foreign exchange rates can be found in Note 30 Financial Instruments and
Financial Risks and in the chapter Risk Management in the Business Part of the Report.
2021 Annual Report – Financial Report of the Krka Group
214
11. Income tax
Adjustment to effective tax rate
€ thousand
2021
2020
Income tax
53,767
50,421
Deferred tax
500
-378
Total income tax
54,267
50,043
Profit before tax
362,417
338,992
Income tax calculated at the rate of 19% (the same as in 2020)
68,859
64,408
Income tax from increased expenses
-1,366
-2,385
Income tax from non-exempt expenses
7,268
4,297
Income tax from tax incentives
-16,028
-17,322
Income tax from adjustment of revenue decreasing the tax base
-611
-1,365
Income tax from adjustment of revenue increasing the tax base
749
780
Effect of different tax rates
603
480
Other
-5,207
1,150
Total income tax
54,267
50,043
Effective tax rate
15.0%
14.8%
Investments in R&D and investment relief represent the major share of tax incentives.
12. Property, plant and equipment
€ thousand
31 Dec 2021
31 Dec 2020
Land
40,645
40,345
Buildings
359,247
376,130
Equipment
313,864
338,059
Property, plant and equipment being acquired
44,090
38,042
Advances for property, plant and equipment
4,743
3,685
Right-of-use assets
11,763
11,563
Total property, plant and equipment
774,352
807,824
In 2021, the most significant investments in the controlling company Krka include the relocation of small series production
and the increase of semi-finished products production capacity in Notol 2 in the amount of €7,260 thousand (2020:
€7,025 thousand), and the construction of Sinteza 2 in Krško in the amount of €5,351 thousand (2020: €1,247 thousand).
A total of €3,606 thousand was spent on various projects in the area of information technology and telecommunications
(2020: €4,279 thousand), for relocation and redevelopment projects. €3,470 thousand (€691 thousand in 2020) were
earmarked for the reconstruction of RCC 4 and RCC 1 in the Laboratory Control Room, and €2,583 thousand (€4 thousand
in 2020) for the reconstruction of RCC 2 and the relocation of equipment to RCC 4.
Major investments in subsidiaries included investment in subsidiary Krka-Rus in Russian Federation amounting to
€5,690 thousand (2020: €5,068 thousand). An additional €2,152 thousand was invested in subsidiary Terme Krka (2020:
€2,001 thousand); €72 thousand was invested in subsidiary Krka-Farma Zagreb (2020: €610 thousand); €25 thousand
was invested in subsidiary Krka – Polska (2020: €173 thousand).
Most of the right-of-use assets relate to the right-of-use buildings in the amount of €8,487 thousand.
2021 Annual Report – Financial Report of the Krka Group
215
Movements in property, plant and equipment (PP&E)
€ thousand
Land
Buildings
Equipment
PP&E being
acquired
Advances
for PP&E
Right-of-use
assets
Total
Cost
At 1 Jan 2020
39,796
851,995
1,191,881
43,113
3,082
15,541
2,145,408
Additions
0
0
0
69,718
874
0
70,592
Capitalisation – transfer
from PP&E under
construction
756
13,881
57,461
-72,098
0
0
0
Capitalisation –
IFRS 16 Leases
0
0
0
0
0
3,041
3,041
Disposals, impairment,
deficit, surplus
0
-162
-19,116
0
0
-1,452
-20,730
Translation reserve
-207
-17,975
-19,715
-2,684
-271
-612
-41,464
Transfers, reclassification
0
289
-330
-7
0
-10
-58
At 31 Dec 2020
40,345
848,028
1,210,181
38,042
3,685
16,508
2,156,789
At 1 Jan 2021
40,345
848,028
1,210,181
38,042
3,685
16,508
2,156,789
Additions
0
0
0
60,166
959
0
61,125
Capitalisation – transfer
from PP&E under
construction
336
8,165
45,356
-53,857
0
0
0
Capitalisation –
IFRS 16 Leases
0
0
0
0
0
3,871
3,871
Disposals, impairment,
deficit, surplus
-80
-723
-18,310
-907
0
-1,135
-21,155
Translation reserve
44
4,087
5,214
677
99
172
10,293
Transfers, reclassification
0
0
-8
-31
0
0
-39
At 31 Dec 2021
40,645
859,557
1,242,433
44,090
4,743
19,416
2,210,884
Accumulated
depreciation
At 1 Jan 2020
0
-449,720
-830,138
0
0
-2,702
-1,282,560
Depreciation
0
-27,851
-73,818
0
0
-2,930
-104,599
Disposals, deficit, surplus
0
91
18,479
0
0
515
19,085
Transfers, reclassification
0
3
36
0
0
1
40
Translation reserve
0
5,579
13,319
0
0
171
19,069
At 31 Dec 2020
0
-471,898
-872,122
0
0
-4,945
-1,348,965
At 1 Jan 2021
0
-471,898
-872,122
0
0
-4,945
-1,348,965
Depreciation
0
-27,560
-71,129
0
0
-3,273
-101,962
Disposals, deficit, surplus
0
423
17,835
0
0
641
18,899
Transfers, reclassification
0
0
5
0
0
0
5
Translation reserve
0
-1,275
-3,158
0
0
-76
-4,509
At 31 Dec 2021
0
-500,310
-928,569
0
0
-7,653
-1,436,532
Carrying amount
At 1 Jan 2020
39,796
402,275
361,743
43,113
3,082
12,839
862,848
At 31 Dec 2020
40,345
376,130
338,059
38,042
3,685
11,563
807,824
At 1 Jan 2021
40,345
376,130
338,059
38,042
3,685
11,563
807,824
At 31 Dec 2021
40,645
359,247
313,864
44,090
4,743
11,763
774,352
No borrowing costs relate to the items of property, plant and equipment in 2021.
The carrying amount of the items of property, plant and equipment, which are temporarily not used amounted to
€1,864 thousand as at 31 December 2021 (2020: €1,467 thousand).
2021 Annual Report – Financial Report of the Krka Group
216
Of total property, plant and equipment in use as at 31 December 2021, 38% was fully depreciated (2020 year-end: 35%).
The share of fully depreciated property, plant and equipment is calculated in consideration of their cost. Land is excluded
from the calculation.
All property, plant and equipment is free of encumbrances. The status of known future commitments related to the
acquisition of property, plant and equipment is disclosed in Note 27 Contingent Liabilities and Commitments.
The movements and lease liabilities recognised in profit or loss are presented in Notes 28 Leases and 30 Financial
Instruments and Risk.
Impairment test of non-current assets of the Terme Krka cash-generating unit
An impairment test of the non-current assets of the Terme Krka cash-generating unit was made as there were signs that
the asset may be impaired due to the impact of the COVID-19 pandemic on the economic environment. With the entry into
force of the PCT conditions in 2021, the tourism and health resort services are operating normally. A portion of the loss of
revenue during the closure of activities was recovered by the Terme Krka, also on account of State measures imposed to
overcome the issues facing the economy (tourist vouchers), improved occupancy and higher prices due to a greater
number of direct bookings and a drop in bookings made through agencies. Terme Krka's performance in 2021 was
successful.
The asset's recoverable amount is the greater of the fair value net of selling expenses or value in use. For the purposes
of the impairment test, the recoverable amount of the cash-generating unit was determined based on its value in use, i.e.
using cash flow projections based on five-year financial plans of the cash-generating unit, under assumption of a gradual
normalisation of the circumstances. The discount rate of 7.0%, and the long-term growth rate of net cash flows (g) after
the forecast period (after 2026) of 2% were applied in the projection. In the opinion of the management, a reasonable
change in the discount rate or growth rate would not result in the asset impairment of the cash-generating unit.
Considering the above assumptions, the assessed recoverable amount of the Terme Krka cash-generating unit exceeds
its carrying amount and therefore no impairment is required.
13. Intangible assets
€ thousand
31 Dec 2021
31 Dec 2020
Goodwill
42,644
42,644
Trademark
34,918
35,788
Concessions, trademarks and licences
22,806
24,452
Intangible assets being acquired
3,933
4,487
Total intangible assets
104,301
107,371
Goodwill arose on the acquisition of subsidiaries TAD Pharma in Germany (€42,277 thousand) and Krka Pharma in Austria
(€367 thousand). The trademark refers mostly to the trademark of TAD Pharma.
2021 Annual Report – Financial Report of the Krka Group
217
Movement of intangible assets (IA)
€ thousand
Goodwill
Trademark
Concessions,
trademarks and
licences
IA
being acquired
Total
Cost
At 1 Jan 2020
42,644
42,629
131,640
4,096
221,009
Additions
0
0
0
6,021
6,021
Transfer from IA being acquired
0
0
5,272
-5,272
0
Disposals, deficit, surplus
0
0
-639
-355
-994
Transfers, reclassification
0
0
-11
0
-11
Translation reserve
0
0
-1,107
-3
-1,110
At 31 Dec 2020
42,644
42,629
135,155
4,487
224,915
At 1 Jan 2021
42,644
42,629
135,155
4,487
224,915
Additions
0
0
0
5,261
5,261
Transfer from IA being acquired
0
0
4,865
-4,865
0
Disposals, deficit, surplus
0
0
-651
-952
-1,603
Transfers, reclassification
0
0
-6
2
-4
Translation reserve
0
0
246
0
246
At 31 Dec 2021
42,644
42,629
139,609
3,933
228,815
Accumulated depreciation
At 1 Jan 2020
0
-5,970
-105,957
0
-111,927
Amortisation
0
-871
-6,218
0
-7,089
Disposals, deficit, surplus
0
0
521
0
521
Transfers, reclassification
0
0
8
0
8
Translation reserve
0
0
943
0
943
At 31 Dec 2020
0
-6,841
-110,703
0
-117,544
At 1 Jan 2021
0
-6,841
-110,703
0
-117,544
Amortisation
0
-870
-6,005
0
-6,875
Disposals, deficit, surplus
0
0
106
0
106
Transfers, reclassification
0
0
2
0
2
Translation reserve
0
0
-203
0
-203
At 31 Dec 2021
0
-7,711
-116,803
0
-124,514
Carrying amount
At 1 Jan 2020
42,644
36,659
25,683
4,096
109,082
At 31 Dec 2020
42,644
35,788
24,452
4,487
107,371
At 1 Jan 2021
42,644
35,788
24,452
4,487
107,371
At 31 Dec 2021
42,644
34,918
22,806
3,933
104,301
Of total intangible assets in use as at 31 December 2021, 67% was fully amortised, (2020 year-end: 65%). The share of
fully amortised intangible assets is calculated in consideration of their cost.
2021 Annual Report – Financial Report of the Krka Group
218
Impairment test of goodwill and TAD Pharma trademark
An impairment test was applied to the TAD Pharma trademark and the associated goodwill which arose on the takeover
of the German company TAD Pharma by the controlling company Krka at the end of 2007. In addition, the Company made
an impairment test of its capital investment in the subsidiary TAD Pharma.
The recoverable amount is the higher of an asset's or a cash-generating unit's fair value less costs to sell, or its value in
use. The recoverable amount of goodwill that arose on the acquisition of the stake in TAD Pharma was determined based
on its value in use using the cash flow projection method based on five-year financial plans of the two cash generating
units to which goodwill was allocated. Both, the Company and TAD Pharma were considered cash-generating units.
A discount rate of 6.8% was applied in the projection for the TAD Pharma cash generating unit (7.6% in 2020) and 7.9%
for Krka (8.5% in 2020). For both cash-generating units, cash flows over 5 years are extrapolated by 2.0% average annual
growth, the same as in 2019. For both cash-generating units, cash flows over 5 years are extrapolated with an average
annual growth rate of 2.0% (also in 2020, cash flows over 5 years for both cash-generating units have been extrapolated
with an average annual growth rate of 2.0%). In the opinion of the management, a reasonable change in the discount rate
or growth rate would not result in impairment of goodwill.
In the opinion of the management, a reasonable change in the discount rate or growth rate would not result in impairment
of goodwill.
Considering the above assumptions, the total assessed value of the Company and TAD Pharma (taking into account the
value of the trademark and goodwill), exceeds the carrying amount and therefore no impairment of goodwill is required.
The controlling company found no indications of impairment of goodwill. The carrying amount of goodwill referring to
TAD Pharma of €42,277 thousand has not changed compared to the previous year. The Company also made an
impairment test of the TAD Pharma trademark and found that the carrying amount of the trademark stands at
€34,770 thousand as at 31 December 2021 (2020 year-end: €35,619 thousand).
14. Loans
€ thousand
31 Dec 2021
31 Dec 2020
Non-current loans
40,300
15,376
– Loans to others
40,300
15,376
Current loans
192,360
54,774
– Portion of non-current loans maturing next year
1,826
1,641
– Loans to others
190,585
53,128
– Current interest receivable
-51
5
Total loans
232,660
70,150
Non-current loans include a loans by a subsidiary in China for the construction of a production plant for an amount of
€27,798 thousand, as well as housing loans granted by the controlling company and certain subsidiaries to employees in
accordance with the internal rules.
Current loans to others include bank deposits in total of €190,264 thousand maturing in more than 90 days (2020 year-
end: €52,988 thousand).
2021 Annual Report – Financial Report of the Krka Group
219
15. Investments
€ thousand
31 Dec 2021
31 Dec 2020
Non-current investments
108,883
10,420
- Financial assets at fair value through OCI
15,861
10,420
– Financial assets at amortised cost
93,022
0
Current investments including derivatives
155,448
9,499
– Financial assets at amortised cost
113,987
0
– Derivatives
1,491
524
– Other current financial investments at fair value through profit or loss
39,970
8,975
Total investments
264,331
19,919
Financial assets at fair value through other comprehensive income (OCI) comprised €1,002 thousand of investments in
shares and interests in companies in Slovenia (2020 year-end: €801 thousand), and €14,859 thousand of investments in
shares of companies located abroad (2020 year-end: €9,619 thousand). Investments at amortised cost include
investments in Slovenian government bonds amounted to €4,455 thousand, while investments in foreign government
bonds amounted to €202,554 thousand. Other current investments at fair value through profit or loss include an investment
in a foreign highly liquid money market fund of €39,970 thousand. In 2020, there were no investments in government
bonds and money market funds.
Movement in financial assets
€ thousand
Financial assets at
fair value through
OCI
Financial assets at
amortised cost
Financial assets at
fair value through
profit or loss
At 1 Jan 2020
9,681
0
0
Adjustment to market value
739
0
0
At 31 Dec 2020
10,420
0
0
At 1 Jan 2021
10,420
0
0
Increase
0
205,946
40,000
Decrease
0
0
0
Exchange rate differences
0
1,063
0
Adjustment to market value
5,441
/
-30
At 31 Dec 2021
15,861
207,009
39,970
Adjustments of non-current investments at fair value through OCI were recognised in other comprehensive income in the
amount of €5,441 thousand (2020: €739 thousand). Exchange differences on investments at amortised cost of
€1,063 thousand are recognised in financial income. The mark-to-market adjustment of investments at fair value through
profit or loss in the amount of -€30 thousand is recognised in financial expenses.
2021 Annual Report – Financial Report of the Krka Group
220
16. Deferred tax assets and liabilities
Assets
Liabilities
€ thousand
2021
2020
2021
2020
Investments, property, plant and equipment and intangible assets
367
360
12,316
12,566
Financial investments at fair value through OCI
1,727
1,727
2,466
1,432
Inventories
24,378
30,481
-37
-66
Receivables
10,242
4,693
0
0
Dividends
19
14
0
0
Provisions for post-employment benefits and other non-current
employee benefits
13,398
13,642
0
0
Transfer of tax loss
575
805
0
0
Total
50,706
51,722
14,745
13,932
Offsetting
-3,823
-2,753
-3,823
-2,753
Net
46,883
48,969
10,922
11,179
€ thousand
At
1 Jan
2020
Recognised
in P&L
Translation
reserve
Recognised
in OCI
At
31 Dec
2020
Recognised
in P&L
Translation
reserve
Recognised
in OCI
At
31 Dec
2021
Investments, property, plant
and equipment and
intangible assets
-12,438
149
83
0
-12,206
296
-39
0
-11,949
Financial assets at fair
value through OCI
436
0
0
-141
295
0
0
-1,034
-739
Inventories
30,120
598
-171
0
30,547
-6,208
76
0
24,415
Receivables
5,626
-337
-596
0
4,693
5,290
259
0
10,242
Dividends
95
-81
0
0
14
5
0
0
19
Provisions for post-
employment benefits and
other non-current employee
benefits
12,382
258
-12
1,014
13,642
347
-3
-588
13,398
Transfer of tax loss
1,012
-207
0
0
805
-230
0
0
575
Total
37,233
380
-696
873
37,790
-500
293
-1,622
35,961
Unrecognised deferred tax on account of tax losses of subsidiaries amounted to €850 thousand at the end of 2021
(2020 year-end: €1,139 thousand).
17. Inventories
€ thousand
31 Dec 2021
31 Dec 2020
Materials
188,994
191,649
Work in progress
104,640
100,741
Finished products
152,597
150,263
Merchandise
7,299
9,614
Advances for inventories
2,177
1,423
Total inventories
455,707
453,690
The write-downs and write-offs of inventories to their net realisable value amounted to €20,738 thousand in 2021. In 2020,
they amounted to €23,019 thousand.
The Group does not pledge inventories as collateral.
2021 Annual Report – Financial Report of the Krka Group
221
18. Trade and other receivables
€ thousand
31 Dec 2021
31 Dec 2020
Current trade receivables
467,764
383,560
– Trade receivables
468,589
385,237
– Deferred revenue from contracts with customers
-825
-1,677
Other current receivables
29,564
27,768
Total trade and other receivables
497,328
411,328
The net amount of the receivable write-offs and impairment disclosed in operating expenses amounted to €1,048 thousand
in 2021 (2020: -€3.206 thousand).
Of the total amount, more than 98.6% of trade receivables was insured with the Coface PKZ, d. d. insurance company
(2020 year-end: 98.2%).
Current trade receivables
€ thousand
Gross
value
Receivable
allowances
Net value at
31 Dec 2021
Net value at
31 Dec 2020
Due from domestic customers
12,285
73
12,212
9,172
Due from foreign customers
493,853
37,476
456,377
376,065
Deferred revenue from contracts with foreign customers
-825
0
-825
-1,677
Total current trade receivables
505,313
37,549
467,764
383,560
Other receivables
Other receivables were mostly due by the State. Income tax credits amounted to €3,057 thousand
(2020: €1,220 thousand), while the remaining €17,368 thousand related to other receivables due by the State
(2020: €17,457 thousand).
Advances for services reached €2,442 thousand at the year-end (€2,620 thousand as at 31 December 2020).
19. Cash and cash equivalents
€ thousand
31 Dec 2021
31 Dec 2020
Cash in hand
30
17
Bank balances
159,808
313,551
Total cash and cash equivalents
159,838
313,568
The Krka Group concluded contracts with two banks to secure bank overdrafts in total of €5,415 thousand (in 2020,
contracts in total of €5,075 thousand were concluded with two banks). No negative balances were recorded on these bank
accounts as at 31 December 2021 as no overdraft facilities were used.
The Krka Group had an undrawn credit facility of €20,000 thousand as at 31 December 2021 (as at 31 Dec 2020
totalling €20,000 thousand).
2021 Annual Report – Financial Report of the Krka Group
222
20. Equity
Share capital
Krka reduced its share capital by withdrawal of 2,632,672 treasury shares, accounting for 7.431% of all shares issued, in
accordance with resolution adopted at the 19th Annual General Meeting on 3 July 2014. After the withdrawal of treasury
shares, the share capital of Krka in the amount of €54,732 thousand is represented by 32,793,448 ordinary no-par value
shares. There is solely one class of shares, whereas the first and only issue of shares was carried out in 1995. The share
capital is fully paid.
Treasury shares
At the 26
th
Annual General Meeting on 9 July 2020, the Management Board was granted authorisation for the purchase of
treasury shares. However, the total amount of treasury shares should not exceed the 10% of Company's share capital, i.e.
3,279,344 shares, whereby the total amount is inclusive of shares already held by Krka as at the date. The authorisation
is valid for a period of 36 months from the date of the decision adoption.
Based on this authorisation, Krka is allowed to acquire treasury shares on the regulated market at respective market prices.
The Company may also acquire treasury shares outside the regulated market. When purchasing treasury shares on the
regulated market or non-regulated market, the purchase price must not be lower than the book value based on the last
published audited financial statements of the Krka Group. Furthermore, the purchase price must not exceed 25-fold the
earnings per share held by the majority stakeholders as stated in the last published audited financial statements of the
Krka Group.
Pursuant to paragraphs 3 and 4, Article 381 of the Companies Act, an entity may reduce the share capital by withdrawal
of all treasury shares in a simplified procedure and recognise the amount against other profit reserves.
Repurchase of treasury shares in 2021
No. of shares
Weighted average
share price (€)
Value of treasury
shares (€ thousand)
At 31 Dec 2020
1,541,774
99,279
Repurchases in 2021
142,134
107.38
15,262
At 31 Dec 2021
1,683,908
114,541
The repurchase of treasury shares in 2021 refers to repurchases that were recorded in books of accounts in 2021. A
subscription fee is included in the weighted average price of shares.
The 2021 repurchase of treasury shares in terms of days is illustrated within Enclosure 1 to the Financial Statements of
the Krka Group and Krka, d. d., Novo mesto.
Reserves
The Krka Group's reserves comprise reserves for treasury shares, the share premium, legal and statutory reserves, fair
value reserve and translation reserves.
Reserves for treasury shares amounted to €114,541 thousand at the reporting date and increased by €15,262 thousand
based on their formation as a result of additional repurchase of treasury shares.
The share premium is to be used under the terms and purposes as defined by the applicable act. The share premium was
reported at €105,897 thousand as at 31 December 2021 and consisted of the general equity revaluation adjustment of
€90,659 thousand that was included in share premium during the transfer to IFRS; the share premium of €10,844 thousand
formed pursuant to a special regulation applicable in the ownership transformation of the controlling company; and
2021 Annual Report – Financial Report of the Krka Group
223
€4,394 thousand of share premium resulting from reduction in the share capital due to the withdrawal of treasury shares.
The amount may be used solely for the purpose of increasing share capital. In 2021, the value of share premium remained
unchanged.
Legal reserves may be formed up to 30% of the share capital. They amounted to €14,990 thousand as at
31 December 2021 and remained unchanged compared to the previous period.
Statutory reserves amounted to €30,000 thousand as at the reporting date and remained unchanged over the previous
period. Statutory reserves are formed by the Krka Group up to the amount of €30,000 thousand. Statutory reserves can
be used for loss coverage, formation of reserves for treasury shares, for decreasing share capital by share withdrawal,
and for regulating the dividend policy.
The fair value reserve includes the cumulative change in the fair value of financial assets and post-employment benefits.
Compared to the previous period, the fair value reserve increased by €12,982 thousand and amounted to
–€22,077 thousand as at 31 December 2021. The cumulative change is due to a €5,441 thousand increase in the fair
value of financial assets through OCI (equity instruments); a decrease for the impact of deferred taxes of €1,622 thousand
and an increase due to the restatement of post-employment benefits of €9,163 thousand.
Compared to the previous period, the value of the translation reserve increased by €13,238 thousand and amounted to
– €98,274 thousand as at 31 December 2021. The increase occurred as a result of exchange rate losses occurring during
the translation of individual items in financial statements of foreign operations into the reporting currency.
Retained earnings
Retained earnings grew based on the majority shareholder's profit of €309,214 thousand. On the other hand, they
decreased as a result of allocation of accumulated profit to dividend payment (€155,896 thousand) in accordance with the
resolution adopted by the 27
th
Annual General Meeting on 8 July 2021; an additional formation of reserves for treasury
shares in total of €15,262 thousand on account of the share repurchase by the controlling company in 2021; and a change
in provisions for termination benefits amounting to €2,404 thousand.
The amount of the dividend payout reported in the statement of cash flows, differs from the figure confirmed by the Annual
General Meeting and reported in the statement of changes in equity by €11 thousand of dividends paid in respect of
previous periods (2020: €9 thousand).
Dividends per share
In 2021, the declared gross dividend per share was €5.00 (2020: €4.25).
Non-controlling interests
Non-controlling interests
Equity
attributable to the
non-controlling interest
Net profit for the year
attributable to the
non-controlling interest
€ thousand
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
Interest held by minority
shareholders in Ningbo Krka Menovo
Pharmaceutical Co. Ltd.*
40.0%
40.0%
13,880
8,479
-1,064
-2,046
Total
13,880
8,479
-1,064
-2,046
*
Krka has a 60-percent holding in Ningbo Krka Menovo Pharmaceutical Co. Ltd., with Ningbo Menovo Pharmaceutical Co., Ltd. having a 40-percent
holding.
2021 Annual Report – Financial Report of the Krka Group
224
21. Earnings per share
Basic earnings per share amounted to €9.92 in 2021 and increased by 7% over the previous year, when it amounted to
€9.27. The calculation of earnings per share took into account the profit for the period attributable to the controlling interests
in the amount of €309,214 thousand (2020: €290,995 thousand). The weighted average number of shares was accounted
for in the calculation for both years, i.e. 31,185,323 shares for 2021, and 31,400,501 shares for 2020. Treasury shares
were eliminated from the calculation.
All shares issued by the controlling company are ordinary shares, hence the diluted earnings per share ratio equals the
basic earnings per share.
22. Provisions
€ thousand
At
31 Dec 2020
Formation
Utilisation
Reversal
Translation
reserve
At
31 Dec 2021
Provisions for lawsuits
2,164
563
-12
-2,138
0
577
Provisions for post-employment
benefits
109,698
854
-4,699
-1,421
-3
104,429
Provisions for other non-current
employee benefits
20,512
1,243
-1,584
-315
-2
19,854
Other provisions
2,312
629
-406
-1,242
0
1,293
Total provisions
134,686
3,289
-6,701
-5,116
-5
126,153
The amounts of provisions for lawsuits referring to intellectual property are defined on the basis of the noted amount of the
indemnification claim, or on the basis of anticipated amount, if the indemnification claim is not yet disclosed. External
advisers for disputes referring to intellectual property are engaged for defining the anticipated amounts. Furthermore,
the management each year verifies the calculated amount of provisions for each individual claim that is not yet closed.
In total, 17 lawsuits referring to intellectual property were filed against Krka and its subsidiaries, 11 of which were in
Portugal. In 2021, 8 disputes were closed. The Krka Group has no provisions allocated for intellectual property disputes.
In other areas of law (civil, labour, administrative, etc.), Krka and its subsidiaries were involved as defendants in 14 disputes
in 2021, with the total value of claims against Krka estimated at €1,073 thousand. For these disputes, the Krka Group has
provisions €577 thousand.
Provisions for obligations to employees arising from post-employment and other non-current benefits are based on
actuarial calculation using the following assumptions:
The discount rate that depends on the average duration of a liability per company. The controlling company opted
for the discounted interest rate of 1.27% annually, equal to the return on 15-year corporate bonds with high credit
rating in the Eurozone at the end of October 2021 (2020: 0.72%). Discount rates applied to subsidiaries
ranged from 0.78% to 3.60% (2020: from 0.33% to 3.60%);
Currently applicable amounts of retirement benefits and anniversary bonuses as defined by internal rules;
Staff turnover depending primarily upon the employees' age;
Mortality rates calculated on the basis of most recent mortality tables available;
The 2.00% increase in salaries, the same as in 2020.
2021 Annual Report – Financial Report of the Krka Group
225
Post-employment benefits
€ thousand
2021
2020
At 1 Jan
109,698
96,994
Employee benefit costs (CSC)
6,602
4,949
Interest expense (IC)
796
1,251
Post-employment benefits paid
-4,526
-3,177
Reversal
-1,382
-2,060
Merger by acquisition
0
470
Actuarial surplus/deficit, of that:
-6,759
11,271
– Change in financial assumptions
-7,973
8,253
– Experience
1,214
3,018
At 31 Dec
104,429
109,698
Sensitivity analysis
Discount rate
Salary increase
Change in
Percentage point
Percentage point
Change by
0.5
-0.5
0.5
-0.5
Impact on liabilities (€ thousand)
-6,643
7,397
7,302
-6,628
23. Deferred revenue
€ thousand
At
31 Dec 2020
New deferred
revenue
received
Deferred
revenue
reversal
At
31 Dec 2021
Grants received from the European Regional Development Fund
and budget of the Republic of Slovenia intended for the production
of pharmaceuticals in the new Notol 2 Plant
1,317
0
-259
1,058
Grants received from the budget for the Dolenjske and Šmarješke
Toplice health resorts and Golf Grad Otočec
3,408
0
-88
3,320
Grants received from the European Regional Development Fund
(Farma GRS)
2,960
0
-584
2,376
Subsidy for acquisition of electric drive vehicles
4
0
-1
3
Property, plant and equipment received free of charge
16
8
-12
12
Emission coupons
0
10
0
10
Subsidy for the purchase of joinery
95
0
-2
93
Subsidy for acquisition of other equipment
4
19
-20
3
Other deferred revenue
0
263
-263
0
Total deferred revenue
7,804
300
-1,229
6,875
Production of pharmaceuticals in the new Notol 2 Plant and Farma GRS projects are partly funded by the European Union
from the European Regional Development Fund. The Notol project is carried out within the framework of the Operational
programme for strengthening regional development potentials for the period 2007 2013; Priority axis 1: Competitiveness
and Research Excellence: main type of activity 1.1.: Improvement of competitiveness and research excellence. The Farma
GRS project was eligible for co-financing of costs under R&D projects, including project management and investment in
research and development and production activities.
The amounts of deferred revenue are decreased by the proportionate share of depreciation of assets to which the grants
refer and by any other types of expenses incurred.
2021 Annual Report – Financial Report of the Krka Group
226
24. Trade payables
€ thousand
31 Dec 2021
31 Dec 2020
Non-current trade payables
10,000
10,006
Current trade payables
130,011
107,116
Payables to domestic suppliers
46,767
38,317
Payables to foreign suppliers
83,244
68,799
Total trade payables
140,011
117,122
In 2014, the Commission of the European Union ruled that Krka infringed the provision of Article 101 of the Treaty on the
Functioning of the European Union, which resulted in a distortion of competition on the perindopril market of the European
Union. Thus, it imposed on Krka a fine of €10,000 thousand. Krka paid the penalty imposed within the deadline set by the
Commission and filed a lawsuit against the Commission's decision before the General Court of the European Union because
it considered that its conduct did not violate the competition law rules. In December 2018, the Court ruled in favour of Krka.
79
The decision of the General Court is not final, as the Commission lodged an appeal against the decision of the General Court,
which will be decided by the European Court of Justice. Although the Commission did indeed pay back a fine of
€10,000 thousand in early 2020, based on the assessment of legal experts Krka deferred the revenue and recognised non-
current trade payables in that same amount until the final decision of the Court is issued.
25. Current contract liabilities
€ thousand
31 Dec 2021
31 Dec 2020
Refund liabilities
116,965
102,070
– Bonuses and volume rebates
114,795
99,097
– Rights of return
2,170
2,973
Contract liabilities
7,765
4,229
– Contract liabilities – deferred revenues
1,101
0
– Contract liabilities – advances from other customers
6,664
4,229
Total current contract liabilities
124,730
106,299
Accrued bonuses and volume discounts include discounts to which the customers are entitled when the relevant terms
and conditions are fulfilled; these discounts are not granted to customers in the year of the sale.
26. Other current liabilities
€ thousand
31 Dec 2021
31 Dec 2020
Payables to employees – gross salaries, other receipts and charges
67,978
61,643
Liabilities under repurchase transactions (repo-type operations)
102,234
0
Other
20,515
17,416
Total other current liabilities
190,727
79,059
The liabilities under repurchase transactions relate to the repurchase of bonds in June 2022, maturing in July 2022.
The repurchase of bonds has legally taken place, but in terms of economics it is a financing activity. The bonds serve as
collateral for a deposit made by the controlling company to the bank. The balance of assets held for repurchase as at
31 December 2021 amounts to €102,228 thousand and is recognised within investments at amortised cost. Liabilities
under repurchase transactions were recognised in the amount €102,234 thousand.
The item ‘Other’ also includes current liabilities to the State on account of VAT payable in the amount of €13,261 thousand
(2020: €7,324 thousand) and other current liabilities to the State totalling €4,133 thousand (2020: €7,114 thousand).
79
GRI GS 206-1
2021 Annual Report – Financial Report of the Krka Group
227
27. Contingent liabilities and commitments
€ thousand
31 Dec 2021
31 Dec 2020
Guarantees issued
16,019
16,111
Other
976
0
Total contingent liabilities
16,995
16,111
Major items of guarantees issued included (i) a contract bond in total of €6,000 thousand for supply of products by
Krka Faramaceutici that was selected as the bidder in tenders in Italy, and (ii) a counter guarantee for due payment of
potential liabilities from customs guarantee issued in the amount of €4,500 thousand in Belarus.
Based on the contracts that had been signed in connection with the on-going investments, at the end of 2021 Krka recorded
€45,539 thousand of commitments for acquisition of property, plant and equipment (2020 year-end: €29,338 thousand).
28. Leases
The Krka Group concludes lease agreements for various assets such as parking spaces and offices, warehouses, land,
apartments, cars and equipment.
The lease terms are assessed according to the type of a lease:
Offices, parking spaces and warehouses: up to 10 years;
Land: 30 years;
Apartments: up to 3 years maximum;
Cars: up to 5 years maximum;
Equipment: up to 10 years.
The Krka Group does not sub-lease the leased assets.
The Krka Group concluded lease contracts for various production and non-production equipment, temporary offices and
parking spaces, with lease term of shorter than one year. In respect of those leases, the Group applied a practical expedient
provided by the Standard.
The carrying amounts of lease liabilities included under interest-bearing loans and borrowings and the
movements during the period
€ thousand
Carrying amounts of lease liabilities under
interest-bearing loans and borrowings
and movements during the period
At 1 Jan 2020
13,000
Increase/Decrease
1,654
Accretion of interest
289
Lease payments
-3,086
Translation reserve
-24
At 31 Dec 2020
11,833
– Current lease liabilities
2,712
– Non-current lease liabilities
9,121
At 1 Jan 2021
11,833
Increase/Decrease
3,473
Accretion of interest
296
Lease payments
-3,515
Translation reserve
70
At 31 Dec 2021
12,157
– Current lease liabilities
3,433
– Non-current lease liabilities
8,724
The maturity analysis of lease liabilities is disclosed in Note 30 Financial instruments and financial risks.
2021 Annual Report – Financial Report of the Krka Group
228
Amounts recognised in profit or loss
€ thousand
2021
2020
Depreciation of right-of-use assets
3,273
2,930
Interest expenses on lease liabilities
296
289
Expenses relating to current leases
1,357
1,204
Expenses relating to leases of low-value assets
0
3
Total amount recognised in profit or loss
4,926
4,426
29. Financial liabilities
Movement in financial liabilities in 2021
€ thousand
At 31 Dec 2020
Monetary
changes
Non-monetary
changes
Other
At 31 Dec 2021
Dividends
1,335
-155,907
155,894
0
1,322
Treasury shares
0
-15,262
15,262
0
0
Leases
11,833
-3,515
3,543
296
12,157
Liabilities under repurchase transactions
(repo-type operations)
0
102,292
0
-58
102,234
Total
13,168
-72,392
174,699
238
115,713
Liabilities under repurchase transactions (repo-type operations) are presented in Note 26 Other current liabilities.
Movement in financial liabilities in 2020
€ thousand
At 31 Dec 2019
Monetary
changes
Non-monetary
changes
Other
At 31 Dec 2020
Dividends
1,344
-133,283
133,274
0
1,335
Treasury shares
0
-25,505
25,505
0
0
Leases
13,000
-3,086
1,630
289
11,833
Total
14,344
-161,874
160,409
289
13,168
30. Financial instruments and financial risks
Detailed information about financial risk management is described in the Business Section of the Annual Report, section
‘Risk Management’.
Credit risk
The key credit risk of the Krka Group arises from trade receivables. This is the risk of customers failing to settle their
liabilities by maturity dates.
The Krka Group introduced a centralised credit control process in 2004. The system includes all customers with credit
limits exceeding €20,000. Numbering over 570 at the end of 2021, they accounted for more than 95% of total trade
receivables. Receivables due from small customers accounted for less than 5% of total trade receivables. Control over
small customers is decentralised in the sales network and under the constant supervision of the controlling company.
2021 Annual Report – Financial Report of the Krka Group
229
Credit control is a two-step process. The first step involves assessing the credit risk for each customer, determining
hedging instruments, and assigning relevant credit limits. We assess each new customer and review the credit ratings of
all customers twice a year. Each credit rating includes many different financial and non-financial indicators, which fall into
four categories; each has a different weight in the final assessment.
Each customer is assigned a customised credit limit according to the credit rating and the expected shipment and payment
dynamics.
The second step in the credit-control process involves regular dynamic monitoring of a customer's payment discipline. The
information systems of all Krka Group companies engaged in sales monitor available limits and overdue receivables.
Control is exercised for each shipment of Krka products to customers. A shipment is automatically blocked if a customer
is in arrears or if receivables together with the new shipment exceed the approved credit limit. Sales personnel are required
to initiate a payment collection procedure or arrange hedging for the outstanding settlements.
Krka’s internal rules determine the process of credit control and authorisations for granting credit limits to customers. Credit
control also avails of a system of regular reporting on trade receivables and the customer's payment discipline. The
reporting system aids the early detection of customers at increased risk of defaulting on payments and facilitates effective
credit risk management.
The credit control process employs uniform rules which apply to all customers. Due to specifics of individual sales markets,
additional national controls have been introduced in individual subsidiaries. Credit control processes are regularly adjusted
to changes in the sales markets.
Credit control guarantees permanent control over the quality of the trade receivables portfolio. The result of the credit
control process is a low percentage of receivable write-offs and impairments in total Krka Group sales.
The amount of receivable write-offs and impairments is also low because receivables are dispersed across many
customers and sales markets, and the majority of outstanding receivables are due from customers with whom Krka has
been doing business for several years.
Despite the risks arising from the COVID-19 pandemic, receivables were well managed in 2021. At the end of 2021, the
value of trade receivables increased by 22% compared to the beginning of the year. However, the amount of overdue and
outstanding receivables remained within limits acceptable for Krka.
The amount of the newly established valuation allowance for receivables exceeded the amount of the reversed allowance.
The impact of net impairments and write-offs on the Krka Group's bottom line in 2021 was less than 0.07% of sales.
Credit risk exposure
The carrying amount of financial assets represents the largest exposure to credit risk as illustrated below.
€ thousand
Notes
31 Dec 2021
31 Dec 2020
Loans
14
232,660
70,150
Investments
15
264,331
19,919
Trade receivables
18
467,764
383,560
Cash and cash equivalents
19
159,838
313,568
Total
1,124,593
787,197
As for the financial assets exposed to credit risk, the loans and trade receivables are presented separately.
2021 Annual Report – Financial Report of the Krka Group
230
Loans by geographical region
€ thousand
31 Dec 2021
31 Dec 2020
Slovenia
101,727
65,933
South-East Europe
114
69
East Europe
159
153
Central Europe
262
256
West Europe
102,302
0
Overseas Markets
28,096
3,739
Total
232,660
70,150
Trade receivables by geographical region
€ thousand
31 Dec 2021
31 Dec 2020
Slovenia
12,214
9,173
South-East Europe
80,178
76,417
East Europe
240,641
167,955
Central Europe
58,109
62,337
West Europe
71,966
64,229
Overseas Markets
4,656
3,449
Total
467,764
383,560
Maturity analysis of loans as at reporting date
€ thousand
Gross at
31 Dec 2021
Allowance at
31 Dec 2021
Gross at
31 Dec 2020
Allowance at
31 Dec 2020
Not past due
232,650
0
70,141
0
Past due up to 20 days
0
0
0
0
Past due from 21 to 50 days
1
0
1
0
Past due from 51 to 180 days
2
0
3
0
Past due more than 180 days
7
0
5
0
Total
232,660
0
70,150
0
Maturity structure of trade receivables as at the reporting date
€ thousand
Gross at
31 Dec 2021
Allowance at
31 Dec 2021
Gross at
31 Dec 2020
Allowance at
31 Dec 2020
Not past due
457,944
487
375,563
569
Past due up to 20 days
7,011
39
4,352
34
Past due from 21 to 50 days
2,341
80
2,310
76
Past due from 51 to 180 days
95
46
823
53
Past due more than 180 days
37,922
36,897
37,798
36,554
Total
505,313
37,549
420,846
37,286
The Krka Group agrees extended terms with certain customers. If Krka did not extend payment terms to some of its
customers, receivable maturity structure would be as follows at the reporting date: not past due €400,150 thousand (2020:
€345,442 thousand); past due up to 20 days €43,046 thousand (2020: €25,915 thousand); past due between 21 and
50 days €22,462 thousand (2020: €8,030 thousand); past due between 51 and 180 days €104 thousand (2020:
€2,762 thousand); and past due more than 180 days €1,610 thousand (2020: €1,243 thousand).
Movement of allowance for loans
€ thousand
2021
2020
At 1 Jan
0
11
Impairment reversal
0
-11
At 31 Dec
0
0
2021 Annual Report – Financial Report of the Krka Group
231
Movement of receivable allowance
€ thousand
2021
2020
At 1 Jan
37,286
25,506
Formation of allowance
1,550
16,065
Write-off of receivables
-957
-269
Impairment reversal
-334
-3,513
Collected written-off receivables
-16
-3
Effect of exchange rate differences
20
-500
At 31 Dec
37,549
37,286
Liquidity risk
Business partners value Krka for its excellent financial discipline and stable cash flows. In 2021, we settled all financial
liabilities regularly. Krka Group exposure to liquidity risk was low.
We did not use any new short-term funding from banks or draw funds from existing credit lines in 2021.
At the end of 2021, the Krka Group recorded excess liquidity, primarily as cash at bank or deposits with first-class
commercial banks. The 2021 increase in excess liquidity resulted from surplus cash flow from operating activities over
negative cash flows from investing and financing activities.
In the European Economic and Monetary Union (EMU) money markets, negative interest rates still apply to low-risk cash
investments. In accordance with internal rules on diversification of investments and taking account of banks’ credit risks,
we deposited a part of the cash surplus with banks during the year. In this way, we reduced the cost of negative interest
rates and invested another part in short-term bonds of selected European countries.
The controlling company manages liquidity risk centrally for the entire Group. The controlling company finances
subsidiaries through intra-group loans. Any potential cash surpluses are deposited with the controlling company. Excess
cash from all Group companies is transferred to the controlling company's master account either automatically daily (cash
pooling) or manually through individual bank transfers. This allows for cash management optimisation, currency risk
mitigation, an overview of liquidity of all Group companies, and enhanced security of cash transactions.
The Krka Group also reported favourable and stable liquidity ratios at the end of 2021. The continuing COVID-19 pandemic
did not increase the Group’s liquidity risk in 2021.
2021 Annual Report – Financial Report of the Krka Group
232
Maturity of financial liabilities
Financial liabilities in terms of maturity are outlined in the tables below.
Maturity of financial liabilities as at 31 Dec 2021
Carrying
amount
Contractual cash flows
€ thousand
Total
Up to 6
months
6 to 12
months
1 to 2
years
2 to 5
years
5 to 10
years
Financial liabilities
Lease liabilities
12,157
12,157
1,777
1,657
2,851
4,445
1,427
Trade payables excluding advances
130,011
130,011
130,011
0
0
0
0
Contract liabilities excluding advances
114,795
114,795
114,795
0
0
0
0
Liabilities under repurchase transactions
(repo-type operations)
102,234
102,234
102,234
0
0
0
0
Other liabilities excluding amounts owed to
the State, to employees and advances
4,241
4,241
4,241
0
0
0
0
Total financial liabilities
363,438
363,438
353,058
1,657
2,851
4,445
1,427
Total derivative financial liabilities
0
0
0
0
0
0
0
Total
363,438
363,438
353,058
1,657
2,851
4,445
1,427
Maturity of financial liabilities as at 31 Dec 2020
Carrying
amount
Contractual cash flows
€ thousand
Total
Up to 6
months
6 to 12
months
1 to 2
years
2 to 5
years
5 to 10
years
Financial liabilities
Lease liabilities
11,833
11,833
1,379
1,333
4,375
3,367
1,379
Trade payables excluding advances
107,116
107,116
107,116
0
0
0
0
Contract liabilities excluding advances
99,097
99,097
99,097
0
0
0
0
Other liabilities excluding amounts owed to
the State, to employees and advances
15,174
15,174
15,174
0
0
0
0
Total financial liabilities
233,220
233,220
222,766
1,333
4,375
3,367
1,379
Total derivative financial liabilities
0
0
0
0
0
0
0
Total
233,220
233,220
222,766
1,333
4,375
3,367
1,379
Foreign exchange risk
The Krka Group operates in diverse international environments and is exposed to foreign exchange risk in certain sales
and purchase markets.
Currency exposure arises from the difference in the value of assets and liabilities in a particular currency in the financial
position statement of the Group and from differences between operating income and expenses generated in individual
currencies.
The key accounting categories composing a currency position are trade receivables, trade payables, liquid financial assets
in foreign currencies, derivatives for currency risk hedging, and subsidiary funding by the controlling company.
At the end of 2021, the Russian rouble accounted for the largest, 29%, share of the Krka Group currency position, taking
into account the size of the position in roubles was partially hedged with derivatives. The position in the rouble arises from
trade receivables in the Russian market and partly from the controlling company’s funding in the Russian Federation.
The importance of the Russian sales market, level of currency exposure, and volatility of the Russian rouble are why we
pay special attention to Russian rouble risk management.
2021 Annual Report – Financial Report of the Krka Group
233
Unlike with other currencies, a surplus of liabilities over assets has accrued in regular business operations from exposure
to the US dollar, or in other words, the currency position is short. Exposure to the US dollar arises primarily from purchasing
raw and other materials. Considering liquid financial assets in US dollars, which offset the short currency position from
operations, the exposure in US dollars accounts for approximately 6% of the Krka Group total currency exposure.
The exposure to the Romanian leu, accounting for 18% of the currency position at the end of 2021, arises from trade
receivables accrued due to extended payment terms in Romania. Exposure to the Polish zloty is the result of trade
receivables and manufacturing facilities held by the Group in Poland and represents 15% of the currency position.
Other currencies, among them the Croatian kuna, Swedish krona, North Macedonian denar, Kazakh tenge, Serbian dinar,
British pound, Czech koruna, Ukrainian hryvnia, and Hungarian forint, account for 32% of the Krka Group currency position.
Krka's key sales and purchase markets experienced imbalanced dynamics in terms of economic recovery and uncertainty
with regard to rising inflation in individual countries while at the same time facing a constant risk of economies shutting
down again. Uncertainty in currency markets led to high volatility of individual exchange rates.
The 2021 fluctuation in the Russian rouble was favourable for us. The value of the rouble expressed in euros increased
by 7.2% during the year. The average 2021 value of the Russian rouble was 5.1% lower compared to 2020.
The Brent oil price expressed in US dollars jumped by 50% in 2021. The value of the rouble expressed in the euro did not
follow the dynamics of oil price increase. After 2020, which was heavily affected by the pandemic, the Russian economy
recorded high economic growth and rising inflation in 2021. Consequently, the Central Bank of the Russian Federation
increased its key interest rate by 4.25 percentage points. Owing to high interest rate growth accompanied by a significant
rise in oil prices, the rouble strengthened against the euro and the US dollar. Interest rate increase in the Russian
Federation led to a gradual rise in the cost of hedging Krka’s position in roubles in 2021.
The Polish zloty was more stable in 2021. Its value dropped by 0.8% from the beginning to the end of the year, while the
average value was 2.7% lower than in 2020. In the last quarter of 2021, the Polish central bank started to increase its key
interest rate due to the rising inflation. The central bank is not in favour of strengthening the domestic currency, which
impacted the market value of zloty.
Over the course of 2021, the value of the Romanian leu expressed in the euro declined by 1.7%, which was in line with
the gradual depreciation of the currency against the euro in recent years.
The Croatian kuna, participating in the ERM II mechanism since 2020, remained stable against the euro. In 2021, the
British pound went up 7% against the euro. Although the movement of both currencies in 2021 positively impacted the
Krka Group's net financial result, the contribution was small.
The value of the US dollar expressed in the euro went up by 8.3% over the course of 2021, while the average value of the
dollar expressed in the euro was 3.4% below the 2020 level. The US dollar strengthened more significantly in the second
half of 2021, when it became clear that the inflation in the US and worldwide would rise over the longer term. In the second
half of the year, the US Federal Reserve announced that it would gradually withdraw monetary stimulus measures and
increase the key interest rate for the first time in 2022. Meanwhile, the European Central Bank decided to delay and slow
down the tightening of its monetary policy, which further contributed to strengthening of the US dollar against the euro
in 2021.
In 2021, the Ukrainian hryvnia strengthened again after plummeting in 2020. However, its value against the euro weakened
due to the geopolitical risk at the end of the year. The macroeconomic situation in the country remains uncertain, which
will continue to be reflected in currency movements.
The Krka Group generally mitigates currency risks by natural hedging, primarily by increasing purchases and liabilities in
currencies in which sales invoices are issued. When this is not possible, we use derivatives or do not hedge the risk.
Generally, only forward contracts are used for hedging.
2021 Annual Report – Financial Report of the Krka Group
234
In 2021, Krka continued its policy of partial hedging against rouble-related risk. Less than 50% of the risk exposure to the
Russian rouble was hedged using forward contracts. Due to the strengthening of the rouble value in euros, we generated
net foreign exchange gains partially offset by net expenses from forward contracts used for hedging the rouble.
The increasing operational risk exposure and an interest rate difference between the euro and the US dollar that is
favourable for Krka are two key reasons that contributed to partial hedging of the exposure in the US dollar with financial
instruments also in 2021. Due to the short currency position, the dollar strengthening had a negative financial impact on
the Krka Group result. In 2021 however, this was largely offset by income from the US dollar hedging instruments.
We generated net foreign exchange losses from other currencies in 2021. Exposure to other currencies was not hedged.
The Krka Group's currency exposure to the Ukrainian hryvnia, Kazakh tenge, Serbian dinar, and certain other currencies
is less significant, and no hedging instruments are available.
The currency risk balance in 2021 was positive, totalling €7,654 thousand. Net financial result of the Krka Group, which
also included currency risk result, interest income and expenses, and other financial income and expenses, totalled
€7,629 thousand.
Exposure to the risk of foreign exchange rate fluctuations
31 Dec 2021
€ thousand
EUR*
RUB
PLN
HRK
RON
Loans
204,071
69
211
0
31
Trade receivables
118,062
198,121
44,803
17,924
44,213
Cash and cash equivalents
87,416
6,497
3,104
1,733
1,075
Non-current trade payables
-10,000
0
0
0
0
Current trade payables
-101,305
-8,566
-2,058
-496
-283
Financial position exposure (net)
298,244
196,121
46,060
19,161
45,037
* EUR is the functional currency and does not represent exposure to foreign currency risk.
31 Dec 2020
€ thousand
EUR*
RUB
PLN
HRK
RON
Loans
65,999
3,003
1,051
0
38
Trade receivables
91,709
142,197
46,729
18,815
42,154
Cash and cash equivalents
284,753
9,191
3,383
488
1,376
Non-current trade payables
-10,000
0
0
0
0
Current trade payables
-85,994
-8,208
-1,725
-475
-262
Financial position exposure (net)
346,467
146,183
49,437
18,827
43,307
* EUR is the functional currency and does not represent exposure to foreign currency risk.
Significant foreign exchange rates
Average exchange rate*
Final exchange rate*
2021
2020
2021
2020
RUB
87.15
82.72
85.30
91.47
PLN
4.57
4.44
4.60
4.56
HRK
7.53
7.54
7.52
7.55
RON
4.92
4.84
4.95
4.87
* Number of national currency units for one euro
The above-stated exchange rates were used for the calculation of items in the financial statements as at 31 Dec and equal
the reference exchange rates of the ECB effective on the last day of the year.
2021 Annual Report – Financial Report of the Krka Group
235
Sensitivity analysis
A 1% increase/decrease of the euro exchange rate in respect of currencies stated as at 31 December 2021 or 31 December
2020 would increase or decrease the profit by the amounts stated below. The analysis, prepared in the same manner for
both years, assumes that all other remaining variables, in particular interest rates, remain unchanged. The calculation of
the above-stated exchange rate volatility impact took into account the balance of receivables, liabilities, loans and
borrowings denominated in the local currencies.
Effect on the profit or loss before tax
2021
2020
Currency fluctuation
+1%
-1%
+1%
-1%
RUB
1,961
-1,961
1,462
-1,462
PLN
461
-461
494
-494
HRK
192
-192
188
-188
RON
450
-450
433
-433
Any additional 1% increase/decrease of the euro exchange rate in respect of currencies stated above, would increase or
decrease the profit or loss before tax in the above-stated amounts.
Interest rate risk
Interest rate risk is the risk of losses that result from a change in interest rates and is related to Krka’s non-current
borrowings and investments.
The interest rate risk with current borrowings and current investments is managed as part of the Group's liquidity risk.
The Krka Group had no non-current borrowings in 2021.
Exposure to interest rate risk
€ thousand
31 Dec 2021
31 Dec 2020
Financial instruments at a fixed rate of interest
232,701
70,135
Financial assets
232,701
70,135
Financial liabilities
0
0
Financial instruments at a variable rate of interest
10
10
Financial assets
10
10
Financial liabilities
0
0
Analysis of the cash flow’s sensitivity by applying the variable interest rate
Decrease/increase of the interest rate by 100 basis points would increase/decrease the profit or loss for 2021 by
€0.1 thousand. Decrease/increase of the interest rate by 100 basis points would increase/decrease the profit or loss for
2020 by €0.1 thousand. The analysis, prepared in the same manner for both years, assumes that all other remaining
variables, in particular the foreign exchange rate, remain unchanged.
Capital management
Krka reduced its share capital by withdrawal of 2,632,672 treasury shares, accounting for 7.431% of all shares issued, in
accordance with the resolution adopted at the 19
th
Annual General Meeting on 3 July 2014. After the withdrawal of treasury
shares, the share capital of Krka in the amount of €54,732 thousand is represented by 32,793,448 ordinary no-par value
shares. Krka has one class of shares only, and the first and only issue of shares was carried out in 1995. The share capital
was fully paid.
2021 Annual Report – Financial Report of the Krka Group
236
The Group's capital management is aimed at ensuring high credit rating and relevant financing indicators in order to ensure
the proper development of its operations and to generate a maximum value for its shareholders.
The Krka Group follows the changes in the economic environment by managing and adjusting its equity structure.
Dividends are paid out on annual basis in line with the strategic policy of dividend increase. The Krka Group has no specific
goals as regards the ownership share held by employees or share option plans.
There were no changes in Company’s approach to capital management in 2021 or 2020.
The Krka Group monitors capital using a gearing ratio, which is net debt divided by total net debt plus total equity. Within
net debt, Krka includes interest bearing borrowings and trade payables less cash and cash equivalents.
Gearing (debt/equity) ratio
€ thousand
31 Dec 2021
31 Dec 2020
Trade payables and other current liabilities
455,468
302,480
Cash and cash equivalents
159,838
313,568
Net indebtedness
295,630
-11,088
Equity
1,919,085
1,751,812
Equity and net indebtedness
2,214,715
1,740,724
Gearing (debt/equity) ratio
13.3%
-0.6%
Fair value
31 Dec 2021
31 Dec 2020
€ thousand
Carrying amount
Fair value
Carrying amount
Fair value
Non-current financial assets
Loans
40,300
40,300
15,376
15,376
Financial assets at fair value through OCI
15,861
15,861
10,420
10,420
Financial assets at amortised cost
93,022
92,570
0
0
Current financial assets
Loans
192,360
192,360
54,774
54,774
Financial assets through profit or loss
39,970
39,970
8,975
8,975
Financial assets at amortised cost
113,987
113,912
0
0
Derivatives
1,491
1,491
524
524
Trade receivables
467,764
467,764
383,560
383,560
Cash and cash equivalents
159,838
159,838
313,568
313,568
Non-current financial liabilities
Trade payables
-10,000
-10,000
-10,006
-10,006
Lease liabilities
-8,724
-8,724
-9,121
-9,121
Current financial liabilities
Lease liabilities
-3,433
-3,433
-2,712
-2,712
Trade payables excluding advances
-130,011
-130,011
-107,116
-107,116
Contract liabilities excluding advances
-114,795
-114,795
-99,097
-99,097
Liabilities under repurchase transactions (repo-type
operations)
-102,234
-102,234
0
0
Other current liabilities excluding amounts owed to
the State, to employees and advances
-4,241
-4,241
-15,174
-15,174
Total
751,155
750,628
543,971
543,971
2021 Annual Report – Financial Report of the Krka Group
237
In terms of fair value, assets and liabilities are classified into three levels:
Level 1 – assets at market price;
Level 2 – assets not classified within level 1 and the value of which is determined directly or indirectly based on
observable market data;
Level 3 – assets the value of which cannot be determined using observable market data.
Assets at fair value
31 Dec 2021
31 Dec 2020
€ thousand
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets at fair value
Financial assets at fair value through
OCI
14,474
0
1,387
15,861
9,033
0
1,387
10,420
Financial assets through profit or loss
39,970
0
0
39,970
8,975
0
0
8,975
Derivatives
0
0
1,491
1,491
0
0
524
524
Total assets at fair value
54,444
0
2,878
57,322
18,008
0
1,911
19,919
Assets for which fair value is
disclosed
Loans
0
0
232,660
232,660
0
0
70,150
70,150
Trade receivables
0
0
467,764
467,764
0
0
383,560
383,560
Financial assets at amortised cost
206,482
0
0
206,482
0
0
0
0
Cash and cash equivalents
0
0
159,838
159,838
0
0
313,568
313,568
Total assets for which fair value is
disclosed
206,482
0
860,262
1,066,744
0
0
767,278
767,278
Total
260,926
0
863,140
1,124,066
18,008
0
769,189
787,197
Liabilities at fair value
31 Dec 2021
31 Dec 2020
€ thousand
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Liabilities for which fair value is
disclosed
Trade payables
0
0
10,000
10,000
0
0
10,006
10,006
Borrowings
0
0
0
0
0
0
0
0
Lease liabilities
0
0
12,157
12,157
0
0
11,833
11,833
Trade payables excluding advances
0
0
130,011
130,011
0
0
107,116
107,116
Contract liabilities excluding
advances
0
0
114,795
114,795
0
0
99,097
99,097
Liabilities under repurchase
transactions (repo-type operations)
0
0
102,234
102,234
0
0
0
0
Other current liabilities excluding
amounts owed to the State, to
employees and advances
0
0
4,241
4,241
0
0
15,174
15,174
Total liabilities for which fair value
is disclosed
0
0
373,438
373,438
0
0
243,226
243,226
Total
0
0
373,438
373,438
0
0
243,226
243,226
The fair value of securities held for trading is computed on the basis of the stock exchange quotation of the respective
securities as at reporting date, and is not decreased by any costs that may arise upon the sale or purchase of securities.
2021 Annual Report – Financial Report of the Krka Group
238
31. Related party transactions
Data on groups of persons
By the end of the year, members of the Management Board of the controlling company held 37,040 Krka shares i.e.
0.1129% of total equity or 0.1191% of voting rights. Members of the Supervisory Board of the controlling company held
3,347 shares, i.e. 0.0102% of total equity or 0.0108% of voting rights. Directors of subsidiaries held 3114 shares, i.e.:
0.0095% of the total equity or 0.0100% of voting rights.
Equity stakes held by Management and the Supervisory Board members of the controlling company and their
shares of voting rights
31 Dec 2021
31 Dec 2020
No. of
shares
Equity
share
(%)
Share of
voting
rights
(%)
No. of
shares
Equity
share
(%)
Share of
voting
rights
(%)
Members of the Management Board
Jože Colarič
22,500
0.0686
0.0723
22,500
0.0686
0.0720
Aleš Rotar
13,915
0.0424
0.0447
13,915
0.0424
0.0445
Vinko Zupančič
120
0.0004
0.0004
120
0.0004
0.0004
David Bratož
0
0.0000
0.0000
0
0.0000
0.0000
Milena Kastelic
505
0.0015
0.0016
505
0.0015
0.0016
Total Members of the Management Board
37,040
0.1129
0.1191
37,040
0.1129
0.1185
Members of the Supervisory Board
(owner representatives)
Jože Mermal
0
0.0000
0.0000
0
0.0000
0.0000
Matej Lahovnik
600
0.0018
0.0019
600
0.0018
0.0019
Julijana Kristl
230
0.0007
0.0007
230
0.0007
0.0007
Borut Jamnik
0
0.0000
0.0000
0
0.0000
0.0000
Mojca Osolnik Videmšek
617
0.0019
0.0020
617
0.0019
0.0020
Boris Žnidarič
0
0.0000
0.0000
0
0.0000
0.0000
Members of the Supervisory Board
(owner representatives)
Franc Šašek
1,400
0.0043
0.0045
1,400
0.0043
0.0045
Tomaž Sever
500
0.0015
0.0016
500
0.0015
0.0016
Mateja Vrečer
0
0.0000
0.0000
0
0.0000
0.0000
Total Members of the Supervisory Board
3,347
0.0102
0.0108
3,347
0.0102
0.0107
Total
40,387
0.1232
0.1298
40,387
0.1232
0.1292
Treasury shares were eliminated from the calculation of voting rights (1,683,908 treasury shares as at 31 December 2021
and 1,541,774 as at 31 December 2020).
Remuneration paid to groups of persons (gross)
€ thousand
31 Dec 2021
31 Dec 2020
Members of the Management Board in the controlling company
3,560
3,768
Managers of subsidiaries
2,682
2,609
Members of the Supervisory Board in the controlling company
303
210
Members of the Supervisory and Management Boards in subsidiaries
1
1
Total gross remuneration paid to groups of persons
6,546
6,588
Remuneration paid to members of the Management Board in the controlling company and directors of subsidiaries included
wages and salaries, fringe benefits and any other earnings. For each year, they are shown on a cost basis and therefore
2021 Annual Report – Financial Report of the Krka Group
239
differ from the remuneration shown in the Report on Remuneration of the Members of the Management Board and
Supervisory Board of Krka for 2021, where they are shown by payments in each year.
Remuneration paid to members of the Supervisory Board in the controlling company represents earnings in connection
with exercising the function within the Supervisory Board. Remuneration paid to members of the Supervisory and
Management Boards in subsidiaries, who simultaneously act as members of the Management Board in the controlling
company or are employed under individual employment contracts, also only include earnings for exercising the function
within the Supervisory and Management Boards.
Gross earnings paid to persons employed under individual employment contracts in 2021 amounted to €13,091 thousand
(2020: €12,670 thousand).
Remuneration paid to Management Board members in the controlling company in 2021
Salary – fixed part
Salary – variable part
Total
€ thousand
Gross
Net payout
Net fringe
benefits
and other
earnings
Gross
Net
Gross
Net
Jože Colarič
430
178
7
734
306
1,164
491
Aleš Rotar
342
141
11
465
194
807
346
Vinko Zupančič
289
120
13
387
161
676
294
David Bratož
283
120
11
380
159
663
290
Milena Kastelic
170
78
6
80
34
250
118
Total Members of the Management
Board
1,514
637
48
2,046
854
3,560
1,539
Net fringe benefits and other earnings
€ thousand
Executive
health
insurance
Supplementary
pension
insurance
Anniversary
bonuses
Other
bonuses
Refund of
work-
related
costs
Pay for
annual
leave
Total
Jože Colarič
0.00
2.82
0.00
1.79
0.05
1.98
6.64
Aleš Rotar
0.00
2.82
0.00
4.80
1.05
1.98
10.65
Vinko Zupančič
0.00
2.82
0.00
7.15
0.91
1.98
12.86
David Bratož
0.00
2.82
1.34
3.59
1.08
1.98
10.81
Milena Kastelic
0.00
2.82
0.00
0.44
1.08
1.98
6.32
Total Members of the
Management Board
0.00
14.10
1.34
17.77
4.17
9.90
47.28
Remuneration paid to Management Board members in the controlling company in 2020
Salary – fixed part
Salary – variable part
Total
€ thousand
Gross
Net payout
Net fringe
benefits
and other
earnings
Gross
Net
Gross
Net
Jože Colarič
432
177
8
800
313
1,232
498
Aleš Rotar
347
141
13
517
202
864
356
Vinko Zupančič
290
119
13
430
168
720
300
David Bratož
281
119
10
422
166
703
295
Milena Kastelic
169
78
6
80
32
249
116
Total Members of the Management Board
1,519
634
50
2,249
881
3,768
1,565
2021 Annual Report – Financial Report of the Krka Group
240
Net fringe benefits and other earnings
€ thousand
Executive
health
insurance
Supplementary
pension
insurance
Anniversary
bonuses
Other
bonuses
Refund of
work-
related
costs
Pay for
annual
leave
Total
Jože Colarič
0.00
2.82
0.00
3.41
0.03
1.81
8.06
Aleš Rotar
0.00
2.82
1.86
5.32
1.12
1.81
12.93
Vinko Zupančič
0.00
2.82
0.00
7.87
0.99
1.81
13.48
David Bratož
0.00
2.82
0.00
4.13
1.06
1.81
9.82
Milena Kastelic
0.00
2.82
0.00
0.05
1.04
1.81
5.71
Total Members of the
Management Board
0.00
14.10
1.86
20.78
4.23
9.04
50.00
Other bonuses refer to the use of a company car for private purposes and other similar bonuses. Refund of work-related
costs consists of commuting and meal allowances. Members of the Management Board do not receive attendance fees or
any other income for exercising their functions in the Management and Supervisory Boards in subsidiaries.
Remuneration paid to Supervisory Board members in the controlling company in 2021
Basic pay for
exercising the
function
Attendance fees
Commuting
allowances
Total
€ thousand
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Members of the Supervisory
Board (owner representatives)
Jože Mermal
33.51
24.38
1.65
1.20
0.00
0.00
35.16
25.58
Matej Lahovnik
30.82
22.41
2.97
2.16
0.23
0.17
34.02
24.74
Borut Jamnik
31.61
22.99
2.97
2.16
0.00
0.00
34.58
25.15
Julijana Kristl
29.70
21.60
2.53
1.84
0.42
0.31
32.65
23.75
Mojca Osolnik Videmšek
29.70
21.60
2.97
2.16
0.40
0.29
33.07
24.05
Boris Žnidarič
31.61
22.99
2.53
1.84
0.41
0.30
34.55
25.13
Members of the Supervisory
Board (employee representatives)
Franc Šašek
31.23
22.71
2.97
2.16
0.00
0.00
34.20
24.87
Tomaž Sever
29.70
21.60
2.53
1.84
0.51
0.37
32.74
23.81
Mateja Vrečer
29.70
21.60
2.53
1.84
0.00
0.00
32.23
23.44
Total remuneration paid to
Members of the Supervisory
Board
277.58
201.88
23.65
17.20
1.97
1.44
303.20
220.52
In accordance with a resolution adopted at the 27
th
Annual General Meeting on 8 July 2021, Members of the controlling
company's Supervisory Board are entitled to an attendance fee, which for each individual member of the controlling
company's Supervisory Board amounts to €275.00 gross. Members of the Supervisory Board Commission receive an
attendance fee for their participation in sessions, which for each individual member amounts to 80% of the attendance fee
for Supervisory Board sessions. The attendance fee for participating in correspondence sessions amounts to 80% of the
general attendance fee. Notwithstanding the foregoing, and irrespective of the number of attendances at meetings of the
Supervisory Board and the Commissions in any financial year, a member of the Supervisory Board shall be entitled to the
payment of attendance fees until the total amount of the attendance fees reaches 50% of the basic pay for exercising the
function of a Member of the Supervisory Board on an annual basis. Notwithstanding the foregoing, and irrespective of the
number of attendances at meetings of the Supervisory Board and the Commissions in any financial year, a member of the
Supervisory Board who is a member of a Commission or Commissions of the Supervisory Board shall be entitled to the
payment of attendance fees until the total amount of the attendance fees for attendance at sessions of the Supervisory
Board and the Commissions reaches 75% of the basic pay for exercising the function of a Member of the Supervisory
Board on an annual basis.
2021 Annual Report – Financial Report of the Krka Group
241
In addition to attendance fees, member of the Company's Supervisory Board receives on an annual basis also a basic pay
for exercising the function in the amount of €15,000.00 gross. The President of the Supervisory Board is further entitled to
an extra fee in the amount of 50% of the basic pay for exercising the function of Member of NS, whereas Deputy President
of the Supervisory Board is entitled to an extra fee of 10% of the basic pay for exercising the function of a Member of the
Supervisory Board. Members of the Supervisory Board Commission are further entitled to a bonus corresponding to 25%
of the basic fee for exercising the function of a member of the Supervisory Board. The President of the Commission is
entitled to a bonus corresponding to 37.5% of the extra fee for exercising the function of a member of the Supervisory
Board Commission. A Member of the Supervisory Board Commission is in every financial year entitled – regardless of the
above-mentioned or the number of Commissions he/she is a member of or presides over – to receive bonuses until the
total amount of these bonuses reaches 50% of the basic pay for exercising the function of the Supervisory Board member
on an annual basis. Notwithstanding the above, if the term of office of a member of the SC is shorter than a financial year,
and irrespective of the number of Commissions of which he/she is a member or presides over, a member of a Commission
of the Supervisory Board shall be entitled to pay-outs of extra fees for the performance of his/her duties in a financial year,
until the total amount of such pay-outs for exercising the function reaches 50% of the basic pay for of a member of the
Supervisory Board in respect of the eligible payments for the period of his/her term of office in the financial year.
Members of the Supervisory Board are also entitled to extra fees for special tasks. Special tasks are those which involve
the actual performance of unusual tasks of above-average complexity over a prolonged period of time, normally lasting at
least one month. The Supervisory Board is authorised to take decisions with the agreement of the Supervisory Board
member on the assignment of special tasks to that member, the duration of the special tasks and the extra fees for the
special tasks in accordance with this Assembly Decision. The Supervisory Board is also authorised to take decisions on
extra fees for special tasks of the Supervisory Board members due to objective circumstances in the company. Extra fees
for special tasks are only admissible for the time when the special tasks are actually carried out, which may exceptionally
be decided retrospectively by the Supervisory Board (in particular in the case of special tasks due to objective
circumstances in the company), but not more than for the previous financial year. The extra fees for special tasks that a
member may receive in a given year may amount to a maximum of 50% of the basic pay for exercising the functions of a
member of the Supervisory Board (irrespective of the number of special tasks). The amount of the additional payment
shall take into account the complexity of the special task and the increased workload and responsibility involved. The extra
fee rate shall be calculated according to the time actually spent on the special task.
Members of the Company's Supervisory Board receive a basic pay and an extra fee for exercising the function and a
bonus for special tasks, in proportionate monthly payments which they are entitled while they are performing a function
and/or a special task. The monthly payment amounts to one twelfth of the aforesaid annual amounts. Depending on the
circumstances, a surcharge for special tasks may also be applied in a lump sum when the special task is completed.
The limitation of the amount of the total amount of the attendance fees and the payment of the extra fees to a member of
the Supervisory Board shall in no way affect his/her duty to actively participate in all sessions of the Supervisory Board
and of the sessions of the Commissions of which he/she is a member, nor his/her statutory responsibility.
The Members of the Supervisory Board are entitled to reimbursement of transportation costs, daily allowance and overnight
accommodation expenses incurred in connection with their work for the Supervisory Board, up to the amount laid down in
the rules governing the reimbursement of expenses relating to work and other income not deductible for tax purposes
(provisions applicable to transport on official travel and accommodation on business travel). The amount due to a member
of the Supervisory Board under the above-mentioned regulation is increased by the corresponding levies, therefore the
net payment represents the reimbursement of actual travel expenses. The distances between places calculated on the
AMZS public website are used to determine the mileage. Overnight accommodation expenses may be reimbursed only if
the permanent or temporary residence of the member of the Supervisory Board or of a member of a Supervisory Board
Commission is at least 100 kilometres from the place of work of the body, if he/she was unable to return because the
timetable no longer provided for any public transport or for other objective reasons.
2021 Annual Report – Financial Report of the Krka Group
242
Loans to groups of persons
Balance
Repayments
€ thousand
31 Dec 2021
31 Dec 2020
2021
2020
Members of the Management Board in the
controlling company
0
0
0
0
Managers of subsidiaries
37
11
10
0
Members of the Supervisory Board in the controlling
company
0
0
0
0
Members of the Supervisory and Management
Boards in subsidiaries
0
0
0
0
Total loans to groups of persons
37
11
10
0
Loans to staff employed under individual employment contracts amounted to €179 thousand at 31 December 2021
(€155 thousand as at 31 December 2020). In 2021, repayments of loans by staff employed under individual employment
contracts reached €26 thousand (2020: €22 thousand).
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243
32. Profile of the Krka Group
80
Transactions between the Krka Group companies were implemented on the basis of sale and purchase contracts, whereby
intercompany transactions were based on market prices of products and services.
Ownership
share
Share capital
value at
31 Dec 2021
in thousand
Currency
Headcount at
31 Dec 2021
Headcount at
31 Dec 2020
Controlling company
Krka, d. d., Novo mesto
100%
54,732
EUR
6,228
6,191
Subsidiaries
TERME KRKA, d. o. o., Novo mesto, Slovenia
100%
14,753
EUR
548
580
KRKA-FARMA d.o.o., Zagreb, Croatia
100%
143,027
HRK
184
191
KRKA ROMANIA S.R.L., Bucharest, Romania
100%
37
RON
144
147
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
100%
65
RSD
77
82
KRKA-FARMA DOOEL, Skopje, North Macedonia
100%
49,021
MKD
44
42
KRKA Bulgaria EOOD, Sofia, Bulgaria
100%
20
BGN
74
72
KRKA HELLAS E.P.E., Athens, Greece
100%
10
EUR
16
18
KRKA FARMA, d.o.o., Sarajevo, Bosnia and
Herzegovina
100%
20
BAM
1
1
KRKA-RUS LLC, Istra, Russian Federation
100%
5,361,375
RUB
525
525
KRKA FARMA LLC, Istra, Russian Federation
100%
753,875
RUB
1,427
1,547
KRKA UKRAINE LLC, Kiev, Ukraine
100%
100
UAH
395
384
LLC ´KRKA Kazakhstan´, Almaty, Kazakhstan
100%
14
USD
93
91
KRKA – POLSKA Sp. z.o.o., Warsaw, Poland
100%
17,490
PLN
660
683
KRKA ČR, s. r. o., Prague, Czech Republic
100%
100
CZK
173
187
KRKA Magyarország Kft., Budapest, Hungary
100%
44,880
HUF
174
170
KRKA Slovensko, s.r.o., Bratislava, Slovakia
100%
10
EUR
113
122
UAB KRKA Lietuva, Vilnius, Lithuania
100%
10
EUR
55
62
SIA KRKA Latvija, Riga, Latvia
100%
10
EUR
39
40
TAD Pharma GmbH, Cuxhaven, Germany
100%
6,650
EUR
215
235
KRKA Sverige AB, Stockholm, Sweden
100%
150
SEK
7
6
KRKA Pharma GmbH, Vienna, Austria
100%
37
EUR
21
22
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
100%
10
EUR
46
46
KRKA FARMACÉUTICA, S.L., Madrid, Spain
100%
10
EUR
62
59
KRKA Farmaceutici Milano, S.r.l., Milan, Italy
100%
10
EUR
69
72
Krka France Eurl, Paris, France
100%
10
EUR
41
28
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
100%
1
EUR
11
8
KRKA Belgium, SA, Brussels, Belgium
100%
300
EUR
21
22
KRKA Finland Oy, Espoo, Finland
100%
3
EUR
17
15
KRKA UK Ltd, London, United Kingdom
100%
1
GBP
14
12
123 Acurae Pharma GmbH, Cuxhaven, Germany
100%
25
EUR
0
0
Ningbo Krka Menovo Pharmaceutical Co. Ltd., Ningbo,
China
60%
345
CNY
17
17
KRKA USA LLC, Wilmington, USA
100%
10
USD
0
0
Total
11,511
11,677
The subsidiary Terme Krka, d. o. o. had a 100% interest in Golf Grad Otočec, d. o. o., at 31 December 2021; the subsidiary
KRKA France Eurl had a 100-percent interest in HCS bvba in Belgium. The Chinese company Ningbo Menovo
Pharmaceutical Co. Ltd. has a 40-percent holding of the company Ningbo Krka Menovo.
80
GRI GS 102-45
2021 Annual Report – Financial Report of the Krka Group
244
33. Educational structure of the Krka Group employees
2021
2020
Average
headcount
Equity
(%)
Average
headcount
Equity
(%)
PhD
206
1.8
203
1.7
MSc
397
3.4
391
3.4
University education
5,313
45.9
5,428
46.7
Higher professional education
1,727
14.9
1,700
14.6
Vocational college education
306
2.6
297
2.6
Secondary school education
2,613
22.6
2,547
21.9
Skilled workers
859
7.4
877
7.5
Unskilled workers
160
1.4
188
1.6
Total (average for the year)
11,581
100.0
11,631
100.0
34. Transactions with audit firms
The annual fee for auditing of the Krka Group's financial statements in 2021 amounted to €483 thousand (2020:
€466 thousand). In addition, the auditing firms provided various consultation services to the Krka Group in 2021 charging
a fee of €31 thousand (2020: €60 thousand).
35. Subsequent events
The events after the end of the period had no impact on the 2021 financial statements.
Situation in Ukraine and the Russian Federation: Impact on the Krka Group Operations
We conduct business in Ukraine and the Russian Federation, sales Region East Europe, through three subsidiaries and
the controlling company, Krka, d. d., Novo mesto. The registered office of our subsidiary Krka Ukraine LLC engaged only
in marketing, but not manufacturing, is in Kiev. The registered office of Krka-Rus LLC engaged in pharmaceutical
production is in Istra, a town in the vicinity of Moscow. Main offices of Krka Farma LLC, a company engaged in marketing
and sales, are in Moscow.
On account of rapid changes and their unpredictability, it is not possible to reliably forecast the impact of the situation in
Ukraine and Russian Federation on our business operations in 2022 and any long-term consequences. Krka has a strong
capital structure, generates a strong cash flow from operations and has no financial debt, so its successful business
performance in the long run is not jeopardised. Our Management Board closely monitor events and implement all
necessary activities to ensure business continuity in the two countries. They also take measures to manage operational
risks and reduce the eventual negative impact on business results. The Management Board will prepare and publish the
eventual revision of guidance for 2022, when and if tangible assessment of short and long term implication of current
situation is possible.
As at 31 December 2022, Krka’s trade receivables due from customers outside the Krka Group in Ukraine amounted to
€39,159 thousand. Krka’s Ukrainian subsidiary does not deal with sales, so it posted no trade receivables due from
customers outside the Krka Group, but recorded other assets in total of €2,492 thousand. As at 31 December 2021, the
Krka Group recorded trade receivables in total of €181,661 thousand in the Russian Federation. The Krka Group’s other
assets in the two subsidiaries in the Russian Federation amounted to €133,968 thousand.
In 2022, there was an unfavorable change in the EUR/RUB exchange rate. The exposure at 31 December 2021 and
related risks are presented in Note 30 Financial instruments and financial risks.
2021 Annual Report – Financial Report of the Krka Group
245
Acquisition of Treasury Shares in 2022
From 1 January 2022 to 14 April 2022, we acquired 21,689 treasury shares. At the end of this period, Krka held
1,705,597 treasury shares, accounting for 5.201% of total shares.
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246
Independent Auditor's Report
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252
Financial statements of Krka, d. d., Novo mesto
Statement of Financial Position
€ thousand
Notes
31 Dec 2021
31 Dec 2020
Index
2021/20
Assets
Property, plant and equipment
12
570,086
605,164
94
Intangible assets
13
25,628
27,893
92
Investments in subsidiaries
14
346,444
339,612
102
Loans
15
31,010
35,024
89
Investments
16
108,882
10,419
1,045
Deferred tax assets
17
12,742
14,222
90
Other non-current assets
627
615
102
Total non-current assets
1,095,419
1,032,949
106
Assets held for sale
41
41
100
Inventories
18
394,323
389,178
101
Contract assets
300
500
60
Trade receivables
19
424,588
415,286
102
Other receivables
19
17,381
15,667
111
Loans
15
195,459
57,836
338
Investments
16
155,448
524
29,666
Cash and cash equivalents
20
144,981
296,398
49
Total current assets
1,332,521
1,175,430
113
Total assets
2,427,940
2,208,379
110
Equity
Share capital
21
54,732
54,732
100
Treasury shares
21
-114,541
-99,279
115
Reserves
21
246,424
218,787
113
Retained earnings
21
1,689,527
1,617,610
104
Total equity
1,876,142
1,791,850
105
Liabilities
Provisions
24
113,136
119,830
94
Deferred revenue
25
3,546
4,387
81
Trade payables
26
10,000
10,000
100
Lease liabilities
2,101
2,163
97
Total non-current liabilities
128,783
136,380
94
Trade payables
26
178,143
143,294
124
Borrowings
23
55,092
46,345
119
Lease liabilities
987
659
150
Income tax payables
4,611
13,354
35
Contract liabilities
27
19,477
16,581
117
Other current liabilities
28
164,705
59,916
275
Total current liabilities
423,015
280,149
151
Total liabilities
551,798
416,529
132
Total equity and liabilities
2,427,940
2,208,379
110
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
253
Income Statement
€ thousand
Notes
2021
2020
Index
2021/20
Revenue
1,381,367
1,447,112
95
– Revenue from contracts with customers
5
1,374,765
1,440,930
95
– Other revenue
6,602
6,182
107
Cost of goods sold
-614,832
-624,105
99
Gross profit
766,535
823,007
93
Other operating income
6
6,660
5,137
130
Selling and distribution expenses
-271,425
-263,174
103
– Of that net impairments and write-offs of receivables
-50
1,177
R&D expenses
-150,232
-150,727
100
General and administrative expenses
-78,213
-75,361
104
Operating profit
273,325
338,882
81
Financial income
10
24,714
31,786
78
Financial expenses
10
-12,083
-72,837
17
Net financial result
12,631
-41,051
Profit before tax
285,956
297,831
96
Income tax
11
-40,740
-39,357
104
Net profit
245,216
258,474
95
Basic earnings per share (€)
22
7.86
8.23
96
Diluted earnings per share (€)
22
7.86
8.23
96
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
Statement of Other Comprehensive Income
€ thousand
Notes
2021
2020
Index
2021/20
Net profit
245,216
258,474
95
Net profit – effect of the merger
0
1,778
0
Other comprehensive income for the year
Other comprehensive income that will not be reclassified to
profit or loss at a future date
Change in fair value of financial assets
5,441
739
736
Restatement of post-employment benefits
24
6,438
-10,966
Deferred tax effect
-1,645
901
Effect of the merger
0
35,525
0
Net other comprehensive income that will not be
reclassified to profit or loss at a future date
10,234
26,199
39
Total other comprehensive income of the year (net of tax)
10,234
26,199
39
Total comprehensive income of the year (net of tax)
255,450
286,451
89
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
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Statement of Changes in Equity
€ thousand
Share
capital
Treasury
shares
Reserves
Retained earnings
Total
equity
Reserves
for
treasury
shares
Share
premium
Legal
reserves
Statutory
reserves
Fair value
reserve
Other profit
reserves
Retained
earnings
Profit
for the year
At 1 Jan 2021
54,732
-99,279
99,279
105,897
14,990
30,000
-31,379
1,280,090
102,773
234,747
1,791,850
Net profit
0
0
0
0
0
0
0
0
0
245,216
245,216
Total other comprehensive income of the year
(net of tax)
0
0
0
0
0
0
12,375
0
-2,141
0
10,234
Total comprehensive income of the year
(net of tax)
0
0
0
0
0
0
12,375
0
-2,141
245,216
255,450
Total transactions with owners, recognised in
equity
Formation of other profit reserves under the resolution
of the AGM
0
0
0
0
0
0
0
90,812
-90,812
0
0
Transfer of previous period's profits to retained
earnings
0
0
0
0
0
0
0
0
234,747
-234,747
0
Repurchase of treasury shares
0
-15,262
0
0
0
0
0
0
0
0
-15,262
Formation of reserves for treasury shares
0
0
15,262
0
0
0
0
0
0
-15,262
0
Dividends paid
0
0
0
0
0
0
0
0
-155,896
0
-155,896
Total transactions with owners, recognised in
equity
0
-15,262
15,262
0
0
0
0
90,812
-11,961
-250,009
-171,158
At 31 Dec 2021
54,732
-114,541
114,541
105,897
14,990
30,000
-19,004
1,370,902
88,671
229,954
1,876,142
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
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€ thousand
Share
capital
Treasury
shares
Reserves
Retained earnings
Total
equity
Reserves
for
treasury
shares
Share
premium
Legal
reserves
Statutory
reserves
Fair value
reserve
Other profit
reserves
Retained
earnings
Profit
for the year
At 1 Jan 2020
54,732
-73,774
73,774
105,897
14,990
30,000
-23,604
1,211,292
43,158
227,713
1,664,178
Net profit
0
0
0
0
0
0
0
0
0
258,474
258,474
Net profit – effect of the merger
0
0
0
0
0
0
0
0
0
1,778
1,778
Total other comprehensive income of the year
(net of tax)
0
0
0
0
0
0
-7,775
0
33,974
0
26,199
Total comprehensive income of the year
(net of tax)
0
0
0
0
0
0
-7,775
0
33,974
260,252
286,451
Total transactions with owners, recognised in
equity
Formation of other profit reserves under the resolution
of the AGM
0
0
0
0
0
0
0
68,798
-68,798
0
0
Transfer of previous period's profits to retained
earnings
0
0
0
0
0
0
0
0
227,713
-227,713
0
Repurchase of treasury shares
0
-25,505
0
0
0
0
0
0
0
0
-25,505
Formation of reserves for treasury shares
0
0
25,505
0
0
0
0
0
0
-25,505
0
Dividends paid
0
0
0
0
0
0
0
0
-133,274
0
-133,274
Total transactions with owners, recognised in
equity
0
-25,505
25,505
0
0
0
0
68,798
25,641
-253,218
-158,779
At 31 Dec 2020
54,732
-99,279
99,279
105,897
14,990
30,000
-31,379
1,280,090
102,773
234,747
1,791,850
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
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256
Statement of Cash Flows
€ thousand
Notes
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit
245,216
258,474
Adjustments for:
126,230
111,062
– Amortisation/Depreciation
12, 13
84,863
85,146
– Foreign exchange differences
-3,634
1,611
– Investment income
-10,118
-28,408
– Investment expenses
12,951
15,131
– Financial income
-3
-3,779
– Interest expenses and other financial expenses
1,431
2,004
– Income tax
11
40,740
39,357
Operating profit before changes in net current assets
371,446
369,536
Change in trade receivables
-10,797
57,672
Change in inventories
18
-5,145
-22,171
Change in trade payables
41,785
-13,832
Change in provisions
-1,128
1,176
Change in deferred revenue
25
-841
-518
Change in other current liabilities
2,567
3,288
Income tax paid
-49,648
-42,641
Net cash flow from operating activities
348,239
352,510
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
403
575
Dividends received
668
575
Proportionate profit of subsidiaries
5,419
7,092
Proceeds from sale of property, plant and equipment
1,391
760
Purchase of property, plant and equipment
12
-48,851
-60,917
Purchase of intangible assets
13
-4,836
-5,582
Acquisition of subsidiaries and a share of minority interests net of financial
assets acquired
14
-7,824
-11,281
Refunds of subsequent contributions to subsidiaries
14
992
0
Net proceeds from non-current loans
3,875
2,207
Net payments for current loans
-137,558
-23,210
Net payments for non-current investments
-92,135
-540
Net payments for current investments
-51,488
0
Net payments for/proceeds from derivatives
-8,457
2,769
Net cash flow from investing activities
-338,401
-87,552
CASH FLOWS FROM FINANCING ACTIVITY
Interest paid
-444
-512
Net proceeds from/payments for current borrowings
31
8,703
-2,269
Lease liabilities paid
30
-991
-732
Dividends and other profit shares paid
31
-155,907
-133,283
Repurchase of treasury shares
31
-15,262
-25,505
Net cash flow from financing activities
-163,901
-162,301
Net decrease/increase in cash and cash equivalents
-154,063
102,657
Cash and cash equivalents at beginning of year
296,398
195,236
Effect of foreign exchange rate fluctuations on cash held
2,646
-1,751
Cash proceeds from merger of Farma GRS
0
256
Closing balance of cash and cash equivalents
144,981
296,398
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
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257
Notes to the Financial Statements
Krka, d. d., Novo mesto is the controlling company in the Krka Group with its registered seat at Šmarješka cesta 6, 8501
Novo mesto, Slovenia. The Company was registered at the District Court of Novo mesto on 13 July 1989, registration
number 1/00097/00. Company registration No.: 5043611000.
The financial statements of the Company refer to the year ended 31 December 2021.
The Company is engaged in the development, production, marketing and sale of human health products (prescription
pharmaceuticals and non-prescription products), and animal health products.
1. Basis of preparation
Statement of compliance
The financial statements of the Company have been prepared in accordance with International Financial Reporting
Standards (‘IFRS‘), and interpretations issued by the International Financial Reporting Interpretations Committee of the
IASB (‘IFRIC’), as adopted by the European Union, and in compliance with the Companies Act (ZGD-1).
The financial statements were approved by the Krka Management Board on 28 March 2022.
Basis of measurement
The financial statements have been prepared on the historical cost basis, with the exception of derivatives, financial
instruments at fair value through profit or loss and financial instruments at fair value through OCI for which fair value was
used. Methods applied in the measurement of fair value are presented in Note 2 Fair Value.
Functional and reporting currency
The financial statements are presented in the euro, which is the Company’s functional currency. All financial information
presented in the euro has been rounded to the nearest thousand.
Use of estimates and judgements
The preparation of financial statements requires the Management Board of the controlling company to make judgements,
estimates and assumptions that affect the carrying amounts of assets and liabilities of Krka as well as the reported income
and expenses for the period.
These include, among others: determination of the useful life and residual value of property, plant and equipment, as well
as intangible assets; income from contracts with customers, allowances made for inventories and receivables; investment
impairment; assumptions material to the actuarial calculation of defined employee benefits; assumptions used in the
calculation of potential provisions for disputes, and an estimate of the duration of the lease and the interest rate used.
Regardless of the fact that the Management Board duly considers all factors that may impact the preparation of these
assumptions, the actual consequences of business events may differ from those estimates. In the process of making
accounting estimates, management makes judgements while considering potential changes in the business environment,
new business events, new and additional information that may be available, as well as experience.
Key estimates and assumptions as at the day of the statement of financial position that are associated with future
operations and which could result in significant adjustment of the book values of assets and liabilities are presented below.
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258
Information on significant estimates about uncertainty and critical judgements in applying accounting policies that have the
most significant effect on the amounts recognised in the financial statements is presented in the following notes:
Note 5 ‘Revenue from contracts with customers’
Revenue from contracts with customers is recognised when control of the goods and services is transferred to the
customer at an amount that reflects the consideration to which Krka expects to be entitled in exchange for those
goods or services, while considering specific terms and conditions of an individual contract. In assessing variable
compensation, Krka specifically addresses returns, while considering specific terms and conditions of an individual
contracts for the sale of products and services to customers, statutory provisions, and business practices in a given
environment. When assessing variable compensation, Krka must use either the expected value method or the most
likely amount method, whichever better predicts the amount of consideration to which it will be entitled.
Given the large number of contracts with customers, Krka determined the expected value method as the most
appropriate for estimating variable consideration for the sale of products with a right to return. To estimate the
variable consideration for expected future volume rebates on the quantity of products purchased, Krka identified
combination of the most likely amount method and the expected value method as the most appropriate. The method
that best predicts the amount of variable consideration is primarily driven by the number of volume thresholds
contained in the contract, legal provisions and business practices in various environments. The most likely amount
method is best suited for contracts with a single-volume threshold, and the expected value method for contracts
with more than one volume threshold.
Prior to including any variable consideration in the transaction price, Krka assesses whether there is a constraint
on variable consideration. Based on past experience, business forecasts and current economic conditions, Krka
has determined that there are no constraints on variable consideration.
The Company is a seller of products that may be subject to payment terms in excess of one year in certain markets.
Krka recognises financial income and expenses on these sales using the appropriate discount rate.
Note 14 ‘Impairment testing of investments in subsidiaries’
The controlling company checks whether there are any indicators of impairment of investments in subsidiaries at
least once a year. The fair value of investments that may be impaired is determined as the present value of future
cash flows, which is based on an estimate of expected cash flows from the cash-generating unit and on
determination of the appropriate discount rate. Krka found no need for impairment of investments in subsidiaries
as at 31 December 2021.
Note 19 ‘Impairment testing of receivables’
On the financial statement preparation (quarterly and annually), Krka recognises allowances (impairment) of those
receivables for which it is assumed that will not be settled in full or not at all. Allowances are recognised using
uniform methodology applicable to the Krka Group and in consideration of the probability or assessed probability
of receivable settlement by the debtors. The methodology includes quantitative and qualitative criteria grouped into
the following four sets: an analysis of the existing business dealings with the customer, an analysis of the customer's
financial statements, a qualitative assessment of the customer by the sales personnel, and an assessment of the
customer's country risk. Hence, allowances of receivables due from individual customer are calculated by means
of an algorithm that includes all the above criteria.
Note 24 ‘Post-employment benefits’
Defined post-employment benefit obligations include the present value of termination benefits on retirement. They
are recognised on the basis of the actuarial calculation using assumptions and estimates effective at the time of
the calculation, and which may, as a result of future changes, differ from actual assumptions applicable at that
future time. This applies primarily to determination of a discount rate, assessment of employee turnover, mortality
assessment, and assessment of an increase in salaries. Due to the complexity of the actuarial calculation and the
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long-term nature of the item, defined benefit obligations are sensitive to changes in the above estimates and
assessments.
Note 24 ‘Provisions for lawsuits and contingent liabilities’
Lawsuits and claims may be brought against the Company for alleged breaches of intellectual property (patent
rights or competition law) and those referring to other civil law areas. A provision is recognised when Krka has
present obligations (legal or constructive) as a result of past events, a reliable estimate can be made of the amount
of obligation, and it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation. Contingent liabilities are not recognised in the financial statements as their actual existence will be
confirmed only upon the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of Krka. The Management Board continually assess contingent liabilities to determine whether an outflow
of resources embodying economic benefits has become probable. If this is the case, a provision is recognised in
the financial statements of the period in which the change in probability occurs.
Note 27 ‘Current liabilities from contracts with customers’
Krka accrues contractually agreed discounts in its financial statements when, based on the annual sales, individual
customers gain the right to discount recognition in the next financial year, i.e. when contractually agreed terms and
conditions of discounts are fulfilled. The assessed rate of discount depends on the facts known at the time of the
financial statement preparation, past experience in trading with individual customers, and other relevant facts.
Notes 30 ‘Leases’
Krka recognises leases based on measurement of lease liabilities and thus its determination of the lease term, its
incremental borrowing rate if the implicit interest rate is not readily determinable, and its assessment at contract
inception whether a contract is, or contains, a lease.
At contract inception, Krka assesses whether a contract is, or contains a lease. That is, if the contract conveys the
right to control the use of an identified asset for a period of time in exchange for consideration.
As a lessee, Krka determines the lease term as the period during which the lease cannot be terminated, inclusive
of:
a) The period for which the option to extend the lease applies if it is reasonably certain that the lessee will
exercise that option; and
b) The period for which the option to terminate the lease applies if it is reasonably certain that the lessee will not
exercise that option.
Krka considers all relevant facts, circumstances, and past practices that provide an economic incentive for Krka not
to exercise the option of contract extension or termination.
Krka reassesses the lease term upon occurrence of any significant event or a material change in the circumstances
it controls that affect its decision to exercise the option of contract extension or termination.
Krka uses its incremental borrowing rate when the implicit interest rate in the lease cannot be determined. The
assessed borrowing rate is based on the estimated bond yield if the Company were to incur debt on the financial
markets, depending on the maturity of the contract.
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2. Significant accounting policies
Krka applied the same accounting policies in all periods presented in the accompanying financial statements.
The accounting policies and the calculation methods used are the same as for the last annual reporting, except for the
newly adopted standards and interpretations. which are noted below and were applied if relevant events occurred in the
Company in the reporting period.
New standards and interpretations effective from 1 January 2021
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform – Phase two
The International Accounting Standards Board (IASB) published phase two of the Interest Rate Benchmark Reform,
namely the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, which concludes its work to respond to the
effects of Interbank Offered Rates (IBOR). The amendments introduce a temporary exemption for reporting the financial
effects of replacing the interbank offered rates (IBOR) with an alternative nearly risk-free interest rate (RFR). They provide
a practical expedient to companies when accounting for modification in the basis for determining the contractual cash flows
of a financial asset and liability, where an entity is required to adjust the effective interest rate that is equivalent to the
fluctuation of the market interest rates. In addition, they provide entities with certain relief from discontinuing hedge
accounting, including a temporary exemption from the requirement of differentiation for hedging relationships in which an
alternative interest rate reference has been specified as a non-contractually determined risk component.
Amendments to IFRS 7 – Financial Instruments
Amendments require entities to make appropriate disclosures to enable the financial statement users to understand the
effect of the interest rate benchmark reform on their financial instruments and risk management strategy. The entity must
apply the amendments retrospectively, without restatement of prior period data. The management has assessed the
impact of the amendments and believes they had no significant impact on the Krka’s consolidated financial statements.
Amendments to IFRS 16 Leases – COVID-19-Related Rent Concessions after 30 June 2021
The amendments are effective for annual periods beginning on or after 1 April 2021 and must be applied retrospectively,
with early application permitted even in financial statements that were not authorised for issue at the date of the
amendments. In March 2021, the IASB amended the conditions for applying the practical expedient in IFRS 16, which
allows a lessee not to treat lease rent adjustments that arise as a direct result of the COVID-19 pandemic under the
guidance in the standard IFRS 16. An entity may obtain practical expedient relief from the treatment of a rent concession
where the individual rent reduction affects only payments that would have been originally due on or before 30 June 2022,
and provided that all the conditions for applying the practical expedient are met. The Company applied the amendments
on 1 June 2020. The management has assessed the impact of the amendments and believes they had no significant
impact on the consolidated financial statements of the Company.
Merger of a subsidiary
Pursuant to the agreement on the purchase of business stakes, in February 2020 Krka, d. d., Novo mesto acquired a
100% stake in Farma GRS, d. o. o. In October 2020, Farma GRS, d. o. o. merged with the Company, with 30 June 2021
as the effective date of the merger. The merger of Farma GRS, d. o. o. did not have any impact on the financial statements
of the Krka Group since the controlling company, Krka, d. d., Novo mesto was its sole owner. The difference between the
net value of the merged assets of €38,183,327 and the investment of €1,004,410 was recognised in the controlling
company's separate financial statements within the same capital category as in the Group's consolidated financial
statements prior to the merger. Consequently, on 2 October 2020, Farma GRS, d. o. o. was removed from the court
register. The key reason for the merger of the acquiree with the acquirer is in addition to the rationalisation of processes,
the simplification of operations and business processes.
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In 2020, following the merger of Farma GRS, d. o. o., the Company recognised:
€1,777,842 of net profit of the 2020 financial period;
€35,501,994 of retained earnings; and
€22,421 of value reserves.
A more detailed presentation of the effects of the merger is disclosed below in Notes to the separate financial statements
of the Company for the previous year.
Foreign currencies
Foreign currency transactions
Transactions and balances in foreign currencies are translated to the euro (the functional currency of Krka) at exchange
rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting
date are converted to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities
denominated in foreign currencies are translated to the euro at the exchange rate applicable on the reporting date. Non-
monetary assets and liabilities denominated in foreign currencies and measured at the fair value are converted to the euro
at the exchange rate at the date that the fair value was determined. Foreign currency differences are recognised in profit
or loss, except for differences arising on the translation of equity instruments, which are recognised directly in other
comprehensive income. Non-cash items measured at historical cost in foreign currency are translated to the functional
currency by applying the exchange rate valid at the date of the transaction.
Fair value
A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial
and non-financial assets and liabilities.
Fair value is the amount for which an asset could be sold or a liability exchanged in a regular transaction between market
participants. All assets and liabilities measured and disclosed at their fair value in financial statements are classified in the
fair value hierarchy on the basis of lowest level of input data significant for measurements of total fair value:
• Level 1 – market value (unadjusted) from the active market for similar assets and liabilities;
• Level 2 – valuation model, which is not classified in level 1, is valued directly or indirectly on the basis of comparable
market data;
• Level 3 – valuation model which is not based on the market data.
Fair values have been determined for measurement and/or disclosure purposes based on the methods presented below.
Where applicable, further information about the assumptions made in determining fair values is disclosed in the
Notes specific to that asset or liability.
Investments in equity and debt securities
The fair value of financial assets at fair value through profit or loss and at fair value through OCI is determined by reference
to their quoted closing bid price. For investments in debt securities at amortised cost, for reporting purposes the fair value
is calculated on the basis of the closing rate, which is increased by accrued interest on the reporting date.
Trade and other receivables
Fair value of trade and other receivables is estimated at the present value of future cash flows discounted at the market
rate of interest effective at the reporting date.
Financial liabilities
Fair value is determined based on the present value of future principal and interest payments discounted at the market
rate of interest prevailing at the reporting date.
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Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial assets
Financial assets of the Company include cash and cash equivalents, receivables and loans and financial investments and
investments in subisidiaries (see accounting policies in the Investments in subsidiaries section).
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial assets’ contractual cash flow
characteristics and Krka's business model for managing them. With the exception of trade receivables that do not contain
a significant financing component or for which the Company has applied the practical expedient, the Company initially
measures a financial asset at fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has
applied the practical expedient are measured at the transaction price determined under IFRS 15. Refer to the accounting
policies in section ‘Revenue from contracts with customers’.
In order for financial assets to be classified and measured at amortised cost or fair value through OCI, they need to give
rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at an instrument level.
Krka's business model for managing financial assets refers to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the
financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the marketplace (regular way trades) are recognised on the trade date, i.e. the date that the Company
commits to purchase or sell the asset.
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire or when
it transfers the rights to the contractual cash flows from the financial asset in a transaction that transfers all the risks and
rewards of ownership of the financial asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified into four categories:
Financial assets at amortised cost (debt instruments);
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments);
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments);
Financial assets at fair value through profit or loss.
Financial assets at amortised cost (debt instruments)
Cash and cash equivalents comprise cash, bank deposits up to three months, and other current, highly realisable
investments with an original maturity of three months or less. The latter can be easily converted into known amounts of
cash and for which the risk of changes in value is insignificant. The cash flows derived from these assets are solely
payments of the principal and interest are therefore classified as financial assets at amortised cost.
According to the SSPI test, loans issued by the Company are classified as financial assets at amortised cost, since the
cash flows derived from these assets are solely payments of the principal and interest on the principal amount outstanding.
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Krka's investments in debt securities, which include only low credit risk government bonds, are classified as financial
assets at amortised cost.
The Company’s financial assets at amortised cost also include trade receivables.
After initial recognition, these investments are measured using the effective interest method and are subject to impairment.
Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets at fair value through OCI (debt instruments)
The Company classifies its investments in equity securities as financial assets at fair value through OCI.
Subsequent to initial recognition, they are measured at fair value. Interest income, foreign exchange differences, and
impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for
financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition,
the cumulative fair value change recognised in OCI is recycled to profit or loss.
Financial assets at fair value through OCI (equity instruments)
The Company classifies its investments in equity securities as financial assets at fair value through OCI. The Company
elected to classify irrevocably its listed and non-listed investments in this category.
Subsequent to initial recognition, they are measured at fair value. Changes in fair value are recognised directly in other
comprehensive income. When an investment is derecognised, the cumulative gain or loss in equity is not transferred to
profit or loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated
upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair
value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in
the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they
are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal
and interest are classified and measured at fair value through profit or loss, irrespective of the business model.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net
changes in fair value recognised in the statement of profit or loss.
Impairment of financial assets is described in the Impairment – financial assets section.
Financial liabilities
Financial liabilities consist mainly of loans, payables to suppliers and other liabilities. Lease liabilities and employee
benefits are treated separately (see accounting policies in the Leases and Employee Benefits sections). All other financial
liabilities are initially recognised on the trade date or when the Company becomes a contracting party in relation to the
instrument. On initial recognition, the Company classifies non-derivative financial liabilities as subsequently measured at
amortised cost and derivative financial liabilities as at fair value through profit or loss. After initial recognition, financial
liabilities arising from loans are measured using the effective interest method. Gains and losses are recognised in profit or
loss when these liabilities are discharged or modified. The ompany derecognises a financial liability if the obligations set
out in the contract are fulfilled, cancelled or expired.
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Investments in subsidiaries
Non-current investments made in equity of subsidiaries included in consolidated financial statements are valued at cost.
Participation in the profit of a subsidiary is recognised in the profit or loss of the controlling company when an appropriate
resolution referring to profit distribution has been adopted. If the investment is required to be impaired due to subsidiary's
loss, the amount of loss due to impairment is measured as a difference between the carrying amount of the investment
and the present value of expected future cash flows.
Property, plant and equipment
The items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses
(refer to the accounting policy ‘Impairment’). The cost of an item of property, plant and equipment as at 1 January 2004,
the date of transition to IFRS, is determined by reference to its fair value at that date.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other directly attributable cost of making the asset ready for its intended
use, and (if applicable) assessed costs of dismantling and removing the items and restoring the site on which they are
located, as well as capitalised borrowing costs. Purchased software that is integral to the functionality of the related
equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined as the difference between
proceeds from disposal and the carrying amount of property, plant and equipment and are recognised within ‘Other
operating income’ or ‘Other operating expenses’ in profit or loss.
As from 1 January 2009, costs of borrowings that may be directly attributable to the acquisition, construction or production
of an asset under construction, are also part of the cost of an item of property, plant and equipment. If borrowings raised
are not earmarked and they cannot be attributed directly to the acquisition of an asset under construction, the pro-rata
amount of costs is capitalised only when borrowing costs exceed 10% of the value of all investments of the accounting
period. The pro-rata amount of costs is calculated using the capitalisation rate as the weighted average costs of borrowings
that have not been settled in the accounting period. The pro-rata amount of costs increases the cost of significant assets
under construction, i.e. assets that account for more than 10% of total investments in the period and the construction of
which extends over a period of more than 6 months.
Subsequent expenditure
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it
is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be
measured reliably. The carrying amount of the replaced part is derecognised. All other costs are recognised in profit or
loss as an expense when incurred.
Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each item of property,
plant and equipment or its individual parts. Land and assets being acquired are not depreciated.
The estimated useful lives are as follows:
For buildings 15 to 60 years,
For plant and equipment 2 to 20 years,
For furniture 5 years,
For computer hardware 4 to 6 years, and
For means of transportation 5 to 15 years.
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Leases
At contract inception, the Company assesses whether a contract is, or contains a lease. That is, if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration.
As a lessee, the Company determines the lease term as the period during which the lease cannot be terminated, inclusive
of:
a) The period for which the option to extend the lease applies if it is reasonably certain that the lessee will exercise
that option; and
b) The period for which the option to terminate the lease applies if it is reasonably certain that the lessee will not
exercise that option.
The Company as a lessee
The Company applied a single measurement and recognition approach for all leases, except for current leases and leases
of low-value assets. In respect of those, the Krka Group applies a practical expedient of the standard and recognises lease
liabilities as expenses on a straight-line basis over the lease term. The practical expedient applies to leases with a lease
term of less than 1 year and leases of assets valued at less than €5,000.
The Company recognises right-of-use assets and lease liabilities at the commencement date of the lease (i.e. the date the
underlying asset is available for use).
Right-of-use assets
Right-of-use assets are measured at cost less any accumulated depreciation and impairment losses and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received,
as well as an assessment of costs that will be incurred in dismantling or removing the leased asset, restoring the site to its
original condition, or returning the asset to a condition as required in the lease terms.
The right-of-use assets are depreciated on a straight-line basis over the shorter of the estimated lease term or the
estimated useful lives of the assets.
Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid by the Company under residual value guarantees. The lease payments also include the exercise price
of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the
lease if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend
on an index or a rate are recognised in profit or loss as expenses in the period in which the event or condition that triggers
the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate based on estimated
bond returns if the Company were to incur debt on the financial markets, while considering their maturity if the interest rate
implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made.
The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in
the lease payments (e.g. changes to future payments resulting from a change in an index or rate used to determine such
lease payments) or a change in the assessment of an option to purchase the underlying asset.
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The Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset
are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and
is included in revenue in the statement of profit or loss. Initial direct costs incurred in negotiating and arranging an operating
lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as
rental income.
Intangible assets
Research and development
All costs referring to the research and development work within the Company are recognised in profit or loss as incurred.
Other intangible assets
Other intangible assets that are acquired by the Company, which have finite useful lives, are measured at cost less
accumulated amortisation and accumulated impairment losses (refer to the accounting policy ‘Impairment’).
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset
to which it relates. All other expenditure is recognised in profit or loss as incurred.
Amortisation
Amortisation is recognised on a straight-line basis over the estimated useful lives of intangible assets from the date that
they are made available for use.
The estimated useful lives for software, licences and other rights range from 2 to 10 years.
Inventories
In the statement of financial position, inventories are measured at the lower of cost and net realisable value. Net realisable
value is the estimated selling price at the reporting date less selling expenses and other potential administrative expenses,
which are usually associated with the sale. The Company reviews the net realisable value of inventories once a year at
the financial position date. If the carrying amount of inventories exceeds their net realisable value, inventories are impaired.
An inventory unit of raw materials and materials, auxiliary and packaging materials is valued at cost including all direct
costs of purchase. Inventories of material are carried at moving average prices. Inventories of finished products and work
in progress are carried at standard cost, which in addition to direct cost of material includes also cost of production, such
as: direct labour cost, direct cost of depreciation, direct cost of services, energy, maintenance, and quality management.
Fixed price variances are determined in accordance with the current valuation of inventories using production costs.
A quantity unit of merchandise is valued at cost including cost of purchase, import duties, and all costs directly attributable
to the acquisition decreased by discounts. Inventories of merchandise are carried at moving average prices.
Impairments
Financial assets
The Company recognises an allowance for the expected credit losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements
that are integral to the contractual terms.
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Expected credit losses are recognised in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are
possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant
increase in credit risk since the initial recognition, a loss allowance is required for credit losses expected over the remaining
life of the exposure, irrespective of the timing of the default (a lifetime ECL).
Impairments of receivables and assets from contracts
For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Trade
receivables that do not contain a significant financing component or for which the Company has applied the practical
expedient (contracts agreed for a period of one year or less) are measured at the transaction price determined under
IFRS 15 less any impairment losses.
Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on a lifetime
ECL at each reporting date. The Company has established a provision matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and the economic environment. Allowances are
recognised using uniform methodology applicable to the Company and in consideration of the probability or assessed
probability of receivable settlement by the debtors.
Impairment of investments
For investments that include government bonds measured at amortised cost, the Company measures expected credit
losses annually. If there has been a significant increase in credit risk since recognition, the Company recognises an
allowance over the life of the expected credit loss.
Non-financial assets
The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether
there is any indication of impairment. If such indications exist, the asset’s recoverable amount is assessed.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated
recoverable amount. Impairment loss is recognised in profit or loss. Impairment losses recognised in respect of cash-
generating units are allocated to assets in the unit (group of units) on a pro rata basis of the asset's carrying amount.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For
the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets.
Impairment losses recognised in previous periods are assessed at each reporting date for any indications that the loss
has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount of the asset. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised in the previous periods.
Share capital
Repurchase of treasury shares
When treasury shares recognised as a part of share equity are repurchased, the amount of the consideration paid,
including directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as
treasury shares and are presented as a deduction from total equity.
Dividends
Dividends are recognised in the Company’s financial statements in the period in which they are declared by the Annual
General Meeting.
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Current employee benefits
Current employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is
provided.
Non-current employee benefits
Provisions for post-employment benefits and other non-current employee benefits
Pursuant to the local legislation, Krka is liable to pay to its employees’ anniversary bonuses and termination benefits upon
retirement and recognises relevant amount of provisions for these purposes. The Company has no other pension
obligations.
Provisions are determined by discounting, at the reporting date, the estimated future benefits in respect of retirement
benefits and anniversary bonuses paid to employees in those countries where this legal obligation exists. The obligation
is calculated by estimating the costs of retirement benefits upon retirement and the costs of all expected anniversary
bonuses until retirement. The calculation is performed using the projected unit credit method. Employee benefit costs, as
well as cost of interest, are recognised in profit or loss, whereas restatement of post-employment benefits or unrealised
actuarial profit or loss is recognised in other comprehensive income.
Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the estimated future cash flows to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Provisions for disputes
The Company discloses provisions for lawsuits referring to alleged patent infringements. The eligibility of provisions formed
in terms of a favourable or unfavourable outcome of the lawsuit is assessed on an annual basis. The amounts of provisions
are defined on the basis of the noted amount of the indemnification claim, or on the basis of anticipated potential amount,
if the indemnification claim is not yet disclosed.
Revenue from contracts with customers
The Company is engaged in development, production, marketing and sale of human health products (prescription
pharmaceuticals, non-prescription products), animal health products, and material. Revenue from contracts with customers
is recognised when control of the goods and services is transferred to the customer at an amount that reflects the
consideration to which the Company expects to be entitled in exchange for those goods or services while considering
specific terms and conditions of an individual contract.
Transfer of control over those goods and services depends on terms and conditions of the contract. In general, control is
transferred when goods are accepted by the customer or services are rendered. The normal credit term ranges from 30 to
120 days.
The Company considers whether there are other promises in the contract that are separate performance obligations to
which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of products,
The Company considers the effects of variable consideration and the existence of significant financing components.
Variable consideration
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which
it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract
inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
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recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some
contracts for the sale of products provide customers with a right of return, bonuses, and volume rebates. The rights of
return, bonuses, and volume rebates give rise to variable consideration.
Rights of return
Certain contracts provide a customer with a right to return goods that are past the expiry date. The Company uses the
expected value method to estimate the goods that will not be returned because this method best predicts the amount of
variable consideration to which it will be entitled. The requirements of IFRS 15 on constraining estimates of variable
consideration are also applied in order to determine the amount of variable consideration that can be included in the
transaction price. For the goods expected to be returned instead of revenue, the Company recognises a refund liability.
A right-of-return asset (and corresponding adjustment to cost of products sold) is also recognised for the right to recover
products from a customer.
Bonuses and volume rebates
The Company provides retrospective bonuses and volume rebates to certain customers once the quantity or value of
products purchased during the period exceeds a threshold specified in the contract. Rebates are offset against amounts
payable by the customer. The Company estimates the variable consideration for the expected future bonuses and volume
rebates based on terms and conditions of the contract including criteria and elements that provide the basis for the
recognition of those bonuses and volume rebates. For valuation, the Company uses the most probable value method or
the expected value method. The method chosen, which best predicts the value of the rebates and volume discounts, is
based on the number of thresholds in the contract.
Disclosures about the use of estimates and judgements in estimating variable consideration are provided in the Basis of
preparation of the financial statements section.
Significant financing component
In some cases, the Company receives current advances from its customers. Using the practical expedient in IFRS 15.63,
the Company does not adjust the promised amount of consideration for the effects of a significant financing component if
it expects, at contract inception, that the period between the transfer of the promised goods or services to the customer
and when the customer pays for those goods or services will be one year or less.
For sales to the subsidiary Krka-Rus in the Russian Federation, the Company has in the past periods agreed payment
terms in excess of one year. In order to take into account a significant financing component, in such cases the transaction
price under these contracts is discounted using a discount rate that reflects the Company's separate financial transactions.
Contract balances
Contract assets
A contract asset is the right to an amount of consideration in exchange for goods or services transferred to the customer.
If the Company transfers goods or services to a customer before the customer pays consideration or payment is due, a
contract asset is recognised for the earned consideration that is conditional. Once the transaction is completed and the
customer is confirmed, the contract assets are reclassified as trade receivables.
Trade receivables
A receivable represents the Company's right to an amount of consideration that is unconditional, i.e. only the passage of
time is required before payment of consideration is due. Refer to the accounting policy ‘Recognition of financial
instruments’.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the goods
or services are transferred to the customer, a contract liability is recognised when the payment is made, or the payment is
due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
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Right-of-return assets
Right-of-return assets represent the Company's right to recover the goods expected to be returned by the customer.
The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods,
including any potential decreases in the value of returned goods. The Company regularly updates the measurement of the
asset recorded for any revisions to its expected level of returns, as well as any additional decreases in the value of the
returned products.
Refund liabilities
A refund liability is the obligation to refund some or all of the consideration received (or receivable from the customer). The
refund liability arises from bonuses and volume discounts. It is measured at the amount the Company ultimately expects
it will have to return to the customer.
The Company updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end
of each reporting period. Refer to above accounting policy on variable consideration.
Government grants
Revenue referring to government grants is initially recognised when there is reasonable assurance that they will be
received and that the Company will comply with the conditions associated with the grants. Revenue that compensates the
expenses incurred is recognised in profit or loss on a systematic basis in the same periods in which the costs are
recognised. Revenue that compensates an entity for the cost of an asset is recognised in profit or loss on a systematic
basis over the useful life of the asset.
Financial income and expenses
Financial income comprises interest income on funds invested, dividend income, gains on the disposal of financial assets,
changes in the fair value of financial assets at fair value through profit or loss, foreign exchange gains and gains on hedging
instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the
effective interest method. Dividend income is recognised on the date that the shareholder's right to receive payment is
established, which in the case of quoted securities is the ex-dividend date.
Financial expenses comprise interest expense on borrowings, foreign exchange losses, changes in the fair value of
financial assets at fair value through profit or loss, impairment losses recognised on financial assets, and losses on hedging
instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective
interest method, except those that are attributable to property, plant and equipment under construction.
Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the
extent that it relates to items recognised directly in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date,
and any adjustment to tax payable in respect of previous financial years.
Deferred tax is recognised using the balance sheet liability approach providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating
to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the
foreseeable future. Also, deferred tax is not recognised for taxable temporary differences arising on the initial recognition
of goodwill. The amount of deferred tax is based on the expected manner of settling the carrying amount of assets and
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
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liabilities using tax rates enacted at the reporting date. Deferred tax assets are offset against deferred tax liabilities when
an entity has a legal right to offset current assets and liabilities, and deferred tax assets and liabilities relate to the same
taxable entity and the same tax authority.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which
the deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
Earnings per share
The Company presents basic earnings per share (EPS) data. EPS is calculated by dividing the profit or loss attributable
to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the
period. Diluted EPS equals the basic EPS, as all the Company shares belong to the same class of ordinary no-par value
shares.
Segment reporting
An operating segment is a distinguishable component of Krka that is engaged in providing products or services within a
particular geographically defined economic environment. Segments are different in terms of risks and returns. The
Company's segment reporting is based on internal reporting system applied by the management in the decision-making
process.
The segments include: the EU (all countries of the European Union), South-Eastern Europe (Serbia, Bosnia and
Herzegovina, North Macedonia, Montenegro, Kosovo and Albania) and Eastern Europe (Russian Federation and other
former Soviet Union countries excluding the Baltic countries), as well as Other (countries not included in any of the above
segments).
Revenues generated by individual segments of the Company are presented in terms of customers’ geographical location.
The data are calculated on the basis of revenue and expenses, assets and liabilities directly attributable to each market of
the Company.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and
intangible assets.
Amendments to standards and interpretations issued but not yet effective
The following new and amended standards have not come into effect by the date of the financial statements and will be
applied in future periods. The Company will apply the new and revised standards and interpretations when they become
effective. The Company did not apply any revised standards or interpretations prior to their effective date.
Amendments to IFRS 10 – Consolidated Financial Statements and IAS 28 – Investments in Associates and Joint
Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in
dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main
consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (whether
it is housed in a subsidiary or not). A partial gain or loss is recognised by an entity when a transaction involves assets that
do not constitute the entity’s business, even if these assets are housed in a subsidiary. In December 2015, the IASB
postponed the effective date of this standard indefinitely pending the outcome of its research project on the equity method
of accounting. The amendments have so far not been endorsed by the EU. The management has assessed the impact of
the amendments and believes they will have no significant impact on the consolidated financial statements of the
Company.
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272
Amendments to IAS 1 – Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current
The amendments were initially effective for annual periods beginning on or after 1 January 2022. Early adoption was
permitted. In response to the COVID-19 pandemic, the IASB has deferred the effective date by one year, i.e.
by 1 January 2023, to provide companies with more time to implement any changes to the classification of liabilities
resulting from the amendments. The amendments help promoting consistency in applying the requirements by helping
entities determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement
date should be classified as current or non-current. The amendments affect the presentation of liabilities in the statement
of financial position; however, they do not change existing requirements around measurement or timing of recognition of
any asset, liability, income or expenses, nor the information that entities disclose about those items. Also, the amendments
clarify the classification requirements for debt which may be settled by an entity issuing own equity instruments.
In November 2021, the IASB published an Exposure Draft (ED) that clarifies how an entity treats liabilities that are subject
to commitments that are due to be fulfilled at a date after the reporting period.
In particular, the Board proposes a limited scope of amendments to IAS 1 that effectively repeal the 2020 amendments
that require an entity to classify the liabilities to which the commitments are linked as current liabilities that it is not required
to meet until within the next twelve months after the reporting period if it is not meeting them at the end of the reporting
period.
Instead, the proposed amendments require an entity to present separately and make additional disclosures about any
non-current liabilities, to which the commitments are linked that it is not required to meet until within the next twelve months
after the reporting period if it is not meeting them at the end of the reporting period.
The proposed amendments are effective for annual periods beginning on or after 1 January 2024 and, in accordance with
the requirements of IAS 8, an entity shall apply them retrospectively. Early adoption is permitted. At the same time, the
Management Board has proposed to postpone the entry into force of the amendments from 2020, which means that
companies do not need to change their existing practices before the proposed amendments enter into force. The EU has
not yet endorsed the updates to the standard and the drafts for public consultation. The management has assessed the
impact of the amendments and believes they will have no significant impact on the consolidated financial statements of
the Company.
Amendments to IFRS 3 – Business Combinations, IAS 16 – Property, Plant and Equipment, IAS 37 – Provisions,
Contingent Liabilities and Contingent Assets, as well as Annual Improvements 2018–2020
The amendments are effective for annual periods beginning on or after 1 January 2022. Early adoption is permitted. The
IASB has issued narrow-scope amendments to the IFRS standards as follows:
IFRS 3 Business Combinations (Amendments), updated reference to IFRS 3, Conceptual Framework for Financial
Reporting without changing the accounting requirements for business combinations.
IAS 16 Property, Plant and Equipment (Amendments) prohibit a company from deducting from the cost of property,
plant and equipment amounts received from selling items produced while the company is preparing the asset for
its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendments) specify which costs a company
includes in determining the cost of fulfilling a contract for the purpose of assessing whether a contract is onerous.
Annual Improvements 2018–2020 make minor amendments to IFRS 1 First-time Adoption of International Financial
Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying
IFRS 16 – Leases.
The management has assessed the impact of the amendments and believes they will have no significant impact on the
consolidated financial statements of the Company.
Amendments to IAS 1 – Presentation of Financial Statements and Note 2 to IFRS – Disclosure of Accounting Policies
The amendments are effective for annual periods beginning on or after 1 January 2023. Early adoption is permitted. The
amendments provide guidance for assessing materiality in the disclosure of accounting policies and replace the
requirement to disclose “significant” accounting policies with a requirement to disclose “material” accounting policies. At
the same time, the Note provides guidance and illustrative examples to assist in applying the concept of materiality in
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
273
assessing disclosures about accounting policies. The amendment has so far not been endorsed by the EU. The
management has assessed the impact of the amendments and believes they will have no significant impact on the
consolidated financial statements of the Company.
Amendments to IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors Definition of accounting
estimates
The amendments are effective for annual periods beginning on or after 1 January 2023. Early adoption is permitted. They
address changes in accounting policies and accounting estimates at the beginning of the period or subsequently and
define accounting estimates as monetary amounts in the financial statements that have measurement uncertainty
associated with them. They also explain what changes in accounting estimates are and how they differ from changes in
accounting policies and corrections of errors. The amendment has so far not been endorsed by the EU. The management
has assessed the impact of the amendments and believes they will have no significant impact on the consolidated financial
statements of the Company.
Amendments to IAS 12 – Income Taxes: Deferred Tax related to Assets and Liabilities from a single transaction
The amendments are effective for annual periods beginning on or after 1 January 2023. Early adoption is permitted. In
May 2021, the IASB issued amendments to IAS 12 to restrict the application of the initial recognition exemption under IAS
12 and to specify how an entity should account for deferred tax on certain transactions, such as leases and
decommissioning liabilities. Under the amendments, the exemption does not apply to transactions for which the taxable
amount at initial recognition is equal to the amount of deductible temporary differences. The exception applies only if, on
recognition of the leased asset and the related liability (or the liability in connection with the decommissioning and
decommissioning of a component of the asset), the taxable amount is not equal to the amount of the deductible temporary
differences. The amendment has so far not been endorsed by the EU. The management has assessed the impact of the
amendments and believes they will have no impact on the consolidated financial statements of the Company.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
274
4. Segment reporting
The Company reports in terms of certain geographical segments. Revenues generated by individual segments are presented in terms of customers’ geographical location. The data are
calculated on the basis of revenue and expenses, assets and liabilities directly attributable to each market of the Company.
Segment reporting
European Union
South-Eastern Europe
Eastern Europe
Other
Total
€ thousand
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Revenue
767,347
815,626
85,075
80,346
463,028
489,452
65,917
61,688
1,381,367
1,447,112
– Revenue from contracts with customers
761,005
809,659
85,075
80,346
462,982
489,401
65,703
61,524
1,374,765
1,440,930
– Other revenue
6,342
5,967
0
0
46
51
214
164
6,602
6,182
Other operating income
6,660
5,137
0
0
0
0
0
0
6,660
5,137
Operating costs
-648,942
-667,278
-59,187
-54,534
-353,383
-343,942
-53,190
-47,613
-1,114,702
-1,113,367
Operating profit
125,065
153,485
25,888
25,812
109,645
145,510
12,727
14,075
273,325
338,882
Interest income
501
438
0
0
0
8
0
2
501
448
Interest expenses
-497
-454
-2
-2
-11
-11
-3
-10
-513
-477
Net financial result
4,546
737
-61
-83
5,501
-40,634
2,645
-1,071
12,631
-41,051
Income tax
-18,641
-17,826
-3,859
-2,998
-16,343
-16,899
-1,897
-1,634
-40,740
-39,357
Net profit
110,970
136,396
21,968
22,731
98,803
87,977
13,475
11,370
245,216
258,474
Investments
49,493
61,311
0
0
0
0
0
0
49,493
61,311
Depreciation of property, plant and equipment
59,410
58,769
1,680
1,672
15,536
16,647
1,677
1,610
78,303
78,698
Depreciation of the right-of-use assets
721
549
20
15
194
160
20
15
955
739
Amortisation
3,113
3,218
345
317
1,879
1,931
268
243
5,605
5,709
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
Total assets
1,836,904
1,644,023
53,117
47,873
485,242
470,677
52,677
45,806
2,427,940
2,208,379
Total liabilities
372,823
288,890
22,299
15,112
125,083
95,513
31,593
17,014
551,798
416,529
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
275
5. Revenue from contracts with customers
Breakdown of revenue from contracts with customers
€ thousand
2021
2020
Revenue from contracts with customers (products)
1,211,494
1,222,011
Revenue from contracts with customers (materials)
163,271
218,919
Total revenue from contracts with customers
1,374,765
1,440,930
Revenue from contracts with customers by region
€ thousand
2021
2020
Slovenia
56,421
55,385
South-East Europe
205,491
197,185
East Europe
320,973
289,471
Central Europe
336,699
325,793
West Europe
246,350
313,365
Overseas Markets
45,560
40,812
Total
1,211,494
1,222,011
Revenue from contracts with customers by product groups
€ thousand
2021
2020
Prescription pharmaceuticals
1,017,273
1,039,105
Non-prescription products
118,527
110,562
Animal health products
75,694
72,344
Total
1,211,494
1,222,011
Contract balances
Trade receivables are described in Note 19 Trade and other receivables, while liabilities recognised from contracts with
customers in Note 27 Current liabilities from contracts with customers. The Company recognised assets from contracts
with customers in the amount of €300 thousand (2020: €501 thousand) and liabilities from contracts in the amount of
€5,839 thousand (2020: €4,641). Recognised assets and liabilities arising from contracts with customers are reported in
the statement of financial position.
Right-of-return assets and liabilities
The Company recognised right-of-return liabilities as accrued bonuses, volume rebates and discounts on products sold to
other customers in the amount €13,638 thousand (2020: €11,940 thousand). There were no right-of-return entitlements.
Performance obligations
The Company is engaged in the development, production, marketing and sale of human health products (prescription
pharmaceuticals, non-prescription products), animal health products, and material. Revenue from contracts with customers
is recognised when control of the goods and services is transferred to the customer at an amount that reflects the
consideration to which the Company expects to be entitled in exchange for those goods or services, while considering
specific terms and conditions of an individual contract.
Transfers of risks and rewards depend on terms and conditions of an individual contract. Generally, the transfer occurs
when the customer accepts the goods in accordance with INCOTERMS 2020 or when the relevant services are performed.
Payment terms vary from region to region (distribution channels), while the normal credit term ranges from 30 to 120 days.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
276
At the year-end, the Company incurred no costs on acquisition or fulfilment of contracts with customers.
6. Other operating income
€ thousand
2021
2020
Reversal of non-current provisions
3,332
2,058
Deferred revenue reversal
870
640
Gains on sale of property, plant and equipment and intangible assets
515
396
Revaluation operating revenue – leases
3
7
Other operating income
1,940
2,036
Total other operating income
6,660
5,137
Other operating income includes €489 thousand (2020: €1,172 thousand) of government grants aimed at curbing the
COVID-19 pandemic. The government grants received were linked to the fulfilment of conditions from past operations and
are therefore fully recognised in the 2021 financial statements.
7. Costs by nature
€ thousand
2021
2020
Cost of goods and materials
388,639
414,326
Cost of services
307,464
305,619
Employee benefits
305,192
301,908
Amortisation and depreciation
84,863
85,146
Inventory write-offs and allowances (net)
17,287
12,895
Receivable impairments and write-offs (net)
50
-1,177
Formation of provisions for lawsuits
543
0
Other operating expenses
25,053
24,220
Total costs
1,129,091
1,142,937
Change in the value of inventories of finished products and work in progress
-14,389
-29,570
Total
1,114,702
1,113,367
8. Employee benefits
€ thousand
2021
2020
Gross wages and salaries and continued pay
234,331
231,236
Social security contributions
16,173
16,209
Pension insurance contributions
31,079
30,349
Post-employment benefits and other non-current employee benefits
7,020
7,464
Other employee benefits
16,589
16,650
Total employee benefits
305,192
301,908
Post-employment benefits and other non-current employee benefits are detailed in Note 24 Provisions. Other employee
benefits include primarily vacation bonuses and commuting allowances.
Compulsory pension and disability insurance (comprising both the employee’s and the employer’s contribution) payable
in 2021 amounted to €57,825 thousand (2020: €56,422 thousand). Compulsory pension and disability insurance amounted
to €57,825 thousand, and there was no exemption from compulsory pension and invalidity insurance contributions.
Supplementary pension insurance contributions amounted to €8,913 thousand in 2021 (2020: €8,448 thousand).
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277
9. Other operating expenses
€ thousand
2021
2020
Grants and assistance for humanitarian and other purposes
1,409
1,286
Environmental protection expenditures
3,653
3,528
Other taxes and levies
15,040
15,819
Loss on sale and write-offs of property, plant and equipment and intangible assets
2,506
1,138
Other operating expenses
2,445
2,449
Total other operating expenses
25,053
24,220
Other levies include €13,100 thousand of various taxes and levies paid on pharmaceuticals and fees paid to associates in
individual foreign countries for pursuing promotional activities (2020: €13,892 thousand).
10. Financial income and expenses
€ thousand
2021
2020
Net foreign exchange differences
15,111
0
Interest income
501
448
Derivatives income
2,968
20,319
– Realised revenue
2,002
17,212
– Fair value change
966
3,107
Income from dividends and other profit shares
6,075
7,247
– Dividends
691
650
– Profits of subsidiaries
5,384
6,597
Other financial income
59
3,772
Total financial income
24,714
31,786
Net foreign exchange differences
0
-56,392
Interest expenses
-513
-477
– Interest paid
-466
-428
– Interest expenses on lease liabilities
-47
-49
Derivatives expenses
-10,459
-14,443
– Incurred expenses
-10,459
-14,443
Other financial expenses
-1,111
-1,525
Total financial expenses
-12,083
-72,837
Net financial result
12,631
-41,051
The net financial result in 2021 was better mainly due to a better result of €71,503 thousand in the net foreign exchange
result. In 2021, Krka continued its policy of partial hedging against rouble-related risk and the US dollar with financial
instruments. The most significant impact was the exchange rate of the rouble (final exchange rate on 31 December 2021
€1 = RUB 85.3004 and on 31 December 2020 €1 = RUB 91.4671).
Detailed information on the risk of changes in foreign exchange rates can be found in Note 32 Financial Instruments and
Financial Risks and in the chapter Risk Management in the Business Part of the Report.
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278
11. Income tax
Adjustment to effective tax rate
€ thousand
2021
2020
Income tax
40,905
39,436
Deferred tax
-165
-79
Total income tax
40,740
39,357
Profit before tax
285,956
297,831
Income tax calculated at the rate of 19% (the same as in 2020)
54,332
56,588
Income tax from increased expenses
728
-846
Income tax from non-exempt expenses
2,598
2,370
Income tax from tax incentives
-15,664
-17,172
Income tax from adjustment of revenue decreasing the tax base
-1,254
-1,583
Total income tax
40,740
39,357
Effective tax rate
14.2%
13.2%
Investments in R&D and investment relief represent the major share of tax incentives.
12. Property, plant and equipment
€ thousand
31 Dec 2021
31 Dec 2020
Land
28,065
27,758
Buildings
248,553
263,859
Equipment
255,802
280,433
Property, plant and equipment being acquired
32,960
27,242
Advances for property, plant and equipment
1,661
3,021
Right-of-use assets
3,045
2,851
Total property, plant and equipment
570,086
605,164
In 2021, the most significant investments in the Company include the relocation of small series production and the increase
of semi-finished products production capacity in Notol 2 in the amount of €7,260 thousand (2020: €7,025 thousand), and
the construction of Sinteza 2 in Krško in the amount of €5,351 thousand (2020: €1,247 thousand). A total of
€3,606 thousand was spent on various projects in the area of information technology and telecommunications (2020:
€4,279 thousand), for relocation and redevelopment projects. €3,470 thousand (€691 thousand in 2020) were earmarked
for the reconstruction of RCC 4 and RCC 1 in the Laboratory Control Room, and €2,583 thousand (€4 thousand in 2020)
for the reconstruction of RCC 2 and the relocation of equipment to RCC 4.
Most of the right-of-use assets relate to the right-of-use buildings in the amount of €3,026 thousand (2020:
€2,839 thousand).
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279
Movements in property, plant and equipment (PP&E)
€ thousand
Land
Buildings
Equipment
PP&E being
acquired
Advances
for PP&E
Right-of-use
assets
Total
Cost
At 1 Jan 2020
27,074
595,912
982,172
31,473
769
3,719
1,641,119
Merger by acquisition
0
12,358
22,482
0
0
0
34,840
Additions
0
0
0
53,477
2,252
0
55,729
Capitalisation – transfer
from PP&E under
construction
684
10,293
46,731
-57,708
0
0
0
Capitalisation – IFRS 16
Leases
0
0
0
0
0
738
738
Disposals, impairment,
deficit, surplus
0
-58
-13,055
0
0
-397
-13,510
Transfers, reclassification
0
289
-274
0
0
-10
5
At 31 Dec 2020
27,758
618,794
1,038,056
27,242
3,021
4,050
1,718,921
At 1 Jan 2021
27,758
618,794
1,038,056
27,242
3,021
4,050
1,718,921
Additions
0
0
0
46,017
-1,360
0
44,657
Capitalisation – transfer
from PP&E under
construction
307
6,104
33,031
-39,442
0
0
0
Capitalisation – IFRS 16
Leases
0
0
0
0
0
1,320
1,320
Disposals, impairment,
deficit, surplus
0
-683
-12,167
-857
0
-259
-13,966
Transfers, reclassification
0
0
8
0
0
0
8
At 31 Dec 2021
28,065
624,215
1,058,928
32,960
1,661
5,111
1,750,940
Accumulated
depreciation
At 1 Jan 2020
0
-330,054
-697,234
0
0
-621
-1,027,909
Merger by acquisition
0
-3,849
-15,238
0
0
0
-19,087
Depreciation
0
-21,035
-57,663
0
0
-739
-79,437
Disposals, deficit, surplus
0
0
12,520
0
0
160
12,680
Transfers, reclassification
0
3
-8
0
0
1
-4
At 31 Dec 2020
0
-354,935
-757,623
0
0
-1,199
-1,113,757
At 1 Jan 2021
0
-354,935
-757,623
0
0
-1,199
-1,113,757
Depreciation
0
-21,115
-57,188
0
0
-955
-79,258
Disposals, deficit, surplus
0
388
11,691
0
0
88
12,167
Transfers, reclassification
0
0
-6
0
0
0
-6
At 31 Dec 2021
0
-375,662
-803,126
0
0
-2,066
-1,180,854
Carrying amount
At 1 Jan 2020
27,074
265,858
284,938
31,473
769
3,098
613,210
At 31 Dec 2020
27,758
263,859
280,433
27,242
3,021
2,851
605,164
At 1 Jan 2021
27,758
263,859
280,433
27,242
3,021
2,851
605,164
At 31 Dec 2021
28,065
248,553
255,802
32,960
1,661
3,045
570,086
No borrowing costs relate to the items of property, plant and equipment in 2021.
The carrying amount of the items of property, plant and equipment, which are temporarily not used amounted to
€1,348 thousand as at 31 December 2021 (2020 year-end: €1,300 thousand).
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Of total property, plant and equipment in use as at 31 December 2021, 39% was fully depreciated (2020 year-end: 36%).
The share of fully depreciated property, plant and equipment is calculated in consideration of their cost. Land is excluded
from the calculation.
All property, plant and equipment is free of encumbrances. The status of known future commitments related to the
acquisition of property, plant and equipment is disclosed in Note 29 Contingent Liabilities and Commitments.
The movements and lease liabilities recognised in profit or loss are presented in Notes 30 Leases and 32 Financial
Instruments and Risk.
13. Intangible assets
€ thousand
31 Dec 2021
31 Dec 2020
Concessions, trademarks and licences
21,699
23,443
Intangible assets being acquired
3,929
4,450
Total intangible assets
25,628
27,893
Intangible assets refer to software and registration documentation for new pharmaceuticals.
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Movement of intangible assets (IA)
€ thousand
Concessions,
trademarks and
licences
IA
being acquired
Total
Cost
At 1 Jan 2020
107,475
4,062
111,537
Merger by acquisition
438
0
438
Additions
0
5,582
5,582
Transfer from IA being acquired
4,839
-4,839
0
Disposals, deficit, surplus
-627
-355
-982
Transfers, reclassification
-5
0
-5
At 31 Dec 2020
112,120
4,450
116,570
At 1 Jan 2021
112,120
4,450
116,570
Additions
0
4,836
4,836
Transfer from IA being acquired
4,404
-4,404
0
Disposals, deficit, surplus
-541
-953
-1,494
Transfers, reclassification
-8
0
-8
At 31 Dec 2021
115,975
3,929
119,904
Accumulated depreciation
At 1 Jan 2020
-83,127
0
-83,127
Merger by acquisition
-354
0
-354
Amortisation
-5,709
0
-5,709
Disposals, deficit, surplus
509
0
509
Transfers, reclassification
4
0
4
At 31 Dec 2020
-88,677
0
-88,677
At 1 Jan 2021
-88,677
0
-88,677
Amortisation
-5,605
0
-5,605
Transfers, reclassification
6
0
6
At 31 Dec 2021
-94,276
0
-94,276
Carrying amount
At 1 Jan 2020
24,348
4,062
28,410
At 31 Dec 2020
23,443
4,450
27,893
At 1 Jan 2021
23,443
4,450
27,893
At 31 Dec 2021
21,699
3,929
25,628
Of total intangible assets in use as at 31 December 2021, 58% was fully amortised (55% as at 31 December 2020).
The share of fully amortised intangible assets is calculated in consideration of their cost.
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14. Investments in subsidiaries
Movement of investments in subsidiaries
€ thousand
Investments in subsidiaries
Cost
At 1 Jan 2020
338,326
Subsequent payments
11,281
Merger by acquisition
-1,004
At 31 Dec 2020
348,603
At 1 Jan 2021
348,603
Establishment of new companies
25
Subsequent payments
7,799
Refunds of subsequent contributions
-992
At 31 Dec 2021
355,435
Accumulated depreciation
At 1 Jan 2020
-8,991
At 31 Dec 2020
-8,991
At 1 Jan 2021
-8,991
At 31 Dec 2021
-8,991
Carrying amount
At 1 Jan 2020
329,335
At 31 Dec 2020
339,612
At 1 Jan 2021
339,612
At 31 Dec 2021
346,444
The Company reviews whether there are any indications for impairment of investments in subsidiaries at least once a year.
The fair value of an investment that may be impaired is determined by applying methods that are most appropriate in an
individual investment. The most recent assessment was performed in November 2021.
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Investments in subsidiaries
Ownership
share
Share capital
Value of share
in subsidiaries
€ thousand
31 Dec 2021
31 Dec 2021
31 Dec 2021
31 Dec 2020
KRKA-RUS LLC, Istra, Russian Federation
100%
62,853
118,916
118,916
TAD Pharma GmbH, Cuxhaven, Germany
100%
6,650
97,000
97,000
TERME KRKA, d. o. o., Novo mesto, Slovenia
100%
14,753
36,416
36,416
Ningbo Krka Menovo Pharmaceutical Ltd., Ningbo, China
60%
48,067
26,414
18,615
KRKA-FARMA d.o.o., Zagreb, Croatia
100%
19,031
19,738
19,738
KRKA – POLSKA Sp. z.o.o., Warsaw, Poland
100%
3,805
18,697
18,697
KRKA FARMA LLC, Istra, Russian Federation
100%
8,838
15,170
15,170
Krka France Eurl, Paris, France
100%
10
4,662
4,662
KRKA Pharma GmbH, Vienna, Austria
100%
36
2,344
2,344
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
100%
10
2,266
2,266
KRKA Farmaceutici Milano, S.r.l., Milan, Italy
100%
10
1,350
1,350
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
100%
1
1,042
1,042
KRKA Finland Oy, Espoo, Finland
100%
2
1,003
1,003
KRKA-FARMA DOOEL, Skopje, North Macedonia
100%
797
802
802
KRKA Belgium, SA, Brussels, Belgium
100%
300
285
285
KRKA Magyarország Kft., Budapest, Hungary
100%
122
184
184
123 Acurae Pharma GmbH, Cuxhaven, Germany
100%
25
25
0
KRKA Sverige AB, Stockholm, Sweden
100%
15
16
16
LLC ´KRKA Kazakhstan´, Almaty, Kazakhstan
100%
12
11
11
KRKA Bulgaria EOOD, Sofia, Bulgaria
100%
10
10
10
KRKA FARMA, d.o.o., Sarajevo, Bosnia and Herzegovina
100%
10
10
10
KRKA FARMACÉUTICA, S.L., Madrid, Spain
100%
10
10
1,002
KRKA HELLAS E.P.E., Athens, Greece
100%
10
10
10
KRKA ROMANIA S.R.L., Bucharest, Romania
100%
7
10
10
KRKA Slovensko, s.r.o., Bratislava, Slovakia
100%
10
10
10
SIA KRKA Latvija, Riga, Latvia
100%
10
10
10
UAB KRKA Lietuva, Vilnius, Lithuania
100%
10
10
10
KRKA UKRAINE LLC, Kiev, Ukraine
100%
3
9
9
KRKA USA LLC, Wilmington, USA
100%
9
8
8
KRKA ČR, s. r. o., Prague, Czech Republic
100%
4
3
3
KRKA UK Ltd, London, United Kingdom
100%
1
2
2
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
100%
1
1
1
Total
165,432
346,444
339,612
The subsidiary Terme Krka, d. o. o. had a 100% interest in Golf Grad Otočec, d. o. o., at 31 December 2021; the subsidiary
KRKA France Eurl had a 100-percent interest in HCS bvba in Belgium. The Chinese company Ningbo Menovo
Pharmaceutical Co. Ltd. has a 40-percent holding of the company Pharmaceutical Ltd. has a 40-percent holding of the
company Ningbo Krka Menovo.
Impairment test of equity investment in Terme Krka
An impairment test of Krka's equity investment in Terme Krka was made as there were signs that the asset may be impaired
due to the impact of the COVID-19 pandemic on the economic environment. In 2021, with the PCT conditions in 2021, the
tourism and health resorts services are operating normally. A portion of the loss of revenue during the closure of activities
was recovered by Terme Krka, also on account of State measures imposed to overcome the issues facing the economy
(tourist vouchers), improved occupancy and higher prices due to a greater number of direct bookings and a drop in
bookings made through agencies. Terme Krka's performance in 2021 was successful.
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The asset's recoverable amount is the greater of the fair value net of selling expenses or value in use. For the purposes
of the impairment test, the equity investment's recoverable amount was determined based on its value in use, i.e. using
cash flow projections based on five-year financial plans of the cash-generating unit, under the assumption of a gradual
normalisation of the circumstances. The discount rate of 7.0%, and the long-term growth rate of net cash flows (g) after
the forecast period (after 2026) of 2% were applied in the projection. In the opinion of the management, a reasonable
change in the discount rate or growth rate would not result in the asset impairment of the cash-generating unit.
Considering the above assumptions, the assessed recoverable amount of the investment in Terme Krka exceeds the
carrying amount and therefore no impairment of the cash-generating unit required.
15. Loans
€ thousand
31 Dec 2021
31 Dec 2020
Non-current loans
31,010
35,024
– Loans to subsidiaries
18,850
23,650
– Loans to others
12,160
11,374
Current loans
195,459
57,836
– Portion of non-current loans maturing next year
4,163
4,022
– Loans to subsidiaries
1,055
707
– Loans to others
190,287
53,094
– Current interest receivable
-46
13
Total loans
226,469
92,860
The annual rate of interest agreed on conclusion of loan contracts within the Krka Group companies, is the rate of interest
set by the Minister of Finance in accordance with the Corporate Income Tax Act that defines the interest rate for related
parties. In 2021, the interest rate ranged from 0.0086% to 0.0165%.
Non-current loans to other entities comprise loans that are extended to the employees in accordance with internal rules of
the Company. These loans are used for the purchase or renovation of dwellings. The actual interest rate fluctuated
between 0.269% and 0.367% in 2021 (2020: between 0.294% and 0.707%). The maximum repayment period is 15 years.
Current loans to others include bank deposits in total of €190,264 thousand maturing in more than 90 days (2020 year-
end: €52,988 thousand).
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Loans to subsidiaries including related current interest receivable
€ thousand
31 Dec 2021
31 Dec 2020
Non-current loans to subsidiaries
18,850
23,650
TERME KRKA, d. o. o., Novo mesto, Slovenia
16,800
21,500
KRKA Farmaceutici Milano, S.r.l., Milan, Italy
2,000
2,000
KRKA Bulgaria EOOD, Sofia, Bulgaria
50
150
Current loans to subsidiaries, inclusive of the current amounts of non-current
loans
3,559
3,215
TERME KRKA, d. o. o., Novo mesto, Slovenia
2,500
2,705
KRKA Finland Oy, Espoo, Finland
462
12
KRKA HELLAS E.P.E., Athens, Greece
365
145
SIA KRKA Latvija, Riga, Latvia
115
175
123 Acurae Pharma GmbH, Cuxhaven, Germany
80
0
HCS bvba*, Edegem, Belgium
33
33
Krka France Eurl, Paris, France
2
34
TAD Pharma GmbH, Cuxhaven, Germany
1
3
KRKA Sverige AB, Stockholm, Sweden
1
0
KRKA Belgium, SA, Brussels, Belgium
0
106
KRKA UKRAINE LLC, Kiev, Ukraine
0
1
KRKA FARMACÉUTICA, S.L., Madrid, Spain
0
1
Total loans to subsidiaries
22,409
26,865
* Subsidiary Krka France Eurl holds a 100% stake in HCS bvba
The maximum repayment period on non-current loans to subsidiaries as at 31 December 2021 is three years.
16. Investments
€ thousand
31 Dec 2021
31 Dec 2020
Non-current investments
108,882
10,419
– Financial assets at fair value through OCI
15,860
10,419
– Financial assets at amortised cost
93,022
0
Current investments including derivatives
155,448
524
– Financial assets at amortised cost
113,987
0
– Derivatives
1,491
524
– Other current financial investments at fair value through profit or loss
39,970
0
Total investments
264,330
10,943
Financial assets at fair value through other comprehensive income (OCI) comprised €1,001 thousand of investments in
shares and interests in companies in Slovenia (2020 year-end: €801 thousand), and €14,859 thousand of investments in
shares of companies located abroad (2020 year-end:€9,619 thousand). Investments at amortised cost include investments
in Slovenian government bonds amounted to €4,455 thousand, while investments in foreign government bonds amounted
to €202,554 thousand. Other current investments at fair value through profit or loss include an investment in a foreign
highly liquid money market fund of €39,970 thousand. In 2020, there were no investments in government bonds and money
market funds.
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Movement in financial assets
€ thousand
Financial assets at
fair value through
OCI
Financial assets at
amortised cost
Financial assets at
fair value through
profit or loss
At 1 Jan 2020
9,680
0
0
Adjustment to market value
739
0
0
At 31 Dec 2020
10,419
0
0
At 1 Jan 2021
10,419
0
0
Increase
0
205,946
40,000
Decrease
0
0
0
Exchange rate differences
0
1,063
0
Adjustment to market value
5,441
/
-30
At 31 Dec 2021
15,860
207,009
39,970
Adjustments of non-current investments at fair value through OCI were recognised in other comprehensive income in the
amount of €5.441 thousand in 2020 (2020: €739 thousand). Exchange differences on investments at amortised cost of
€1,063 thousand are recognised in financial income. The mark-to-market adjustment of investments at fair value through
profit or loss in the amount of -€30 thousand is recognised in financial expenses.
17. Deferred tax assets and liabilities
Assets
Liabilities
€ thousand
2021
2020
2021
2020
Financial assets at fair value through OCI
1,727
1,727
2,466
1,432
Receivables
1,484
1,447
0
0
Dividends
19
14
0
0
Provisions for post-employment benefits and other non-current
employee benefits
11,978
12,411
0
0
Provisions for post-employment benefits and other non-current
employee benefits – effect of the merger by acquisition
0
55
0
0
Total
15,208
15,654
2,466
1,432
Offsetting
-2,466
-1,432
-2,466
-1,432
Net
12,742
14,222
0
0
€ thousand
At
1 Jan
2020
Recognised
in P&L
Recognised
in OCI
Merger by
acquisition–
P&L
Merger by
acquisition–
OCI
At
31 Dec
2020
Recognised
in P&L
Recognised
in OCI
At
31 Dec
2021
Financial assets at fair
value through OCI
436
0
-141
0
0
295
0
-1,034
-739
Receivables
1,535
-88
0
0
0
1,447
37
0
1,484
Dividends
95
-81
0
0
0
14
5
0
19
Provisions for post-
employment benefits and
other non-current
employee benefits
11,121
248
1,042
58
-3
12,466
123
-611
11,978
Total
13,187
79
901
58
-3
14,222
165
-1,645
12,742
The relevant amount of deferred tax assets and liabilities was calculated using the 19% income tax rate.
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18. Inventories
€ thousand
31 Dec 2021
31 Dec 2020
Materials
183,593
182,523
Work in progress
89,744
90,196
Finished products
108,124
105,170
Merchandise
10,773
10,062
Advances for inventories
2,089
1,227
Total inventories
394,323
389,178
The write-downs and write-offs of inventories to their net realisable value amounted to €17,287 thousand in 2021, and
€12,895 in 2020.
The Company has no pledged stock as a liability guarantee.
19. Trade and other receivables
€ thousand
31 Dec 2021
31 Dec 2020
Current trade receivables
424,588
415,286
– Receivables due from subsidiaries
234,064
242,370
– Receivables due from customers other than Group companies
191,294
174,505
– Deferred revenue from contracts with customers
-770
-1,589
Current receivables for dividends
99
76
– Current receivables for other dividends
99
76
Other current receivables
17,282
15,591
Total trade and other receivables
441,969
430,953
Of the total amount, 99.1% of trade receivables due from customers other than related parties was insured with the Coface
PKZ, d. d. insurance company (2020 year-end: 98.7%).
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Current trade receivables
Current trade receivables due from subsidiaries
€ thousand
31 Dec 2021
31 Dec 2020
KRKA-RUS LLC, Istra, Russian Federation
104,394
118,451
KRKA FARMA LLC, Istra, Russian Federation
52,541
43,434
KRKA Sverige AB, Stockholm, Sweden
16,508
19,419
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
9,098
8,407
KRKA – POLSKA Sp. z.o.o., Warsaw, Poland
8,763
7,192
KRKA-FARMA DOOEL, Skopje, North Macedonia
8,750
8,582
LLC ´KRKA Kazakhstan´, Almaty, Kazakhstan
7,667
6,637
Krka France Eurl, Paris, France
5,384
6,799
TAD Pharma GmbH, Cuxhaven, Germany
4,558
0
KRKA Farmaceutici Milano S.r.l., Milan Italy
3,843
5,541
KRKA Finland Oy, Espoo, Finland
3,175
3,580
KRKA-FARMA d.o.o., Zagreb, Croatia
3,091
1,392
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
1,360
2,033
KRKA Belgium, SA, Brussels, Belgium
1,301
2,726
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
1,137
2,329
KRKA Pharma GmbH, Vienna, Austria
1,026
846
KRKA FARMACÉUTICA, S.L., Madrid, Spain
605
2,692
KRKA UK Ltd, London, United Kingdom
244
1,845
Ningbo Krka Menovo Pharmaceutical Co. Ltd., Ningbo, China
200
247
Receivables due from other Group companies
419
218
Total current trade receivables due from subsidiaries
234,064
242,370
Current trade receivables due from customers other than Group companies
€ thousand
Gross value
Receivable
allowances
Net value at
31 Dec 2021
Net value at
31 Dec 2020
Current trade receivables due from domestic customers other than
Group companies
10,394
13
10,381
7,641
Current trade receivables due from foreign customers other than
Group companies
215,465
34,552
180,913
166,864
Deferred revenue from contracts with foreign customers
-770
0
-770
-1,589
Total current trade receivables due from customers other than
Group companies
225,089
34,565
190,524
172,916
The net amount of the receivable write-offs and impairment disclosed in operating expenses amounted to €50 thousand
in 2021 (2020: -€1,177 thousand).
Other receivables
The major proportion of other current receivables in total of €17,282 thousand (2020: €15,591 thousand) was due from the
State on account of VAT amounting to €10,227 thousand (€8,987 thousand as at 31 December 2020).
Advances for services reached €777 thousand (€764 thousand as at 31 December 2020).
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20. Cash and cash equivalents
€ thousand
31 Dec 2021
31 Dec 2020
Cash in hand
1
1
Bank balances
144,980
296,397
Total cash and cash equivalents
144,981
296,398
The Company concluded contracts with two banks to secure bank overdrafts in total of €5,415 thousand (in 2020, contracts
in total of €5,075 thousand were concluded with two banks). No negative balances were recorded on these bank accounts
as at 31 December 2021 as no overdraft facilities were used.
The Company had an undrawn credit facility of €20,000 thousand as at 31 December 2021 (as at 31 Dec 2020
totalling €20,000 thousand).
21. Equity
Share capital
Krka reduced its share capital by withdrawal of 2,632,672 treasury shares, accounting for 7.431% of all shares issued, in
accordance with resolution adopted at the 19th Annual General Meeting on 3 July 2014. After the withdrawal of treasury
shares, the share capital of Krka in the amount of €54,732 thousand is represented by 32,793,448 ordinary no-par value
shares. Krka has one share class only, and the first and only issue of shares was carried out in 1995. The share capital
was fully paid.
Treasury shares
At the 26
th
Annual General Meeting on 9 July 2020, the Management Board was granted authorisation for the purchase of
treasury shares. However, the total amount of treasury shares should not exceed the 10% of Company's share capital, i.e.
3,279,344 shares, whereby the total amount is inclusive of shares already held by Krka as at the date. The authorisation
is valid for a period of 36 months from the date of the decision adoption.
Based on this authorisation, Krka is allowed to acquire treasury shares on the regulated market at respective market prices.
The Company may also acquire treasury shares outside the regulated market. When purchasing treasury shares on the
regulated market or non-regulated market, the purchase price must not be lower than the book value based on the last
published audited financial statements of the Krka Group. Furthermore, the purchase price must not exceed 25-fold the
earnings per share held by the majority stakeholders as stated in the last published audited financial statements of the
Krka Group.
Pursuant to paragraphs 3 and 4, Article 381 of the Companies Act, an entity may reduce the share capital by withdrawal
of all treasury shares in a simplified procedure and recognise the amount against other profit reserves.
Repurchase of treasury shares in 2021
No. of shares
Weighted average
share price (€)
Value of treasury
shares (€ thousand)
At 31 Dec 2020
1,541,774
99,279
Repurchases in 2021
142,134
107.38
15,262
At 31 Dec 2021
1,683,908
114,541
The repurchase of treasury shares in 2021 refers to repurchases that were recorded in books of accounts in 2021.
A subscription fee is included in the weighted average price of shares.
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The 2021 repurchase of treasury shares in terms of days is illustrated within Enclosure 1 to the Financial Statements of
the Krka Group and Krka, d. d., Novo mesto.
Reserves
The Company's reserves comprise reserves for treasury shares, the share premium, legal and statutory reserves and fair
value reserve.
Reserves for treasury shares amounted to €114,541 thousand at the reporting date and increased by
€15,262 thousand based on their formation as a result of additional repurchase of treasury shares.
The share premium is to be used under the terms and purposes as defined by the applicable act. The share premium was
reported at €105,897 thousand as at 31 December 2021 and consisted of the general equity revaluation adjustment
(€90,659 thousand) that was included in share premium during the transfer to IFRSs; the share premium
(€10,844 thousand) formed pursuant to a special regulation applicable in the ownership transformation of the controlling
company; and €4,394 thousand of share premium resulting from reduction in the share capital due to the withdrawal of
treasury shares. The amount may be used solely for the purpose of increasing share capital. In 2021, the value of share
premium remained unchanged.
Legal reserves are to be formed up to 30% of the share capital. They amounted to €14,990 thousand as at
31 December 2021 and remained unchanged compared to the previous period.
Statutory reserves amounted to €30,000 thousand as at the reporting date and remained unchanged over the previous
period. Statutory reserves are formed by Krka up to the amount of €30,000 thousand. Statutory reserves can be used for
loss coverage, formation of reserves for treasury shares, for decreasing share capital by share withdrawal, and for
regulating the dividend policy.
The fair value reserve includes the cumulative change in the fair value of financial assets and post-employment benefits.
Compared to the previous period, the fair value reserve increased by €12,375 thousand and amounted to
-€19,004 thousand as at 31 December 2021. The cumulative change is due to a €5,441 thousand increase in the fair value
of financial assets through OCI (equity instruments); an increase due to the restatement of post-employment benefits of
€8,579 thousand, and a decrease for the impact of deferred taxes of €1,645 thousand.
Retained earnings
Retained earnings grew based on the majority shareholder's profit of €245,216 thousand; on the other hand, they
decreased as a result of allocation of €155,896 thousand of accumulated profit to dividend payment in accordance with
the resolution adopted at the 27
th
Annual General Meeting held on 8 July 2021, and an additional formation of reserves for
treasury shares in total of €15,262 thousand.
The amount of the dividend payout reported in the statement of cash flows, differs from the figure confirmed by the Annual
General Meeting and reported in the statement of changes in equity by €11 thousand of dividends paid in respect of
previous periods (2020: €9 thousand).
Dividends per share
In 2021, the declared gross dividend per share was €5.00 (2020: €4.25).
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
291
Identification of distributable profit
Data in the following table is expressed in €, unlike all other tables in the financial report, where data is expressed in
€ thousand.
€
2021
2020
Compulsory appropriation of profit
Net profit
245,216,436.23
258,473,731.06
– To cover the loss from previous periods
0.00
0.00
– Allocation to legal reserves
0.00
0.00
– Allocation to reserves for treasury shares
-15,261,862.79
-25,504,335.93
– Allocation to statutory reserves
0.00
0.00
Profit after compulsory appropriation
229,954,573.44
232,969,395.13
– Formation of other profit reserves under the resolution of the Management and
Supervisory Boards
0.00
0.00
– Net profit – the merger effect
0.00
1,777,841.82
Surplus of profit
229,954,573.44
234,747,236.95
Identification of distributable profit
– Surplus of profit
229,954,573.44
234,747,236.95
– Transferred profit
88,670,552.72
67,270,600.18
– Transferred profit – the merger effect
0.00
35,501,993.87
Distributable profit
318,625,126.16
337,519,831.00
22. Earnings per share
Basic earnings per share amounted €7.86 in 2021, a decrease of 4% on the previous year, when it amounted to €8.23.
The calculation took into account the net profit of €245,216 thousand (2020: €258,474 thousand). The weighted average
number of shares was accounted for in the calculation for both years, i.e. 31,185,323 shares for 2021 and
31,400,501 shares for 2020. Treasury shares were eliminated from the calculation.
All shares issued by the Company are ordinary shares, hence the diluted earnings per share ratio equals the basic earnings
per share.
23. Borrowings
€ thousand
31 Dec 2021
31 Dec 2020
Current borrowings
55,092
46,345
– Borrowings from subsidiaries
55,068
46,317
– Current interest payable
24
28
Total borrowings
55,092
46,345
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
292
Borrowings from subsidiaries, including current interest payable
€ thousand
31 Dec 2021
31 Dec 2020
– Current borrowings from subsidiaries
55,092
46,345
TAD Pharma GmbH, Cuxhaven, Germany
51,960
39,114
TERME KRKA, d. o. o., Novo mesto, Slovenia
1,575
0
KRKA FARMACÉUTICA, S.L., Madrid, Spain
1,211
2,156
KRKA Pharma GmbH, Vienna, Austria
337
484
KRKA Belgium, SA, Brussels, Belgium
8
0
Krka France Eurl, Paris, France
1
1
KRKA Sverige AB, Stockholm, Sweden
0
3,984
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
0
1
KRKA Finland Oy, Espoo, Finland
0
1
KRKA UK Ltd, London, United Kingdom
0
604
Total borrowings from subsidiaries
55,092
46,345
Current borrowings are denominated in euro and were extended for the period of one year. These borrowings are not
collateralised.
24. Provisions
€ thousand
At
31 Dec 2020
Formation
Utilisation
Reversal
At
31 Dec 2021
Provisions for lawsuits
2,100
543
0
-2,100
543
Provisions for post-employment
benefits
98,516
318
-3,879
-992
93,963
Provisions for post-employment
benefits and other non-current
employee benefits
19,214
1,136
-1,480
-240
18,630
Total provisions
119,830
1,997
-5,359
-3,332
113,136
In total, 15 lawsuits referring to intellectual property were filed against the Company and its subsidiaries, 11 of which were
in Portugal. In 2021, it closed 8 disputes. The Krka Group has no provisions allocated for intellectual property disputes. In
other areas of law (civil, labour, administrative, etc.), the Company was involved as defendant in 2 disputes in 2021, with
the total value of claims against the Company estimated at €730 thousand. For this purpose, the Company formed
provisions in amount of €543 thousand.
Provisions for obligations to employees arising from post-employment and other non-current benefits are based on
actuarial calculation using the following assumptions:
The selected discounted interest rate of 1.27% annually equals the return on 15-year corporate bonds with high
credit rating in the Eurozone at the end of October 2021 (2020: 0.72 percent); source of data: Bloomberg;
Currently applicable amounts of retirement benefits and anniversary bonuses as defined by internal rules;
Staff turnover depending primarily upon the employees' age;
Mortality rates calculated on the basis of most recent mortality tables available;
The 2.00% increase in salaries, the same as in 2020.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
293
Post-employment benefits
€ thousand
2021
2020
At 1 Jan
98,516
85,986
Employee benefit costs (CSC)
6,030
4,446
Interest expense (IC)
726
1,188
Post-employment benefits paid
-3,879
-2,628
Reversal
-992
-1,913
Merger by acquisition
0
470
Actuarial surplus/deficit, of that:
-6,438
10,966
– Change in financial assumptions
-7,562
8,050
– Experience
1,124
2,916
At 31 Dec
93,963
98,516
Sensitivity analysis
Discount rate
Salary increase
Change in
Percentage point
Percentage point
Change by
0.5
-0.5
0.5
-0.5
Impact on liabilities (€ thousand)
-6,412
7,141
7,052
-6,398
25. Deferred revenue
€ thousand
At
31 Dec 2020
New deferred
revenue
received
Deferred
revenue
reversal
At
31 Dec 2021
Grants received from the European Regional Development Fund
and budget of the Republic of Slovenia intended for the production
of pharmaceuticals in the new Notol 2 Plant
1,317
0
-259
1,058
Subsidy for acquisition of electric drive vehicles
4
0
-1
3
Property, plant and equipment received free of charge
7
0
-4
3
Emission coupons
0
10
0
10
Subsidy for the purchase of joinery
95
0
-2
93
Subsidy for acquisition of other equipment
4
19
-20
3
Grants received from the European Regional Development Fund
(Farma GRS)
2,960
0
-584
2,376
Total deferred revenue
4,387
29
-870
3,546
Production of pharmaceuticals in the new Notol 2 Plant and Farma GRS projects are partly funded by the European Union
from the European Regional Development Fund. The Notol project is carried out within the framework of the Operational
programme for strengthening regional development potentials for the period 2007 2013; Priority axis 1: Competitiveness
and Research Excellence: main type of activity 1.1.: Improvement of competitiveness and research excellence. The Farma
GRS project was eligible for co-financing of costs under R&D projects, including project management and investment in
research and development and production activities.
The amounts of deferred revenue are decreased by the proportionate share of depreciation of assets to which the grants
refer and by any other types of expenses incurred.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
294
26. Trade payables
€ thousand
31 Dec 2021
31 Dec 2020
Non-current trade payables
10,000
10,000
Current trade payables
178,143
143,294
Payables to subsidiaries
79,391
66,205
Payables to domestic suppliers
43,654
36,329
Payables to foreign suppliers
55,098
40,760
Total trade payables
188,143
153,294
In 2014, the Commission of the European Union ruled that Krka infringed the provision of Article 101 of the Treaty on the
Functioning of the European Union, which resulted in a distortion of competition on the perindopril market of the European
Union. Thus, it imposed on Krka a fine of €10,000 thousand. Krka paid the penalty imposed within the deadline set by the
Commission and filed a lawsuit against the Commission's decision before the General Court of the European Union
because it considered that its conduct did not violate the competition law rules. In December 2018, the Court ruled in
favour of Krka.
The decision of the General Court is not final, as the Commission lodged an appeal against the decision of the General
Court, which will be decided by the European Court of Justice. Although the Commission did indeed pay back a fine of
€10,000 thousand in early 2020, based on the assessment of legal experts Krka deferred the revenue and recognised
non-current trade liabilities in that same amount until the final decision of the Court is issued.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
295
Payables to subsidiaries
€ thousand
31 Dec 2021
31 Dec 2020
KRKA-FARMA d.o.o., Zagreb, Croatia
21,116
16,355
KRKA FARMA LLC, Istra, Russian Federation
17,042
20,572
KRKA – POLSKA Sp. z.o.o., Warsaw, Poland
6,612
6,156
KRKA ROMANIA S.R.L., Bucharest, Romania
4,459
3,941
Krka France Eurl, Paris, France
3,622
479
KRKA ČR, s. r. o., Prague, Czech Republic
3,190
2,287
KRKA UKRAINE LLC, Kiev, Ukraine
3,081
2,022
TAD Pharma GmbH, Cuxhaven, Germany
2,886
1,323
KRKA Magyarország Kft., Budapest, Hungary
2,872
2,944
KRKA-RUS LLC, Istra, Russian Federation
2,403
1,600
KRKA Slovensko, s.r.o., Bratislava, Slovakia
2,124
1,987
Ningbo Krka Menovo Pharmaceutical Co. Ltd., Ningbo, China
1,466
55
UAB KRKA Lietuva, Vilnius, Lithuania
1,431
1,004
KRKA Farmaceutici Milano S.r.l., Milan Italy
873
662
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
866
1,010
LLC ´KRKA Kazakhstan´, Almaty, Kazakhstan
767
239
KRKA Bulgaria EOOD, Sofia, Bulgaria
766
673
SIA KRKA Latvija, Riga, Latvia
681
636
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
475
489
KRKA-FARMA DOOEL, Skopje, North Macedonia
461
514
KRKA FARMACÉUTICA, S.L., Madrid, Spain
455
263
KRKA Belgium, SA, Brussels, Belgium
427
137
KRKA HELLAS E.P.E., Athens, Greece
322
153
KRKA Finland Oy, Espoo, Finland
249
193
KRKA FARMA, d.o.o., Sarajevo, Bosnia and Herzegovina
213
25
KRKA Sverige AB, Stockholm, Sweden
176
152
KRKA Pharma GmbH, Vienna, Austria
143
210
HCS bvba, Edegem, Belgium*
77
55
KRKA UK Ltd, London, United Kingdom
68
40
TERME KRKA, d. o. o., Novo mesto, Slovenia
43
10
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
24
18
KRKA USA LLC, Wilmington, USA
1
1
Total payables to subsidiaries
79,391
66,205
* Subsidiary Krka France Eurl holds a 100% stake in HCS bvba
27. Current contract liabilities
€ thousand
31 Dec 2021
31 Dec 2020
Refund liabilities
13,638
11,940
– Bonuses and volume rebates
13,638
11,940
Contract liabilities
5,839
4,641
– Contract liabilities – advances from group companies
0
2,021
– Contract liabilities – advances from other customers
5,839
2,620
Total current contract liabilities
19,477
16,581
Accrued bonuses and volume discounts include discounts to which the customers are entitled when the relevant terms
and conditions are fulfilled; these discounts are not granted to customers in the year of the sale.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
296
28. Other current liabilities
€ thousand
31 Dec 2021
31 Dec 2020
Payables to employees – gross salaries, other receipts and charges
53,446
52,202
Liabilities under repurchase transactions (repo-type operations)
102,234
0
Other
9,025
7,714
Total other current liabilities
164,705
59,916
The liabilities under repurchase transactions relate to the repurchase of bonds in June 2022, maturing in July 2022. The
repurchase of bonds has legally taken place, but in terms of economics it is a financing activity. The bonds serve as
collateral for a deposit made by the Company to the bank. The balance of assets held for repurchase as at
31 December 2021 amounts to €102,228 thousand and is recognised within investments at amortised cost. Liabilities
under repurchase transactions were recognised in the amount of €102,234 thousand.
The item ‘Other’ also includes current liabilities to the State on account of VAT payable in the amount of €6,284 thousand
(2020: €5,215 thousand).
29. Contingent liabilities and commitments
€ thousand
31 Dec 2021
31 Dec 2020
Guarantees issued
13,695
14,204
Other
976
0
Total contingent liabilities
14,671
14,204
Major items of guarantees issued included (i) a contract bond in total of €6,000 thousand issued after Krka was selected
as the best bidder in a tender in Italy; (ii) a counter guarantee for due payment of potential liabilities from customs guarantee
issued in the amount of €4,500 thousand in Belarus; and (iii) a contract bond issued on behalf of the subsidiary
TAD Pharma in the amount of €3,000 thousand.
Based on the contracts that had been signed in connection with the on-going investments, at the end of 2021 Krka recorded
€27,787 thousand of commitments for acquisition of property, plant and equipment (2020 year-end: €27,215 thousand).
30. Leases
The Company concludes lease agreements for various assets such as land, parking spaces and offices, apartments,
warehouses, and equipment.
The lease terms are assessed according to the type of a lease:
Offices, parking spaces and warehouses: up to 10 years;
Land: 30 years;
Apartments: up to 2 years maximum;
Equipment: up to 10 years.
The Company does not sub-lease the leased assets.
The Company has concluded lease contracts for various production and non-production equipment, temporary offices and
parking spaces, with lease term of shorter than one year. In respect of those leases, Krka applied the practical expedient
provided by the Standard.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
297
The carrying amounts of lease liabilities included under interest-bearing loans and borrowings and movements
during the period
€ thousand
Carrying amounts of lease liabilities under
interest-bearing loans and borrowings
and movements during the period
At 1 Jan 2020
3,093
Increase/Decrease
412
Accretion of interest
49
Lease payments
-732
At 31 Dec 2020
2,822
– Current lease liabilities
659
– Non-current lease liabilities
2,163
At 1 Jan 2021
2,822
Increase/Decrease
1,210
Accretion of interest
47
Lease payments
-991
At 31 Dec 2021
3,088
– Current lease liabilities
987
– Non-current lease liabilities
2,101
The maturity analysis of lease liabilities is disclosed in Note 32 Financial instruments and risks.
Amounts recognised in profit or loss
€ thousand
2021
2020
Depreciation of right-of-use assets
956
739
Interest expenses on lease liabilities
47
49
Expenses relating to current leases
39
23
Expenses relating to leases of low-value assets
6
6
Total amount recognised in profit or loss
1,048
817
31. Financial liabilities
Movement in financial liabilities in 2021
Non-monetary changes
€ thousand
At 31 Dec 2020
Monetary
changes
Addition/
Disposal
Other
At 31 Dec 2021
Borrowings
46,317
8,703
0
48
55,068
Accretion of interest
28
-444
440
0
24
Dividends
1,335
-155,907
155,894
0
1,322
Treasury shares
0
-15,262
15,262
0
0
Leases
2,822
-991
1,210
47
3,088
Liabilities under repurchase
transactions (repo-type
operations)
0
102,292
0
-58
102,234
Total
50,502
-61,609
172,806
37
161,736
Liabilities under repurchase transactions (repo-type operations) are presented in Note 28 Other current liabilities.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
298
Movement in financial liabilities in 2020
Non-monetary changes
€ thousand
At 31 Dec 2019
Monetary
changes
Addition/
Disposal
Other
At 31 Dec 2020
Borrowings
72,961
-2,337
0
-24,307
46,317
Accretion of interest
72
-512
468
0
28
Dividends
1,344
-133,283
133,274
0
1,335
Treasury shares
0
-25,505
25,505
0
0
Leases
3,093
-732
412
49
2,822
Total
77,470
-162,369
159,659
-24,258
50,502
32. Financial instruments and financial risks
Detailed information about financial risk management is described in the Business Section of the Annual Report, section
‘Risk Management’.
Credit risk
The key credit risk of the Company arises from trade receivables. This is the risk of customers failing to settle their liabilities
by maturity dates.
The Krka Group introduced a centralised credit control process in 2004. The system includes all customers with credit
limits exceeding €20,000. Numbering over 570 at the end of 2021, they accounted for more than 95% of total trade
receivables. Receivables due from small customers accounted for less than 5% of total trade receivables. Control over
small customers is decentralised in the sales network and under the constant supervision of the controlling company.
Credit control is a two-step process. The first step involves assessing the credit risk for each customer, determining
hedging instruments, and assigning relevant credit limits. We assess each new customer and review the credit ratings of
all customers twice a year. Each credit rating includes many different financial and non-financial indicators, which fall into
four categories; each has a different weight in the final assessment.
Each customer is assigned a customised credit limit according to the credit rating and the expected shipment and payment
dynamics.
The second step in the credit-control process involves regular dynamic monitoring of a customer's payment discipline. The
information systems of all Krka Group companies engaged in sales monitor available limits and overdue receivables.
Control is exercised for each shipment of Krka products to customers. A shipment is automatically blocked if a customer
is in arrears or if receivables together with the new shipment exceed the approved credit limit. Sales personnel are required
to initiate a payment collection procedure or arrange hedging for the outstanding settlements.
Krka’s internal rules determine the process of credit control and authorisations for granting credit limits to customers. Credit
control also avails of a system of regular reporting on trade receivables and the customer's payment discipline. The
reporting system aids the early detection of customers at increased risk of defaulting on payments and facilitates effective
credit risk management.
The credit control process employs uniform rules which apply to all customers. Due to specifics of individual sales markets,
additional national controls have been introduced in individual subsidiaries. Credit control processes are regularly adjusted
to changes in the sales markets.
Credit control guarantees permanent control over the quality of the trade receivables portfolio. The result of the credit
control process is a low percentage of receivable write-offs and impairments in total Krka Group sales.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
299
The amount of receivable write-offs and impairments is also low because receivables are dispersed across many
customers and sales markets, and the majority of outstanding receivables are due from customers with whom Krka has
been doing business for several years.
Despite the risks arising from the COVID-19 pandemic, receivables were well managed in 2021. At the end of 2021,
the value of trade receivables increased by 2% compared to the beginning of the year. However, the amount of overdue
and outstanding receivables remained within limits acceptable for Krka.
Credit risk exposure
The carrying amount of financial assets represents the largest exposure to credit risk as illustrated below.
€ thousand
Notes
31 Dec 2021
31 Dec 2020
Loans
15
226,469
92,860
Investments
16
264,330
10,943
Current trade receivables including those due from subsidiaries
19
424,687
415,362
Cash and cash equivalents
20
144,981
296,398
Total
1,060,467
815,563
As for the financial assets exposed to credit risk, the loans, trade receivables and receivables due from subsidiaries are
presented separately.
Loans by geographical region
€ thousand
31 Dec 2021
31 Dec 2020
Slovenia
121,027
90,137
South-East Europe
50
151
East Europe
41
63
Central Europe
115
175
West Europe
105,236
2,334
Overseas Markets
0
0
Total
226,469
92,860
Trade receivables including those due from subsidiaries by geographical region
€ thousand
31 Dec 2021
31 Dec 2020
Slovenia
10,452
7,697
South-East Europe
83,873
79,248
East Europe
222,183
211,531
Central Europe
56,348
58,152
West Europe
46,877
54,962
Overseas Markets
4,855
3,696
Total
424,588
415,286
Maturity analysis of loans as at reporting date
€ thousand
Gross at
31 Dec 2021
Allowance at
31 Dec 2021
Gross at
31 Dec 2020
Allowance at
31 Dec 2020
Not past due
226,456
0
92,851
0
Past due up to 20 days
0
0
0
0
Past due from 21 to 50 days
1
0
1
0
Past due from 51 to 180 days
3
0
4
0
Past due more than 180 days
9
0
4
0
Total
226,469
0
92,860
0
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
300
Maturity structure of trade receivables including those due from subsidiaries as at reporting date
€ thousand
Gross at
31 Dec 2021
Allowance at
31 Dec 2021
Gross at
31 Dec 2020
Allowance at
31 Dec 2020
Not past due
409,494
187
397,995
1,071
Past due up to 20 days
7,384
14
5,229
10
Past due from 21 to 50 days
4,597
67
6,810
71
Past due from 51 to 180 days
2,361
0
5,524
40
Past due more than 180 days
35,317
34,297
34,781
33,861
Total
459,153
34,565
450,339
35,053
The Company agrees extended terms with some customers. If the Company did not extend payment terms to some of its
customers, receivable maturity structure would be as follows at the reporting date: not past due €404,494 thousand
(2020: €387,380 thousand); past due up to 20 days €9,223 thousand (2020: €10,846 thousand); past due between 21 and
50 days €6,905 thousand (2020: €8,728 thousand); past due between 51 and 180 days €2,360 thousand
(2020: €7,476 thousand); and past due more than 180 days €1,606 thousand (2020: €932 thousand).
Movement of allowance for loans
€ thousand
2021
2020
At 1 Jan
0
11
Impairment reversal
0
-11
At 31 Dec
0
0
Movements of trade receivable allowance including those due from subsidiaries
€ thousand
2021
2020
At 1 Jan
35,053
20,783
Formation of allowance
1,215
16,299
Write-off of receivables
-766
-174
Impairment reversal
-921
-1,852
Collected written-off receivables
-16
-3
At 31 Dec
34,565
35,053
Liquidity risk
Business partners value Krka for its excellent financial discipline and stable cash flows. In 2021, we settled all financial
liabilities regularly. Krka Group exposure to liquidity risk was low last year.
We did not use any new short-term funding from banks or draw funds from existing credit lines in 2021.
At the end of 2021, the Krka Group recorded excess liquidity, primarily as cash at bank or deposits with first-class
commercial banks. The 2021 increase in excess liquidity resulted from surplus cash flow from operating activities over
negative cash flows from investing and financing activities.
In the European Economic and Monetary Union (EMU) money markets, negative interest rates still apply to low-risk cash
investments. In accordance with internal rules on diversification of investments and taking account of banks’ credit risks,
we deposited a part of the cash surplus with banks during the year. In this way, we reduced the cost of negative interest
rates and invested another part in short-term bonds of selected European countries.
The controlling company manages liquidity risk centrally for the entire Group. The controlling company finances
subsidiaries through intra-group loans. Any potential cash surpluses are deposited with the controlling company. Excess
cash from all Group companies is transferred to the controlling company's master account either automatically daily (cash
pooling) or manually through individual bank transfers. This allows for cash management optimisation, currency risk
mitigation, an overview of liquidity of all Group companies, and enhanced security of cash transactions.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
301
The Krka Group also reported favourable and stable liquidity ratios at the end of 2021. The continuing COVID-19 pandemic
did not increase the Group’s liquidity risk in 2021.
Maturity of financial liabilities
Financial liabilities in terms of maturity are outlined in the tables below.
Maturity of financial liabilities as at 31 Dec 2021
Carrying
amount
Contractual cash flows
€ thousand
Total
Up to 6
months
6 to 12
months
1 to 2
years
2 to 5
years
5 to 10
years
Financial liabilities
Lease liabilities
3,088
3,088
511
476
633
1,230
238
Trade payables excluding advances
178,143
178,143
178,143
0
0
0
0
Contract liabilities excluding advances
13,638
13,638
13,638
0
0
0
0
Liabilities under repurchase transactions
(repo-type operations)
102,234
102,234
102,234
0
0
0
0
Other liabilities excluding amounts owed to
the State, to employees and advances
2,741
2,741
2,741
0
0
0
0
Total financial liabilities
354,936
354,936
352,359
476
633
1,230
238
Lease liabilities
3,088
3,088
511
476
633
1,230
238
Total derivative financial liabilities
0
0
0
0
0
0
0
Total
354,936
354,936
352,359
476
633
1,230
238
Maturity of financial liabilities as at 31 Dec 2020
Carrying
amount
Contractual cash flows
€ thousand
Total
Up to 6
months
6 to 12
months
1 to 2
years
2 to 5
years
5 to 10
years
Financial liabilities
Other current borrowings
46,345
46,345
46,345
0
0
0
0
Lease liabilities
2,822
2,822
332
327
554
1,206
403
Trade payables excluding advances
143,294
143,294
143,294
0
0
0
0
Contract liabilities excluding advances
11,940
11,940
11,940
0
0
0
0
Other liabilities excluding amounts owed to
the State, to employees and advances
2,499
2,499
2,499
0
0
0
0
Total financial liabilities
206,900
206,900
204,410
327
554
1,206
403
Total derivative financial liabilities
0
0
0
0
0
0
0
Total
206,900
206,900
204,410
327
554
1,206
403
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
302
Foreign exchange risk
The Company operates in diverse international environments and is exposed to foreign exchange risk in certain sales and
purchase markets.
Currency exposure arises from the difference in the value of assets and liabilities in a particular currency in the financial
position statement of the Group and from differences between operating income and expenses generated in individual
currencies.
The key accounting categories composing a currency position are trade receivables, trade payables, liquid financial assets
in foreign currencies, derivatives for currency risk hedging, and subsidiary funding by the controlling company.
Krka's key sales and purchase markets experienced imbalanced dynamics in terms of economic recovery and uncertainty
with regard to rising inflation in individual countries while at the same time facing a constant risk of economies shutting
down again. Uncertainty in currency markets led to high volatility of individual exchange rates.
The 2021 fluctuation in the Russian rouble was favourable for us. The value of the rouble expressed in the euro went up
by 7.2% during the year. The average 2021 value of the Russian rouble was 5.1% below the 2020 level.
The Brent oil price expressed in US dollars jumped by 50% in 2021. The value of the rouble expressed in the euro did not
follow the dynamics of oil price increase. After 2020, which was heavily affected by the pandemic, the Russian economy
recorded high economic growth and rising inflation in 2021. Consequently, the Central Bank of the Russian Federation
increased its key interest rate by 4.25 percentage points. Owing to high interest rate growth accompanied by a significant
rise in oil prices, the rouble strengthened against the euro and the US dollar. Interest rate increase in the Russian
Federation led to a gradual rise in the cost of hedging Krka’s position in roubles in 2021.
The Polish zloty was more stable in 2021. Its value dropped by 0.8% from the beginning to the end of the year, while the
average value was 2.7% lower than in 2020. In the last quarter of 2021, the Polish central bank started to increase its key
interest rate due to the rising inflation. The central bank is not in favour of strengthening the domestic currency, which
impacted the market value of złoty.
Over the course of 2021, the value of the Romanian leu expressed in the euro declined by 1.7%, which was in line with
the gradual depreciation of the currency against the euro in recent years.
The Croatian kuna, participating in the ERM II mechanism since 2020, remained stable against the euro. In 2021, the
British pound went up 7% against the euro. Although the movement of both currencies in 2021 positively impacted the
Krka Group's net financial result, the contribution was small.
The value of the US dollar expressed in the euro went up by 8.3% over the course of 2021, while the average value of the
dollar expressed in the euro was 3.4% below the 2020 level. The US dollar strengthened more significantly in the second
half of 2021, when it became clear that the inflation in the US and worldwide would rise over the longer term. In the second
half of the year, the US Federal Reserve announced that it would gradually withdraw monetary stimulus measures and
increase the key interest rate for the first time in 2022. Meanwhile, the European Central Bank decided to delay and slow
down the tightening of its monetary policy, which further contributed to strengthening of the US dollar against the euro
in 2021.
In 2021, the Ukrainian hryvnia strengthened again after plummeting in 2020. However, its value against the euro weakened
due to the geopolitical risk at the end of the year. The macroeconomic situation in the country remains uncertain, which
will continue to be reflected in currency movements.
The Company generally mitigates currency risks by natural hedging, primarily by increasing purchases and liabilities in
currencies in which sales invoices are issued. When this is not possible, we use derivatives or do not hedge the risk.
Generally, only forward contracts are used for hedging.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
303
In 2021, Krka continued its policy of partial hedging against rouble-related risk. Less than 50% of the risk exposure to the
Russian rouble was hedged using forward contracts. Due to the strengthening of the rouble value in euros, we generated
net foreign exchange gains partially offset by net expenses from forward contracts used for hedging the rouble.
The increasing operational risk exposure and an interest rate difference between the euro and the US dollar that is
favourable for Krka are two key reasons that contributed to partial hedging of the exposure in the US dollar with financial
instruments also in 2021. Due to the short currency position, the dollar strengthening had a negative financial impact on
the Krka Group result. In 2021 however, this was largely offset by income from the US dollar hedging instruments.
We generated net foreign exchange losses from other currencies in 2021. Exposure to other currencies was not hedged.
The Company's currency exposure to the Ukrainian hryvnia, Kazakh tenge, Serbian dinar, and certain other currencies is
less significant, and no hedging instruments are available.
Exposure to the risk of foreign exchange rate fluctuations
31 Dec 2021
€ thousand
EUR*
RUB
PLN
HRK
RON
Loans
226,469
0
0
0
0
Trade receivables
128,233
176,785
42,897
20,782
44,213
Cash and cash equivalents
85,394
1,217
1,295
1,677
994
Borrowings
-55,092
0
0
0
0
Non-current trade payables
-10,000
0
0
0
0
Current trade payables
-131,638
-19,493
-6,957
-15
-4,438
Financial position exposure (net)
243,366
158,509
37,235
22,445
40,770
* EUR is the functional currency and does not represent exposure to foreign currency risk.
31 Dec 2020
€ thousand
EUR*
RUB
PLN
HRK
RON
Loans
92,860
0
0
0
0
Trade receivables
110,640
183,377
42,456
20,073
42,154
Cash and cash equivalents
282,664
184
1,998
405
1,314
Borrowings
-45,741
0
0
0
0
Non-current trade payables
-10,000
0
0
0
0
Current trade payables
-99,050
-22,129
-6,340
-7
-3,934
Financial position exposure (net)
331,373
161,432
38,114
20,471
39,534
* EUR is the functional currency and does not represent exposure to foreign currency risk.
Significant foreign exchange rates
Average exchange rate*
Final exchange rate*
2021
2020
2021
2020
RUB
87.15
82.72
85.30
91.47
PLN
4.57
4.44
4.60
4.56
HRK
7.53
7.54
7.52
7.55
RON
4.92
4.84
4.95
4.87
* Number of national currency units for one euro
The above-stated exchange rates were used for the calculation of items in the financial statements as at 31 Dec and equal
the reference exchange rates of the ECB effective on the last day of the year.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
304
Sensitivity analysis
A 1% percent increase/decrease of the euro exchange rate in respect of currencies stated as at 31 December 2021 or
31 December 2020 would increase or decrease the profit by the amounts stated below. The analysis, prepared in the
same manner for both years, assumes that all other remaining variables, in particular interest rates, remain unchanged.
The calculation of the above-stated exchange rate volatility impact took into account the balance of receivables, liabilities,
loans and borrowings denominated in the local currencies.
Effect on the profit or loss before tax
€ thousand
2021
2020
Currency fluctuation
+1%
-1%
+1%
-1%
RUB
1,585
-1,585
1,614
-1,614
PLN
372
-372
381
-381
HRK
224
-224
205
-205
RON
408
-408
395
-395
Any additional 1% increase/decrease of the euro exchange rate in respect of currencies stated above, would increase or
decrease the profit or loss before tax in the above-stated amounts.
Interest rate risk
Interest rate risk is the risk of losses that result from a change in interest rates and is related to Krka’s non-current
borrowings and investments.
The interest rate risk with current borrowings and current investments is managed as part of the Group's liquidity risk.
In 2021, the Company raised non-current borrowings only from subsidiaries.
Exposure to interest rate risk
€ thousand
31 Dec 2021
31 Dec 2020
Financial instruments at fixed rate of interest
226,043
92,483
Financial assets
226,043
92,483
Financial liabilities
0
0
Financial instruments at variable rate of interest
-54,596
-45,953
Financial assets
472
364
Financial liabilities
-55,068
-46,317
Analysis of the cash flow’s sensitivity by applying the variable interest rate
Decrease/increase of the interest rate by 100 basis points would increase/decrease the profit or loss for 2021 by
€546 thousand. Decrease/increase of the interest rate by 100 basis points would increase/decrease the profit or loss for
2020 by €460 thousand. The analysis, prepared in the same manner for both years, assumes that all other remaining
variables, in particular the foreign exchange rate, remain unchanged.
A detailed schedule of current borrowings is presented below.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
305
Current borrowings
€ thousand
31 Dec 2021
31 Dec 2020
Current borrowings inclusive of current portion of non-current borrowings
55,068
46,317
– Other borrowings
55,068
46,317
Current borrowings exclusive of current portion of non-current borrowings
55,068
46,317
Average balance of current borrowings
50,693
59,639
Interest paid in the financial year
280
423
Other costs of raising current borrowings
0
0
Average effective cost of current borrowings
0.55%
0.71%
Currency structure of current borrowings
– EUR
100%
100%
Structure of current borrowings in terms of interest rates
– Fixed
0%
0%
– Variable
100%
100%
Capital management
Krka reduced its share capital by withdrawal of 2,632,672 treasury shares, accounting for 7.431% of all shares issued, in
accordance with the resolution adopted at the 19
th
Annual General Meeting on 3 July 2014. After the withdrawal of treasury
shares, the share capital of Krka in the amount of €54,732 thousand is represented by 32,793,448 ordinary no-par value
shares. Krka has one class of shares only, and the first and only issue of shares was carried out in 1995. The share capital
was fully paid.
The Company’s capital management is aimed at ensuring a high credit rating and relevant financing indicators in order to
ensure the proper development of its operations and to generate a maximum value for its shareholders.
The Company follows the changes in the economic environment by managing and adjusting its equity structure. Dividends
are paid out on an annual basis in line with the strategic policy adopted. The Company has no specific goals as regards
the ownership share held by employees, and no share option plans.
There were no changes in Company’s approach to capital management in 2021 or 2020.
The Company monitors capital using a gearing ratio, which is net debt divided by total net debt plus total equity. Within net
debt, Krka includes interest bearing borrowings and trade payables less cash and cash equivalents.
Gearing (debt/equity) ratio
€ thousand
31 Dec 2021
31 Dec 2020
Borrowings
55,092
46,345
Trade payables and other current liabilities
372,325
229,791
Cash and cash equivalents
144,981
296,398
Net indebtedness
282,436
-20,262
Equity
1,876,142
1,791,850
Equity and net indebtedness
2,158,578
1,771,588
Gearing (debt/equity) ratio
13.1%
-1.1%
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
306
Fair value
31 Dec 2021
31 Dec 2020
€ thousand
Carrying amount
Fair value
Carrying amount
Fair value
Non-current financial assets
Loans
31,010
31,010
35,024
35,024
Financial assets at fair value through OCI
15,860
15,860
10,419
10,419
Financial assets at amortised cost
93,022
92,570
0
0
Current financial assets
Loans
195,459
195,459
57,836
57,836
Financial assets through profit or loss
39,970
39,970
0
0
Financial assets at amortised cost
113,987
113,912
0
0
Derivatives
1,491
1,491
524
524
Trade receivables
424,588
424,588
415,286
415,286
Cash and cash equivalents
144,981
144,981
296,398
296,398
Non-current financial liabilities
Trade payables
-10,000
-10,000
-10,000
-10,000
Lease liabilities
-2,101
-2,101
-2,163
-2,163
Current financial liabilities
Borrowings
-55,092
-55,092
-46,345
-46,345
Lease liabilities
-987
-987
-659
-659
Trade payables excluding advances
-178,143
-178,143
-143,294
-143,294
Contract liabilities excluding advances
-13,638
-13,638
-11,940
-11,940
Liabilities under repurchase transactions (repo-type
operations)
-102,234
-102,234
0
0
Other liabilities excluding amounts owed to the
State, to employees and advances
-2,741
-2,741
-2,499
-2,499
Total
695,432
694,905
598,587
598,587
In terms of fair value, investments are classified into three levels
Level 1 – assets at market price;
Level 2 – assets not classified within level 1 and the value of which is determined directly or indirectly based on
observable market data;
Level 3 – assets the value of which cannot be determined using observable market data.
In 2021, there were no transfers between fair value levels.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
307
Assets at fair value
31 Dec 2021
31 Dec 2020
€ thousand
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets at fair value
Financial assets at fair value through
OCI
14,474
0
1,386
15,860
9,033
0
1,386
10,419
Financial assets through profit or loss
39,970
0
0
39,970
0
0
0
0
Derivatives
0
0
1,491
1,491
0
0
524
524
Total assets at fair value
54,444
0
2,877
57,321
9,033
0
1,910
10,943
Assets for which fair value is
disclosed
Loans
0
0
226,469
226,469
0
0
92,860
92,860
Trade receivables
0
0
424,588
424,588
0
0
415,286
415,286
Financial assets at amortised cost
206,482
0
0
206,482
0
0
0
0
Cash and cash equivalents
0
0
144,981
144,981
0
0
296,398
296,398
Liabilities for which fair value is
disclosed
206,482
0
796,038
1,002,520
0
0
804,544
804,544
Total
260,926
0
798,915
1,059,841
9,033
0
806,454
815,487
Liabilities at fair value
31 Dec 2021
31 Dec 2020
€ thousand
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Liabilities for which fair value is
disclosed
Trade payables
0
0
10,000
10,000
0
0
10,000
10,000
Borrowings
0
0
55,092
55,092
0
0
46,345
46,345
Lease liabilities
0
0
3,088
3,088
0
0
2,822
2,822
Trade payables excluding advances
0
0
178,143
178,143
0
0
143,294
143,294
Contract liabilities excluding
advances
0
0
13,638
13,638
0
0
11,940
11,940
Liabilities under repurchase
transactions (repo-type operations)
0
0
102,234
102,234
0
0
0
0
Other liabilities excluding amounts
owed to the State, to employees and
advances
0
0
2,741
2,741
0
0
2,499
2,499
Total liabilities for which fair value
is disclosed
0
0
364,936
364,936
0
0
216,900
216,900
Total
0
0
364,936
364,936
0
0
216,900
216,900
The fair value of securities held for trading is computed on the basis of the stock exchange quotation of the respective
securities as at reporting date, and is not decreased by any costs that may arise upon the sale or purchase of securities.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
308
33. Related party transactions
Intragroup transactions
Transactions with subsidiaries in 2021 are presented below.
€ thousand
Sales
Purchases
Borrowings
Loans
TERME KRKA, d. o. o., Novo mesto, Slovenia*
293
439
0
0
KRKA-FARMA d.o.o., Zagreb, Croatia
7,644
23,491
0
0
KRKA ROMANIA S.R.L., Bucharest, Romania
84
17,512
0
0
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
28,268
3,582
0
0
KRKA-FARMA DOOEL, Skopje, North Macedonia
22,604
1,695
0
0
KRKA Bulgaria EOOD, Sofia, Bulgaria
48
2,935
0
0
KRKA HELLAS E.P.E., Athens, Greece
16
1,341
0
220
KRKA FARMA, d.o.o., Sarajevo, Bosnia and Herzegovina
4
619
0
0
KRKA-RUS LLC, Istra, Russian Federation
143,278
8,888
0
0
KRKA FARMA LLC, Istra, Russian Federation
94,238
51,277
0
0
KRKA UKRAINE LLC, Kiev, Ukraine
155
15,689
0
0
LLC ´KRKA Kazakhstan´, Almaty, Kazakhstan
15,267
2,522
0
0
KRKA – POLSKA Sp. z.o.o., Warsaw, Poland
25,121
25,764
0
0
KRKA ČR, s. r. o., Prague, Czech Republic
84
10,457
0
0
KRKA Magyarország Kft., Budapest, Hungary
68
11,628
0
0
KRKA Slovensko, s.r.o., Bratislava, Slovakia
294
6,475
0
0
UAB KRKA Lietuva, Vilnius, Lithuania
28
3,732
0
0
SIA KRKA Latvija, Riga, Latvia
21
2,718
0
0
KRKA Finland Oy, Espoo, Finland
11,439
1,485
0
0
TAD Pharma GmbH, Cuxhaven, Germany
57,973
9,910
0
0
KRKA Sverige AB, Stockholm, Sweden
32,187
1,681
0
0
KRKA Pharma GmbH, Vienna, Austria
8,985
1,625
0
0
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
14,499
2,173
0
0
KRKA FARMACÉUTICA, S.L., Madrid, Spain
10,204
2,503
0
0
KRKA Farmaceutici Milano S.r.l., Milan Italy
15,437
7,004
0
0
Krka France Eurl, Paris, France**
4,128
5,885
0
0
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
6,857
86
0
0
KRKA Belgium, SA, Brussels, Belgium
9,017
1,439
0
0
KRKA UK Ltd, London, United Kingdom
4,819
647
0
0
123 Acurae Pharma GmbH, Cuxhaven, Germany
0
0
0
80
Ningbo Krka Menovo Pharmaceutical Co. Ltd., Ningbo, China
353
11,603
0
0
KRKA USA LLC, Wilmington, USA
0
7
0
0
Total
513,413
236,812
0
300
* Including the subsidiary Golf Grad Otočec, d. o. o.
** Including the subsidiary HCS bvba
The transactions between the Company and the above-mentioned subsidiaries were based on sales contracts, which
included rendering products and services at market prices.
The annual rate of interest agreed on conclusion of loan contracts within the Krka Group companies, is the rate of interest
set by the Minister of Finance in accordance with the Corporate Income Tax Act that defines the interest rate for related
parties. In 2021, the interest rate ranged from 0.0086% to 0.0165%.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
309
The balance of loans to subsidiaries is presented in Note 15 Loans, the balance of borrowings from subsidiaries is
presented in Note 23 Borrowings, the balance of receivables due from subsidiaries is presented in Note 19 Trade
receivables and the balance of current trade payables to subsidiaries is presented in Note 26 Trade payables.
Data on groups of persons
By the end of the year, members of the Management Board of Krka held 37,040 of Krka shares, i.e. 0.1129% of total equity
or 0.1191% of voting rights.
By the end of the year, Members of the Supervisory Board of Krka held 3,347 of Krka shares, i.e. 0.0102% of total equity
or 0.0108% of voting rights.
Equity stakes held by Management and the Supervisory Boards members of the Company and their shares of
voting rights
31 Dec 2021
31 Dec 2020
No. of
shares
Equity
share
(%)
Share of
voting
rights
(%)
No. of
shares
Equity
share
(%)
Share of
voting
rights
(%)
Members of the Management Board
Jože Colarič
22,500
0.0686
0.0723
22,500
0.0686
0.0720
Aleš Rotar
13,915
0.0424
0.0447
13,915
0.0424
0.0445
Vinko Zupančič
120
0.0004
0.0004
120
0.0004
0.0004
David Bratož
0
0.0000
0.0000
0
0.0000
0.0000
Milena Kastelic
505
0.0015
0.0016
505
0.0015
0.0016
Total Members of the Management Board
37,040
0.1129
0.1191
37,040
0.1129
0.1185
Members of the Supervisory Board
(owner representatives)
Jože Mermal
0
0.0000
0.0000
0
0.0000
0.0000
Matej Lahovnik
600
0.0018
0.0019
600
0.0018
0.0019
Julijana Kristl
230
0.0007
0.0007
230
0.0007
0.0007
Borut Jamnik
0
0.0000
0.0000
0
0.0000
0.0000
Mojca Osolnik Videmšek
617
0.0019
0.0020
617
0.0019
0.0020
Boris Žnidarič
0
0.0000
0.0000
0
0.0000
0.0000
Members of the Supervisory Board
(owner representatives)
Franc Šašek
1,400
0.0043
0.0045
1,400
0.0043
0.0045
Tomaž Sever
500
0.0015
0.0016
500
0.0015
0.0016
Mateja Vrečer
0
0.0000
0.0000
0
0.0000
0.0000
Total Members of the Supervisory Board
3,347
0.0102
0.0108
3,347
0.0102
0.0107
Total
40,387
0.1232
0.1298
40,387
0.1232
0.1292
Treasury shares were eliminated from the calculation of voting rights (1,683,908 treasury shares as at 31 December 2021
and 1,541,774 as at 31 December 2020).
Remuneration paid to groups of persons (gross)
€ thousand
31 Dec 2021
31 Dec 2020
Members of the Management Board
3,560
3,768
Members of the Supervisory Board
303
210
Total gross remuneration paid to groups of persons
3,863
3,978
Remuneration paid to members of the Management Board in the controlling company included wages and salaries, fringe
benefits and any other earnings. For each year, they are shown on a cost basis and therefore differ from the remuneration
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
310
shown in the Report on Remuneration of the Members of the Management Board and Supervisory Board of Krka for 2021,
where they are shown by payments in each year.
Gross earnings paid to persons employed under individual employment contracts in 2021 amounted to €11,919 thousand
(2020: €11,454 thousand).
Remuneration paid to Management Board members in 2021
Salary – fixed part
Salary – variable part
Total
€ thousand
Gross
Net payout
Net fringe
benefits
and other
earnings
Gross
Net
Gross
Net
Jože Colarič
430
178
7
734
306
1,164
491
Aleš Rotar
342
141
11
465
194
807
346
Vinko Zupančič
289
120
13
387
161
676
294
David Bratož
283
120
11
380
159
663
290
Milena Kastelic
170
78
6
80
34
250
118
Total Members of the Management Board
1,514
637
48
2,046
854
3,560
1,539
Net fringe benefits and other earnings
€ thousand
Executive
health
insurance
Supplementary
pension
insurance
Anniversary
bonuses
Other
bonuses
Refund of
work-
related
costs
Pay for
annual
leave
Total
Jože Colarič
0.00
2.82
0.00
1.79
0.05
1.98
6.64
Aleš Rotar
0.00
2.82
0.00
4.80
1.05
1.98
10.65
Vinko Zupančič
0.00
2.82
0.00
7.15
0.91
1.98
12.86
David Bratož
0.00
2.82
1.34
3.59
1.08
1.98
10.81
Milena Kastelic
0.00
2.82
0.00
0.44
1.08
1.98
6.32
Total Members of the
Management Board
0.00
14.10
1.34
17.77
4.17
9.90
47.28
Remuneration paid to Management Board members in 2020
Salary – fixed part
Salary – variable part
Total
€ thousand
Gross
Net payout
Net fringe
benefits
and other
earnings
Gross
Net
Gross
Net
Jože Colarič
432
177
8
800
313
1,232
498
Aleš Rotar
347
141
13
517
202
864
356
Vinko Zupančič
290
119
13
430
168
720
300
David Bratož
281
119
10
422
166
703
295
Milena Kastelic
169
78
6
80
32
249
116
Total Members of the Management
Board
1,519
634
50
2,249
881
3,768
1,565
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
311
Net fringe benefits and other earnings
€ thousand
Executive
health
insurance
Supplementary
pension
insurance
Anniversary
bonuses
Other
bonuses
Refund of
work-
related
costs
Pay for
annual
leave
Total
Jože Colarič
0.00
2.82
0.00
3.41
0.03
1.81
8.06
Aleš Rotar
0.00
2.82
1.86
5.32
1.12
1.81
12.93
Vinko Zupančič
0.00
2.82
0.00
7.87
0.99
1.81
13.48
David Bratož
0.00
2.82
0.00
4.13
1.06
1.81
9.82
Milena Kastelic
0.00
2.82
0.00
0.05
1.04
1.81
5.71
Total Members of the
Management Board
0.00
14.10
1.86
20.78
4.23
9.04
50.00
Other bonuses refer to the use of a company car for private purposes and other similar bonuses. Refund of work-related
costs consists of commuting and meal allowances. Members of the Management Board do not receive attendance fees or
any other income for exercising their functions in the Management and Supervisory Boards in subsidiaries.
Remuneration paid to Supervisory Board members in 2021
Basic pay for
exercising the
function
Attendance fees
Commuting
allowances
Total
€ thousand
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Remuneration of the members of
the Supervisory Board (owner
representatives)
Jože Mermal
33.51
24.38
1.65
1.20
0.00
0.00
35.16
25.58
Matej Lahovnik
30.82
22.41
2.97
2.16
0.23
0.17
34.02
24.74
Borut Jamnik
31.61
22.99
2.97
2.16
0.00
0.00
34.58
25.15
Julijana Kristl
29.70
21.60
2.53
1.84
0.42
0.31
32.65
23.75
Mojca Osolnik Videmšek
29.70
21.60
2.97
2.16
0.40
0.29
33.07
24.05
Boris Žnidarič
31.61
22.99
2.53
1.84
0.41
0.30
34.55
25.13
Members of the Supervisory
Board (employee representatives)
Franc Šašek
31.23
22.71
2.97
2.16
0.00
0.00
34.20
24.87
Tomaž Sever
29.70
21.60
2.53
1.84
0.51
0.37
32.74
23.81
Mateja Vrečer
29.70
21.60
2.53
1.84
0.00
0.00
32.23
23.44
Total remuneration paid to
Members of the Supervisory
Board
277.58
201.88
23.65
17.20
1.97
1.44
303.20
220.52
In accordance with a resolution adopted at the 27
th
Annual General Meeting on 8/7/2021, Members of the controlling
company's Supervisory Board receive an attendance fee, which for each individual member of the amounts to €275.00
gross. Members of the Supervisory Board Commission receive an attendance fee for their participation in sessions, which
for each individual member amounts to 80% of the attendance fee for Supervisory Board sessions. The attendance fee
for participating in correspondence sessions amounts to 80% of the general attendance fee. Notwithstanding the foregoing,
and irrespective of the number of attendees at the meetings, a member of the Supervisory Board shall be entitled to the
payment of attendance fees in an individual financial year until the total amount of the attendance fees reaches 50% of
the basic remuneration for exercising the function of a Member of the Supervisory Board on an annual basis.
Notwithstanding the foregoing, and irrespective of the number of attendances at meetings of the Supervisory Board and
the Commissions in any financial year, a member of the Supervisory Board who is a member of a Commission or
Commissions of the Supervisory Board shall be entitled to the payment of attendance fees until the total amount of the
attendance fees for attendance at sessions of the Supervisory Board and the Commissions reaches 75% of the basic
remuneration for exercising the function of a Member of the Supervisory Board on an annual basis.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
312
In addition to attendance fees, member of the Company's Supervisory Board receives on an annual basis also a basic pay
for exercising the function in the amount of €15,000.00 gross. The President of the Supervisory Board is further entitled to
an extra fee in the amount of 50% of the basic pay for exercising the function of Member of NS, whereas Deputy President
of the Supervisory Board is entitled to an extra fee of 10% of the basic pay for exercising the function of a Member of the
Supervisory Board. Members of the Supervisory Board Commission are further entitled to a bonus corresponding to 25%
of the basic fee for exercising the function of a member of the Supervisory Board. The President of the Commission is
entitled to a bonus corresponding to 37.5% of the extra fee for exercising the function of a member of the Supervisory
Board Commission. A member of the Supervisory Board Commission is in every financial year entitled – regardless of the
above-mentioned or the number of Commissions he/she is a member of or presides over – to receive bonuses until the
total amount of these bonuses reaches 50% of the basic pay for exercising the function of the Supervisory Board member
on an annual level. Notwithstanding the above, if the term of office of a member of the SC is shorter than a financial year,
and irrespective of the number of Commissions of which he/she is a member or presides over, a member of a Commission
of the Supervisory Board shall be entitled to pay-outs of extra fees for the performance of his/her duties in a financial year,
until the total amount of such pay-outs for exercising the function reaches 50% of the basic pay for of a member of the
Supervisory Board in respect of the eligible payments for the period of his/her term of office in the financial year.
Members of the Supervisory Board are also entitled to extra fees for special tasks. Special tasks are those which involve
the actual performance of unusual tasks of above-average complexity over a prolonged period of time, normally lasting at
least one month. The Supervisory Board is authorised to take decisions with the agreement of the Supervisory Board
member on the assignment of special tasks to that member, the duration of the special tasks and the extra fees for the
special tasks in accordance with this Assembly Decision. The Supervisory Board is also authorised to take decisions on
extra fees for special tasks of the Supervisory Board members due to objective circumstances in the company. Extra fees
for special tasks are only admissible for the time when the special tasks are actually carried out, which may exceptionally
be decided retrospectively by the Supervisory Board (in particular in the case of special tasks due to objective
circumstances in the company), but not more than for the previous financial year. The extra fees for special tasks that a
member may receive in a given year may amount to a maximum of 50% of the basic pay for exercising the functions of a
member of the Supervisory Board (irrespective of the number of special tasks). The amount of the additional payment
shall take into account the complexity of the special task and the increased workload and responsibility involved. The extra
fee rate shall be calculated according to the time actually spent on the special task.
Members of the Company's Supervisory Board receive a basic pay and an extra fee for exercising the function and a
bonus for special tasks, in proportionate monthly payments which they are entitled while they are performing a function
and/or a special task. The monthly payment amounts to one twelfth of the aforesaid annual amounts. Depending on the
circumstances, the bonus for special tasks may also be made in a single lump sum when the specific task is completed.
The limitation of the amount of the total amount of the attendance fees and the payment of the extra fees to a member of
the Supervisory Board shall in no way affect his/her duty to actively participate in all sessions of the Supervisory Board
and of the sessions of the Commissions of which he/she is a member, nor his/her statutory responsibility.
The Members of the Supervisory Board are entitled to reimbursement of transportation costs, daily allowance and overnight
accommodation expenses incurred in connection with their work for the Supervisory Board, up to the amount laid down in
the rules governing the reimbursement of expenses relating to work and other income not deductible for tax purposes
(provisions applicable to transport on official travel and accommodation on business travel). The amount due to a member
of the Supervisory Board under the above-mentioned regulation is increased by the corresponding levies, therefore the
net payment represents the reimbursement of actual travel expenses. The distances between places calculated on the
AMZS public website are used to determine the mileage. Overnight accommodation expenses may be reimbursed only if
the permanent or temporary residence of the member of the Supervisory Board or of a member of a Supervisory Board
Commission is at least 100 kilometres from the place of work of the body, if he/she was unable to return because the
timetable no longer provided for any public transport or for other objective reasons.
In 2020 and 2021, the members of the Management Board and the Supervisory Board, the employee representatives, did
not receive any loans from Krka.
Loans to staff employed under individual employment contracts amounted to €179 thousand at 31 December 2021
(€155 thousand as at 31 December 2020). In 2021, repayments of loans by staff employed under individual employment
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
313
contracts reached €26 thousand (2020: €22 thousand). The loans to the above-mentioned persons are meant for housing
purposes.
34. Educational structure of employees
2021
2020
Average
headcount
Equity
(%)
Average
headcount
Equity
(%)
PhD
169
2.7
161
2.7
MSc
268
4.3
266
4.5
University education
1,947
31.4
1,875
31.2
Higher professional education
846
13.7
798
13.3
Vocational college education
257
4.1
248
4.1
Secondary school education
1,905
30.7
1,809
30.1
Skilled workers
716
11.5
728
12.1
Unskilled workers
96
1.6
120
2.0
Total (average for the year)
6,204
100.0
6,005
100.0
35. Transactions with the audit firm
The agreed fee for the audit services performed in 2021 by the audit firm ERNST & YOUNG Revizija, poslovno
svetovanje, d. o. o., amounted to €107 thousand, the same as in 2020. In total, audit costs amounted to €109 thousand
(2020: €112 thousand). In addition to the financial statement audit, the audit firm provided a translation of the financial
section of the Annual Report at a cost of €3 thousand and the audit of the on the compliance of the report with the ESEF
Regulation at a cost of €5 thousand.
36. Subsequent events
The events after the end of the period had no impact on the 2021 financial statements.
Situation in Ukraine and the Russian Federation: Impact on the Company Operations
On account of rapid changes and their unpredictability, it is not possible to reliably forecast the impact of the situation in
Ukraine and Russian Federation on our business operations in 2022 and any long-term consequences. Krka has a strong
capital structure, generates a strong cash flow from operations and has no financial debt, so its successful business
performance in the long run is not jeopardised. Our Management Board closely monitor events and implement all
necessary activities to ensure business continuity in the two countries. They also take measures to manage operational
risks and reduce the eventual negative impact on business results. The Management Board will prepare and publish the
eventual revision of guidance for 2022, when and if tangible assessment of short and long term implication of current
situation is possible.
As at 31 December 2021, Krka’s investment in Ukrainian subsidiary totalled €9 thousand, while investments in two Russian
subsidiaries added up to €134,086 thousand.
As at 31 December 2021, Krka’s trade receivables in Ukraine due from customers and subsidiaries amounted to
€39,194 thousand, of that €35 thousand from the subsidiary and €39,159 thousand from customers outside the Krka
Group. As at 31 December 2021, Krka’s trade receivables in the Russian Federation due from customers and subsidiaries
amounted to €160,340 thousand, of that €156,935 thousand from the subsidiaries and €3,405 thousand form customers
outside the Krka Group.
In 2022, there was an unfavorable change in the EUR/RUB exchange rate. The exposure at 31 December 2021 and
related risks are presented in Note 32 Financial instruments and financial risks.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
314
Acquisition of Treasury Shares in 2022
From 1 January 2022 to 14 April 2022, we acquired 21,689 treasury shares. At the end of this period, Krka held 1,705,597
treasury shares, accounting for 5.201% of total shares.
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
315
Independent Auditor's Report
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
316
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
317
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
318
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
319
2021 Annual Report – Financial Report of Krka, d. d., Novo mesto
320
Annual Report 2021 – Financial Report
321
Enclosure 1
Repurchased treasury shares in 2021 by days
Date
No. of
shares
Average
share price
(€)
Value of
treasury
shares
(€ thousand)
Date
No. of
shares
Average
share price
(€)
Value of
treasury
shares
(€ thousand)
Date
No. of
shares
Average
share price
(€)
Value of
treasury
shares
(€ thousand)
4 Jan 2021
1,909
91.23
174
25 May 2021
1,200
107.68
129
17 Aug 2021
270
110.68
30
5 Jan 2021
2,044
92.60
189
26 May 2021
1,023
107.17
110
18 Aug 2021
1,044
112.65
118
6 Jan 2021
2,218
93.44
207
27 May 2021
1,399
107.10
150
19 Aug 2021
1,047
113.48
119
7 Jan 2021
1,877
94.62
178
28 May 2021
1,525
106.67
163
20 Aug 2021
211
112.25
24
8 Jan 2021
926
95.82
89
31 May 2021
1,059
106.48
113
23 Aug 2021
633
112.04
71
11 Jan 2021
1,764
96.92
171
1 June 2021
1,440
106.37
153
24 Aug 2021
1,106
111.98
124
12 Jan 2021
1,727
96.90
167
2 June 2021
1,331
107.17
143
25 Aug 2021
540
112.41
61
13 Jan 2021
1,876
96.59
181
3 June 2021
1,414
107.17
152
26 Aug 2021
1,077
112.61
121
29 Jan 2021
1,578
95.50
151
4 June 2021
1,480
106.68
158
27 Aug 2021
1,050
112.30
118
1 Feb 2021
1,613
95.15
153
7 June 2021
1,526
106.17
162
30 Aug 2021
310
112.08
35
2 Feb 2021
1,610
95.00
153
8 June 2021
1,587
105.05
167
31 Aug 2021
967
113.61
110
3 Feb 2021
1,706
94.78
162
9 June 2021
1,645
103.74
171
1 Sep 2021
978
113.14
111
4 Feb 2021
1,666
94.55
158
10 June 2021
1,787
104.67
187
2 Sep 2021
999
111.68
112
5 Feb 2021
1,637
94.29
154
11 June 2021
1,814
105.41
191
3 Sep 2021
977
113.05
110
9 Feb 2021
1,630
93.92
153
14 June 2021
1,850
105.17
195
6 Sep 2021
715
112.49
80
10 Feb 2021
1,561
93.35
146
15 June 2021
1,885
105.17
198
7 Sep 2021
516
113.59
59
11 Feb 2021
1,425
92.99
133
16 June 2021
1,906
105.44
201
8 Sep 2021
968
112.93
109
12 Feb 2021
1,369
92.89
127
17 June 2021
1,911
105.26
201
9 Sep 2021
1,008
111.92
113
15 Feb 2021
307
93.08
29
18 June 2021
1,968
104.67
206
10 Sep 2021
799
111.45
89
15 Apr 2021
2,041
99.00
202
21 June 2021
1,813
104.09
189
13 Sep 2021
852
112.46
96
16 Apr 2021
843
100.58
85
22 June 2021
1,819
104.02
189
14 Sep 2021
1,032
112.54
116
19 Apr 2021
2,390
103.18
247
23 June 2021
1,250
103.29
129
15 Sep 2021
580
111.68
65
21 May 2021
1,011
107.04
108
29 July 2021
1,158
108.75
126
16 Sep 2021
996
111.92
111
24 May 2021
1,188
107.33
128
16 Aug 2021
1,040
110.69
115
17 Sep 2021
883
111.68
99
Annual Report 2021 – Financial Report
322
Date
No. of
shares
Average
share price
(€)
Value of
treasury
shares
(€ thousand)
Date
No. of
shares
Average
share price
(€)
Value of
treasury
shares
(€ thousand)
Date
No. of
shares
Average
share price
(€)
Value of
treasury
shares
(€ thousand)
20 Sep 2021
884
110.46
98
13 Oct 2021
687
111.18
76
7 Dec 2021
1,323
117.76
156
21 Sep 2021
994
111.30
111
14 Oct 2021
214
111.34
24
8 Dec 2021
1,448
117.90
171
22 Sep 2021
1,007
110.99
112
15 Oct 2021
1,064
112.30
119
9 Dec 2021
773
117.19
91
23 Sep 2021
274
111.22
30
18 Oct 2021
1,073
111.96
120
10 Dec 2021
1,263
117.92
149
24 Sep 2021
835
115.15
96
18 Nov 2021
510
115.24
59
13 Dec 2021
1,474
117.48
173
27 Sep 2021
1,092
112.44
123
19 Nov 2021
915
115.53
106
14 Dec 2021
1,302
118.13
154
28 Sep 2021
605
112.30
68
22 Nov 2021
940
116.46
109
15 Dec 2021
1,689
117.81
199
29 Sep 2021
1,056
112.64
119
23 Nov 2021
286
117.74
34
16 Dec 2021
1,754
117.19
206
30 Sep 2021
800
112.92
90
24 Nov 2021
921
119.31
110
17 Dec 2021
1,582
116.17
184
1 Oct 2021
445
112.62
50
25 Nov 2021
1,015
119.92
122
20 Dec 2021
1,496
116.47
174
4 Oct 2021
941
111.55
105
26 Nov 2021
1,000
119.90
120
21 Dec 2021
785
115.88
91
5 Oct 2021
1,010
111.38
112
29 Nov 2021
834
119.82
100
22 Dec 2021
442
116.53
52
6 Oct 2021
332
109.68
36
30 Nov 2021
1,155
117.19
135
23 Dec 2021
1,298
116.93
152
7 Oct 2021
522
111.17
58
1 Dec 2021
1,227
116.62
143
27 Dec 2021
1,597
118.05
189
8 Oct 2021
978
111.38
109
2 Dec 2021
1,122
116.68
131
28 Dec 2021
910
118.78
108
11 Oct 2021
620
110.49
69
3 Dec 2021
1,572
116.19
183
12 Oct 2021
783
110.45
86
6 Dec 2021
981
115.65
113
Total
purchase in
2021
142,134
107.38
15,262
A broker's fee is included in the weighted average price of shares.
2021 Annual Report
323
SIGNING OF THE 2021 ANNUAL REPORT AND ITS CONSTITUENT
PARTS
President and members of the Krka, d. d., Novo mesto Management Board are aware of the content of the integral parts
of the 2021 Annual Report of Krka and the Krka Group, and hence of the entire 2021 Annual Report of Krka and the Krka
Group. We hereby acknowledge the Report by our signatures.
Jože Colarič
President of the Management Board and CEO
dr. Aleš Rotar
Member of the Management Board
dr. Vinko Zupančič
Member of the Management Board
David Bratož
Member of the Management Board
Milena Kastelic
Member of the Management Board – Worker Director