Krka, d. d., Novo mesto
ANNUAL REPORT
2022
2
Kazalo
INTRODUCTION ................................................................................................................................................. 3
Statement by the President of the Management Board ................................................................................................. 3
Krka Group financial highlights ...................................................................................................................................... 7
Krka’s sustainable development indicators .................................................................................................................... 8
At a glance................................................................................................................................................................... 10
2022 highlights ............................................................................................................................................................ 14
Subsequent event ........................................................................................................................................................ 16
Business report ............................................................................................................................................... 17
Corporate governance statement ................................................................................................................................ 17
Non-financial statement ............................................................................................................................................... 38
Krka Group development strategy ............................................................................................................................... 50
Macroeconomic forecast for 2023 ............................................................................................................................... 55
Risk management ........................................................................................................................................................ 59
Investor and share information .................................................................................................................................... 79
Performance analysis .................................................................................................................................................. 82
Marketing and sales .................................................................................................................................................... 88
Product and service groups ....................................................................................................................................... 101
Research and development ....................................................................................................................................... 121
Production and supply chain ..................................................................................................................................... 127
Investments ............................................................................................................................................................... 130
Quality ....................................................................................................................................................................... 133
SUSTAINABLE DEVELOPMENT................................................................................................................... 139
Materiality assessment process ................................................................................................................................ 139
About the report ......................................................................................................................................................... 140
Employees ................................................................................................................................................................. 144
Patients and other customers .................................................................................................................................... 152
Corporate social responsibility ................................................................................................................................... 154
Natural environment .................................................................................................................................................. 158
GRI content index ...................................................................................................................................................... 174
FINANCIAL REPORT ..................................................................................................................................... 181
Introduction to Financial Statements ......................................................................................................................... 183
Statement of Compliance .......................................................................................................................................... 184
Consolidated Financial Statements of the Krka Group .............................................................................................. 185
Financial Statement of Krka, d.d., Novo mesto ......................................................................................................... 250
SIGNING OF THE 2022 ANNUAL REPORT AND ITS CONSTITUENT PARTS ........................................... 316
In accordance with Commission Delegated Regulation (EU) 2019/815 and Paragraph 1 of Article 134 of the Market in Financial
Instruments Act (ZTFI-1), the official and original version of the report is the one created in the European Single Electronic
Format (ESEF), prepared in the Slovenian language and published via SEOnet, the official electronic dissemination
information system of the Ljubljana Stock Exchange. This version of the annual report is translation. All possible care has
been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of the report takes precedence over this translation.
Annual Report 2022 – Introduction
3
INTRODUCTION
Statement by the President of the Management Board
1
Dear shareholders, business partners and employees,
The Krka Group achieved good results in 2022 despite constant changes and swift reversals on the global market. We are
pleased that this dynamic year for Krka, the pharmaceutical industry and the economy in general was a year of growth
and progress. We overcame various business setbacks owing to our robust business model and constant adjustments in
multiple operating areas.
Continued growth of Krka Group sales in 2022
The Krka Group generated €1,717.5 million in revenue from sales of products and services, a 10% year-on-year rise.
Sales in markets outside Slovenia accounted for 94% of overall Krka Group sales. Product sales volume increased by 4%.
We are one of the leading providers of generic pharmaceuticals in many large markets and the leading one in several
therapeutic categories.
Region East Europe remained our leading sales region in 2022. Regional sales totalled €623.4 million, up 14% on 2021.
We recorded growth in all regional markets, except in Ukraine. In absolute terms, sales growth was the highest in the
Russian Federation and Uzbekistan, and in relative terms, in Turkmenistan. Sales totalling €387 million, up 16% on 2021,
placed us third among foreign providers of generic pharmaceuticals in the Russian Federation. Product sales in Ukraine,
another of our key markets, amounted to €95.2 million, accounting for 99% of total sales in 2021. We ranked second
among foreign providers of generic medicines in the pharmacy segment in Ukraine.
Region Central Europe generated product sales totalling €364.2 million, up 4%. We recorded sales growth in all regional
markets except in Hungary. The Czech Republic delivered the strongest sales growth. In Poland, the largest regional
market and one of our key markets, product sales reached €168.2 million, up 1% on 2021, ranking us third among foreign
providers of generic medicines. In the Czech Republic, another of our key markets, year-on-year sales increased 16% to
€55.8 million. We ranked fourth among foreign providers of generic medicines in the country. Hungary, another of our key
markets, generated sales totalling €47.1 million, down 6% on 2021, ranking us second among primarily foreign providers
of generic medicines. Sales in Slovakia grew to €40.5 million, ranking us fourth among all providers of generic medicines
in the country.
Region West Europe, collectively regarded as one of our key markets, recorded product sales of €327.3 million in 2022,
a 7% year-on-year increase. Germany, Scandinavia, France, and Italy led in terms of sales. We are among the leading
providers of sartans and an important supplier of generic medicines from many other therapeutic categories in the markets
of Region West Europe. Our sales in Germany totalled €88.6 million, a 10% year-on-year increase, ranking us eighth
among foreign providers of generic medicines in the pharmacy segment.
Region South-East Europe generated product sales of €224.5 million, a year-on-year increase of more than 7%. We
recorded sales growth in all regional markets and the highest absolute growth in Croatia, Romania, and Serbia. We ranked
sixth among foreign providers of generic medicines in Romania, one of our key markets. Product sales totalled
€63.2 million, an 8% year-on-year increase. We ranked third among foreign providers of generic medicines in Croatia,
where sales amounted to €41 million, up 14% on 2021.
Region Overseas Markets generated sales of €66.1 million, a 23% year-on-year rise. We have been increasing sales
through our Chinese subsidiary Ningbo Krka Menovo, where our product sales reached €12.8 million, more than doubling
the 2021 sales figure. We also recorded growth in the markets of the Middle East, Far East, Africa, and Central America.
Product and service sales in Slovenia, our domestic and another key market, amounted to €103 million. Product sales
were valued at €60.5 million, up 7% on 2021. Health resorts and tourist services generated €42.6 million, up 17% on the
year before, significantly contributing to 11%-sales growth in the domestic market.
1
GRI 2-22
Annual Report 2022 – Introduction
4
Profitable business operations
Companies encountered many complex situations in sales and purchase markets in 2022. The labour market situation
was equally demanding. We surmounted all difficulties owing to our robust business model and constant adjustments in
various operating areas. We generated record net profit totalling €363.7 million, up 18% on 2021. ROE reached 17.9%.
We intend to further strengthen and optimise our vertically integrated business model, which once again proved to be our
greatest competitive advantage. It allows us to manage most business processes ourselves, from development, API and
finished product manufacture to marketing and sales. We can quickly respond to market demand while providing high
product quality, safety, and efficacy standards.
Innovation-driven product development
We obtained marketing authorisations for 11 new products in 2022: nine prescription pharmaceuticals and two non-
prescription products. We place a considerable emphasis on managing the life cycle of products best established among
users of our medicines. We constantly monitor the quality of our medicines, launch them on new markets, and add new
strengths, pharmaceutical forms, and fixed-dose combinations. We upgrade them in line with the latest scientific findings
and guidelines and align them with regulatory and market requirements. Last year, we received approvals for more
than 28,000 regulatory variations.
In 2022, we filed 14 patent applications for new technological solutions evaluated as inventions at the global ranking level.
Based on priority applications from 2021, we submitted nine international patent applications. We were granted three
patents in different countries. Over 200 patents protect Krka’s technological solutions.
We intend to continue focusing on medicines for treating the most common contemporary chronic diseases.
Cardiovascular agents currently account for more than 50% of our prescription pharmaceuticals, followed by central
nervous system agents and gastrointestinal tract medicines. We also focus on other medicines, primarily on antidiabetic
and oncology agents, medicines for pain relief, etc. We also plan to add new products to our non-prescription and animal
health portfolios.
We are aware that long-term growth primarily depends on managing the life cycle of products and the continuous increase
of supply, so we intend to supplement our portfolio with in-house innovative R&D solutions in the future. We allocate 10%
of our annual revenue to research and development. We have more than 170 products in the pipeline.
16.8 billion tablets and capsules made
Setting a record in 2022, the volume of our finished products saw a 4% year-on-year increase. We are good at fusing
research and development with production and quality management, which speeds up the transfer of new products to
production.
Last year, we further optimised technological processes and introduced many alternative sources of materials. This
enabled uninterrupted production and ensured long-term product volume growth, further reducing risks posed by the
situation in purchasing markets.
Value-added production and research infrastructure
The value of investments increased on 2021 and 2020, amounting to €106 million.
We closed out two essential investments. We installed additional highly automated and robotised packaging lines in our
largest solid dosage production plant, Notol 2 (Novo mesto, Slovenia), equipping it completely. This investment was worth
€39.2 million. We have invested €259 million in the Notol 2 plant to date. We completed several investments to upgrade
research, development and analysis capacities in our development-and-control laboratories. They totalled €8.3 million.
Other planned major investments include the chemical synthesis plant Sinteza 2 and laboratories for chemical analyses
Kemijsko-analitski center – two facilities for API development and production in Krško, Slovenia, that will significantly
increase API development and production capacities. The total investment value is estimated at €163 million.
Annual Report 2022 – Introduction
5
Over 47,000 shareholders
Krka shares remained the most actively traded security on the Ljubljana Stock Exchange in 2022, with an average daily
trading volume of €0.76 million. The share also reached one of the highest dividend yields in the industry.
The shareholders received €5.63 gross dividend per share, up 12.6% on the previous year. Gross dividend yield was 6.1%.
We allocate at least 50% of the net profit of the majority holders for dividends each year. The Krka Group’s financial
requirements for investments and potential acquisitions are also taken into account.
To share our successful business story with investors, we participated in 16 investment conferences with investors from
over 15 countries and held conference calls with over 100 shareholders.
Know-how as our competitive advantage
We know we can deliver on the set strategy only through effective organisation combined with dedicated work in all
business segments and our prowess. Of all Krka employees, 51% hold at least a university degree. We constantly educate
and motivate our employees. We were awarded the silver TOP Education Management certificate in 2022, placing us
among the Slovenian companies that invest the most in employee education and development. Krka received
the 2022 MEGA Acceleration (MEGA pospešek 2022) award, the highest recognition for remarkable achievements in
intergenerational activities, cooperation and integration at the workplace.
We are a varied but tightly-knit team. Our employees come from 49 countries. Employees on open-ended contracts
account for 88.1%, and women occupy 50.8% of all managerial posts.
Upgrading sustainability commitments
Sustainability has been the foundation for our stable growth for decades, outmatching the exclusively environmental
responsibility. Our social impact is significant and encompasses integrated quality management and ensuring high-quality,
safe, effective, and affordable medicines. To enhance sustainable development, we put a lot of effort into talent attraction
and retention, follow good management and governance practices, mitigate our impact on the environment and climate
change, and ensure compliance, integrity, and transparency of business operations.
We recently upgraded Krka Group ESG governance to further improve the management of our material sustainability
areas, reduce sustainability-related risk, and increase the positive impacts of sustainable development. We formally
introduced sustainable development guidelines and strategic goals in November 2022, when the Management and
Supervisory Boards adopted two documents: the ESG Policy of the Krka Group; and the ESG Strategy of the Krka Group,
that set down all measurable goals we plan to deliver on by 2026. This will help us achieve stable long-term business
results and increase our competitive advantage.
We fully embrace our responsibility of providing our medicines to more than 50 million patients, primarily those with chronic
diseases. One of our strategic goals is to increase the number of patients treated with our cardiovascular agents and
hence directly help attain one of the goals from the United Nations 2030 Agenda: to reduce deaths caused by
noncommunicable diseases by one-third by 2030.
We included many additional disclosures in this regard in this annual report. We intend to obtain an independent
ESG rating by the end of 2023.
Growth set to continue in 2023
Despite many market changes, the situation has been favourable, and our products have been in reasonably high demand.
We have one of the most robust marketing and sales networks of all pharmaceutical companies in countries, where our
presence is long standing. We manage sales in most western European markets through our network. We successfully
navigate challenges related to the situation in Ukraine and the Russian Federation, meaning our activities run relatively
smoothly. We also benefit from our 60-year business experience in those countries.
Annual Report 2022 – Introduction
6
Governments and healthcare institutions in many countries worldwide are cutting back on healthcare spending and
encouraging the use of generic medicines. The demand for generic medicines is rising, and certain markets are only
beginning to emerge.
The Krka Group forecasts 2023 product and service sales at €1,755 million. The plan is in synch with our 2022–
2026 development strategy. It is based on assumptions, estimations, forecasts, and other data available during plan
preparation in November 2022. We plan to achieve at least 5% average annual sales growth and EBITDA margin of at
least 25% by 2026.
The Krka Group is an innovative generic company whose long-term orientation is to continue supplying high-quality
medicines to improve the quality of life for patients from all corners of the world. We have many reasons to be confident,
as our competitive advantage lies in: innovative generic medicines; ranking among global best-sellers; a flexible and
resilient business model; highly qualified and motivated employees; digitalisation and innovative approaches to all
business segments; being sustainability-centric; and the ease and speed at which we adapt to changes.
I am convinced that they guarantee the Krka Group’s fitness, increase owners’ assets, and provide new professional
challenges for employees while meeting the expectations of the wider community.
Jože Colarič
President of the Management Board and CEO
Annual Report 2022 – Introduction
7
Krka Group financial highlights
2
€ thousand
2022
2021
2020
2019
2018
Revenue
1,717,453
1,565,802
1,534,941
1,493,409
1,331,858
– Of that revenue from contracts with customers (products
and services)
1,708,542
1,560,288
1,529,959
1,489,080
1,326,747
Earnings before interest, tax, depreciation and amortisation
(EBITDA)
1
488,895
463,625
502,432
385,437
343,280
Operating profit (EBIT)
2
381,211
354,788
390,744
274,195
232,686
Profit before tax (EBT)
433,073
362,417
338,992
284,368
202,573
Net profit
363,662
308,150
288,949
244,272
174,008
Non-current assets (year-end)
1,125,025
1,075,052
990,998
1,041,833
1,010,811
Current assets (year-end)
1,562,475
1,461,936
1,244,544
1,142,785
974,258
Equity (year-end)
2,138,509
1,919,085
1,751,812
1,667,516
1,540,270
Non-current liabilities (year-end)
132,130
162,674
172,796
160,905
123,058
Current liabilities (year-end)
416,861
455,229
310,934
356,197
321,741
R&D expenses
162,580
154,559
153,447
152,421
130,700
Investments
105,974
66,386
76,613
112,568
96,293
RATIOS
2022
2021
2020
2019
2018
EBITDA margin
28.5%
29.6%
32.7%
25.8%
25.8%
EBIT margin
22.2%
22.7%
25.5%
18.4%
17.5%
EBT margin
25.2%
23.1%
22.1%
19.0%
15.2%
Net profit margin (ROS)
21.2%
19.7%
18.8%
16.4%
13.1%
Return on equity (ROE)
3
17.9%
16.8%
16.9%
15.2%
11.5%
Return on assets (ROA)
4
13.9%
12.9%
13.1%
11.7%
8.9%
Liabilities/Equity
0.257
0.322
0.276
0.310
0.289
R&D expenses/Revenue
9.5%
9.9%
10.0%
10.2%
9.8%
NUMBER OF EMPLOYEES
2022
2021
2020
2019
2018
Year-end
11,598
11,511
11,677
11,696
11,390
Average
11,569
11,581
11,631
11,484
11,129
SHARE INFORMATION
2022
2021
2020
2019
2018
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 €
5
11.69
9.92
9.27
7.73
5.46
Gross dividend per share in €
5.63
5.00
4.25
3.20
2.90
Closing price on LJSE at the end of the period in €
92.00
118.00
91.40
73.20
57.80
Price/Earnings ratio (P/E)
7.87
11.90
9.86
9.47
10.59
Book value in €
6
65.21
58.52
53.42
50.85
46.97
Price/Book value (P/B)
1.41
2.02
1.71
1.44
1.23
Market capitalisation in € thousand (31 Dec)
3,016,997
3,869,627
2,997,321
2,400,480
1,895,461
1
The difference between operating income and expenses increased by accumulated depreciation and amortisation
2
The difference between operating income and expenses
3
Net profit/Average shareholders' equity in the year
4
Net profit/Average total asset balance in the year
5
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
6
Equity as at 31 Dec/Total number of shares issued
2
GRI 2-6, 201-1
Annual Report 2022 – Introduction
8
Krka’s sustainable development indicators
Unit of
measure
2022
2021
2020
2019
2018
ENVIRONMENTAL DATA
Water consumption (total)
m
3
1,461,617
1,461,024
1,623,046
1,399,303
1,341,333
Drinking water
m
3
676,482
643,965
684,950
613,919
655,837
River water
m
3
785,135
817,059
938,096
785,384
685,496
Energy (total)
1, 3
GJ
1
1,010,667
953,366
969,833
956,577
961,319
Electric power
GJ
361,190
330,453
344,957
356,610
344,983
Natural gas
GJ
584,480
601,041
604,287
580,048
595,739
Liquid petroleum gas
GJ
0
17,750
20,564
19,409
20,214
Fuel oil (extra light)
GJ
64,997
4122
26
510
383
Generated electric power –
alternative sources (total)
GJ
29,315
53,337
48,294
39,482
46,909
Solar power plant
GJ
275
266
280
252
223
Cogeneration
GJ
29,040
53,071
48,014
39,230
46,686
Energy intensity
Specific use of energy
3
MJ/€
1.52
1.62
1.62
1.66
1.88
Specific use of energy
3
TJ/billion units
77.4
78.1
78.1
82.6
86.6
Wastewater (total)
4
m
3
1.305.619
1.266.494
1.388.829
1.225.003
1.150.578
Cooling water
m
3
424,261
407,807
517,090
392,490
298,137
Industrial wastewater
m
3
881,358
858,687
871,739
832,513
852,441
– Suspended solids load
t
7.0
11.8
10.3
23.9
16.1
– Biochemical oxygen demand
t
3.6
3.1
7.0
6.9
5.0
– Chemical oxygen demand
t
48.0
41.4
42.1
57.5
38.4
– Nitrogen
t
6.2
5.1
2.9
4.9
4.8
– Phosphorus
t
0.7
0.7
0.6
0.7
0.6
Environmental load units (ELU)
2
ELU
1,584
1,371
1,241
1,737
1,286
Waste (total)
t
11,932
11,369
12,512
11,091
10,312
Hazardous waste (total)
t
6,786
6,480
7,329
6,047
5,491
Solid waste
t
871
808
889
789
670
Liquid waste
t
5,915
5,672
6,440
5,258
4,821
Non-hazardous waste (total)
t
5,146
4,889
5,183
5,044
4,821
Disposal at landfills (total)
t
665
763
791
802
824
Composites (energy use and processing)
t
502
495
427
489
371
Biomass (composting)
t
1,447
1,231
1,618
1,308
1,187
Recycling waste (total)
t
2,532
2,381
2,327
2,422
2,422
– Paper
t
1,303
1,243
1,273
1,221
1,191
– Plastics
t
513
421
380
401
432
– Glass
t
113
110
135
136
125
– Metal
t
188
186
150
239
201
– Wood
t
398
421
389
425
473
Electric and electronic equipment
t
17
19
20
23
17
3
GRI 302-1
4
GRI 306-3
Annual Report 2022 – Introduction
9
Unit of
measure
2022
2021
2020
2019
2018
ENVIRONMENTAL DATA
Air emissions
5
Energy related CO
2
– direct
t CO
2
-eq
3
33,475
35,046
34,709
33,332
34,242
Energy related CO
2
– indirect
4
t CO
2
-eq
3
0
0
45,707
47,251
45,710
Energy related SO
2
t
3.7
1
1
1
1
Energy related NO
x
t
35.9
28.0
27.9
26.8
27.6
Ozone-depleting substances and fluorinated
greenhouse gases
t CO
2
-eq
1,174
1,277
2,501
1,744
1,954
Compliance
Extraordinary events related to environment
0
0
0
0
3
Environmental protection (total)
€ thousand
11,968
11,599
10,056
7,672
6,738
Environmental protection costs
€ thousand
7,701
6,258
6,357
5,517
5,107
Investments in environmental programmes
€ thousand
4,267
5,301
3,699
2,155
1,631
SOCIETY
Number of employees
6,320
6,228
6,191
5,907
5,496
Slovenia
5,763
5,690
5,679
5,386
4,995
Representative offices abroad
557
538
512
521
501
Health and safety
4
Number of accidents
32
22
21
27
19
Lost time injury frequency rate (LTIFR)
3.3
2.4
2.3
2.8
1.9
Proportion of disabled employees
%
5.0
5.0
4.9
5.3
5.4
Education and training
Number of education and training hours
hour/employee
44
27
32
41
42
Education and training costs
€/employee
754
603
667
897
881
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
Calorific value assessment methodology changed in 2022. Higher heating value (HHV) was considered instead of the previously used lower heating
value (LHV). All indicators for the last five years were updated accordingly.
4
The calculation of tonnes of CO
2
was based on the emission factors published on the website of the Slovenian Environment Agency.
5
GRI 305-6, 305-7
Annual Report 2022 – Introduction
10
At a glance
6
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 resort and tourist services.
Production takes place at the controlling company in Slovenia and at 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 market and/or sell Krka products, but do not have production capacities.
Terme Krka, d. o. o., Novo mesto provides health resort 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 2022, we established a wholly-owned subsidiary in the United Arab Emirates, Krka GCC L.L.C.
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
6
GRI 2-1
Annual Report 2022 – Introduction
11
Krka Group business model
Annual Report 2022 – Introduction
12
Krka Group organisational chart
Abbreviated company names are used in the remainder of this document.
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 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 Latvija
Italy
KRKA FARMACEUTICI MILANO S.R.L.
France
KRKA France Eurl a capital variable
Belgium
KRKA Belgium, SA
Kazakhstan
LLC KRKA Kazakhstan
The chart includes companies operating as at 31 December 2022.
Other subsidiaries outside Slovenia
Production and distribution companies
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
UAE
Krka GCC L.L.C
Region Slovenia
Health resorts and tourist services
Annual Report 2022 – Introduction
13
Krka in global markets
7
7
GRI 2-1
Annual Report 2022 – Introduction
14
2022 highlights
Business operations
• Krka Group revenue grew by 10% year on year to €1,717.5 million, and net profit by 18% year on year to
€363.7 million.
• The proposed dividend per share of €5.63 gross, up 12.6% on the previous year, was approved at the 28th Annual
General Meeting.
• We participated in 16 investment conferences and held four webcasts to present our business operations to
investors and analysts. We regularly informed the financial and general public about our business achievements in
compliance with applicable regulations and stock exchange reporting rules.
• The Krka Group weathered the challenging operating climate well and reached new sales milestones. We have
doubled sales of perindopril-containing products over the past five years, and sales of our analgesics topped
€100 million in 2022.
• We upgraded our sustainability governance by adopting the Krka Group ESG Policy and ESG Strategy defining
strategic environmental, social and corporate governance objectives. The Management Board and the Supervisory
Board approved both documents.
Visibility
• In 2022, Krka once again scored highly in the long-running Slovenian Business Excellence survey, conducted by
specialist service providers, winning the top place among 54 surveyed companies.
• At the 23rd best annual report contest held by the Slovenian business daily Finance, Krka received the highest
award in the category of large companies for the eighth time.
• Krka maintained its position among top employers in the Slovenian reputation poll (Ugled delodajalca). We have
received the award for the most reputable employer in Slovenia seven times since the poll began in 2007.
• Krka was awarded the silver TOP Education Management certificate, placing it among the Slovenian companies
that invest the most in employee education and development.
• Our long-standing successful collaboration and good relations with the University of Maribor made us a worthy
recipient of the University’s special award for collaboration in research and development.
• The Slovenian Chemical Society awarded Krka an honorary title at their Annual Meeting.
• Krka innovations received three gold and four silver awards at the innovation ceremony of the Chamber of
Commerce of Dolenjska and Bela krajina (GZDBK).
• Krka researchers received two silver awards for innovation at the Slovenian Chamber of Commerce and Industry
(GZS) Innovation Day, winning the award for an innovative lenalidomide hard capsule in cancer treatment and the
award for innovative approaches in ensuring the safety of Krka’s medicines containing sartans.
• At the GZS Innovation Day, Krka received special recognition as the company that has received the Chamber’s
gold award for the best innovation most frequently over the award’s 20 years.
• Krka received the 2022 MEGA Acceleration (MEGA pospešek 2022) award, the highest recognition for remarkable
achievements in intergenerational activities, cooperation and integration at the workplace.
Annual Report 2022 – Introduction
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Sustainability
• The 2021 Talent-of-the-Year Awards were announced at the 16th traditional meeting with Krka’s sponsorship
recipients. Three outstanding young people were awarded for their sports and culture accomplishments.
• Our social responsibility project Krka’s Week of Charity and Volunteering united our employees from 16 countries
in fostering the values of volunteering and mutual help and building bridges between generations.
• On Krka Car-Free Day, our employees from 11 countries reaffirmed our shared commitment to sustainable mobility,
a healthy environment, and improved quality of life.
• We continued our unique and long-standing tradition of Krka Prizes by conferring the secondary school,
undergraduate and graduate-level prizes for the 52nd consecutive time. The recipients presented their research
work at the scientific symposium.
• We donated 50 portable bedside ultrasound machines featuring a tablet computer to various Slovenian institutions
and provided training support to the users. Our donation will help physicians to manage patients even better.
• We presented the 11th consecutive Volunteer of the Year Award and thanked Krka employees who donate blood
regularly.
• We marked the 50th anniversary of Krka’s Culture and Arts Society, which has become an inseparable part of our
company and its culture.
Employees
• The 19th International Regulatory and Pharmacovigilance Conference was organised as a hybrid event. More than
300 colleagues from 36 countries joined the event remotely, while our colleagues from 29 countries attended in
person. The best regulatory affairs employees received awards, recognitions, and commendations.
• 148 colleagues from 40 markets attended the 24th Marketing and Sales Conference. The event focused on Krka’s
strategy up to 2026 and its marketing and sales objectives.
• The 13th HR Conference, held remotely, examined global human resources challenges.
• We organised the 6th Quality Conference for Krka subsidiaries with a marketing authorisation holder status.
• Nearly 12,600 employees contribute to Krka’s development and progress. We acknowledged their commitment and
professional achievements by presenting the 2022 Krka Awards.
• In April, we held 18 worker assemblies at Krka in Slovenia. The President and members of the Management Board
briefed more than 3,570 employees on performance results, plans for the current year, the strategy, and other
current issues.
• The best employees in marketing were presented with Marketing Awards for the 24th consecutive time. The
recipients came from 30 countries.
• In July, 20 colleagues from nine countries completed the 18th Krka International Leadership School.
• We thanked our colleagues and organisational units that submitted the best useful proposals and improvements
for their innovation efforts, contributing to our company’s progress.
• We continued with our tradition of organising an annual event for our newly retired colleagues to recognise the
contribution to the company’s success by many generations of our employees.
Annual Report 2022 – Introduction
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Subsequent event
The event after the end of the period had no impact on the 2022 financial statements.
Acquisition of treasury shares
From 1 January 2023 to 20 March 2023, we acquired 25,852 of treasury shares. At the end of this period, Krka held
1,811,701 treasury shares (5.525% of total shares).
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BUSINESS REPORT
Corporate governance statement
8
Krka employs a two-tier corporate governance 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
materials for each AGM can be viewed at the Company’s registered office from the day of the notice.
All shareholders entered in the shareholder register as at the record date, which is published in the notice, have the right
to attend and vote at the AGM. The same applies to their representatives and proxies.
At the AGM, the Management Board provides shareholders with all information required to assess the agenda, taking into
account all legal or other information disclosure restrictions.
In the 2022 AGM notice, per Item 8.2 of the Corporate Governance Code for Listed Companies in force, 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 28th AGM of 7 July 2022, shareholders:
• Received the Management Board 2021 activity report, including the auditor’s report, the Supervisory Board report
verifying and endorsing the 2021 annual report, and the 2021 Management and Supervisory Board remuneration
report.
• Adopted the resolution on the appropriation of accumulated profit for 2021;
• Discharged the Management and Supervisory Boards of liability for 2021;
• Discussed in compliance with ZGD-1 the remuneration policy for management and supervisory bodies, and did not
approve it at consultative voting;
• Elected Borut Jamnik, a member–shareholder representative, to the Supervisory Board for a five-year term
commencing on 8 July 2022;
• Appointed as the auditor for financial years 2022, 2023, and 2024 the audit firm KPMG SLOVENIJA, podjetje za
revidiranje, d. o. o., Železna cesta 8a, 1000 Ljubljana.
According to the 2023 financial calendar, the regular AGM is set for 6 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 notice 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’.
8
GRI 2-9, 2-10
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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 (a) the
appointment, removal, and remuneration of the Head of Internal Audit; (b) the act regulating the purpose, meaning, and
duties of Internal Audit; and (c) 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 contracts with the external auditor. Only with the
Supervisory Board’s consent can the Management Board invite shareholders in the AGM notice to attend the AGM and
vote even if they are not present at the meeting in person (Item 6.21 of the Articles of Association).
The company’s Articles of Association stipulate the composition of the Supervisory Board. The Supervisory Board has
nine members: six are elected by the AGM, and the Company’s Works Council elects three employee representatives.
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 new five-
year terms of office. Another two shareholder representatives sit on the Supervisory Board: Borut Jamnik elected by the
AGM on 6 July 2017 and again on 7 July 2022, and Mojca Osolnik Videmšek elected by the AGM 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 performance complies with legislation, recommendations of professional associations, primarily
the Slovenian Directors’ Association, and other good practice recommendations, particularly the Slovenian Corporate
Governance Code.
Supervisory Board members’ remuneration, reimbursement, and other benefits are not directly linked to the Company’s
performance and are disclosed in the financial report under the Note entitled ‘Related party transactions’ and in the report
to the AGM on Management and Supervisory Board remuneration. In addition to attendance fees, members receive fixed
amounts for exercising their functions and additional payments, i.e. for membership on committees, chairing 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, and Krka makes the information public. Please find the disclosure on how many Krka shares Supervisory
Board members hold in the ‘Related party transactions’ section of the financial report.
In addition to the Companies Act, also the Rules of Procedure of the Supervisory Board govern any potential conflict of
interest of the Supervisory Board members. Supervisory Board members must consider the Company’s objectives when
discharging their duties and accordingly subordinate any personal interests or interests of third parties. All members were
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 steps to be taken by members in any case 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
terminating 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 2022 is detailed in ‘2022 Supervisory Board report’,
published on SEOnet (http://seonet.ljse.si) of the Ljubljana Stock Exchange, ESPI of the Warsaw Stock Exchange, and
Krka’s webpages.
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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 senior managerial positions since 1978.
He was the driving force behind the project to restructure and transform public warehouses into a thriving, dynamic, and
rapidly expanding company that has also become one of Europe’s largest business, shopping, entertainment, recreation,
culture, and innovation centres: 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
stewardship, the company has forged links with long-term business partners through various exploits, creating a unique
business ecosystem and seeking new opportunities and challenges in an age of mass 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 roles 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 has received 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 advocate of culture and was named
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 in 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 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. He led the corporate governance and investment negotiation teams during
Slovenia’s OECD membership talks.
He has been involved in many scientific project teams researching the behaviour of enterprises and financial institutions
in transition; Slovenian economic development strategy; successful competitive strategies of Slovenian and Croatian
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companies; company acquisitions in economies in transition; and market regulations post-EU accession. 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.
Dr Boris Žnidarič
President of the Human Resource Committee
Boris Žnidarič 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. Before 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 insurance fraud prevention and detection department. 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 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 the establishment of the First Pension Fund in Slovenia.
In 2000, he began his term on the management board of Kapitalska družba in charge of finance, analyses, IT, 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 responsible 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
consultancy Posebna družba za podjetniško svetovanje (PDP) until its dissolution following the merger with Slovenski
državni holding (SDH, Slovenian Sovereign Holding). The process involved a series of financial and business
restructurings, culminating in the sale of the companies. In 2011 he was appointed chairperson of 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 been a member of or chaired many governing bodies of major Slovenian companies, including Telekom
Slovenije, Pivovarna Laško, Zavarovalnica Triglav, NLB, Luka Koper, Comet, Swaty, Lesnina, Žito, Krka, etc. Until 2018,
he was a management board member of the European Association of Public Sector Pension Institutions (EAPSPI). He
was a supervisory board and audit committee member at Nova KBM bank until 4 January 2023.
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 continues his committee board member tenure.
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.
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Mojca Osolnik Videmšek
Mojca Osolnik Videmšek (born 1966) holds a university degree in economics. She sits on the management board of
Gorenjska banka, a bank, and is responsible for risk management. A bank employee since 2014, she sat on the
management board from 2014 until 2019, and acted as the director of the bank’s subsidiary GB Leasing, d. o. o. (2019–
2022). Her other duties included financial management, back office, compliance management, human resource
management, organisation, and legal affairs.
Before taking up employment with Gorenjska banka, she was responsible for various challenging areas of work at another
Slovenian bank, 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 has also gained experience in executive positions 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 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 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, the University of Lyon, and the pharmaceutical industry.
Her scientific career started in the area of pharmaceutical technology. Her greatest achievements include sustainable
development and deploying pharmaceutical nanotechnology in Slovenia and beyond. Her work initially focused on
developing and evaluating API nanodelivery systems that support innovative modes and new treatment mechanisms.
Other notable achievements include lipid and polymer nanostructure (various nanoparticles and nanofibres) research and
development, the discovery of mechanisms for increasing active ingredient solubility and bioavailability, and understanding
the correlation between the structural composition and the real-time cell response on contact with them. Owing to her
achievements, she is a pharmaceutical nanotechnologist of global renown. In 2021, the Ministry of Education, Science
and Sport of the Republic of Slovenia awarded Kristl the Zois Lifetime Achievement Award. She was awarded emeritus
status by the University of Ljubljana in 2022 for her significant contribution to the development of pharmaceutical science
and dedicated pedagogical and scientific work.
Throughout her career, she held many managerial posts, serving 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 levels. Since 2021, she has
actively participated in the council of the Slovenian Quality Assurance Agency for Higher Education, Slovenian Directors’
Association, Slovenian Pharmaceutical Society, and the Outstanding Achievements Awards and Recognition Committee
of the Republic of Slovenia.
She is committed to research, gaining and sharing know-how 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. From the outset, he has worked in engineering and technical services ranging from technologist, Head of the
Technical and Technological Preparations Department, and later senior specialist in maintenance and project
management.
In 2004, he was the SAP PM-maintenance project team leader for the rollout of the business process management system
(SAP) and subsequently appointed process owner for maintenance in the Krka Group. In 2021, he was appointed as the
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process owner to the project team for the rollout of the new system, SAP S/4HANA, again as the maintenance project
manager.
He has served as an authorised person and trainer for quality assurance since 1999. He conducted internal audits of the
integrated quality system as a certified internal quality auditor between 2000 and 2013. He was appointed Information
Security Officer for engineering and technical services in 2007, and in 2019 also Business Continuity Officer. He is jointly
responsible for integrated quality system maintenance, compliance and business continuity in the organisational unit and
the Company.
In 2009, he completed supervisory and management board member training 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.
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 planned new products, and once approved, she managed product registration and product launch campaigns 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 was born in 1967. After graduating as a mechanical engineer, he acquired 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; establishing and expanding Krka’s presence in individual markets;
specifying the product range; recommending pricing strategies for individual markets; taking part in the preparation of sales
campaigns; designing, developing, and managing distribution channels; and participating in the sales network creation
abroad. Before joining Krka, he worked for IBM Slovenia from 1992 to 1995, first as an information systems sales
representative and later managing information system installation projects.
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. Up to 2011, he was a project manager at KPMG, where he planned, led, and conducted complex
audits in 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 registered 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.
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Management Board
The Management Board’s primary 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 has five members:
• President of the Management Board;
• Three members; and
• A worker director representing employee interests regarding human resource and social issues.
The President and other members of the Management Board of Krka were not members of any governance or supervisory
bodies outside the Krka Group in 2022.
The term of office of Management Board members is six years. Members can be reappointed. The candidacy procedure
and selection of the Management Board members took place in 2021, when the Supervisory Board appointed the
Management Board for a term of office commencing on 1 January 2022.
The Rules of Procedure of the Management Board define the Management Board’s operational functions and assignment
of duties. 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 facilitates
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;
• Corporate Identity Committee; and
• Sustainability Board.
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 for implementing annual plans. Certain committees also have a risk management remit. The Sustainability
Board has been active since 1 January 2023.
Remuneration, reimbursements, and other benefits for Management Board members are fixed in work contracts between
the Supervisory Board and individual Management Board members. In compliance with the Companies Act, the
remuneration policy for management and supervisory bodies is decided on by a consultative resolution. This provision has
been applied to AGMs since 24 August 2021.
In 2022, payments to Management Board members were made in cash. The data are disclosed in the financial report
under the Note entitled ‘Related Party Transactions’, and in the report on remuneration for the members of the
Management and Supervisory Boards of Krka, reviewed at the AGM of 7 July 2022.
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.
Annual Report 2022 – Business Report
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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
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 anti-competitive
practices throughout their term of office. Under the Rules of Procedure, they can accept seats on supervisory bodies of
companies outside the Krka Group only after notifying and obtaining approval from the Supervisory Board of Krka. In 2022,
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 Board’s 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, Slovenia) completed his secondary education at Gimnazija Novo mesto, then
continued his studies at the Faculty of Economics in Ljubljana, graduating in 1979.
He has been employed at Krka since 1982. He started in the Finance Sector, where he initially headed Foreign Currency
Payments, and then won promotion to Assistant Director. In 1989, he began managing the Exports Department within the
Import-Export Sector. Two years later, he became Deputy Director of Import-Export.
Early in 1993, Colarič was appointed Deputy Chief Executive for Marketing and Finance. In September of the same year
also assumed management of the Marketing-and-Sales Sector.
In 1997, he was appointed 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 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 an unchanged Management Board, and the
Supervisory Board unanimously reappointed to the Management Board for the 2022–2027 term of office the Worker
Director proposed by the Works Council.
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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 received his MBA from IEDC, Brdo. He
earned his doctorate from the Faculty of Pharmacy, Ljubljana, in 2000.
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 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. Owing to his strong performance, in November 2015, the Supervisory
Board unanimously appointed Rotar to the Management Board for a new term of office from 2016 to 2021 following a
nomination 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 enhance technology transfer and product life cycle management, leading to higher production output.
During his terms of office, Krka almost doubled product launches.
Following his 2021 nomination by Colarič, the Supervisory Board unanimously appointed him to 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, Slovenia) 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 role of assistant to the head of
Warehouse and Transport Services. In 2002, he became Deputy Head of Supply Chain. Commencing on 1 February 2004,
Zupančič took up his appointment as Director at Krka’s representative office in Bangalore, India. He returned to Krka in
Slovenia on 1 July 2005 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 to 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 his 2015 nomination by Colarič, the Supervisory Board unanimously appointed him to the Management
Board for a term of office from 2016 to 2021. During that term, he successfully managed raw material development,
production, and the supply chain. He played a key role in supply chain management regarding finished products, from
improving raw material economics to process optimisation. He is also credited with continuously streamlining warehousing
capacities and optimising road and other means of transport.
Following his 2021 nomination by Colarič, the Supervisory Board unanimously appointed him to 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, Slovenia) 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. He graduated
in 2000, specialising in finance.
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Bratož began his career at Krka in 2001 in the Finance department, where he managed several major projects. In 2003,
he began working in Sales, Region Central Europe, primarily in charge of the Polish market. Owing to his strong
performance, he was appointed Director of Krka - Polska in 2007, where he managed marketing, sales, production, and
distribution operations. 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.
Bratož has extensive knowledge of all business functions of a large corporation. Following his 2015 nomination 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. He was also accountable for managing finance, the economics of
international and domestic business operations, Krka Group controlling, business intelligence, and the 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 enhancing sustainable management 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 employee recreation, meals during work time, housing issues, and Krka’s societies.
He sits on the supervisory board of the Chamber of Commerce and Industry of Slovenia.
Following his 2021 nomination by Colarič, the Supervisory Board unanimously appointed him to 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, Slovenia) 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 nearly three decades,
her professional career has been closely linked to herbs, the 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 managed successfully until April 2018. At present, Kastelic heads Semi-Solid, Liquid and
Other Products. She took up the role of Deputy Director of Pharmaceutical Production in charge of the corresponding
segment in July 2021 and also delivers employee training.
As Krka’s internal auditor of 15 years, she has contributed to enhancing business processes in the Company. This function
allowed her to learn about the workings of other organisational units, the importance of close cooperation between them,
and the results of mutual cooperation.
In 2015, the Works Council proposed her as the Worker Director. 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 in 2021.
The Supervisory Board, therefore, unanimously appointed her to the Management Board – Worker Director for another
six-year term of office commencing on 1 January 2022.
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/.
Annual Report 2022 – Business Report
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In line with good practice, we hereby declare that Management Board member David Bratož acts under the board
resolution as the expert team leader for enhancing sustainable management.
2022 diversity policy for Management and Supervisory Boards
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 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 2022,
women accounted for 33% of the Supervisory Board structure, constituting 29% of the Management and Supervisory
Boards.
Key areas of the Diversity Policy are gender, age, and qualification profile diversity. The policy pursues a 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. However, the Company also intends to apply it
rationally 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
standing, sexual orientation, or other personal particulars.
Diversity policy monitors are: (a) Human Resource Committee of the Supervisory Board; (b) Supervisory Board; (c)
Management Board; (d) Works Council; (e) Any committees involved in procedures for selecting members to management
and supervisory bodies; and (f) Human Resources of Krka.
Governance of the Krka Group
The Krka Group comprises the controlling company Krka and subsidiaries in Slovenia and abroad. Generally, Krka is the
sole owner of the subsidiaries incorporated as limited liability companies.
Uniform governance, organisation, and operation rules 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.
Corporate compliance and integrity
Values, norms, integrity
9
Corporate integrity, compliance, and transparency of operations are important at Krka and apply to all levels of business
operations, employees, and third parties. We constantly strive to enhance the ethics culture and safeguard Krka’s renown
and assets. When working and carrying out tasks, the benchmark for all employees is to comply with fundamental ethical
principles of honesty, loyalty, professionalism, applicable regulations, and Krka’s bye-laws. We are constantly working to
raise employee awareness of potential fraud, non-compliance and other violations, and ways of managing them,
accountability in their detection, and reporting.
9
GRI 2-23, SDG 16
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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 adopted the document in 2018 at the Group
level. It was updated in 2020 and is to be reviewed and, if necessary, updated biennially. It was last reviewed in
January 2023. It is available in 29 languages on our corporate website or websites of our subsidiaries. Subsidiaries must
take national legislation and transparent business practices into account.
The Code is binding on all employees.
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 with a conflict of interest risk.
Education and training on corporate compliance and integrity
10
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.
Krka’s various departments screen 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. Training course attendance records are kept or logged via eCampus.
Addressing purported irregularities
11
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, with the
Rules on Fraud Prevention, Detection and Investigation.
Employees can report 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 and, in turn, appoints a working team for each case separately by including experts on relevant
issues. We guarantee anonymity to reporters and safeguard them against any potential retaliatory measures. When a case
is closed, we adopt corrective measures if necessary.
Krka’s Code of Conduct entered into force on 1 May 2018. Since then, the compliance officer has received 72 reports for
consideration, 8 in 2022; 15 in 2021; 25 in 2020; 10 in 2019; and 14 in 2018. On the back of those reports, we adopted
relevant corrective measures to further strengthen our internal controls.
Chief Compliance Officer
12
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 advise on
managing compliance in their respective areas, and a secretary assists him. The Chief Compliance Officer briefs the
Supervisory Board on his activities through the Integrity Plan discussed by the body biennially, which happened last
in 2022. He reports to the Management Board on all activities once a year.
Our subsidiaries with 250 or more employees employ their own compliance officers. In 2022, subsidiaries in the Russian
Federation, Poland, Ukraine, Germany, and Terme Krka (Slovenia) had their own compliance officers. They report to
Krka’s Chief Compliance Officer every quarter.
10
GRI 205-2
11
GRI 2-26, 3-3, 205-3
12
GRI 2-16, 2-24
Annual Report 2022 – Business Report
29
Integrity Plan
13
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. The plan is updated every year. The plan commits us to constant improvements in operational compliance
in the following areas.
The 2022–2023 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;
• Risk of health-and-safety at work non-compliance;
• Systemic risk related to integrity and compliance.
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 Russian Federation, Poland, and Ukraine subsidiaries drew up their integrity plans in 2021, while our German
subsidiary and Terme Krka (Slovenia) prepared them in 2022.
In 2022, no high risk was detected in connection with any area listed above.
14
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
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.
We regularly update all these rulebooks. They have been translated into the national languages of the countries where
our marketing network operates. Marketing employees receive information through eCampus, at internal cyclic meetings,
and training courses for marketing employees. They learn about the rules mentioned above and sign a relevant declaration.
Management approach to non-discrimination
15
Two umbrella documents set down non-discrimination principles; Krka’s Code of Conduct and the Integrity Plan, an
implementation document.
13
GRI 2-23, 2-24
14
GRI 205-1
15
GRI 3-3, 406-1
Annual Report 2022 – Business Report
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To date, we have not received any reports on purported discrimination based on race, skin colour, gender, religious or
political conviction, nationality, or social origin.
Contributions and other spending
16
In 2022 and over the past five years, Krka did not fund any political campaigns, political organisations, lobbyists, or lobbying
organisations.
Krka Group companies are members of those advocacy groups where their membership is obligatory or considered a
common practice in the industry.
17
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 preceding year.
We manage sponsorships and donations in the context of Krka Group’s sustainable business operations. Activities are
carried out in accordance with The Krka Group Sponsorship Manual governing sponsorships and donations. In line 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 the majority of funds to sports, culture, healthcare, science, education and humanitarian
actions. Please refer to the ‘Sustainable Development’ section for further information.
Human rights in business operations
18
On 31 May 2019, Krka signed the Commitment to Respect Human Rights in Business Operations instigated by the Ministry
of Foreign Affairs of the Republic of Slovenia. 18 major Slovenian companies signed the document. At the state level, the
issue is governed by National Action Plan of the Republic of Slovenia on Business and Human Rights.
Krka contracts currently do not include stipulations on human rights. However, we are committed to honouring them by
Krka’s Code of Conduct. We comply with all human rights legislation and standards in all countries where we operate.
Human resources are referred to by the Integrity Plan, updated yearly; the latest update was made in June 2022.
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 2022 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 compliance with the regulations of each audit area.
Internal auditors reviewed processes in: API R&D; Analytics Development; QA Incoming Materials and APIs; Sales; Digital
Marketing; Promotional Material Preparation; Environmental Protection; Hazardous Materials Warehouse, and IT
management. 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 aforementioned standards. Internal
Audit primarily participated in the preparation of the ESG Policy and strategy.
Internal auditors provided assurances that the applied systems of internal controls in the audited areas and processes had
been established, operational, and effective in achieving set objectives. However, improvements could be made, so they
made recommendations, categorised them by individual risk levels, and regularly verified their implementation.
16
GRI 3-3, 415-1
17
GRI 2-28
18
GRI 2-23, 2-24, 3-3
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Internal auditors work with the Krka Supervisory Board, 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
19
The Krka Group has established internal controls, i.e. guidelines and procedures at every level of operation to manage
financial and tax reporting risks. Internal controls ensure the reliability of financial reporting and compliance with applicable
legislation and other internal and external regulations. Implementing standard information systems in subsidiaries and
developing business information systems facilitate the exchange of 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: comply with the legislation in the
country in which we operate; settle tax liabilities voluntarily and on time; avoid risky tax decisions; 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, serve to
restrict and supervise 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 annually.
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 KPMG SLOVENIJA, podjetje za revidiranje, d. o. o., audits the financial statements of the controlling
company and the consolidated financial statements of the Krka Group. The audit firm was appointed as the auditor for
financial years 2022, 2023, and 2024 by shareholders at the 28th Annual General Meeting of Krka held on 7 July 2022.
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 KPMG SLOVENIJA, podjetje za revidiranje, d. o. o., 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’.
19
GRI 3-3, 207-1, 207-2, 207-3
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32
Composition of Supervisory Board of Krka as at 31 December 2022
20
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
Duration of current
term of office
2025
2022
2025
2025
2025
2024
2024
2024
2024
Representing
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
Employees
Employees
Employees
Meeting attendance
record
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 2022, 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 record 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
Supervisory Board members, especially shareholder representatives, 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 (ZGD-1).
ESG competencies
Received several
awards for his
visionary work in the
economy and 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;
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
Long-standing work on
employee inclusion
and participation in
management; elected
employee
representative on the
Supervisory Board
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
20
GRI 2-9, 2-10, 2-11, 405-1
Annual Report 2022 – Business Report
33
External members of Committees as at 31 December 2022
Audit Committee
Name and surname
Borut Šterbenc
Function
Independent external expert of the Audit Committee in accordance with Article 280 of the
Companies Act
Meeting attendance record
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 registered 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 hedge fund committee of Pokojninska družba A, d. d
Competence in sustainability management
Transparency in terms of reporting and business operations; is a certified auditor
Annual Report 2022 – Business Report
34
Composition of Management Board as at 31 December 2022
21
Name and surname
Jože Colarič
Aleš Rotar
Vinko Zupančič
David Bratož
Milena Kastelic
Function
President
Member
Member
Member
Member, Worker Director
Remit on 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
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
By the end of 2027
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
Sustainability management
expertise
Extensive 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 generics
Knowledge of and extensive
experience in the development
and production of quality
products for accessible
healthcare
(managing development,
research, pharmaceutical
production, new products)
Supply chain management,
contributed to the
uninterrupted supply of
medicines in markets and a
resilient and flexible vertically
integrated business model
Head of the sustainability 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 concerning
human resource and social
issues as well as workplace
health and safety
Independent
Yes. Members’ independence is assessed upon their appointment.
Under the Rules of Procedure of the Management Board, members must immediately disclose any conflicts of interest. The Rules of Procedure of the
Management Board propose measures to manage such conflicts.
Management Board remuneration details are disclosed in the ‘Related Party Transactions’ section.
21
GRI 2-9, 2-10, 2-11, 2-12, 2-15, 2-17, 405-1
Annual Report 2022 – Business Report
35
Corporate governance code compliance statement
In 2022, Krka’s code of reference was the Slovenian Corporate Governance Code for Listed Companies (hereinafter: the
Code), adopted on 9 December 2021 by the Ljubljana Stock Exchange and the Slovenian Directors’ Association.
The Code entered into force on 1 January 2022 and is published on the Ljubljana Stock Exchange website.
We, the Management and Supervisory Boards of Krka, tovarna zdravil, d. d., Novo mesto hereby declare that in 2022
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 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 2022, no proposal for additional training was put forward, so the plan was not
adopted (Item 15.1 of the Code).
Supervisory Board members evaluated 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 2022, an external audit of the
Supervisory Board’s performance in collaboration with a specialised institution or other experts was not conducted
(Items 16.2 and 16.4 of the Code). The 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.
We use a digital application to distribute Supervisory Board materials securely. Supervisory Board members can access
the archive until the end of their terms in office (Items 14.2 and 14.6 of the Code), which complies with our Information
Security Policy.
According to our Rules of Procedure of the Supervisory Board, 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 key activities of the bodies. The Rules of Procedure of the Supervisory Board state that when the
president is absent or unavailable to attend, the shareholder representative is first to assume the president’s duties 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 17.4 of the Code).
In 2022, 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 5.6 of the Code).
We do not list any association of the Management and Supervisory Board members with any governance or supervisory
bodies of non-related companies in the uniform tables (Attachments C1 and C2 to the Code in force) in the ‘Corporate
governance statement’ section of the 2022 Annual Report of Krka. The Management Board members do not engage in
corporate governance and supervisory functions outside the Krka Group, while information about Supervisory Board
members’ engagements is included in their CVs (Item 5.5 of the Code). Variable remuneration for the Management Board
is always paid in two parts: as an advance payment based on semi-annual results; and as back pay after the Supervisory
Board confirms the annual report at their meeting, always together with the monthly salary for the following month
(Item 23.2 of the Code).
The Supervisory Board updated the Management Board variable remuneration criteria in 2012, 2014, 2016, and 2018 in
consideration of additional Management Board duties related to business strategy, changes to the business environment,
or remuneration trends. The Supervisory Board also made considerable adjustments to the remuneration policy in 2022
and submitted them for AGM approval.
The Supervisory Board did not set the criteria every year in line with the recommendations under Item 14.11 of the Code
because they are related to the Krka Group’s long-term development strategy.
Annual Report 2022 – Business Report
36
Under the Rules of Procedure of the Management Board, Management Board members may join supervisory boards of
non-related companies only after they inform and obtain consent from the Company’s Supervisory Board. This is a partial
derogation from Article 21.6 of the Code, which addresses all companies, not only the non-related ones.
We publish contact details for investors and the public on our website but not the names of individuals (Item 31.2 of the
Code) because several persons are in charge of various areas.
We also made public the Rules of Procedure of the Supervisory Board. In the 2022 ‘Corporate governance statement’, we
disclosed the composition, remits, and other aspects concerning the operation of our bodies, and hence all essential
information on corporate governance. We did not publish any other operational documents regarding the performance of
the bodies in 2022 (Item 32.7 of the Code).
Two members of the Supervisory Board, i.e. employee representatives, could be regarded as members of the wider
management team according to certain criteria (Item 13 of the Code). This is despite the fact that they cannot entirely
independently make decisions for their respective work areas regarding financial resource allocations, employment, or
strategy.
We also complied with 73% of the valid Best Practice for GPW Listed Companies code provisions, which applies to
companies listed on the Warsaw Stock Exchange. We explain discrepancies in a separate document published in the
dissemination system of the Warsaw Stock Exchange.
Novo mesto, 28 March 2023
Jože Colarič
President of the Management Board and CEO
Jože Mermal
President of the Supervisory Board
Annual Report 2022 – Business Report
37
Signatories to 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
Annual Report 2022 – Business Report
38
Non-financial statement
22
The Management Board of Krka, tovarna zdravil, d. d., Novo mesto (hereinafter the Company) hereby declares that all
Krka Group subsidiaries adhere to Krka Group policies relating to the social sphere and human resources, respect for
human rights and diversity, anti-corruption and anti-bribery management, and the environment. The non-financial
statement applies to all Krka Group constituent entities, i.e. to Krka, the controlling company, and all Krka Group
subsidiaries.
The Krka Group operates under the business model presented in the ‘Krka Group business model’ section and also
monitors its position in various environments. Further information is available in the ‘Risk management’ section.
We at the Company and the Krka Group are committed to high ethical standards. Krka’s Code of Conduct includes
principles and rules of ethical conduct, as well as good business practices and standards of conduct in the Krka Group,
binding on all Company employees. The Code is the keystone for all other Company and Krka Group bye-laws. The
guiding principle is to act in line with the highest moral standards, principles governing honesty, loyalty, and
professionalism, and consistently comply with regulations and guidelines provided by international organisations for the
pharmaceutical industry and bye-laws. The Code is published on the Company website. All business partners can access
the Code, and we expect them to adhere to it when doing business with any Krka Group entity.
We at the Company and the Krka Group place a 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. Our success
depends on employees’ commitment, good and constructive relationships, and contemporary and stable management
methods that guide our employees towards efficiency, proactivity, improvement, and development, thus upholding the
Company’s values. We try to make our overall operations reflect responsibility towards employees, the environment, and
stakeholders. The Company values guide us when setting objectives, achieving results, working with employees, and
managing and developing employee potential. Together we encourage a culture of mutual trust, respect, cooperation and
teamwork, lifelong learning, and responsible, efficient, and sustainable work. The Company and Krka Group employees
are known to be loyal, innovative, flexible, diligent, and focused on achieving business objectives and results. For further
information, please see the 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 workplace health and safety. Smoking is prohibited
at all Company and Krka Group sites.
We operate in line with all regulatory requirements and standards relating to human rights in all countries where the
Company does business. 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
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 undermine another person’s dignity. Any employee may report mobbing to the relevant
company officer.
The diversity policy of the Company and the Krka Group applies the principle of integration and equal opportunities, which
also applies to the composition of the supervisory and management bodies. In 2021, the Management and Supervisory
Boards adopted, in line with the recommendations of the Slovenian Directors’ Association, the Diversity Policy and made
the document available to the public. Please see also the ‘Corporate governance statement’ section, subsection
‘2022 Management and Supervisory Board diversity policy’.
22
GRI 2-14
Annual Report 2022 – Business Report
39
The document Rules on Fraud Prevention, Detection and Investigation is available to the public and applies to the
Company and the Krka Group. It governs the prevention of fraud and corruption, measures to combat it, and the
responsibility of employees in its detection. We apply the principle of zero tolerance regarding fraud, 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 the Company’s business opportunities, its assets, and information for
personal, commercial, or third-party gain. We do not promise any benefits or 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 concerning our work. We ensure that persons with access to inside information are aware of such
information's confidentiality levels and sensitivity. Our bye-laws govern trading in the Company’s financial instruments,
and we have oversight mechanisms in place for employees and third parties handling 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 this time they are prohibited from trading in the Company’s financial instruments. You can find
more on this topic in the Krka’s Code of Conduct and the ‘Corporate governance statement’ section, subsection ‘Corporate
compliance and integrity’. In 2022, no cases of corruption were detected or confirmed.
We safeguard the environment and respect environmental regulations, while working in tandem with the local community
and beyond. We set out our commitment to preserving the natural environment in our Environmental Policy, which binds
us to safeguard the environment in accordance with the newly issued ISO 14001:2015 standard, and 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, the Company is subject to the EU Taxonomy Regulation
(EU) 2021/852 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 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, i.e. we believe they do not 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 consider its impact and the reporting obligations it imposes.
Risks, policies, and due diligence reviews relating to Company and Krka Group non-financial operations are detailed in
the ‘Risk management’ and ‘Sustainable development’ sections, while non-financial indicators or the ensuing policy results
can be found in the ‘Sustainable development’ section and in the ‘Krka’s sustainable development indicators’ chart in the
introduction to the Annual report.
In 2022, we made an important step forward in integrating a sustainability perspective in our strategic planning and
business operations in line with the ‘Krka Group key strategic objectives up to 2026’. We updated policies in our key areas
and adopted strategic objectives in ESG-relevant domains per materiality assessment findings. We outlined guidelines for
sustainable business operations in the ESG Policy of the Krka Group, the master document for strategic sustainability
governance in relation to the environmental (E), social (S), and corporate governance (G) dimensions of the group. The
Policy specifies management approaches to material sustainability areas. It sets down the fundamental principles and
efforts for sustainable business followed by the Krka Group in its operations throughout value chain creation and in
relations with various groups of stakeholders, from suppliers to customers and subsidiaries within the group. The
fundamental objective of integrating the Krka Group sustainability principles and sustainable governance approaches into
management processes and business decisions is to heighten awareness of sustainability-related risks and opportunities
that can impact the success of our business operations and help improve their management going forward.
The ‘Corporate governance statement’, subsection ‘Corporate compliance and integrity’ describes our activities in the
following areas: corporate compliance and integrity; corporate compliance and corporate integrity education and training;
addressing purported irregularities; the role of the Chief Compliance Officer in the Company; integrity plan; management
approach to non-discrimination; and human rights in business operations.
Annual Report 2022 – Business Report
40
EU Taxonomy
Regulation (EU) 2020/852 (hereinafter Taxonomy) sets the classification system for environmentally sustainable economic
activities and is an important step towards achieving a climate-neutral Union in line with the EU climate objectives by 2050.
‘Taxonomy-aligned economic activity’ means an economic activity that complies with the requirements laid down in
delegated acts supplementing the Taxonomy, whether or not a specified economic activity meets any or all technical
screening criteria laid down in those delegated acts. The EU adopted Commission Delegated Regulation (EU) 2021/2139
of 4 June 2021 supplementing Regulation (EU) 2020/852 (hereinafter Delegated Regulation). An economic activity is
taxonomy-aligned if it meets technical screening criteria for review specified in the delegated act on climate and is
implemented in compliance with the minimal safeguards for human and consumer rights, fight against corruption and
bribery, tax provisions, and fair competition.
To review and monitor economic activities of Krka and the Krka Group, we established a Krka Group interdisciplinary
sustainability project team composed of experts from various organisational units, i.e. Environmental Protection;
Engineering and Technical Services; Energy Supply; Transport; Corporate Performance Management; and Finance.
We based our disclosures on examination of the said taxonomy documents, our current understanding of the matter, and
available data. As the Delegated Regulation is to be upgraded, we intend to promptly examine all further explanations and
requirements and consider their impact on upcoming disclosures of Krka and Krka Group data. We intend to improve our
reporting systems in the transitional reporting period (2022 and 2023) in line with the recommendations of various
regulators to ensure comprehensive disclosures in compliance with the Delegated Regulation.
The taxonomy from the start prioritises sectors that qualify as contributing substantially to climate change mitigation, so
pharmaceutical industry for now does not fall under Annexes I and II to the Delegated Regulation. Also, a technical
screening has not been done to identify other economic activities for additional inclusion in the currently valid Taxonomy.
The technical screening has not been done yet to identify those economic activities that will probably not significantly
contribute to climate change mitigation, but are unlikely to cause significant harm.
In compliance with Article 8 of the Taxonomy, the Krka Group discloses information and key performance indicators
showing to what extent Krka’s and the Krka Group’s activities are related to economic activities that qualify as
environmentally sustainable. Information disclosure is in line with technical screening criteria for determination of
conditions under which an economic activity significantly contributes to climate change mitigation or adaptation, and for
verification that the economic activity does not significantly harm any other environmental objective.
As regards the currently applicable Taxonomy, most activities performed by Krka and the Krka Group are for now excluded
from reporting within the context of the Regulation (EU). They represent a minor part of Krka and the Krka Group
exclusively supporting activities.
Krka’s activities that currently fall under the Taxonomy, include:
• Electricity generation using solar photovoltaic technology (Taxonomy item 4.1);
• Transmission and distribution of electricity (Taxonomy item 4.9);
• District heating/cooling distribution (Taxonomy item 4.15);
• Production of heat/cool using waste heat (Taxonomy item 4.25);
• Construction, extension and operation of waste water collection and treatment (Taxonomy item 5.3);
• Collection and transport of non-hazardous waste in source segregated fractions (Taxonomy item 5.5);
• Renovation of existing buildings (Taxonomy item 7.2);
• Freight transport services by road (Taxonomy item 6.6);
• Transport by motorbikes, passenger cars and light commercial vehicles (Taxonomy item 6.5).
We calculated key performance indicators (KPIs) related to turnover, capital expenditure (CapEx), and operating
expenditure (OpEx) in accordance with our understanding of the screening criteria set out in Annex I to Commission
Delegated Regulation (EU) 2021/2178.
Annual Report 2022 – Business Report
41
In the economic activity screening, we identified all three categories of key performance indicators for taxonomy-eligible
economic activities of the controlling company Krka (hereinafter Krka) and the Krka Group.
The Krka Group’s business strategy is sustainability oriented. Corporate governance is one of key Krka Group strategic
guidelines and is detailed in the Krka Group’s 2023–2026 ESG Strategy and ESG Policy. The Management and
Supervisory Boards adopted them in 2022. We understand sustainable operations as responsible management of our
impacts on the environment, society and economy. We integrate sustainability principles into our business operations,
products and services as much as possible. We follow the sustainable development goals (SDG) of the United Nations
specified in the 2030 Agenda and in compliance with the ESG guidelines provide for adequate identification and
management of sustainability related risks and opportunities.
One of Krka Group’s important strategic commitments and goals is reduction of our carbon footprint. We intend to
implement our action plan for reduction of greenhouse gas emissions and hence pursue effective green transition. We
therefore expect that a large part of our revenue, capital expenditure (CapEx), and operating expenditure (OpEx) will be
included in the updated list of activities eligible or aligned with the taxonomy. Please see the ‘Sustainable development’
section and the ‘Krka’s sustainable development indicators’ chart on pages 8 and 9 for details on sustainability of
operations.
Please find below key performance indicators of Krka and the Krka Group in compliance with Annex I to the Commission
Delegated Regulation (EU) 2021/2178.
Proportion of turnover derived from products or services associated with taxonomy-aligned
economic activities
Krka Group operating income totalled €1,726,650 thousand in 2022, and included sales revenue and other operating
income. The items are posted in the income statement and disclosed in ‘Notes to consolidated financial statements of the
Krka Group’, Note 4 – ‘Revenue from contracts with customers’ and in Note 5 – ‘Other operating income’. Operating
income associated with taxonomy-aligned economic activities totalled €435 thousand, or 0.03% of total operating income.
Operating income derived from taxonomy non-eligible economic activities of €1,726,215 thousand accounted for 99.97%
of total operating income. We generated the major proportion of revenue from taxonomy-eligible economic activities by
separate collection and transport of hazardous waste (NACE E38.11) totalling €336,000 or 0.02% of total Krka Group
operating income. Technological water treatment (NACE E37.00) yielded €80 thousand or 0.005% of operating income,
while generation of electricity (NACE D35.11) yielded €19 thousand or 0.001% of total Krka Group operating income.
Krka operating income totalled €1,558,213 thousand in 2022, and included sales revenue and other operating income.
They are posted in the income statement and disclosed in ‘Notes to financial statements of Krka’, Note 3 – ‘Revenue from
contracts with customers’ and Note 4 – ‘Other operating income’. Operating income associated with taxonomy-aligned
economic activities totalled €435 thousand, or 0.03% of total operating income. Revenue derived from taxonomy non-
eligible economic activities in total of €1,557,778 thousand accounted for 99.97% of total operating income. We generated
the major proportion of operating income from taxonomy-eligible economic activities by separate collection and transport
of non-hazardous waste (NACE E38.11), totalling €336,000 or 0.02% of total Krka operating income. Technological water
treatment (NACE E37.00) yielded €80 thousand or 0.005% of operating income, while production of electricity
(NACE D35.1.1) yielded €19 thousand or 0.001% of Krka operating income.
Proportion of capital expenditure (CapEx) for products or services associated with taxonomy-
aligned economic activities
Krka Group investments are the basis for calculation of capital expenditure key performance indicator and amounted
to €109,622 thousand in 2022. The total included acquisition of property, plant and equipment (PP&E), right-of-use assets,
and acquisition of other intangible assets. They are disclosed in ‘Changes in equity’, Note 11 – ‘Property, plant and
equipment’, and Note 12 – ‘Intangible assets’ in ‘Notes to consolidated financial statements of the Krka Group’. Taxonomy-
aligned investments totalled €1,289 thousand or 1.18% of Krka Group total CapEx in 2022. Investments in taxonomy non-
eligible assets totalled €108,333 thousand or 98.82% of total Krka Group CapEx. Most taxonomy-aligned investments
were associated with technological water treatment (NACE E37.00) totalling €550 thousand or 0.50% of total Krka Group
Annual Report 2022 – Business Report
42
CapEx. Investment in existing buildings (NACE F41, F43) amounted to €389 thousand or 0.35% of total CapEx, while
investment in transmission and distribution or electricity (NACE D35.12, D35.13) totalled €350 thousand or 0.32%.
Krka investments are the basis for calculation of capital expenditure key performance indicator and amounted
to €81,458 thousand in 2022. The total includes acquisition of property, plant and equipment (PP&E), right-of-use assets,
and acquisition of other intangible assets. They are disclosed in ‘Changes in equity’ and ‘Notes to financial statements of
Krka’, Note 10 – ‘Property, plant and equipment’ and Note 11 – ‘Intangible assets’. Taxonomy-aligned investments totalled
€830 thousand or 1.01% of total Krka CapEx in 2022. Taxonomy non-eligible investments totalled €80,633 thousand or
98.99% of total Krka CapEx. Most taxonomy-aligned investments were associated with reconstruction of the existing
buildings (NACE F41, F43) and totalled €389 thousand or 0.48% of total Krka CapEx. Krka investments in transmission
and distribution or electricity (NACE D35.12, D35.13) totalled €350 thousand or 0.43%, while investments in technological
water treatment (NACE E37.00) totalled €90 thousand or 0.11% of total Krka CapEx.
Proportion of operating expenditure (OpEx) for products or services associated with taxonomy-
aligned economic activities
Operating expenses of the Krka Group comprised of total operating expenses decreased by depreciation and amortisation
totalled €1,237,755 thousand. Operating expenses are disclosed in ‘Notes to consolidated financial statements of the Krka
Group’, Note 6 – Costs by nature. Taxonomy-aligned operating expenses totalled €8,410 thousand or 0.68% of Krka
Group operating expenses. Taxonomy non-eligible operating expenses totalled €108,333 thousand or 99.32% of Krka
Group operating expenses. Major taxonomy-aligned operating expenses were associated with technological water
treatment (NACE E37.00), totalling €2,350 thousand or 0.19% of Krka Group operating expenses. Transmission and
distribution of electricity (NACE D35.12, D35.13) followed at €1,943 thousand or 0.16% and steam and air-conditioning
supply (NACE D35.30) at €1,818 thousand or 0.15% of operating expenses of the Krka Group.
Operating expenses of Krka comprised total operating expenses decreased by depreciation and amortisation totalled
€1,118,127 thousand. Operating expenses are disclosed in ‘Notes to financial statements of Krka’, Note 5 – Costs by
nature. Taxonomy-aligned operating expenses totalled €8,002 thousand or 0.72% of Krka operating expenses. Taxonomy
non-eligible operating expenses totalled €1,110,125 thousand or 99.28% of Krka operating expenses. Major taxonomy-
aligned operating expenses were associated with technological water treatment (NACE E37.00), totalling €2,246 thousand
or 0.20% of Krka operating expenses. Transmission and distribution of electricity (NACE D35.12, D35.13) followed at
€1,943 thousand or 0.17% and steam and air-conditioning supply (NACE D35.30) at €1,818 thousand or 0.16% of
operating expenses of Krka.
Annual Report 2022 – Business Report
43
Proportion of turnover derived from products or services associated with taxonomy-aligned economic activities for the Krka Group
Substantial contribution criteria
DNSH criteria
Taxonomy-
aligned
proportion
of turnover,
year N
Taxonomy-
aligned
proportion
of turnover,
year N-1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Economic activities
Codes
Absolute turnover
Proportion of turnover
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Minimum safeguardes
2022
2021
Category
(enabling activity
Category
(transitional activity)
€ million
%
%
%
%
%
%
%
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
%
%
O
P
A. TAXONOMY ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities
(taxonomy-aligned)
Electricity generation using solar photovoltaic
technology
D35.11
0.02
0.00
100
YES
YES
0.00
0.00
Sewerage
E37.00
0.08
0.01
100
YES
YES
0.01
0.00
Collection and transport of non-hazardous
waste in source segregated fractions
E38.11
0.34
0.02
100
YES
YES
0.02
0.00
Turnover of environmentally sustainable
activities (taxonomy-aligned) (A.1)
0.44
0.03
0.03
0.00
A.2 Taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities)
/
Turnover of taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities) (A.2)
-
0.00
0.00
0.00
Total (A.1 + A.2)
0.44
0.03
0.03
0.00
B.Taxonomy-non-eligible activities
Turnover of taxonomy-non-eligible
activities (B)
1,726.22
99.97
Total (A + B)
1,726.65
100.00
Annual Report 2022 – Business Report
44
Proportion of capital expenditure (CapEx) for products or services associated with taxonomy-aligned economic activities for the Krka Group
Substantial contribution criteria
DNSH criteria
Taxonomy-
aligned
proportion
of CapEx,
year N
Taxonomy-
aligned
proportion
of CapEx,
year N-1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Economic activities
Codes
Absolute CapEx
Proportion of CapEx
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Minimum safeguardes
2022
2021
Category
(enabling activity
Category
(transitional activity)
€ million
%
%
%
%
%
%
%
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
%
%
E
T
A. TAXONOMY ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities
(taxonomy-aligned)
Transmission and distribution of electricity
D35.12,
D35.13
0.35
0.32
100
YES
YES
0.32
0.00
Sewerage
E37.00
0.55
0.50
100
YES
YES
0.50
0.00
Reconstruction of the existing buildings
F41, F43
0.39
0.35
100
YES
YES
0.35
0.00
CapEx of environmentally sustainable
activities (taxonomy-aligned) (A.1)
1.29
1.18
1.18
0.00
A.2 Taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities)
-
0.00
/
CapEx of taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities) (A.2)
-
0.00
0,00
0,00
Total (A.1 + A.2)
1.29
1.18
1.18
0.00
B.Taxonomy-non-eligible activities
CapEx of taxonomy-non-eligible activities
(B)
108.33
98.82
Total (A + B)
109.62
100.00
Annual Report 2022 – Business Report
45
Proportion of operating expenditure (OpEx) for products or services associated with taxonomy-aligned economic activities for the Krka Group
Substantial contribution criteria
DNSH criteria
Taxonomy-
aligned
proportion of
OpEx,
year N
Taxonomy-
aligned
proportion of
OpEx, year
N-1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Economic activities
Codes
Absolute OpEx
Proportion of OpEx
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Minimum safeguardes
2022
2021
Category
(enabling activity
Category
(transitional activity)
€ million
%
%
%
%
%
%
%
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
%
%
E
T
A. TAXONOMY ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities
(taxonomy-aligned)
Electricity generation using solar photovoltaic
technology
D35.11
0.01
0.00
100
YES
YES
0.00
0.00
Transmission and distribution of electricity
D35.12,
D35.13
1.94
0.16
100
YES
YES
0.16
0.00
District heating/cooling distribution
D35.30
1.82
0.15
100
YES
YES
0.15
0.00
Heat/cooling production using waste heat
D35.30
0.59
0.05
100
YES
YES
0.05
0.00
Sewerage
E37.00
2.35
0.19
50
50
YES
YES
0.19
0.00
Collection and transport of non-hazardous
waste in source segregated fractions
E38.11
1.70
0.14
100
YES
YES
0.14
0.00
Transport by motorbikes, passenger cars and
light commercial vehicles
H34.32,
H49.39
0.01
0.00
100
YES
YES
0.00
0.00
OpEx of environmentally sustainable
activities (taxonomy-aligned) (A.1)
8.41
0.68
0.68
0.00
A.2 Taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities)
-
0.00
/
/
-
0.00
0.00
0.00
OpEx of taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities) (A.2)
8.41
0.68
0.68
0.00
Total (A.1 + A.2)
B.Taxonomy-non-eligible activities
OpEx of taxonomy-non-eligible activities
(B)
1,229.35
99.32
Total (A + B)
1,237.76
100.00
Annual Report 2022 – Business Report
46
Proportion of turnover derived from products or services associated with taxonomy-aligned economic activities for Krka
Substantial contribution criteria
DNSH criteria
Taxonomy-
aligned
proportion
of turnover,
year N
Taxonomy-
aligned
proportion
of turnover,
year N-1
Substantial
contribution
criteria
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Economic activities
Codes
Absolute turnover
Proportion of turnover
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Minimum safeguardes
2022
2021
Category
(enabling activity
Category
(transitional activity)
€ million
%
%
%
%
%
%
%
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
%
%
O
P
A. TAXONOMY ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities
(taxonomy-aligned)
Electricity generation using solar photovoltaic
technology
D35.11
0.02
0.00
100
YES
YES
0.00
0.00
Sewerage
E37.00
0.08
0.01
100
YES
YES
0.01
0.00
Collection and transport of non-hazardous
waste in source segregated fractions
E38.11
0.34
0.02
100
YES
YES
0.02
0.00
Turnover of environmentally sustainable
activities (taxonomy-aligned) (A.1)
0.44
0.03
0.03
0.00
A.2 Taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities)
/
Turnover of taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities) (A.2)
-
0.00
0.00
0.00
Total (A.1 + A.2)
0.44
0.03
0.03
0.00
B.Taxonomy-non-eligible activities
Turnover of taxonomy-non-eligible
activities (B)
1,557.78
99.97
Total (A + B)
1,558.21
100.00
Annual Report 2022 – Business Report
47
Proportion of capital expenditure (CapEx) for products or services associated with taxonomy-aligned economic activities for Krka
Substantial contribution criteria
DNSH criteria
Taxonomy-
aligned
proportion
of CapEx,
year N
Taxonomy-
aligned
proportion
of CapEx,
year N-1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Economic activities
Codes
Absolute CapExr
Proportion of CapEx
Climate change
mitigation
Climate echange
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Minimum safeguardes
2022
2021
Category
(enabling activity
Category
(transitional activity)
€ million
%
%
%
%
%
%
%
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
%
%
O
P
A. TAXONOMY ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities
(taxonomy-aligned)
Transmission and distribution of electricity
D35.12,
D35.13
0.35
0.43
100
YES
YES
0.43
0.00
Sewerage
E37.00
0.09
0.11
100
YES
YES
0.11
0.00
Reconstruction of the existing buildings
F41, F43
0.39
0.48
100
YES
YES
0.48
0.00
CapEx of environmentally sustainable
activities (taxonomy-aligned) (A.1)
0.83
1.01
1.01
0.00
A.2 Taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities)
-
0.00
/
CapEx of taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities) (A.2)
-
0.00
0.00
0.00
Total (A.1 + A.2)
0.83
1.01
1.01
0.00
B.Taxonomy-non-eligible activities
CapEx of taxonomy-non-eligible activities
(B)
80.63
98.99
Total (A + B)
81.46
100.00
Annual Report 2022 – Business Report
48
Proportion of operating expenditure (OpEx) for products or services associated with taxonomy-aligned economic activities for Krka
Substantial contribution criteria
DNSH criteria
Taxonomy-
aligned
proportion of
CapEx, year
N
Taxonomy-
aligned
proportion of
CapEx, year
N-1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Economic activities
Codes
Absolute OpEx
Proportion of OpEx
Climate change mitigation
Climate change adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Climate change mitigation
Climate change adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity and
ecosystems
Minimum safeguardes
2022
2021
Category
(enabling activity
Category
(transitional activity)
€ million
%
%
%
%
%
%
%
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
%
%
E
T
A. TAXONOMY ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities
(taxonomy-aligned)
Electricity generation using solar photovoltaic
technology
D35.11
0.01
0.00
100
YES
YES
0.00
0.00
Transmission and distribution of electricity
D35.12,
D35.13
1.94
0.17
100
YES
YES
0.17
0.00
District heating/cooling distribution
D35.30
1.82
0.16
100
YES
YES
0.16
0.00
Heat/cooling production using waste heat
D35.30
0.59
0.05
100
YES
YES
0.05
0.00
Sewerage
E37.00
2.25
0.20
50
50
YES
YES
0.20
0.00
Collection and transport of non-hazardous
waste in source segregated fractions
E38.11
1.40
0.12
100
YES
YES
0.12
0.00
Transport by motorbikes, passenger cars and
light commercial vehicles
H49.32,
H49.39
0.01
0.00
100
YES
YES
0.00
0.00
OpEx of environmentally sustainable
activities (taxonomy-aligned) (A.1)
8.00
0.72
0.72
0.00
A.2 Taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities)
-
0.00
/
/
-
0.00
0.00
0.00
OpEx of taxonomy-eligible but not
environmentally sustainable activities
(not taxonomy-aligned activities) (A.2)
8.00
0.72
0.72
0.00
Total (A.1 + A.2)
B.Taxonomy-non-eligible activities
OpEx of taxonomy-non-eligible activities
(B)
1,110.13
99.28
Total (A + B)
1,118.13
100.00
Annual Report 2022 – Business Report
49
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
Annual Report 2022 – Business Report
50
Krka Group development strategy
23
The current Krka Group development strategy covering the five years 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. It 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.
24
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: 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 integral to 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, 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 also updated. 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, thereby maintaining 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 Management Board monitors the Group’s performance criteria, while the
relevant committees (Sales Committee; Development Committee; Economics and Finance Committee; Information
Technology Committee; Human Resource Committee; Quality Committee; and Corporate Identity Committee) monitor
criteria at the level of product and service groups and business functions. The guiding principle in managing the criteria
system is to increase the competitiveness of the Krka Group as a whole and of individual Group companies.
In order to maintain and improve the Krka Group position in an international context, we avail of 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.
23
GRI 3-3
24
GRI 2-23
Annual Report 2022 – Business Report
51
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 marketing and
sales, 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 provide products from new therapeutic classes, 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 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 cancer).
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 assess specific projects on biosimilars with strategic partners in European markets and to assume a central role in regulatory
affairs, sales and marketing of 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 production and sales 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.
Annual Report 2022 – Business Report
52
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 our 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 our 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 create 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 our 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 by introducing our new medicines for the treatment of
multiple sclerosis. To 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).
Annual Report 2022 – Business Report
53
To expand our portfolio of medicines by entering the segments of complex peptides and biosimilars.
To launch products from new therapeutic areas in several 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 2022
In 2022, the Krka Group sales revenue amounted to €1,717.5 million, up 10% on 2021 and 6% more than planned. Of that,
revenue from contracts with customers on sales of products and services amounted to €1,708.5 million, and revenue from
contracts with customers on sales of materials and other sales revenue constituted the difference.
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 82% of total sales, which is in
line with our plans.
Net profit of €361.1 million was higher than planned.
The number of the Krka Group employees was 0.8% higher than at the end of 2021.
Krka Group business objectives for 2023
Product and service sales are expected to reach €1.755 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 82% of overall sales.
Profit is planned at approximately €300 million.
The total number of employees in Slovenia and abroad is expected 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
25
We have introduced sustainability criteria in the management of the 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 2022, 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. An interdisciplinary sustainability project team has also started on its work. Its tasks will be
transferred to a new body, the Sustainability Board, which will address ESG aspects at the Group level and operate under
the umbrella ESG policy. 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
26
The interdisciplinary sustainability project team conducted a comprehensive process of updating the list of our key
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 six 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
25
GRI 2-13
26
GRI 3-1
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Macroeconomic forecast for 2023
Dispersed international operations and the vertically integrated business model ensure the Krka Group’s stable
performance despite shifting states of play in individual key markets.
The European economy adjusted to the situation caused by the COVID-19 pandemic and the situation in Ukraine. After
momentum created by the post-pandemic reopening of the economy in 2021 and buoyant economic activity in the first half
of 2022, economic expansion slowed in the summer. Inflationary pressures were ubiquitous in the economy. Generally,
when prices rise, consumers cut back on spending, and companies shelve planned investments, increasing the probability
of a recession. Macroeconomic development, including energy markets, will greatly depend on the European winter and
the impact of sanctions against the Russian Federation. Economic and energy security anxiety will lead to short-term
government relief measures, increasing fiscal, social and political challenges, primarily in countries with elections on the
horizon.
Tightening financial conditions will deepen the expected recession in Europe. According to projections, the combination of
slower economic growth, rising unemployment, and improving supply chain conditions will slow inflation over the next two
years.
The situation at present puts macroeconomic policy decision-makers in a difficult position.
2023 macroeconomic forecasts
Country
Pharmaceutical
market growth
(%)
Projected value of
pharmaceutical
market at
wholesale prices
(€ million)
FX rate
(currency/€)
Annual change in
GDP
(%)
Annual inflation
rate
(%)
Slovenia
7
920
Euro area
1.0
6.1
Croatia
9
1,700
Euro area
1.2
6.5
Romania
9
5,600
5.0
2.5
9.7
Russian Federation
5
RUB1,975 billion
75
-1.0
5.0
Ukraine
from 5 to 0
from 2,500 to 3,000
38
4.1
20.4
Poland
9
8,080
4.7
0.4
11.7
Hungary
3
2,370
400
0.6
16.4
Czech Republic
4
3,130
24.8
0.1
9.3
Slovakia
6
1,750
Euro area
1.5
9.7
Western Europe
3
270,250
Primarily Euro area
0.6
5.4
Pharmaceutical market forecasts are based on estimates from market data providers (e.g. IQVIA), the Evaluate® European Market Outlook database,
and internal estimates. Other forecasts are based on bank and the European Commission reports.
Slovenia
Notwithstanding a year-end contraction, Slovenia recorded high economic growth throughout the year on the back of
robust growth in the first half of 2022 and a strong carry-over from 2021. Growth in 2023 is expected to slow down due to
a weak external environment, high uncertainty, and tighter financing conditions. Eroded real income could result in modest
household consumption growth. Labour force shortages are expected to persist. However, real wages are expected to rise
significantly. Although softened by the fuel prices cap and other measures implemented by the government, inflation
peaked in the third quarter of 2022, but slightly diminished in the last quarter of the year. The budget deficit in 2022
decreased due to rising tax revenues but is projected to increase again in 2023 due to new discretionary measures
mitigating the impact of high energy prices. Public debt dropped below 70% of GDP in 2022, and is expected to further
gradually decrease over the forecast horizon. The forecast assumes gradual consolidation of public finances when
government support to mitigate the impact of high energy prices gradually phases out and growth picks up. The
macroeconomic situation could be better than projected, depending on the announced revision of the public sector pay
system and tax reform in 2023.
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We estimate the sales value of pharmaceuticals in 2023 at €920 million, up 7% on 2022.
Croatia
Croatia recorded high economic growth in 2022 on the back of booming exports, investments, and household
consumption, benefiting from the recovery of tourism and other services. However, rising inflation and waning confidence
amidst geopolitical tensions are expected to deteriorate the economic outlook and public finances in 2023 and 2024.
Joining the Schengen Area and adopting the euro should have positive impacts on the economic activity. A mild recovery
of GDP growth is projected in 2024. The labour market is projected to remain resilient despite weaker employment growth
and persisting labour shortages. Inflation rates are expected to remain above average in 2023 and moderate in 2024. The
government has already introduced measures to cap high energy prices, and is expected to continue in 2023. Further
budget deficits are projected in 2023 and 2024, driven by expected extra increases in public wages and social transfers.
Public debt significantly declined in 2022 due to strong GDP growth. However, the decrease is expected to moderate due
to subdued economic growth.
We expect the value of the Croatian pharmaceutical market to grow by 9% in 2023 compared to the previous year, to
approximately €1.7 billion.
Romania
Following strong economic expansion in 2022, the Romanian economy is expected to grow between 2% and 3% in the
coming years. High inflation, tighter financing conditions, the negative impact of the situation in Ukraine and deccelerating
of other economies in the EU will slow growth. The unemployment rate levelled off in 2022 and should remain stable
because of economic growth. Inflation is expected to persist before it subdues in 2024. The budget deficit is forecast to
decrease gradually over the years on the back of high tax revenues, reduced current expenditure, and high economic
growth. However, with elections approaching in 2024, it could be higher than expected. Public debt is expected to remain
stable. Macroeconomic risks ahead lie in potential delays in rolling out Romania’s Recovery and Resilience Plan (RRP),
which could decrease investments and economic growth.
We expect the value of the Romanian pharmaceutical market to grow by 9% year on year, reaching €5.6 billion.
Russian Federation
The economic contraction in 2022 was significantly milder than expected. However, contraction is set to continue in 2023.
The situation in Ukraine is projected to cause a milder, but longer recession than previously forecast. A shallow rebound
in the economy is forecast in 2024, which will not be sufficient for the economic activity to reach levels before 2022. A
gradual economic recovery is expected in the years ahead, similar to the recovery after the 2008 financial crisis. Economic
activity is projected to rebound to the pre-2022 level only at the beginning of 2025. At the end of 2022, the price increases
subdued due to a decline in economic activity. In 2023, inflation is forecast to ease gradually because households and
companies have stocked up. The Russian economy prospered in the past because of oil and gas exports and integration
in the global economy, which will be curtailed in the near future. Restrictions on oil exports and lower oil prices might place
additional pressures on fiscal policy, leading to budget deficits and draw-downs from the National Welfare Fund.
We expect the value of the Russian pharmaceutical to reach RUB1,975 billion in 2023, and grow by 5% in national
currency year on year.
Ukraine
Economic activity slumped in 2022 because of the military operations, especially in the east of Ukraine, with several million
people displaced due to the unrest. The budget deficit saw a sharp increase. In 2022, primarily internal sources were used
to finance the budget. In 2023, however, the government plans to secure external financing from the International Monetary
Fund, US and EU. In 2022, monthly inflation rates spiked significantly as many commodities were in short supply.
According to projections, inflation will rise in 2023 and start to level off towards the end of the year. High degrees of
uncertainty and the unavailability of current macroeconomic data render forecasting difficult. Policymakers have limited
options for managing the crisis; however, international donors provide support.
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We expect the value of the Ukrainian pharmaceutical market to change by -5 to 0% and total between €2.5 billion and
€3 billion in 2023.
Poland
After strong GDP growth in 2022, economic activity in Poland is set to weaken due to uncertainty, tightening financing
conditions, and economic adjustment to higher commodity prices. A deceleration in wage growth is expected due to acute
labour shortages and weakening economic activity. Increased inflation rates are also expected in 2023 because increased
costs of services and rising production costs are being passed on to retail prices. In the coming year, inflationary pressures
are expected to wane. Budget deficit is set to deepen due to expenditure pressures arising from social welfare granted to
people fleeing Ukraine, increased expenditure on national defence, and government energy crisis supports. Most of the
economic supports are set to cease in 2024. Rising public debt is tempered by high GDP growth. Public debt is expected
to increase in the coming years.
Given the anticipated 9% growth in 2023, the value of the Polish pharmaceutical market is estimated at approximately
€8 billion.
Hungary
After strong economic growth in the first half of 2022, the economy had to deal with increasing commodity prices and
tighter financing conditions in the second half of the year. A sharp economic downturn and a fall-off in private consumption
and investments are projected in 2023. Energy supply disruptions could have an enormous negative economic impact as
Hungary has limited possibilities to substitute oil and gas imports from Russia in the short term. Government measures
partly shield households from the impact of rising energy prices and mortgage interest rates. With economic growth
slowing, unemployment growth is set to be limited. However, real wages are expected to drop due to high inflation. Inflation
is expected to remain high in 2023 due to depreciation of the national currency but should ease in the coming year. Fiscal
policy uses expansive measures to mitigate the impact of high energy prices. The budget deficit is expected to narrow
in 2023 on the back of additional windfall tax revenue, which is expected to phase out in 2024 mostly. Public debt is
expected to decrease in the coming years gradually. Potentially tightening conditions for public debt financing and limited
access to the Recovery and Resilience Fund pose a risk to fiscal policy.
We expect the Hungarian pharmaceutical market to record 3% growth, reaching €2.4 billion in 2023.
Czech Republic
High economic growth recorded in 2021 slowed in 2022. It is forecast to slow further in 2023 due to the spillover effects
from the situation in Ukraine, high energy costs, and tightening financial conditions. Private consumption started to contract
at the end of 2022 and is expected to continue in 2023. The unemployment rate is forecast to remain low. However, it
could slightly increase in the coming years because displaced persons from Ukraine will start joining the labour force.
Inflation peaked at the end of 2022 and inflationary pressures started subsiding. Inflation is forecast to subdue due to
government measures in 2023. Relief measure expenditure is expected to increase the budget deficit; however, revenue
from windfall taxes is set to stem it in 2023 and 2024 gradually. While public debt is still low compared to other EU Member
States, growth over the past few years has outpaced the EU average. Public debt is forecast to continue rising in the years
ahead.
The Czech pharmaceutical market is expected to grow by 4%, and its value to reach approximately €3.1 billion.
Slovakia
Economic growth is expected to be comparable to that in 2022. Subsidised energy prices are expected to stimulate
economic growth, albeit a global demand slowdown affects economic activity. Successful absorption of the EU structural
and recovery-and-resilience funds will be crucial for achieving economic growth. The unemployment level is expected to
remain relatively stable due to qualified labour force shortages. Inflation is set to increase significantly in 2023 because
increasing energy prices are being passed on to prices of consumables, especially food prices. Inflation is projected to
wane in 2024. In 2023, despite increased tax revenues, the budget deficit is expected to increase due to the cost of energy
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and other cost-of-living measures. The deficit is projected to narrow in the coming year as inflationary pressures ease.
Having hit an all-time high, public debt is set to gradually decline due to strong nominal economic growth, despite growing
budget deficit and public debt.
We expect the value of the Slovakian pharmaceutical market to grow by 6% in 2023, reaching €1.75 billion.
Western Europe
Economic activity did not slow as much in 2022 as expected. Monetary policy tightening is expected to continue in 2023,
reducing the demand just as supply bottlenecks are set to ease. A mild upturn is forecast for 2023 due to temporary
buoyancy. Wage growth, relatively subdued so far, is set to gain momentum in 2023 but is expected to remain below
inflation rates. Inflation peaked at the end of 2022 and is expected to subdue in the second half of 2023. Inflation is set to
moderate and fall below the target rate in the following years. Neutral fiscal policy is expected in 2023. Rising budget deficit
financing costs and reactivation of fiscal rules could restrict support to demand and economic activity.
We expect the value of the western European pharmaceutical market to grow by 3%, reaching €270 billion in 2023.
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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. The ‘2022 Supervisory Board Report’ describes their risk management work. The Krka Group monitors
its exposure to various forms of risk daily 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;
• Sustainability Board;
• 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 2,700 standard operating procedures relating to quality systems, other bye-laws, and
instructions that determine the activities and responsibilities that allow uninterrupted operations and mitigate risks.
We use the following risk management support tools:
• The Krka Group Risk Register, which 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;
• The Integrity Plan, which complements the Risk Register and addresses ethics, integrity, and compliance. The
Management Board adopts the Plan, reviews it annually, and updates it if necessary;
• Guidelines from the Business Continuity Strategy;
• Guidelines from the Information Security Management System (ISMS);
• Principles of good manufacturing practice (GMP);
• Requirements of the ISO 14001 standard;
• Guidelines relating to the integration of quality management in all business processes.
ESG (Environment, Social, Governance) risks are managed as part of various risks and are included in their risk
management processes. Management approaches for specific material ESG topics are defined in the Krka Group
Environment, Social and Governance (ESG) Policy, adopted by the Management Board and Supervisory Board of Krka.
The Sustainability Board was established at the end of 2022. The responsibility for ESG issues is shared by the
Sustainability Board and the Supervisory Board, Management Board, the ESG coordinator, and ESG managers
responsible for specific sustainability-relevant organisational areas.
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, presence of Krka
experts at certain production sites of contract
manufacturers, 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
Moderate
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 practices
Moderate
Moderate
Technical
services
Inadequate supplies of energy
and industrial media to
processes and substandard
technical maintenance
Alternative power supply resources, robustly planned
media supply systems, redundant system and
equipment capacities, provision of key spare parts,
and carefully 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
Regulation of the business
environment and sales
markets and inadequacy of
marketing activities
Responding to changing geopolitical situations and
statutory requirements related to business operations
in markets, establishing standardised, compliant, and
transparent sales and marketing activities,
continuously educating and testing employees’
knowledge, using modern communication tools and
channels
Moderate
Moderate
Intellectual
property
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 failure to
maintain the validity of
manufacturing authorisations
and GMP certificates
Compliance with legal and regulatory requirements,
planning of control procedures and quality assurance,
regular evaluation and assessment of quality risks,
supervision of product and process quality assurance,
implementation of improvements and new statutory
requirements in routine work processes, business
continuity plan
Moderate
Moderate
Environmental
protection
Climate change, 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
assessment
Latest risk
assessment
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 sales 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. We prepare business continuity plans for each critical
process or service based on the Business Continuity Management Strategy. In agreement with the Business Continuity
Officer, we appoint persons responsible for critical processes to prepare and maintain these plans. Critical process or
critical service managers and the Business Continuity Officer approve the plans.
The adequacy of plans is reviewed at least once a year and harmonised with the business continuity policy and strategy.
Exercises and training are key to testing the implementation of individual business continuity measures. The Quality
Committee discusses the adequacy of the implementation of these plans annually. In 2021, Krka’s Management Board
also included pandemic-event measures in 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.
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63
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
are 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 the adopted criteria to assess and select our suppliers and regularly audit them. 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 are conducted immediately. When selecting our contractual partners, we primarily focus on
appropriate material specification, regulatory compliance, guaranteed quality and environmental protection, price
competitiveness, and supply reliability. Relevant SOPs regulate the selection and evaluation of a contractual partner for
the manufacture of finished products and the implementation and management of the transfer. SOPs are part of the quality
system described in the ‘Quality management risks’ section. Further information on performed audits and regular controls
are available in the ‘Inspections and audits of the management and quality system’ subsection of the ‘Quality’ section.
We ensure the punctual supply of finished products by managing the planning operations and monitoring the
implementation of every product supply phase. Production material inventories are planned according to sales forecasts.
Inventory levels are checked regularly, and we hold contingency stocks for strategically important production materials.
We have several independent supply sources for APIs and production materials required for key products.
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 that key products are manufactured on different production lines in
several production plants at Krka sites and at our contract manufacturers.
We comply with good warehousing and manufacturing practices when warehousing production materials, bulk products,
and finished products. Several standalone warehouses are available in the case of 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. We have set up several global (maritime, air, and
road) transport routes that allow us to deliver materials should any emergency occur.
Technical service risks
Technical service risks include those related to energy and industrial media supply, operation of active fire protection and
property protection systems, reliability and availability of technical systems and equipment, and risk associated with the
metrological control of measuring and regulation equipment and control systems.
We have two separate supply lines to provide uninterrupted electricity at the Ločna production site in Novo mesto, Slovenia.
If the Ločna substation fails, the Bršljin substation can supply 3 MW of power to prevent possible damage to the
infrastructure and buildings in winter. We use 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 in terms of risks and
opportunities due to climate change, we identified drinking water supply shortages for production purposes as a potential
risk. At the main production site in Novo mesto, Slovenia, where most of 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
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in 2021. In the case of loss of water supply from the primary 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.
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 manage operational and maintenance issues. The team uses a central computerised 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. Critical equipment is duplicated. 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 for active fire protection and property
protection through constant computer control, regular preventive maintenance and system testing, critical equipment
redundancy, robust system planning, and improvements. Employees undergo regular training, and their skills and
qualifications are assessed regularly.
We mitigate risks related to the reliability and availability of technical systems and equipment by continuously monitoring
performance, conducting preventive maintenance checks, servicing, improving the equipment, and introducing new
maintenance approaches using modern diagnostic instruments. 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,
operate and maintain technical systems and equipment undergo regular training. Their qualifications and skills are
assessed regularly.
Metrology is a major factor behind product and service quality, safety, and efficacy. It is closely related to measurement
traceability and global comparability of measurement results. This is why we have a distinctive, stable and rational
management system in place for monitoring and measuring equipment in compliance with the highest industrial standards.
We regularly measure, calibrate, and maintain the monitoring and measuring equipment based on its GxP criticality
assessment. We use approved procedures and apply the latest standards to minimise the risk of deviations.
We ensure the reliability and availability of technical systems and equipment with our own resources 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. The overhaul of the ISMS system in Krka Group subsidiaries finished 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 ‘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,
constructing, and using information systems, we implement all relevant information and cyber security elements.
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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 the assessments, organisational units take steps to eliminate unacceptable risks. Another
method of threat detection involves independent security audits of our information resources. 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 at two separate locations: back-up server rooms at the
Krka headquarters (i.e. the Disaster Recovery Centre – DRC) and 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) system, security
information and event management (SIEM) system, vulnerability management system, user and entity behaviour analytics
(UEBA) system, and periodic software updates.
As an international group, we are required to protect personal data in conformity with the national legislation of all countries
where our subsidiaries and representative offices are located. The Management Board appointed a Data Protection Officer
at the Company and Group level, who ensures that personal data are protected per EU regulations or national legislation
insofar as 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, authorised professionals for health and safety at work and responsible technologists assess the risks related
to individual technological procedures. Risk assessments are conducted for all new technological procedures in research
and development and if any changes are made to these procedures. This process results in the consent to the
technological procedure including a risk assessment. 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 hazard level, we determine the safety measures strategy to prevent employees from being
exposed to a specific technological procedure. We continually verify the suitability and appropriateness of technical and
organisational measures and personal protective equipment in practice by conducting relevant measurements during
technological operations.
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 and promising employees 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.
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Protection of property
Building and property exposure is subject to regular and systematic assessments under 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 high-quality, safe, and effective. The required properties must be confirmed by relevant research
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, 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. The responsibilities of leaders, organisational units, and work processes 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 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 R&D, API R&D, 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 the successful work of highly
educated professionals, constant broadening of knowledge, and 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: we introduce the most advanced development and technological processes, and
invest in research and development capacities.
Regulatory risk management, associated with legislation changes and 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 consider them
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 statutory amendments in this field.
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Sales and marketing risks
The Krka Group has a broad marketing and sales network, as it sells its products in 73 countries worldwide. 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, especially concerning
the recent events in eastern Europe, and prompt adjustment of sales and marketing activities in individual markets. We
continuously monitor market conditions (especially competing generic producers and national pharmaceutical industry),
the legal frameworks related to the movement of goods and services and 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 receives a briefing 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 employees’ work in the marketing network. Our employees
undergo training regularly, and we frequently test their qualifications, skills, and familiarity with work directions, 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 focus on business compliance, so marketing
forms a part of 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 in existing markets and the risks related to entering new markets and new therapeutic areas, lowering
prices of medicines in compliance with national regulations, cross-border reference country impacts, and risks associated
with 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. Before concluding sales agreements, the customer must 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, particularly 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 euro-denominated
sales revenue in markets where sales are conducted in national currencies (especially in the Russian Federation) remain
among the most significant 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 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 the tertiary level (sales to end-
users in pharmacies). We ensure that inventories are optimised and sufficient throughout the distribution chain. We duly
monitor pharmacy networks and any changes by individual market, and adjust our actions accordingly. Sales Committee
meetings discuss all of the above regularly.
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 the product portfolio and our activities according to current market
positions of particular active ingredients and their development path. We perform systematic analyses regarding 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 new
therapeutic areas while continually striving to improve further the position of our products containing existing active
ingredients. 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
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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 the Krka Group operations. Therefore, we start the development of a new product by analysing the status and
extent of applicable third-party patent rights and determining which technical solutions are patent-protected. We define
and direct our development work based on these findings and assess whether the technological and technical solutions
produced by our own development infringe the applicable rights of third parties. The current situation and any potential
changes in 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 that 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 set aside 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 and safety and Group operations.
We apply well-known risk assessment methods 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 a 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, 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. Based on the findings, we plan audits and other activities as part of the GxP
partner evaluation procedure.
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 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 ‘Quality’ section, subsection ‘Quality system objectives’.
We place a strong emphasis on ensuring data integrity in quality management, thereby mitigating the risk of improper use
of test results when determining the suitability of raw materials, packaging, processes, and finished products.
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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 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 to prevent any other non-compliance.
Concerning quality risk management, we separately 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.
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.
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 environmental impact. Risks and emergencies related to environmental protection,
hazardous chemical handling, and climate change, are assessed and managed at meetings of the Committee for
Monitoring Environmental Aspects at least twice a year and routinely by 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 risks and minimise our environmental impact by using the best available
techniques in manufacturing, warehousing, wastewater treatment, waste air treatment, and waste management, by
operating spill containment and firewater retention systems, by 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.
We reduced waste removal risk by adding waste solvent warehousing facilities, dividing our waste streams, and engaging
several contractual waste collection and removal partners. We reduced the risks associated with hazardous chemical and
firewater spillage by extending spill containment and firewater retention systems. We also improved the system for
supervising hazardous substance management.
In 2022, we recorded no extraordinary events or incidents with a negative impact on the environment.
Investment project risks
Investment project risks primarily include risks related to planning investments and their value, the purchase of equipment,
execution of works, and schedules, and risks associated with quality and changes to the original plan. We reduce these
risks through document planning and preparation, the established system for selecting contractors and equipment
suppliers, and their regular reviews. 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.
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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 our employees’ training and development while assigning them new work responsibilities,
encouraging them to take on new duties, and delegating them to new positions. We schedule employee training and
development in our annual training plan, prepared by organisational units in collaboration 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 primary market risk is foreign exchange risk. We monitor interest rate risk; however, in 2022, we did not
take any measures due to low interest rate exposure. The risk of market value changes in raw materials and the risk of
market value changes in 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 risks in certain sales
and purchase markets.
Structure of revenue by currency (%)
42%
23%
10%
5%
4%
16%
EUR
RUB
PLN
USD
RON
Other currencies
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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 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.
Currency position structure of the Krka Group
The Russian rouble accounted for the major, 39%, share in the currency position of the Krka Group at the end of 2022.
The rouble’s currency position strengthened compared to the beginning of the year. Hedging the rouble with derivative
financial instruments was no longer possible from April 2022, which was the primary reason for the strengthening of the
rouble position. It arises from trade receivables in the Russian market and partly from subsidiary funding in the Russian
Federation by the controlling company.
The importance of the Russian sales market, the level of currency exposure, and the volatility of the Russian rouble are
why we pay special attention to Russian rouble risk management. The availability of financial instruments was reduced,
and we therefore focused more on natural risk mitigation methods.
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 arose primarily from purchasing
raw and other materials. Considering liquid financial assets in US dollars and dollar forward contracts that together offset
the short financial position from operations, the 2022 year-end exposure to US dollars accounted for approximately 5% in
total currency exposure of the Krka Group.
The exposure to the Romanian leu, accounting for 15% of the currency position at the end of 2022, arose from trade
receivables accrued due to extended payment terms in Romania. Exposure to the Polish złoty resulted from trade
receivables and manufacturing facilities held by the Group in Poland and accounted for 13% of the currency position.
Other currencies, among them the Swedish krona, North Macedonian denar, Kazakh tenge, Serbian dinar, British pound,
Czech koruna, Ukrainian hryvnia, and Hungarian forint, accounted for 28% of the Krka Group currency position.
2022 currency markets
Soaring energy prices, growing inflation, the risk of subdued global economic growth and tightening monetary policies of
the major world central banks increased the volatility of foreign exchange rates in 2022.
The European Central Bank (ECB) raised key interest rates for the first time in 11 years in the third quarter of 2022. The
US Federal Reserve was increasing the key interest rate even faster. Interest rates increased in our other important sales
markets, for example, Poland, Hungary, Romania, and the Czech Republic. Uneven growth of interest rates added to the
volatility of exchange rates in those countries.
The Central Bank of the Russian Federation intervened by increasing the interest rate in the first quarter of 2022. However,
by the end of the year, it fell to 7.5%. The rouble’s value dropped in the first quarter of the year but then stabilised and
increased despite strict international sanctions imposed on the Russian Federation. Its value dropped again in the last
quarter of the year. The value of the Russian rouble denominated in the euro increased by 8.8% from the beginning to the
end of the year and was, on average, 18.7% higher than in 2021.
The value of the US dollar denominated in the euro increased by 6.2% during 2022 and was, on average, 12.3% higher
than the previous year. The US dollar strengthened primarily on the back of aggressive raises in interest rates by
US Federal Reserves. The impact of the US dollar fluctuations on the net financial result of the Krka Group was offset
using financial instruments.
The Ukrainian hryvnia lost approximately 20% of its value on the euro since the start of the Russian invasion. The
macroeconomic situation in the country remains uncertain, which will continue to be reflected in currency movements.
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The Polish złoty was relatively stable, and its value dropped by 1.8% from the beginning to the end of the year, while the
average value was 2.6% lower than in 2021. The Romanian leu and Croatian kuna were very stable, and Croatia employed
the ERM mechanism. From the beginning to the end of 2022, the value of the British pound dropped by 5.3%. The
contribution of these currencies to the net financial result was negligible.
2022 movement of currencies expressed in euro (index 31 Dec 2021 = 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 impossible, we use derivatives or do not hedge the risk.
Generally, only forward contracts are used for hedging.
In 2022, we continued our policy of partially hedging the Russian rouble and US dollar with financial instruments. The risk
exposure to the Russian rouble was partially hedged using forward contracts in the first quarter of the year, but this was
no longer possible from April. As the value of the Russian rouble denominated in the euro strengthened, we generated net
foreign exchange gains.
The increasing US dollar exposure from operations and the 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 2022. Due to the short currency position, the dollar strengthening had a negative financial
impact on the Krka Group result. In 2022 however, income from the US dollar hedging instruments offset this.
We generated net foreign exchange losses from other currencies in 2022. 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 2022 was positive, totalling €52.7 million. The Krka Group’s net financial result, including
currency risk result, interest income and expenses, and other financial income and expenses, totalled €51.9 million.
2023 objectives
We intend to remain focused on activities for offsetting currency exposure by natural hedging methods. We plan to use
financial instruments for partial hedging against risks entailed by volatile currencies accounting for a significant portion of
Krka’s currency exposure.
50
60
70
80
90
100
110
120
130
140
150
160
31 Dec
2021
31 Jan
2022
28 Feb
2022
31 Mar
2022
30 Apr
2022
31 May
2022
30 Jun
2022
31 Jul
2022
31 Aug
2022
30 Sep
2022
31 Oct
2022
30 Nov
2022
31 Dec
2022
RUB HRK RON PLN USD
Annual Report 2022 – Business Report
73
2022 foreign exchange rates
31 Dec 2021
31 Dec 2022
Low
High
Average
Standard
deviation
Coefficient of
variation*
RUB
85.30
78.43
55.77
157.72
73.43
18.93
25.7%
HRK
7.53
7.54
7.50
7.58
7.53
0.02
0.2%
RON
4.95
4.95
4.82
4.95
4.93
0.02
0.5%
PLN
4.60
4.68
4.49
4.95
4.69
0.09
1.8%
CZK
24.86
24.12
24.12
25.87
24.57
0.26
1.1%
HUF
369.19
400.87
352.92
430.65
391.15
19.84
5.1%
UAH
30.87
37.93
29.30
39.49
34.18
2.94
8.6%
RSD
117.44
117.29
116.84
117.73
117.30
0.17
0.1%
USD
1.13
1.07
0.96
1.15
1.05
0.05
4.8%
GBP
0.84
0.89
0.82
0.90
0.85
0.02
1.9%
* 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 2022.
2023 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.
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 670 at the end of 2022, 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. A customer’s credit rating includes many different financial and non-financial indicators, which
fall into four categories; each has a different weight in the final assessment.
Annual Report 2022 – Business Report
74
Credit risk assessment indicator categories
Each customer is assigned a customised credit limit according to the credit rating, expected shipment, and payment
dynamics.
The second step in the credit-control process involves regular dynamic monitoring of a customer’s payment discipline. All
Krka Group companies employ sales information systems that control available limits and overdue receivables whenever
a product shipment is made. 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 the specifics of sales markets,
additional national controls have been introduced in individual subsidiaries. Credit control processes are regularly adjusted
to changes in the sales markets.
Credit risk management results
Credit control guarantees permanent control over the quality of the trade receivables portfolio. The result is a low proportion
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, with the majority of outstanding receivables due from customers with whom Krka has been
doing business for several years.
A very complex credit risk situation in 2022 derived from COVID-19 pandemic-related challenges and the tense situation
in Ukraine, the Russian Federation, and Belarus. These markets, where we further strengthened trade receivable
management activities, were at our focal point. The credit risk management balance was favourable in 2022 as well. At
the end of 2022, the value of trade receivables decreased by 14% compared to the beginning of the year. 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 2022 was less than 0.11% of sales.
30%
20%
35%
15%
Customers’s profitability and
payment habits
Customers’s financial
stability
Internal quality assessment
Country-related risk
Annual Report 2022 – Business Report
75
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, we extended and supplemented trade receivable insurance. At the end of 2022, 96.1% of trade
receivables were insured with a credit insurer. After deductibles, 86.7% of trade receivables were insured. Bank guarantees
and letters of credit are used only exceptionally to secure payments.
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 2022.
132
124
6
8
17
306
311
377
460
385
0
50
100
150
200
250
300
350
400
450
500
31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022
€ million
Uninsured receivables Receivables insured with insurance company or bank
12
13
9
12
12
74
72
76
80
79
165
186
168
241
144
73
74
62
58
73
111
86
64
72
91
4
4
3
5
6
0
50
100
150
200
250
2018 2019 2020 2021 2022
€ million
Region Slovenia Region South-East Europe Region East Europe
Region Central Europe Region West Europe Region Overseas Markets
Annual Report 2022 – Business Report
76
Receivables by maturity
2023 objectives
We intend to continue standard credit risk management activities in 2023. The insurance contract for our trade receivables
expires in the middle of 2023. Before contract renewal, we intend to examine options for further optimisation of receivable
insurance. 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 acceptable levels is established, we will introduce individual measures to reduce the
exposure gradually.
We aim at low receivable impairment and write-off total at the Krka Group level.
Liquidity risk
Business partners value Krka for its excellent financial discipline and stable cash flows. In 2022, 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 2022.
At the end of 2022, the Krka Group recorded excess liquidity, primarily as cash at bank or deposits with first-class
commercial banks. The 2022 increase in excess liquidity resulted from surplus cash flow from operating activities over
negative cash flows from investing and financing activities.
The European Central Bank started raising key interest rates gradually in the second half of 2022. Low-risk cash
investments started providing positive returns. We deposited most of the cash surplus with commercial banks in
accordance with internal investment diversification rules and in consideration of interest rate, liquidity, credit, and currency
risks.
The controlling company manages liquidity risk centrally for the entire Krka 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 automatically daily (cash
pooling) or manually through individual bank transfers. This allows for cash management optimisation, currency risk
mitigation, an overview of the 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 2022.
421
420
375
457
394
14
11
4
7
7
1
1
2 2
0
3
1
1
0
1
0
2
1
1
1
0
50
100
150
200
250
300
350
400
450
500
2018 2019 2020 2021 2022
€ million
Within maturity Overdue up to 20 days Overdue between 21 and 50 days
Overdue between 51 and 180 days Overdue more than 180 days
Annual Report 2022 – Business Report
77
Krka Group liquidity ratios
2022
2021
2020
2019
2018
5-year
average
Current ratio
3.75
3.21
4.00
3.21
3.03
3.44
Quick ratio
2.42
2.21
2.54
2.02
1.89
2.22
Acid test ratio
1.37
0.69
1.04
0.62
0.38
0.82
Receivables turnover ratio
3.70
3.45
3.50
3.21
2.68
3.31
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
2023 objectives
We plan to carefully manage cash flows and surplus liquidity within the Krka Group to ensure proper liquidity of all group
companies in 2023.
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.
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, the extent of potential
damages, and the impact on operations. The Krka Group primarily invests in prevention because its effect on risk
management is more optimal than taking out insurance policies. One of the reasons for taking out insurance could be
legislation, which may require specific types of insurance.
The Krka Group adjusts the insurance scope and coverage to 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.
Key insurance policies taken out by the Krka Group to manage risks include insurances for property, general civil liability,
product liability, clinical trials, product recalls, freight-in-transit, and business interruption. Insurance policies also indicate
3.03
3.21
4.00
3.21
3.75
1.89
2.02
2.54
2.21
2.42
0.38
0.62
1.04
0.69
1.37
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2018 2019 2020 2021 2022
Current ratio Quck ratio Acid test ratio
Annual Report 2022 – Business Report
78
the main risks, including property protection, especially against disasters (fire, earthquake, flood, storm, explosion),
business interruption at manufacturing plants, product and other liabilities.
The controlling company manages the insurance policies of all Krka Group companies, except local car insurance policies,
but 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. When selecting
insurance companies, we consider the quality of coverage, premium rates, references, financial security (credit ratings
and capital adequacy), and national legal requirements. Key performance evaluation criterion is the proportion of paid
insurance premiums as a total of Krka Group revenue. We also attempt to keep premium rates as low as possible and
ensure that premium growth falls behind the increases in the bases used to calculate premiums.
We continued the analysis of the international insurance market in 2022 to improve our insurance programme. Krka makes
gradual improvements every year and simultaneously assumes part of the risk, either through insurance deductibles or by
cancelling low-risk insurance policies. Four insurance audits were conducted at the Krka Group last year, with no critical
recommendations made.
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 emergency 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.
Extent of property damage
Note: This chart does not include car or personal insurance
All our insurance processes are digitalised. We use certain documents in paper form only as backup copies.
80
29
4
0
25
0
10
20
30
40
50
60
70
80
90
100
2018 2019 2020 2021 2022
€ thousand
Krka Group property damage
Annual Report 2022 – Business Report
79
Investor and share information
Shareholder return
Krka share price on the Ljubljana Stock Exchange
€
2022
2021
2020
2019
2018
Year high
120.00
120.00
92.60
74.60
59.80
Year low
80.80
91.20
54.00
56.80
53.60
31 December
92.00
118.00
91.40
73.20
57.80
Annual change (%)
-22.0
29.1
24.9
26.6
0.5
In 2021, the Krka share price on the Ljubljana Stock Exchange increased by more than 29% but fell by 22% last year.
Krka share price performance compared to selected share indices over the last five years
Reference: The Ljubljana Stock Exchange and S&P Dow Jones Indices LLC
Dividend policy
The AGM decides on the proposed dividend amount. In 2022, we allocated 54.9% of the consolidated net profit attributable
to equity holders of the controlling company generated in 2021 for the dividend payout. Gross dividend per share increased
by 12.6%. The Company's long-term dividend policy is respected when determining the net profit share for dividend payout
each year. 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 considered.
80
100
120
140
160
180
200
220
Index
KRKG SBITOP S&P Global Healthcare
Annual Report 2022 – Business Report
80
Dividends and dividend yield
2022
2021
2020
2019
2018
Earnings per share
1
(€)
11.69
9.92
9.27
7.73
5.46
Gross dividend per share
2
(€)
5.63
5.00
4.25
3.20
2.90
Dividend payout ratio
3
(%)
56.6
53.6
54.3
58.2
60.8
Dividend yield
4
(%)
6.1
4.2
4.6
4.4
5.0
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 equity holders of the controlling company
4
Gross dividend per share/Share price as at 31 December
Share trading and shareholding
27
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
Reference: The Ljubljana Stock Exchange and the Warsaw Stock Exchange
Krka shares are the most traded security on the Ljubljana Stock Exchange. In 2022, the average daily trading volume of
Krka shares on the Ljubljana Stock Exchange reached €0.76 million or 7,600 shares, including blocks.
27
GRI 2-1, 2-6
30
40
50
60
70
80
90
100
110
120
130
0
2,500
5,000
7,500
10,000
12,500
15,000
17,500
20,000
22,500
25,000
31 Dec 2017 31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022
Closing price (€)
Trading volume (€ thousand)
Trading volume on LJSE Trading volume on WSE Closing price on LJSE
Annual Report 2022 – Business Report
81
Ten largest shareholders as at 31 December 2022
Shares owned
Stake (%)
Kapitalska družba, d. d.
3,493,030
10.65
Slovenski državni holding, d. d. (SDH)
2,949,876
9.00
Republic of Slovenia
2,366,121
7.22
OTP banka, d.d.
1
1,547,420
4.72
Erste Group Bank AG - PBZ Croatia Osiguranje
1
1,331,938
4.06
Clearstream Banking SA
1
1,086,939
3.31
Luka Koper, d. d.
433,970
1.32
State Street Bank and Trust
1
377,959
1.15
KDPW
1
345,055
1.05
Privredna banka Zagreb d. d.
1
318,434
0.97
Total
14,250,742
43.46
1
The shares are held in custody accounts with the above-listed banks and are owned by their clients.
At the end of 2022, Krka had 47,170 shareholders, up almost 1% on the end of 2021.
Shareholder structure (%)
Reference: KDD
In 2022, the Company acquired 101,941 treasury shares valued at €10,009 thousand on the regulated market and held
1,785,849 treasury shares as at 31 December 2022.
Communication with investors
28
We adhere to the highest standards in conducting our business, which also applies to investor relations. We pursue corporate
integrity, high levels of transparency in reporting, and engagement of shareholders, analysts, and financial professionals. We
regularly informed the financial and general public about our business achievements throughout the year in compliance with
valid regulations and stock exchange reporting rules. We provided them with information mainly related to our business results
and the Krka Group’s strategy, complying with the information disclosure policy. Investors and financial analysts gave us
feedback, which we always carefully examined and presented to our Management Board. In 2022, we participated in
16 investment conferences with investors from more than 15 countries. We organised four webcasts to present our quarterly
business reports. We also held conference calls with more than 100 investors. 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.
28
GRI 2-29
39.2
38.5
38.2
38.8
40.4
27.2
27.1
27.1
27.1
27.1
7.7
7.6
6.8
6.8
6.1
2.7
3.8
4.7
5.1
5.5
23.2
23.0
23.2
22.2
20.9
31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022
Domestic retail investors State ownership
Domestic legal entities and institutional investors Treasury shares
Foreign investors
Annual Report 2022 – Business Report
82
Performance analysis
Operating income
Revenue
In 2022, the Krka Group generated revenue of €1,717.5 million, a €151.7 million or 10% increase on 2021, of which
revenue from contracts with customers on sales of products and services reached €1,708.5 million, and revenue from
contracts with customers on sales of materials and other sales revenue constituted the difference. Over the past five years,
average annual revenue grew by 4.4% in volume and 6.3% in value. Other operating income of the Krka Group amounted
to €9.2 million.
In 2022, Krka (in this section referred to as ‘the Company’ for clarity reasons) generated revenue of €1,553.5 million,
a €172.1 million or 12% increase on 2021, of which revenue from contracts with customers on sales of products and
services amounted to €1,356.1 million; revenue from contracts with customers on sales of materials totalled €188.3 million;
and other sales revenue reached €9.1 million. Other operating income amounted to €4.7 million.
Operating expenses
The Krka Group posted operating expenses totalling €1,345.4 million, up €123.0 million or 10% on 2021. The Company
incurred operating expenses totalling €1,200.3 million, up 8% on 2021.
Krka Group operating expenses comprised: costs of goods sold totalling €743.1 million; selling and distribution expenses
totalling €349.1 million; R&D expenses totalling €162.6 million; and general and administrative expenses totalling
€90.7 million. Operating expenses accounted for 78% of revenue and, over the past five years, ranged between 75%
in 2020 and 83% in 2018 and 2019.
Costs of goods sold, up 10% on 2021, represented the largest item in the Krka Group operating expense structure. They
accounted for 43.3% of total revenue in 2022, and 43.1% in 2021. Selling and distribution expenses increased by 14%
and accounted for 20.3% of total revenue, up 0.8 percentage points on 2021. R&D expenses constituted 9.5% of total
revenue (down 0.4 percentage points on 2021) and increased by 5%. General and administrative expenses amounted
to 5.3% of total revenue, a 4% increase, while their proportion in revenue dropped by 0.3 percentage points.
Company operating expenses comprised: costs of goods sold totalling €663.3 million; selling and distribution expenses
totalling €301.3 million; R&D expenses totalling €158.3 million; and general and administrative expenses totalling
€77.4 million. Costs of goods sold represented the largest item in the Company operating expense structure and increased
by 8%. They accounted for 42.7% of total revenue, up 1.8 percentage points on 2021. Selling and distribution expenses
1,232
1,390
1,447
1,381
1,554
1,332
1,493
1,535
1,566
1,717
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2018 2019 2020 2021 2022
€ million
Company Krka Group
Annual Report 2022 – Business Report
83
increased by 11% and accounted for 19.4% of total revenue, down 0.2 percentage points on 2021. R&D expenses
constituted 10.2% of total revenue (down 0.7 percentage points on 2021) and increased by 5%. General and
administrative expenses accounted for 5.0% of total revenue, a 1% drop, while their proportion in total revenue decreased
by 0.7 percentage point on 2021.
Financial income and expenses
€ thousand
Krka Group
Company
2022
2021
2020
2019
2018
2022
2021
2020
2019
2018
Financial income
57,668
19,711
23,259
24,987
5,935
57,744
24,714
31,786
34,410
17,382
Financial
expenses
-5,806
-12,082
-75,011
-14,814
-36,048
-3,356
-12,083
-72,837
-14,751
-33,891
Net financial
result
51,862
7,629
-51,752
10,173
-30,113
54,388
12,631
-41,051
19,659
-16,509
In 2022, Krka Group net financial result amounted to €51.9 million and €54.4 million for the Company.
The Krka Group operates in diverse international environments and is exposed to foreign exchange risks in certain sales
and purchase markets. Krka Group currency risk gain reached €52.7 million in 2022. Please see pages 70–73 for details
about foreign exchange risks.
Krka Group financial income comprised: net foreign exchange gains totalling €43.6 million; derivatives income of
€9.1 million; interest income totalling €3.8 million; income from dividends and other profit shares totalling €0.7 million; and
other financial income of €0.5 million. Financial expenses consisted of interest expenses of €1.3 million and other financial
expenses of €4.5 million.
Company financial income comprised: net foreign exchange gains totalling €45.1 million; derivatives income of
€9.1 million; interest income totalling €2.4 million; income from dividends and other profit shares worth €0.7 million; and
other financial income of €0.5 million. Financial expenses consisted of interest expenses of €1.7 million, and other financial
expenses of €1.6 million.
Operating results
Operating profit and net profit for the year
199
264
339
273
358
163
249
258
245
348
233
274
391
355
381
174
244
289
308
364
0
50
100
150
200
250
300
350
400
2018 2019 2020 2021 2022
€ million
Company EBIT Company net profit Krka Group EBIT Krka Group net profit
Annual Report 2022 – Business Report
84
The Krka Group recorded EBIT totalling €381.2 million, up €26.4 million or 7% on 2021. Its EBITDA amounted to
€488.9 million, up €25.3 million or 5%.
The Company created EBIT totalling €357.9 million, while its EBITDA reached €440.1 million.
In 2022, profit before tax of the Krka Group increased by €70.7 million or 19% to €433.1 million. Its effective tax rate
was 16.0%. Profit before tax of the Company amounted to €412.3 million.
29
The Krka Group recorded net profit totalling €363.7 million, up €55.5 million or 18% on 2021, while Company net profit
totalled €348.2 million.
Assets
€ thousand
Krka Group
Company
2022
%
2021
%
Index
2022/21
2022
%
2021
%
Index
2022/21
Non-current
assets
1,125,025
41.9
1,075,052
42.4
105
1,123,594
44.6
1,094,724
45.1
103
Property, plant
and equipment
779,336
29.0
773,657
30.5
101
566,780
22.5
569,391
23.5
100
Intangible assets
102,550
3.8
104,301
4.1
98
24,960
1.0
25,628
1.1
97
Investments and
loans
188,309
7.0
149,183
5.9
126
522,545
20.7
486,336
20.0
107
Other
54,830
2.1
47,911
1.9
114
9,309
0.4
13,369
0.5
70
Current assets
1,562,475
58.1
1,461,936
57.6
107
1,392,950
55.4
1,332,521
54.9
105
Inventories
553,332
20.6
455,707
18.0
121
492,978
19.6
394,323
16.2
125
Trade receivables
402,730
15.0
467,764
18.4
86
357,889
14.2
424,588
17.5
84
Other
606,413
22.5
538,465
21.2
113
542,083
21.6
513,610
21.2
106
Total assets
2,687,500
100.0
2,536,988
100.0
106
2,516,544
100.0
2,427,245
100.0
104
At the end of 2022, Krka Group assets were valued at €2,687.5 million, a €150.5 million or 6% increase on year-end 2021.
The ratio of non-current to current assets in the overall asset structure differed from that recorded at year-end 2021, as
non-current assets decreased by 0.5 percentage points and totalled 41.9%.
At the end of 2022, Company assets were valued at €2,516.5 million, an €89.3 million or 4% increase on year-end 2021.
The ratio of non-current to current assets in the overall asset structure differed from that recorded at year-end 2021, as
non-current assets decreased by 0.5 percentage points and totalled 44.6%.
Krka Group non-current assets were valued at €1,125.0 million, a €50.0 million or 5% increase on year-end 2021. The
most important item in the Krka Group asset structure was property, plant and equipment (PP&E). It was valued at
€779.3 million and accounted for 29.0% of total Krka Group assets (of which the Company’s PP&E accounted
for €566.8 million or 73% of Krka Group PP&E). Intangible assets were worth €102.6 million and accounted for 3.8% of
total assets (of which Company assets accounted for €25.0 million or 24% of total Krka Group intangible assets). Krka
Group non-current loans totalled €77.5 million or 2.9% of its total assets.
Krka Group current assets were valued at €1,562.5 million and increased by €100.5 million or 7% on year-end 2021. Trade
receivables due from customers outside the Krka Group totalled €402.7 million, accounting for 15% of total Krka Group
assets. Inventories amounted to €553.3 million or 21% of total Krka Group assets. Trade receivables decreased
by €65.0 million or 14%, while inventories saw a rise of €97.6 million or 21%. Krka Group current loans totalled €6.3 million
or 0.2% of its total assets. Cash and cash equivalents were valued at €518.9 million, up €359.1 million on year-end 2021,
accounting for 19.3% of its total assets.
29
GRI 207-4
Annual Report 2022 – Business Report
85
Company non-current assets were valued at €1,123.6 million and increased by €28.9 million, up 3% on year-end 2021.
The most important item worth €566.8 million or 23% of its total assets was PP&E. Investments in subsidiaries totalled
€355.8 million or 14% of its total assets. Intangible assets of €25.0 million accounted for 1% of total assets. The Company
recorded non-current loans totalling €56.0 million or 2% of its total assets.
Company current assets were valued at €1,393.0 million and increased by €60.4 million or 5% on year-end 2021. Trade
receivables totalled €357.9 million or 14% of its total assets (of which trade receivables due from customers outside the
Krka Group totalled €164.2 million), while inventories amounted to €493.0 million or 20% of its total assets. Inventories
increased by 25%, but trade receivables decreased by 16%. The Company posted current loans totalling €6.7 million or
0.3% of its total assets. Cash and cash equivalents were valued at €470.3 million, up €325.3 million on year-end 2021,
accounting for 18.7% of total Company assets.
Equity and liabilities
€ thousand
Krka Group
Company
2022
%
2021
%
Index
2022/21
2022
%
2021
%
Index
2022/21
Equity
2,138,509
79.6
1,919,085
75.6
111
2,060,792
81.9
1,876,142
77.3
110
Non-current
liabilities
132,130
4.9
162,674
6.4
81
102,333
4.1
128,783
5.3
79
Current liabilities
416,861
15.5
455,229
18.0
92
353,419
14.0
422,320
17.4
84
Total equity and
liabilities
2,687,500
100.0
2,536,988
100.0
106
2,516,544
100.0
2,427,245
100.0
104
As at 31 December 2022, the Krka Group posted €219.4 million or 11% higher equity than at year-end 2021. The rise was
attributable to Krka Group net profit totalling €363.7 million, other comprehensive income net of tax totalling €34.7 million,
and acquisition of non-controlling interests totalling €6.2 million. Equity declined due to dividends paid totalling
€175.0 million and redemptions of treasury shares totalling €10.0 million.
The Krka Group recorded provisions totalling €107.2 million (of which post-employment and other non-current employee
benefits accounted for €96.0 million; provisions for lawsuits €10.6 million; and other provisions €0.7 million),
an €18.9 million or 15% decrease on year-end 2021. Provisions for post-employment and other non-current employee
benefits decreased by €28.3 million, other provisions declined by €0.6 million, while provisions for lawsuits increased by
€10.0 million.
Of Krka Group current liability items, trade payables increased by €10.8 million (of which payables to suppliers abroad
increased by €1.8 million and payables to domestic suppliers by €9.0 million). Current liabilities from contracts with
customers increased by €33.0 million (of which bonuses and volume rebates increased by €31.1 million and contract
liabilities by €3.1 million, while right of return decreased by €1.2 million). Other current liabilities declined by €103.7 million,
of which liabilities from repurchase agreements (repo) dropped by €102.2 million and other liabilities by €3.3 million, while
payables to employees increased by €1.8 million.
As at 31 December 2022, Company equity was up €184.7 million or 10% higher than at year-end 2021. The increase was
attributable to Company net profit of €348.2 million and other comprehensive income net of tax totalling €21.5 million, while
the decrease resulted from dividends paid totalling €175.0 million and redemptions of treasury shares totalling
€10.0 million.
Company provisions amounted to €96.6 million (of which post-employment and other non-current employee benefits
totalled €86.1 million and provisions for lawsuits €10.5 million). Compared to year-end 2021, provisions declined
by €16.5 million or 15% following a €26.5 million drop in provisions for post-employment and other non-current
employment benefits and a €10.0 million increase in provisions for lawsuits.
Of Company current liability items, trade payables increased by €16.0 million. Current liabilities from contracts with
customers increased by €2.2 million, while other current liabilities decreased by €106.6 million, of which liabilities from
Annual Report 2022 – Business Report
86
repurchase agreements (repo) dropped by €102.2 million. At the end of 2022, Company current borrowings from
subsidiaries amounted to €53.4 million.
Cash flow statement
€ thousand
Krka Group
Company
2022
2021
2022
2021
Net cash from operating activities
467,651
386,097
407,733
348,239
Net cash from investing activities
76,414
-372,637
105,073
-338,401
Net cash from financing activities
-187,022
-169,850
-189,807
-163,901
Net change in cash and cash equivalents
357,043
-156,390
322,999
-154,063
Net change in Krka Group cash and cash equivalents (exclusive of exchange rate fluctuations) totalled €357.0 million
in 2022, because positive cash from operating and investing activities was higher than negative cash used in financing
activities.
The Krka Group generated profit from operating activities before changes in net current assets totalling €552.3 million.
Changes in current assets that had a positive impact on cash flow included changes in trade receivables and trade
payables, while changes in inventories, provisions, deferred revenue and other current liabilities had a negative impact.
Positive cash flows from investing activities totalling €76.4 million were primarily accrued from net payments for current
loans totalling €189.6 million and payments for current investments of €153.8 million. Negative cash flows from financing
activities totalling €187.0 million primarily resulted from dividends paid and other profit shares of €175.0 million and
redeemed treasury shares of €10.0 million.
Performance ratios
25.9
19.8
17.8
13.4
10.6
28.3
23.0
22.4
17.7
14.1
29.6
22.7
19.7
16.8
12.9
28.5
22.2
21.2
17.9
13.9
0
5
10
15
20
25
30
35
EBITDA margin EBIT margin Profit margin ROE ROA
%
Company 2021 Company 2022 Krka Group 2021 Krka Group 2022
Annual Report 2022 – Business Report
87
Krka Group and Company operating figures for the past five years
€ thousand
Krka Group
Company
2022
2021
2020
2019
2018
2022
2021
2020
2019
2018
Revenue
1,717,453
1,565,802
1,534,941
1,493,409
1,331,858
1,553,514
1,381,367
1,447,112
1,390,248
1,231,784
EBITDA
1
488,895
463,625
502,432
385,437
343,280
440,086
358,188
424,028
345,929
282,493
– EBITDA
margin
28.5%
29.6%
32.7%
25.8%
25.8%
28.3%
25.9%
29.3%
24.9%
22.9%
EBIT
2
381,211
354,788
390,744
274,195
232,686
357,870
273,325
338,882
263,852
199,305
– EBIT margin
22.2%
22.7%
25.5%
18.4%
17.5%
23.0%
19.8%
23.4%
19.0%
16.2%
Net profit
363,662
308,150
288,949
244,272
174,008
348,215
245,216
258,474
249,411
163,329
– Net profit
margin
21.2%
19.7%
18.8%
16.4%
13.1%
22.4%
17.8%
17.9%
17.9%
13.3%
Assets
2,687,500
2,536,988
2,235,542
2,184,618
1,985,069
2,516,544
2,427,245
2,208,379
2,129,960
1,916,065
ROA
3
13.9%
12.9%
13.1%
11.7%
8.9%
14.1%
10.6%
11.9%
12.3%
8.7%
Equity
2,138,509
1,919,085
1,751,812
1,667,516
1,540,270
2,060,792
1,876,142
1,791,850
1,664,178
1,552,300
ROE
4
17.9%
16.8%
16.9%
15.2%
11.5%
17.7%
13.4%
15.0%
15.5%
10.7%
1
The difference between operating income and expenses increased by accumulated depreciation and amortisation
2
The difference between operating income and expenses
3
Net profit/Average total asset balance in the year
4
Net profit/Average shareholders’ equity in the year
Annual Report 2022 – Business Report
88
Marketing and sales
In 2022, the Krka Group generated €1,717.5 million from sales of products and services, a 10% year-on-year rise. Of that,
revenue from contracts with customers on sales of products and services amounted to €1,708.5 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 €1,605.5 million and accounted for 94% of overall Krka Group sales. Product sales
volume increased by 4%.
Sales by region
30
Region East Europe recorded the highest sales, €623.4 million, or 36.5% of total Krka Group sales. Region Central Europe
achieved the second highest sales, €364.2 million, or 21.3% of total Krka Group sales. Region West Europe ranked third
in terms of sales with €327.3 million, or 19.2% of total Krka Group sales. Sales in Region South-East Europe totalled
€224.5 million, accounting for 13.1% of total sales, and in Overseas Markets €66.1 million or 3.9% of total sales. Region
Slovenia generated sales of €103 million, accounting for 6% of total Krka Group sales.
2022 Krka Group sales by region
Krka Group and Krka sales by region
€ thousand
Krka Group
Krka
2022
2021
Index
2022/21
2022
2021
Index
2022/21
Region Slovenia
103,047
92,880
111
60,503
56,421
107
Region South-East Europe
224,523
209,166
107
220,624
205,491
107
Region East Europe
623,377
547,778
114
387,489
320,973
121
Region Central Europe
364,154
351,501
104
351,191
336,699
104
Region West Europe
327,343
305,246
107
284,593
246,350
116
Region Overseas Markets
66,098
53,717
123
51,675
45,560
113
Total
1,708,542
1,560,288
110
1,356,075
1,211,494
112
30
GRI 2-6
6.0%
13.1%
36.5%
21.3%
19.2%
3.9%
Region Slovenia
Region South-East Europe
Region East Europe
Region Central Europe
Region West Europe
Region Overseas Markets
Annual Report 2022 – Business Report
89
Krka Group quarterly sales by region
€ thousand
2022
2021
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Region Slovenia
23,432
25,988
27,780
25,847
18,270
23,502
27,033
24,075
Region South-East Europe
60,310
58,951
53,575
51,687
53,276
58,990
51,900
45,000
Region East Europe
146,700
140,983
126,464
209,230
132,122
144,401
121,226
150,029
Region Central Europe
99,620
96,443
84,824
83,267
97,805
91,098
82,955
79,643
Region West Europe
84,595
83,941
73,837
84,970
80,535
79,087
69,334
76,290
Region Overseas Markets
15,991
16,486
16,611
17,010
12,515
14,945
14,298
11,959
Total
430,648
422,792
383,091
472,011
394,523
412,023
366,746
386,996
Krka Group sales by region in the past five years
Region Slovenia
Sales of products and services in Slovenia, one of our key markets, amounted to €103 million in 2022. Product sales
reached €60.5 million, accounting for 7% growth in value. Prescription pharmaceuticals constituted the major proportion
or 74%. Non-prescription products accounted for 22%, and sales of animal health products represented the remaining 3%.
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 €42.6 million, up 17% on the year before,
contributing 11% to sales growth in the domestic market.
Medicines for treating 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.
Medicines for treating cardiovascular diseases recorded the highest sales volume, 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, and we also raised the profile of Sorvitimb (rosuvastatin/ezetimibe). We raised the profile of Roxiper, a single-
pill combination of perindopril, indapamide, and rosuvastatin; and Roxampex, a single-pill combination of rosuvastatin,
amlodipine, and perindopril.
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 market our non-opioid analgesic
89
92
85
93
103
176
191
199
209
225
413
481
517
548
623
318
340
341
352
364
287
336
341
305
327
43
49
46
54
66
0
100
200
300
400
500
600
700
2018 2019 2020 2021 2022
€ million
Region Slovenia Region South-East Europe Region East Europe
Region Central Europe Region West Europe Region Overseas Markets
Annual Report 2022 – Business Report
90
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 portfolio an immunomodulatory agent Lenalidomide Krka (lenalidomide); two oncology
agents, Sunitinib Krka (sunitinib) and Abiraterone Krka (abiraterone); an antidiabetic agent Maysiglu (sitagliptin).
Sales of non-prescription products were driven by Magnezij Krka, followed by Nalgesin S (naproxen), and Septabene
(benzydamine/cetylpyridinium chloride). Sales of animal health products were driven by vitamins and minerals Grovit, and
Floron (florfenicol).
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 approximately a 65% market share;
• Proton pump inhibitors, accounting for more than a 60% market share;
• Statins, accounting for more than a 55% market share;
• Products with effect on pharynx, accounting for more than a 40% market share;
• Agents acting on the renin-angiotensin system, accounting for approximately a 45% market share;
• Antipsychotics, anxiolytics, antidementia 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, including valsartan in combination with hydrochlorothiazide; and venlafaxine.
We were the leading provider of generic medicines containing aripiprazole; duloxetine; etoricoxib; olanzapine; and tamsulosin.
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.
Nalgesin (naproxen), Nolpaza (pantoprazole), Sorvasta (rosuvastatin), Prenewel (perindopril/indapamide), Prenessa (perindopril),
and Doreta (tramadol/paracetamol) were among medicines that achieved highest sales.
Region South-East Europe
Region South-East Europe made product sales of €224.5 million, a year-on-year increase or more than 7%. We recorded
growth on all regional markets. Absolute growth, however, was the highest in Croatia, where our sales totalled almost
€5 million more than a year before. In terms of absolute year-on-year sales growth, it was followed by Romania, where
sales increased by €4.5 million, and Serbia, where sales grew by €2 million.
Prescription pharmaceuticals accounted for over 85%, and non-prescription products for over 11% of regional sales.
Animal health products constituted slightly more than 3% of total regional sales. Our leading product group of prescription
pharmaceuticals achieved 6% year-on-year growth. Non-prescription product sales advanced by 27%, while animal health
products lagged behind the 2021 sales figure by over 3%.
In Romania, one of our key markets and the largest regional one, year-on-year sales increased by 8% to €63.2 million.
Our market share reached 1.6% and market share volume more than 4.6% respectively, ranking us the sixth largest foreign
provider of generic pharmaceuticals in the country. The most important medicines in terms of sales were Atoris
(atorvastatin), Co-Prenessa (perindopril/indapamide), Doreta (tramadol/paracetamol), Roswera (rosuvastatin), and
Nolpaza (pantoprazole). Our best-selling non-prescription products were Bilobil (ginkgo leaf extract), Herbion brand
products, and Nalgesin (naproxen). Companion animal products constituted the major part of animal health product sales,
notably Fypryst brand products, Milprazon (milbemycin/praziquantel), and Selehold (selamectin).
Annual Report 2022 – Business Report
91
Krka Group market position in Romania
We ranked sixth among foreign providers of generic medicines, holding a 1.6% 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 25% market share;
• Antimicrobials (fluoroquinolones), accounting for more than a 20% market share;
• Prescription analgesics and antipyretics, accounting for more than a 15% 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; duloxetine; enalapril; lansoprazole; losartan; mirtazapine;
naproxen; norfloxacin; perindopril in combination with amlodipine; pramipexole; ropinirole; sulfasalazine; telmisartan; tramadol,
including tramadol in combination with paracetamol; and venlafaxine.
We were the leading provider of generic medicines containing aripiprazole; ivabradine; ginkgo leaf extract; combination of
perindopril and indapamide; and combination of perindopril, indapamide, and amlodipine.
Croatia, another of our key markets, ranked second regional market in terms of sales. Croatian sales totalled €41 million,
up 14% on 2021. We ranked fifth among all providers of generic medicines and second among manufacturers of animal
health products in the country. We recorded double-digit growth in sales of prescription pharmaceuticals and non-
prescription products, while sales of animal health products declined.
In accordance with our plans, prescription pharmaceuticals generated the highest sales value, above all: Emanera
(esomeprazole), Atoris (atorvastatin), Co-Perineva (perindopril/indapamide), Co-Dalneva
(perindopril/amlodipine/indapamide), Roswera (rosuvastatin), Valsacombi (valsartan/hydrochlorothiazide), Helex
(alprazolam), Dalneva (perindopril/amlodipine), and Doreta (tramadol/paracetamol). Of non-prescription products,
Nalgesin (naproxen) and Septolete Duo (benzydamine/cetylpyridinium chloride) recorded the strongest sales. Of animal
health products, Fypryst brand products and Enroxil (enrofloxacin) recorded most substantial sales.
Krka Group market position in Croatia
We placed third among foreign providers of generic medicines, holding a 3.3% market share.
In 2022, we outperformed the entire market with respect to sales growth.
We were the leading provider of:
• Angiotensin II receptor antagonists, also in combination with diuretics, accounting for approximately a 65% market share;
• Antimicrobials (fluoroquinolones), accounting for approximately a 55% market share;
• Antitussives, accounting for approximately a 40% market share;
• Statins, accounting for more than a 30% market share;
• ACE inhibitors, also in combination with diuretics, accounting for a 30% market share.
We were among the leading providers of:
• Mono-component corticosteroids for systemic treatment, accounting for more than a 35% market share;
• Typical antipsychotics, accounting for more than a 30% market share;
• Sulphonamide antidiabetics, accounting for more than a 25% market share;
• Proton pump inhibitors, accounting for more than a 25% market share;
• ACE inhibitors and ACE-based combinations with calcium channel blockers, accounting for more than a 20% market share;
• Antidepressants, accounting for more than a 15% market share;
• Anxiolytics, 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; ciprofloxacin; dexamethasone;
diosmin; escitalopram; esomeprazole; clarithromycin; lansoprazole; losartan in combination with hydrochlorothiazide; norfloxacin;
perindopril, including perindopril in combination with indapamide; rosuvastatin, including rosuvastatin in combination with
ezetimibe; theophylline; tramadol in combination with paracetamol; 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 €32.2 million in sales and recorded 7% 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 5% and
Annual Report 2022 – Business Report
92
accounted for 86% of total sales. Nolpaza (pantoprazole), Co-Amlessa (perindopril/amlodipine/indapamide), Roxera
(rosuvastatin), Co-Prenessa (perindopril/indapamide), Atoris (atorvastatin), and Valsacor (valsartan) were key medicines
from this group. Nolpaza (pantoprazole) with 6 million packs sold remained one of five medicines presenting strongest
sales in Serbia. Our non-prescription product sales rose 30% on 2021 and were driven by: Nalgesin (naproxen), Bilobil
(ginkgo leaf extract), and Septolete Total (benzydamine/cetylpyridinium chloride). Sales of animal health products edged
down on 2021. Fypryst and Dehinel brand products, Enroxil (enrofloxacin), and Calfoset were at the forefront.
In Bulgaria, sales totalled €25.6 million, the same as in 2021. Prescription pharmaceuticals contributed the most to overall
sales. Co-Valsacor (valsartan/hydrochlorothiazide), Valsacor (valsartan), Roswera (rosuvastatin), Co-Amlessa
(perindopril/amlodipine/indapamide), Nolpaza (pantoprazole), and Wamlox (valsartan/amlodipine) generated strongest
sales. Non-prescription product sales climbed by 24% on 2021, while animal health products advanced by 13%.
We have recorded sales growth in North Macedonia for eighteen successive years. Sales totalled €25.7 million, up a
sound 5% on 2021. Krka remained the leading foreign provider of generic medicines in the country. Prescription
pharmaceuticals were pivotal to overall sales, in particular: Roswera (rosuvastatin), Nolpaza (pantoprazole), Enap
(enalapril), Co-Prenessa (perindopril/indapamide), Tanyz (tamsulosin), Atoris (atorvastatin), and Lorista (losartan). Our
non-prescription product sales recorded a 4% year-on-year increase and were driven by: Septanazal
(xylometazoline/dexpanthenol), Daleron (paracetamol), Bilobil (ginkgo leaf extract), Septolete Total
(benzydamine/cetylpyridinium chloride), and Herbion brand products. Floron (florfenicol) and Fypryst brand products
contributed to the 13% sales increase the most. In 2022, we started marketing several products in North Macedonia, most
notably our prescription pharmaceuticals Maysiglu (sitagliptin) and Maymetsi (sitagliptin/metformin).
We recorded sales totalling €20.7 million, up 2%, in Bosnia and Herzegovina, again winning us the leadership among
the foreign providers of generic medicines. Sales were driven, in particular, by prescription pharmaceuticals. Enap H and
Enap HL (enalapril/hydrochlorothiazide), Roswera (rosuvastatin), Lexaurin (bromazepam), Amlewel
(perindopril/amlodipine/indapamide), Nolpaza (pantoprazole), Atoris (atorvastatin), and Enap (enalapril) recorded
strongest sales. At the end of the year, we launched two new prescription pharmaceuticals: Maysiglu (sitagliptin) and
Maymetsi (sitagliptin/metformin). Non-prescription product sales were driven by: Nalgesin (naproxen), Septolete Total
(benzydamine/cetylpyridinium chloride), Panatus (butamirate), B-Complex, and Bilobil (ginkgo leaf extract). Fypryst brand
products and Rycarfa (carprofen) were key animal health products. Despite restrictions that applied to foreign
manufacturers on certain reimbursement lists, we maintained a stable position and market share.
In Kosovo, we recorded a sales increase just shy of 8%, placing us among the leading providers of medicines in the
country. Sales value reached €8.5 million. Prescription pharmaceuticals drove overall sales, with Lorista H
(losartan/hydrochlorothiazide), Atoris (atorvastatin), and Roswera (rosuvastatin) generating the strongest sales. Year-on-
year sales went up by 6% to €3.8 million in Albania. As we expected, prescription pharmaceuticals constituted the mass
of sales total. Ultop (omeprazole), Atoris (atorvastatin), and Nolpaza (pantoprazole) generated the strongest prescription
pharmaceutical sales. In Montenegro, we recorded sales total of €2.3 million, up 13%. Sales were driven in particular by
prescription pharmaceuticals: Nolpaza (pantoprazole), Roswera (rosuvastatin), Lorista H and Lorista HD
(losartan/hydrochlorothiazide). Our non-prescription product sales went up by 54% on 2021, driven by Septolete Total
(benzydamine/cetylpyridinium chloride) and Nalgesin (naproxen). In 2022, we started marketing several products in
Montenegro, most notably our prescription pharmaceutical Xerdoxo (rivaroxaban). This was our second year since we
started marketing products ourselves in Greece. We extended our portfolio with antidiabetic agents and in 2022 recorded
product sales totalling €1.5 million. Sales were driven by prescription pharmaceuticals, most notably by Pitavador
(pitavastatin), Zalasta (olanzapine), Marixino (memantine), Rosuvador (rosuvastatin), Esolib (esomeprazole), and Co-
Valsareta (valsartan/hydrochlorothiazide).
Region East Europe
Region East Europe remained our leading sales region in 2022, with €623.4 million in sales, up 14% year on year. We
recorded growth in all other regional markets, except in Ukraine. We recorded the highest absolute year-on-year sales
growth in the Russian Federation, reaching over €54 million, and in Uzbekistan, up more than 8 million. We recorded the
highest sales growth in relative terms in Turkmenistan.
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The Russian Federation remained our key and largest individual market. Sales totalled €387 million, presenting 16% or
€54.1 million year-on-year growth.
Prescription pharmaceuticals were the leading product group and accounted for 78% of total sales, up 9% or €23.7 million
on 2021. Medicines that recorded strongest sales were: Lorista H and Lorista HD (losartan/hydrochlorothiazide), Lorista
(losartan), Valsacor (valsartan), Nolpaza (pantoprazole), Co-Perineva (perindopril/indapamide), Co-Dalneva
(perindopril/amlodipine/indapamide), Vamloset (valsartan/amlodipine), Roxera (rosuvastatin), Valsacor H and
Valsacor HD (valsartan/hydrochlorothiazide), and Atoris (atorvastatin). We recorded the highest absolute growth with Co-
Dalneva (perindopril/amlodipine/indapamide) and Lorista H and Lorista HD (losartan/hydrochlorothiazide). We
successfully launched Roxera Plus (rosuvastatin/ezetimibe), Roxatenz-Amlo (rosuvastatin/perindopril/amlodipine), and
the first two antidiabetic agents, Asiglia (sitagliptin) and Asiglia Met (sitagliptin/metformin). We were the leading provider
of prescription pharmaceuticals for treating cardiovascular diseases in the Russian Federation.
Non-prescription products generated sales totalling €60 million, up 56% or €21.6 million on 2021. 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 €27 million, up 48%. Selafort (selamectin), Milprazon
(milbemycin/praziquantel), and Enroxil (enrofloxacin) generated the strongest sales. We successfully launched Cladaxxa
(amoxicillin/clavulanic acid).
We have been increasing the production capacity of our subsidiary Krka-Rus, which in 2022 manufactured more than 70%
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 1.8% market share.
In 2022, we outperformed the entire market with respect to sales growth.
We were the leading provider of prescription pharmaceuticals for treating 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 approximately 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: aripiprazole; atorvastatin; enalapril, including enalapril in combination with
hydrochlorothiazide; losartan, including the losartan-based combinations with amlodipine and hydrochlorothiazide; naproxen;
norfloxacin; olanzapine; pantoprazole; and valsartan, including all valsartan-based combinations with amlodipine and
hydrochlorothiazide.
We were the leading provider of generic medicines containing escitalopram; esomeprazole; duloxetine; ivabradine; clopidogrel;
perindopril, including all perindopril-based combinations with amlodipine and indapamide; ramipril; rosuvastatin; and telmisartan.
In Ukraine, also our key market, sales of pharmaceuticals stagnated over the past few years. In 2022, sales decreased
due to the extraordinary circumstances in the country. Sales amounted to €95.2, or 99% of 2021 sales total. We
strengthened our market position and ranked second among foreign providers of generic pharmaceuticals in the pharmacy
segment, holding a 3.4% market share. Prescription pharmaceuticals were the leading product group, recording the same
sales figure as in 2021, most notably: Co-Prenessa (perindopril/indapamide), Co-Amlessa
(perindopril/amlodipine/indapamide), Valsacor (valsartan), and Nolpaza (pantoprazole). Sales of non-prescription products
decreased by 16%. Herbion brand products, Nalgesin (naproxen), and Septolete Total (benzydamine/cetylpyridinium
chloride) achieved the highest sales. Sales of animal health products increased by 38% compared to 2021. Enroxil
(enrofloxacin), Milprazon (milbemycin/praziquantel), and Ecocid S generated the strongest sales.
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Krka Group market position in Ukraine (pharmacy segment)
We ranked second among foreign providers of generic medicines in the pharmacy segment, holding a 3.4% market share.
In 2022, we outperformed the entire market with respect to sales growth.
We were the leading provider of:
• Parenteral corticosteroids, accounting for approximately a 45% market share;
• Angiotensin II receptor antagonists, also in combinations, accounting for more than a 35% market share;
• Statins, accounting for more than a 35% market share;
• ACE inhibitors and ACE-based combinations with diuretics, accounting for approximately a 25% market share.
We were among the leading providers of:
• Proton pump inhibitors, accounting for more than a 15% market share;
• Antimicrobials (oral fluoroquinolones), accounting for more than a 10% market share.
We were the leading provider of medicines containing: atorvastatin; dexamethasone; enalapril in combination with
hydrochlorothiazide; ginkgo leaf extract; carvedilol; clarithromycin; losartan in combination with hydrochlorothiazide; naproxen;
pantoprazole; perindopril in combination with indapamide; rosuvastatin; simvastatin; and valsartan.
We were the leading provider of generic medicines containing betamethasone; enalapril; 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
€49.1 million, up 12%. Our product sales saw two-digit growth in Mongolia, Azerbaijan, and Armenia.
Sales in Belarus totalled €21.1 million, a 5% year-on-year increase. We increased our market share by above-average
growth dynamics in terms of value and volume, retaining second place among foreign providers of generic medicines.
Co-Amlessa (perindopril/amlodipine/indapamide), Nolpaza (pantoprazole), and Co-Prenessa (perindopril/indapamide)
accounted for the mass of prescription pharmaceuticals, our key product group. Of non-prescription products,
Septolete Total (benzydamine/cetylpyridinium chloride) and products marketed under the Herbion brand sold best. Sales
of our animal health products generated €0.9 million, with Trisulfon (sulfamonomethoxine/trimethoprim) recording the
strongest sales.
In Mongolia, we recorded sales totalling €14.7 million and 17% year-on-year growth, maintaining our position as the
leading foreign provider of medicines in the country. Growth of prescription pharmaceuticals was driven essentially by a
sharp rise in sales of cardiovascular agents and antibiotics. Nolpaza (pantoprazole), Zyllt (clopidogrel), Lorista (losartan),
Amlessa (perindopril/amlodipine), and Fromilid (clarithromycin) each recorded sales exceeding €1 million. Vamloset
(valsartan/amlodipine) and Emanera (esomeprazole) are our two new medicines, which recorded the most notable
increases in sales. Sales of non-prescription products were driven above all by Septolete Total
(benzydamine/cetylpyridinium chloride), products sold under the Herbion brand, and Nalgesin (naproxen).
In Azerbaijan, our product sales reached €7.5 million or 15% growth on 2021. By holding a 3% market share, we were
the leading generic manufacturer in the country. Sales of prescription pharmaceuticals, our leading product group, climbed
by 14%. Following several years of contraction, non-prescription products grew by 61%, accounting for 5% of overall sales.
Sales of animal health products totalled €0.2 million, similar to the year before.
Sales in Armenia totalled €5.8 million, a 32% year-on-year increase. Despite a high sales increase, the market share
declined to 3.5%, and we ranked second among providers of generic medicines. Prescription pharmaceuticals accounted
for 85% of sales, generated primarily by Co-Amlessa (perindopril/amlodipine/indapamide), Atoris (atorvastatin), and
Kaptopril (captopril). We recorded a 57% increase in sales of non-prescription products. Septolete Total
(benzydamine/cetylpyridinium chloride) and products marketed under the Herbion brand sold best.
Subregion East Europe K
Product sales in Kazakhstan, Moldova, and Kyrgyzstan were valued at €38.7 million, up 19% on 2021. We recorded
growth in all markets of the subregion.
Product sales in Kazakhstan totalled €20.2 million, up 27% on 2021. Prescription pharmaceuticals accounted for 66% of
sales. Nolpaza (pantoprazole), Ulcavis (bismuth), Valodip (valsartan/amlodipine), and Atoris (atorvastatin) generated the
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major part of total sales. Sales of non-prescription products amounted to €5.9 million, up 42%. Products sold under the
Herbion, Septolete, and Pikovit brands recorded the strongest sales. Animal health products generated €1 million in sales,
up 14%. Trisulfon (sulfamonomethoxine/trimethoprim) and Enroxil (enrofloxacin) sold best.
Product sales in Moldova generated €13.2 million, up 15% on 2021. We maintained a high market share and remained
the leading provider of prescription pharmaceuticals, accounting for 73% of overall country sales, up 9%. Valsacor
(valsartan), Lorista (losartan), and Roswera (rosuvastatin) generated the major proportion of sales total. Sales of non-
prescription products amounted to €3.3 million, up 38%. Septanazal (xylometazoline/dexpanthenol), Herbion brand
products, and Septolete Total (benzydamine/cetylpyridinium chloride) were sales leaders in the product group. Animal
health product sales generated €0.4 million, or 33% more than in 2021. We started marketing new products Dekenor
(dexketoprofen) tablets, Dulsevia (duloxetine), KontrDiar (nifuroxazide), and Rivaroxia (rivaroxaban).
We generated €5.3 million in product sales and recorded a 4% increase, winning us a 3.2% market share in Kyrgyzstan,
and placing us third among generic pharmaceutical providers. Prescription pharmaceuticals accounted for a major (72%)
share of total sales. Lorista (losartan), Atoris (atorvastatin), and Nolpaza (pantoprazole) generated the strongest sales.
Sales of our non-prescription products were driven by Septolete Total (benzydamine/cetylpyridinium chloride), and
products sold under the Herbion and Pikovit brands.
Subregion East Europe U
Our Subregion East Europe U, composed of Uzbekistan, Georgia, Tajikistan and Turkmenistan, generated €53.3 million
in product sales, up 26%. We recorded growth in all markets of the subregion.
Product sales in Uzbekistan totalled €39.5 million, up 27% on 2021. We ranked first among all providers of medicines in
the country and were the leading provider of medicines for treating cardiovascular diseases. Of our prescription
pharmaceuticals, Lorista (losartan), Amlessa (perindopril/amlodipine), Co-Amlessa (perindopril/amlodipine/indapamide),
and Valodip (valsartan/amlodipine) generated strongest sales. Of non-prescription products, Septolete Total
(benzydamine/cetylpyridinium chloride) and products marketed under the Pikovit brand sold best.
Our product sales totalled €8 million in Georgia, a 14% year-on-year increase. Our 4.5% market share ranked us fifth of
all providers of medicines in the country. Prescription pharmaceuticals were key in terms of sales; above all Lorista H and
Lorista HD (losartan/hydrochlorothiazide), Amlessa (perindopril/amlodipine), Co-Amlessa
(perindopril/amlodipine/indapamide), and Atoris (atorvastatin). Key non-prescription products were Herbion brand
products.
In Turkmenistan, product sales totalled €2.9 million, almost a 60% year-on-year increase. Nolpaza (pantoprazole) and
Amlessa (perindopril/amlodipine) from our leading product group of prescription pharmaceuticals, and non-prescription
products sold under the Pikovit and Herbion brands generated strongest sales.
In Tajikistan, sales totalled €2.9 million, a 30% year-on-year increase. 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.
Region Central Europe
Region Central Europe product sales totalled €364.2 million, up 4%. We recorded sales growth on all regional markets
except in Hungary. We recorded the highest, 16%, sales growth in terms of value and in relative terms in the Czech
Republic, amounting to €7.9 million.
In Poland, the largest regional market and our key market, product sales totalled €168.2 million, up 1% on 2021. We
attained a 2.1% market share and ranked third among foreign providers of generic medicines in the country.
Sales were driven by prescription pharmaceuticals, most notably pharmaceuticals from the reimbursement list. Our new
medicines placed on the market in the past years also contributed significantly to sales.
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We focused on medicines for treating cardiovascular diseases. We managed to retain sales at the same level as in 2021
despite colossal market pressures, remaining the leading provider of this product group. Valtricom
(valsartan/amlodipine/hydrochlorothiazide) was one of our most notable new medicines launched in recent years, and our
first generic medicine put on the reimbursement list in 2020. Sales increased by 59% compared to 2021. Another notable
agent was Co-Roswera (rosuvastatin/ezetimibe), whose sales more than doubled from 2021. Through sales of our lipid
lowering agents, notably Atoris (atorvastatin) and Roswera (rosuvastatin), we maintained the position of the leading
provider of medicines despite intense competition and price pressure. Owing to Doreta (tramadol/paracetamol), which
accounted for over a 55% market share, we were the leading provider of this combination for pain relief. We should also
mention more than a 15% increase in sales of central nervous system agents, where Dulsevia (duloxetine) was a
significant contributor, whose sales increased by 34%. 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.
Year-on-year sales of non-prescription medicines rose by 63%. Septolete brand products were our leading non-
prescription products. Septanazal (xylometazoline/dexpanthenol) followed by more than double year-on-year sales.
Animal health products generated €6.1 million in sales, up 2%. Sales of Milprazon (milbemycin/praziquantel), up 33%, and
Floron (florfenicol), down 18%, remained best-selling products.
Krka Group market position in Poland
We ranked third among foreign providers of generic medicines, holding a 2.1% market share.
We were the leading provider of:
• Angiotensin II receptor antagonists, also in combinations, accounting for approximately a 40% market share;
• Statins, including statin-based combinations with ezetimibe, accounting for approximately a 35% market share;
• SSRI and SNRI antidepressants, accounting for approximately a 15% market share.
We were among the leading providers of:
• Oral corticosteroids, accounting for more than a 20% market share;
• Sulphonamide antidiabetics, accounting for approximately a 20% market share;
• Antimicrobials (fluoroquinolones), accounting for more than a 15% market share;
• Aminosalicylates for bowel disease, accounting for approximately a 15% market share;
• Proton pump inhibitors, accounting for approximately a 15% market share;
• ACE inhibitors and ACE-based combinations, accounting for more than 10% market share;
• Antiparkinsonians, accounting for approximately a 10% market share.
We were the leading provider of medicines containing atorvastatin; celecoxib; duloxetine; esomeprazole; etoricoxib; candesartan,
including candesartan in combination with hydrochlorothiazide; lansoprazole; losartan, including losartan in combination with
hydrochlorothiazide; norfloxacin; rabeprazole; rosuvastatin; sulfasalazine; tramadol in combination with paracetamol; telmisartan in
combination with amlodipine; and valsartan, including valsartan in combination with hydrochlorothiazide; and valsartan in
combination with amlodipine and hydrochlorothiazide.
We were the leading provider of generic medicines containing gliclazide; ivabradine; and perindopril, including all perindopril-based
combinations with amlodipine and indapamide.
In the Czech Republic, one of our key markets, year-on-year sales increased by 16% to €55.8 million. We ranked fourth
among foreign providers of generic medicines, holding a 1.4% market share. Prescription pharmaceuticals remained the
leading product group, with Atoris (atorvastatin), Sorvasta (rosuvastatin), Lexaurin (bromazepam), Doreta
(tramadol/paracetamol), Asentra (sertraline), Tonanda (perindopril/amlodipine/indapamide), Nolpaza (pantoprazole),
Elicea (escitalopram), Pragiola (pregabalin), Tonarssa (perindopril/amlodipine), and Kventiax (quetiapine) recording
strongest sales.
Sales of non-prescription products jumped by 53%. In addition to Nalgesin S (naproxen), Septolete brand products and
Bisacodyl (bisacodyl) sold best. Sales of animal health products increased by 14%, with products sold under the Dehinel
and Fypryst brands at the forefront.
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Krka Group market position in the Czech Republic
We ranked fourth among foreign providers of generic medicines, holding a 1.4% market share.
In 2022, we outperformed the entire market with respect to sales growth.
We were among the leading providers of:
• Sulphonamide antidiabetics, accounting for more than a 30% market share;
• Anxiolytics, accounting for approximately a 30% market share;
• Angiotensin II receptor antagonists, also in 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 approximately a 20% market share;
• Mono-component products indicated for the treatment of benign hypertrophy of the prostate, accounting for approximately
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; atorvastatin; escitalopram; levocetirizine; olanzapine,
pantoprazole; perindopril, including all perindopril-based combinations with amlodipine and indapamide.
Hungary, another of our key markets, generated sales of €47.1 million, down 6% year on year, placing the country third
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), Emanera (esomeprazole), Valsacor (valsartan), Atoris (atorvastatin), and
Zyllt (clopidogrel).
Sales of non-prescription products generated €3.6 million, 5% growth compared to 2021. Bilobil (ginkgo leaf extract),
Septolete Extra (benzydamine/cetylpyridinium chloride), and Flebaven (diosmin) were the most important non-prescription
products. Our animal health product sales saw a decrease. Milprazon (milbemycin/praziquantel) and Fypryst brand
products generated the strongest sales.
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 more than 25%;
• Antiparkinsonians, accounting for more than a 15% market share.
We were among the leading providers of:
• Antimicrobials (oral fluoroquinolones), accounting for approximately a 25% market share;
• ACE inhibitors and ACE-based combinations with diuretics, accounting for approximately a 20% market share;
• Statins, accounting for more than a 15% market share;
• Proton pump inhibitors, accounting for more than a 15% market share;
• Cerebral and peripheral vasotherapeutics, accounting for approximately a 15% market share;
• Macrolide and pyranoside antibiotics, accounting for approximately a 15% market share;
• Sulphonamide antidiabetics, accounting for more than a 10% market share;
We were the leading provider of medicines containing amlodipine in combination with telmisartan; indapamide; ginkgo leaf extract;
clarithromycin; clopidogrel; losartan, including losartan in combination with hydrochlorothiazide; mirtazapine; pramipexole;
rasagiline; and valsartan, including valsartan in combination with hydrochlorothiazide.
We were the leading generic provider of medicines containing aripiprazole and gliclazide.
Slovakia, another key market, the fourth regional market in size, generated product sales of €40.5 million. Prescription
pharmaceuticals constituted the leading product group in terms of sales, most notably Nolpaza (pantoprazole), Co-
Prenessa (perindopril/indapamide), Atoris (atorvastatin), Co-Amlessa (perindopril/amlodipine/indapamide), Prenessa
(perindopril), and Amlessa (perindopril/amlodipine). Year on year, sales of non-prescription products went up by 32%.
Best-selling products were Nalgesin S (naproxen) and the Septolete brand products. Animal health products recorded
4% growth, and Enroxil (enrofloxacin) and Fypryst brand products recorded the strongest sales.
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Krka Group market position in Slovakia
We ranked fourth among all providers of generic pharmaceuticals, holding a 2.5% market share.
We were the leading provider of:
• Proton pump inhibitors, accounting for more than a 40% market share;
• Angiotensin II receptor antagonists, also in combination with diuretics, accounting for approximately a 40% market share;
• Antimicrobials (fluoroquinolones), accounting for approximately a 35% market share;
• Statins, accounting for more than a 30% market share;
• Antidementives, accounting for approximately a 30% market share.
We were among the leading providers of:
• ACE inhibitors and ACE-based combinations with diuretics, accounting for approximately a 25% market share;
• Anxiolytics, accounting for more than a 20% market share;
• Sulphonamide antidiabetics, accounting for more than a 20% 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 gliclazide and perindopril, including all perindopril-based
combinations with amlodipine and indapamide.
Sales in Lithuania totalled €25 million, up 16% on 2021. Prescription pharmaceuticals constituted the major part of overall
sales, above all Atoris (atorvastatin), Nolpaza (pantoprazole), Kaptopril Krka (captopril), Roswera (rosuvastatin), Escadra
(esomeprazole), and Ravalsyo (rosuvastatin/valsartan). Sales of non-prescription products jumped by 59%. Key products
were Septabene (benzydamine/cetylpyridinium chloride) and Nalgesin S (naproxen). Animal health product sales totalled
€1.5 million, the same as in 2021.
In Latvia, sales totalled €17 million in 2022, a 14% year-on-year increase. This strengthened our leading position among
providers of generic medicines in the country. As expected, prescription pharmaceuticals constituted the major part of
sales, above all Sorvasta (rosuvastatin), Nolpaza (pantoprazole), Prenewel (perindopril/indapamide), Atoris (atorvastatin),
and Co-Amlessa (perindopril/amlodipine/indapamide). Sales of non-prescription products generated €2.7 million, a 98%
year-on-year leap. Septanazal (xylometazoline/dexpanthenol) and Septabene (benzydamine/cetylpyridinium chloride)
were leading products in the segment. Animal health product sales decreased by 16%.
In Estonia, sales totalled €10.6 million, up 8% on 2021. Prescription pharmaceuticals again contributed most to total sales,
above all: Roswera (rosuvastatin), Co-Prenessa (perindopril/indapamide), Atoris (atorvastatin), Co-Dalnessa
(perindopril/amlodipine/indapamide), and Prenessa (perindopril). Sales of non-prescription products increased by 53%
compared to 2021. Septolete Omni (benzydamine/cetylpyridinium chloride) and products sold under the Herbion brand
remained the leading medicines of this product group. Animal health product sales went up by 4%.
Region West Europe
The markets of Region West Europe are collectively regarded as one of our key markets. Regional sales amounted to
€327.3 million in 2022, a 7% year-on-year increase. Germany, Scandinavia, France, and Italy led in terms of sales. Sales
through subsidiaries totalled €259.8 million, an 11% year-on-year increase. We generated 21% of regional sales through
unrelated parties.
The leading product group were prescription pharmaceuticals, recording sales of €280 million, up 6% on 2021, and 86%
of total regional sales. Medicines containing esomeprazole, valsartan, candesartan, losartan and pantoprazole were at the
forefront. We remained one of the leading sartan providers on the markets of Region West Europe.
Animal health products recorded a 7% increase, accounting for 11% of overall regional sales. Sales through related parties
grew by 23% in 2022, accounting for 58% of total sales of animal health products in Region West Europe. Of animal health
products, sales were driven by antiparasitic products, most notably a single-pill combination of milbemycin and
praziquantel in flavoured tablets. Medicines containing flubendazole and toltrazuril sold best of our products for farm
animals.
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Non-prescription products grew by 64%, composing 3% of total sales. Paracetamol-based products, Septolete brand
products, and diosmin-based products were best-selling non-prescription products.
We follow the activities in the region by our key market, Germany, and four subregional units: Europe – South;
Europe – Continental West; Scandinavia; Europe – West. We sell our products to other European countries that do not
fall into any of our categories through unrelated parties. Our sales in these markets increased by 37% to €11.5 million.
Germany remained our most important regional and key individual market. Country sales reached €88.6 million, up 10%
on 2021. Sales through our subsidiaries TAD Pharma and 123 Acurae amounted to €83.7 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 treating the central nervous system. We remained one of the leading sartan
providers in Germany. In 2022, we successfully launched antidiabetic agents from the gliptin product family, while
medicines containing candesartan, valsartan, ramipril, and pantoprazole recorded the highest sales.
Krka Group market position in Germany (pharmacy segment)
We ranked eighth among foreign providers of generic medicines in the pharmacy segment, holding a 1.6% market share.
In 2022, we outperformed the entire market with respect to sales growth.
We were among the leading providers of:
• Calcium channel blockers in combinations with adrenergic receptor beta blockers, accounting for approximately a 30% market
share;
• Angiotensin II receptor antagonists, also in combination with diuretics, accounting for approximately a 20% market share;
• Angiotensin II receptor antagonists, also in combination with calcium channel blockers, accounting for an approximately 20%
market share;
• ACE inhibitors and ACE-based combinations with calcium channel blockers, accounting for more than a 10% market share;
• Platelet aggregation inhibitors (ADP receptor antagonists), accounting for approximately a 10% market share;
• Proton pump inhibitors, accounting for approximately a 10% market share.
After the originator’s patent expired, we were the leading generic provider of gliptin-based products in the last quarter of the year,
holding a 10% market in terms of volume.
We were the leading provider of medicines containing enalapril; candesartan in combination with hydrochlorothiazide; losartan in
combination with hydrochlorothiazide; prasugrel; valsartan in combination with amlodipine and hydrochlorothiazide; and tramadol in
combination with paracetamol.
We were among the leading providers of medicines containing bisoprolol in combination with amlodipine; esomeprazole;
ivabradine; candesartan; carvedilol; losartan; olmesartan in combination with amlodipine and hydrochlorothiazide; pramipexole;
ramipril in combination with amlodipine; valsartan in combination with hydrochlorothiazide; and ziprasidone.
Subregion Europe – South
Subregion Europe – South comprises Italy, Portugal, and Spain. Subregional product sales totalled €79.8 million, a 4%
year-on-year increase. Products marketed under our own brand names accounted for 72% of total subregional sales.
In Italy, year-on-year sales value increased by 1% to €31.1 million. Products marketed under our own brand names
accounted for 70% of sales. We primarily increased sales of non-prescription products. The leading prescription
pharmaceuticals were products containing pantoprazole, clopidogrel, atorvastatin, gliclazide, and quetiapine.
In Portugal, sales totalled €27.7 million, a 20% year-on-year increase. Sales of products under our own brand names
went up by 16% and accounted for 75% of sales in the country. All product groups contributed to the rise. Prescription
pharmaceuticals recorded the highest absolute growth maintaining more than a 6% generic market share. Of leading
prescription pharmaceuticals, we should mention the single-pill combination of rosuvastatin and ezetimibe; esomeprazole;
olanzapine; and the single-pill combination of perindopril and indapamide.
In Spain, year-on-year sales in terms of value decreased by 7% to €21 million. Sales through our subsidiary decreased
by 2%. However, despite the drop, it accounted for a 4 percentage points increase in market share in the country compared
to the previous year. We increased sales of non-prescription products. Medicines containing donepezil, pramipexole,
galantamine, memantine, and dexamethasone generated the strongest sales.
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100
Subregion Europe – Continental West
France and the Benelux countries constitute our Subregion Europe – Continental West. The subregion recorded
€55.5 million in sales, a 1% year-on-year increase. The proportion of sales through our subsidiaries increased by 6%,
accounting for 49%.
Sales in France totalled €34.5 million, an 8% decrease on 2021. Sales through unrelated parties accounted for 66%. The
best-selling medicines contained esomeprazole, gliclazide, and a combination of milbemycin and praziquantel – an animal
health product. Sales through our subsidiary Krka France declined by 11% on 2021, primarily because of a medical
representative shortage resulting in inadequate presence in the field. The majority of sales was generated by prescription
pharmaceuticals, most notably those containing tadalafil; sildenafil; and emtricitabine in combination with tenofovir. In the
non-prescription product group, medicines containing paracetamol stood out and were the best-selling product of the
subsidiary also in 2022. We should also mention strong sales of antiparasitic agents from our animal health product range
for companion animals, in particular, the combination of milbemycin and praziquantel.
In the Benelux, sales amounted to €21 million, a 21% year-on-year rise. We should point out increased sales under our
product brands, which advanced by 24% compared to the year before. Agents containing valsartan; losartan; emtricitabine
in combination with tenofovir; and milbemycin in combination with praziquantel generated the strongest sales.
Subregion Scandinavia
In Scandinavia, sales climbed to €53.7 million. Our product sales were strongest in Sweden, followed by Finland, Norway,
Denmark, and Iceland. Sales through our subsidiaries Krka Sverige and Krka Finland increased by 6% and 19%,
respectively. Overall sales through subsidiaries reached 98%. Sales were driven by medicines containing esomeprazole,
losartan, venlafaxine, sertraline, and candesartan. In Norway, we retained the leading position of many medicines, above
all those containing esomeprazole, pantoprazole, and losartan. We were one of the leading generic manufacturers of
medicines containing venlafaxine, etoricoxib, and duloxetine in Finland; paracetamol and sertraline in Sweden; and
losartan and losartan in combination with hydrochlorothiazide in Denmark. Our product sales for the first time exceeded
€2 million in Iceland.
Subregion Europe – West
The United Kingdom, Ireland, and Austria constitute our Subregion Europe – West. The subregion recorded €38.2 million
in sales, a 6% year-on-year increase. The proportion of sales through our subsidiaries increased by 36%, accounting
for 95%.
Sales in the United Kingdom grew by 5% year on year, totalling €14.8 million. Best-selling products were the animal
health combination of milbemycin and praziquantel, and losartan. Sales through our subsidiary Krka UK saw a 123% year-
on-year increase.
In Ireland, we generated €12.7 million in product sales, outperforming 2021 sales by 9%. Sales through our subsidiary
Krka Pharma Dublin were up by 10%, accounting for 87% of total sales in-country. We were one of the leading providers
of generic medicines containing esomeprazole, tadalafil, venlafaxine, candesartan, valsartan, indapamide, and duloxetine.
In Austria, our sales grew by 3% to €10.8 million. Sales were driven by pharmaceuticals containing pregabalin, valsartan,
and duloxetine. The proportion of sales through our subsidiary Krka Pharma Wien grew by 3% and accounted for 95%.
Region Overseas Markets
Region Overseas Markets generated sales of €66.1 million, a 23% year-on-year rise. All four sales offices recorded sales
growth. Prescription pharmaceuticals were the key driver of the increase. We primarily marketed them under our own
brands, accounting for over 90% of total regional sales.
Year-on-year sales in the Middle East increased by 12% to €27 million, primarily due to increased sales to Iran, which
remained our largest regional market. We recorded the highest relative growth in Saudi Arabia, where we expect high
sales growth rates also in the future. We started marketing our products in Kuwait and successfully continued our sales
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101
from the launch in Bahrain at the end of 2020. In the Middle East, our best-selling products included: Asentra (sertraline),
Nolpaza (pantoprazole), Valsacor (valsartan), Zyllt (clopidogrel), and Yasnal (donepezil).
Product sales in the Far East and Africa markets totalled €24.6 million, up 13% on 2021. Best-selling pharmaceuticals
contained gliclazide; lansoprazole; tramadol in combination with paracetamol; doxazosin; and esomeprazole. In Vietnam,
which remained our largest individual market in the area and the third-largest regional market, sales increased by 22%.
We recorded the highest relative sales growth in the Philippines and Malaysia. We also started marketing our products
in Australia.
Our subsidiary in China generated product sales totalling €12.8 million, more than doubling the 2021 sales figure. Strong
sales of Palprostes (saw palmetto extract), the medicine made by our subsidiary TAD Pharma, continued. We also boosted
sales through our joint venture, Ningbo Krka Menovo, which successfully marketed our pregabalin-based product. We
launched pharmaceuticals containing losartan, atorvastatin, and rosuvastatin.
Our sales office in the Americas remained focused on the countries of Central America, where overall product sales
totalled €1.6 million, a 15% year-on-year increase. Valsaden (valsartan/hydrochlorothiazide), Valsacor (valsartan), Rawel
(indapamide), and Yasnal (donepezil) were our top-selling medicines.
Product* and service groups
31
* 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 2022, sales of prescription pharmaceuticals accounted for 81.4% of total sales, followed by non-prescription products
at 10.7%, animal health products at 5.4%, and health resort and tourist services at 2.5%.
Krka Group sales revenue increased by 10% in 2022. Sales of prescription pharmaceuticals increased by 6.6%, non-
prescription products by 32.6%, animal health products by 14.5%, and health resort and tourist services by 16.7%.
2022 Krka Group sales by product group
31
GRI 2-6
81.4%
10.7%
5.4%
2.5%
Prescription pharmaceuticals
Non-prescription products
Animal health products
Health resorts and tourist
services
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102
Krka Group and Krka sales by product and service group
€ thousand
Krka Group
Company
2022
2021
Index
2022/21
2022
2021
Index
2022/21
Human health products
1,572,949
1,442,566
109
1,267,805
1,135,800
112
– Prescription pharmaceuticals
1,390,972
1,305,316
107
1,104,323
1,017,273
109
– Non-prescription products
181,977
137,250
133
163,482
118,527
138
Animal health products
93,041
81,257
115
88,270
75,694
117
Health resorts and tourist services
42,552
36,465
117
Total
1,708,542
1,560,288
110
1,356,075
1,211,494
112
Quarterly sales by product and service group (Krka Group)
€ thousand
2022
2021
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Human health products
400,342
386,472
348,348
437,787
368,010
380,236
334,098
360,222
– Prescription pharmaceuticals
353,099
356,073
303,471
378,329
340,921
348,208
298,556
317,631
– Non-prescription products
47,243
30,399
44,877
59,458
27,089
32,028
35,542
42,591
Animal health products
21,930
25,278
22,174
23,659
21,656
23,304
19,619
16,678
Health resorts and tourist
services
8,376
11,042
12,569
10,565
4,857
8,483
13,029
10,096
Total
430,648
422,792
383,091
472,011
394,523
412,023
366,746
386,996
2022 sales of leading products*
* Sales of leading products are presented by the leading active ingredient. Also included are combination medicines that incorporate this active
ingredient.
24
30
31
33
33
34
35
46
53
72
77
84
119
167
178
0 20 40 60 80 100 120 140 160 180
milbemycin ± praziquantel (MILPRAZON)
telmisartan ± hydrochlorothiazide ± amlodipine (TOLURA*)
candesartan ± hydrochlorothiazide ± amlodipine (KARBIS*)
HERBION
tramadol ± paracetamol (DORETA*)
enalapril ± hydrochlorothiazide ± lercanidipine (ENAP)
naproxen (NALGESIN*)
SEPTOLETE
esomeprazole (EMANERA*)
atorvastatin ± amlodipine (ATORIS)
rosuvastatin ± ezetimibe (ROSWERA*)
pantoprazole (NOLPAZA*)
losartan ± hydrochlorothiazide ± amlodipine (LORISTA*)
valsartan ± hydrochlorothiazide ± amlodipine ± rosuvastatin (VALSACOR)
perindopril ± indapamide ± amlodipine ± rosuvastatin (PRENESSA*)
€ million
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103
New products
In 2022, sales of new products, i.e. products launched in individual markets in the past five years, accounted for 23% of
Krka Group overall sales, or 1 percentage point down on the year before.
In 2022, the following new products were key in terms of absolute sales growth: Co-Roswera* (rosuvastatin/ezetimibe),
first marketed in 2019; Maymetsi (sitagliptin/metformin) and Lenabdor* (lenalidomide), two medicines first marketed
in 2022; and Valtricom* (valsartan/amlodipine/hydrochlorothiazide), first marketed in 2018. One of the new products that
recorded the highest sales increase in 2022 was the animal health product Selehold* (selamectin), first marketed in 2019.
In 2022, 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.
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 2022
Prescription pharmaceuticals
Antidiabetics
Maysiglu* (sitagliptin)
Maymetsi* (sitagliptin/metformin)
Vimetso* (vildagliptin/metformin)
Central nervous system
Lacosabil* (lacosamide)
Oncology
Lenabdor* (lenalidomide)
Abiratel* (abiraterone)
Sunitad* (sunitinib)
Bortezomib Krka (bortezomib)
Animal health products
Antimicrobials for companion animals
Cladaxxa (amoxicillin/clavulanic acid)
Prescription pharmaceuticals
In 2022, Krka Group sales of prescription pharmaceuticals amounted to €1,391.0 million, up 6.6% year on year. The
Russian Federation, Germany and Uzbekistan contributed the most to growth. Our established prescription
pharmaceuticals from key therapeutic areas generated healthy sales, achieving considerable market shares.
29
33
26
25
23
0
5
10
15
20
25
30
35
2018 2019 2020 2021 2022
%
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104
Top-ranking 2022 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 we have a long-standing presence. We have been managing sales in most markets of Region West Europe through
our network. We use it for communicating with the expert community, especially physicians and pharmacists.
Prescription pharmaceuticals sales by 10 major markets
2022 prescription pharmaceuticals sales by therapeutic class
0
25
50
75
100
125
150
0
50
100
150
200
250
300
Russian Federation
Poland
Germany
Ukraine
Romania
Scandinavia
Czech Republic
Slovenia
Hungary
Slovakia
Index
€ million
2018 2019 2020 2021 2022 Index 2022/21
56.4%
12.4%
11.9%
5.7%
3.6%
2.1%
7.9%
Cardiovascular system
Central nervous system
Gastrointestinal tract
Pain relief
Antiinfectives for systemic
use
Systemic hormonal
preparations
Other
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105
Cardiovascular system
Sartans (angiotensin II receptor antagonists)
2022 highlights
• For several consecutive years, we have been the leading producer of sartans in Regions Slovenia, Central, East, and South-
East Europe. We held more than a 30% market share there last year.
• Krka made almost one in three sartans prescribed in that region.
• We sold almost 4 billion sartan and sartan-based combination tablets.
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*)
Valsartan is our most important sartan. Valsartan-based products placed second in terms of 2022 sales of all our products.
We sold more than 1.3 billion valsartan-based tablets. This product group consists of five medicines: Valsacor* (valsartan);
Valsacombi* (valsartan/hydrochlorothiazide); Wamlox* (valsartan/amlodipine); Valtricom*
(valsartan/amlodipine/hydrochlorothiazide); and Valarox* (valsartan/rosuvastatin). We are the leading generic producer of
valsartan-based varieties in Regions Slovenia, Central, East, and South-East Europe, holding more than a 40% market
share. Nearly two out of three patients on valsartan therapy in the said area are treated by a medicine made by Krka,
adding up to 4 million patients. We are the leading producer of all valsartan products in Poland, the Russian Federation,
and several other countries. Wamlox* and Valtricom* are the leading single-pill combinations of that kind in Regions
Slovenia, Central, East, and South-East Europe, accounting for more than a 40% market share. We are one of the leading
generic producers of the two single-pill combinations in Germany and the only provider of the triple combination in certain
other countries. We started marketing Valtricom* in Bosnia and Herzegovina in 2022, and as the first generic manufacturer
in Azerbaijan and Kazakhstan. Valarox* is indicated for treating lipitension, and was the only single-pill combination of a
sartan and a statin in Europe in 2022.
Losartan is our second most important sartan. Losartan-based products placed third in terms of 2022 sales of all our
products. We sold more than 1.6 billion losartan-based tablets. This product group is composed of Lorista* (losartan);
Lorista H* (losartan/hydrochlorothiazide); and Tenloris* (losartan/amlodipine). Year-on-year sales of said products
increased by more than 15%, placing them among our leading products in terms of absolute sales growth. We remained
the leading producer of losartan-based medicines in Regions Slovenia, Central, East, and South-East Europe, holding
more than a 55% market share. Lorista* and losartan-based combinations were the leaders among all sartans in the
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106
Russian Federation, Uzbekistan, and certain other markets of Region East Europe. We successfully market losartan in
Region West Europe. We are the leading generic manufacturer of losartan-based varieties in Germany, and the only
provider of losartan/amlodipine single-pill combination. We were among the leading generic producers of losartan in
Europe in 2022. We also started marketing it through our subsidiary in China.
Candesartan ranked third among our sartans as regards sales. We market Karbis* (candesartan), Karbicombi*
(candesartan/hydrochlorothiazide), and Camlocor* (candesartan/amlodipine). We recorded the strongest sales of
candesartan in Region West Europe. We were among the leading generic producers of candesartan and candesartan-
based varieties in Germany. We surpassed all competitors in Poland and Lithuania.
Telmisartan-based products, which include Tolura* (telmisartan); Tolucombi* (telmisartan/hydrochlorothiazide); and
Teldipin* (telmisartan/amlodipine), recorded highest sales increase of all our sartans. Our market share in Regions
Slovenia, Central, East, and South-East Europe increased, reaching almost 20%, and we were the leading producer of all
telmisartan-based products in the area. Our market share in Croatia, Slovenia, and Latvia exceeds 40%. We started
marketing all three medicines in Uzbekistan in 2022.
We recorded the strongest sales of olmesartan and olmesartan-based combinations in Region West Europe. We remained
one of the leading generic producers of olmesartan in Germany. We started marketing it in Saudi Arabia and made
olmesartan/amlodipine and olmesartan/amlodipine/hydrochlorothiazide single-pill combinations available in Greece.
Angiotensin-converting enzyme (ACE) inhibitors
2022 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 tablets containing perindopril.
Angiotensin-converting enzyme inhibitors and ACE combinations
• We market 14 medicines from the ACE-inhibitor class based on five different angiotensin-converting enzyme inhibitors.
• Our marketing portfolio comprises three 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. We are
the only producer in Europe that markets triple combinations of perindopril/amlodipine/rosuvastatin and
perindopril/indapamide/rosuvastatin.
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*)
cilazapril (Cazaprol)
captopril (Blocordil*)
In 2022, medicines containing perindopril were among our leading products in terms of sales. They ranked first in terms of
absolute sales growth. We sold more than 1.5 billion medicines. We are a generic pharmaceutical company with the most
comprehensive perindopril-based product range in Europe. 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
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107
Roxampex* are used to treat lipitension, coexisting hypertension and hyperlipidemia. They combine three active
ingredients in a single pill: two antihypertensives and a statin. We started marketing Roxiper* and Roxampex* in new
markets in 2022: the perindopril/indapamide/rosuvastatin single-pill combination in North Macedonia, Belarus, and Croatia,
and the perindopril/indapamide/rosuvastatin single-pill combination in the Russian Federation. We remained the only
provider of the two triple combinations in Europe. Our perindopril-based products accounted for an almost 15% market
share, making us the leading generic producer of angiotensin-converting enzyme (ACE) inhibitors in Regions Slovenia,
Central, East, and South-East Europe. Also, in 2022, we were the leading generic producer of perindopril in Europe.
Even though promotion focused primarily on our new angiotensin-converting enzyme inhibitors, Enap (enalapril) and
enalapril-based combinations remained among our top ten products in terms of sales. In Regions Slovenia, Central, East,
and South-East Europe, we held more than a 30% market share and were the leading producer of enalapril-based
medicines. We ranked among the leading manufacturers of those products in Germany.
Other antihypertensives
Angiotensin-converting enzyme inhibitors and sartans were our two most important groups of antihypertensives also
in 2022. Our product portfolio also included 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 a single-pill combination Sobycombi* (bisoprolol/amlodipine). Altogether, we supplied more
than 40 antihypertensives in more than 150 strengths. In 2022, we started marketing metoprolol in Greece.
Statins and other hypolipemics
2022 highlights
• As in previous years, we remained the leading generic producer of hypolipemics in Regions Slovenia, Central, East, and
South-East Europe.
• We recorded the highest sales increase of all competitors in the area in 2022.
• The leading statins in the area were Atoris* (atorvastatin) and Roswera* (rosuvastatin).
Hypolipemics and single-pill combinations
• We market 11 medicines based on four different statins and ezetimibe.
• The portfolio consists of single-pill combinations of statins and ezetimibe and single-pill combinations of a statin and an
antihypertensive.
• We market the broadest range of atorvastatin strengths and remain the only producer 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/amlodipine
(Atordapin*)
simvastatin (Vasilip)
ezetimibe/simvastatin
(Ezesimin*)
pitavastatin (Pitavador*)
ezetimibe (Ezoleta*)
rosuvastatin/ezetimibe
(Co-Roswera*)
ezetimibe/simvastatin
(Ezesimin*)
Roswera* (rosuvastatin) was our most important statin in 2022 and also one of our top five products in terms of sales. Its
sales increased by more than 15% in 2022, ranking it also in terms of absolute growth among our leading products. In
Regions Slovenia, Central, East, and South-East Europe, it accounted for more than a 20% market share and remained
the leading generic rosuvastatin in terms of sales value. Only our Atoris* of all statins placed higher. Roswera* recorded
the highest absolute sales growth of all competitors in the area. We also started promoting rosuvastatin through our
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subsidiary in China. Our rosuvastatin range also comprises Co-Roswera* (rosuvastatin/ezetimibe), which we started
marketing in five new markets, including, among others, the Russian Federation, Serbia, and Azerbaijan.
Our second most important statin is Atoris* (atorvastatin), one of our top ten leading products in terms of 2022 sales. It is
one of our five products that in 2022 surpassed the milestone of 1 billion tablets sold. Like the year before, Atoris* remained
the leading statin in Regions Slovenia, Central, East, and South-East Europe. Its market share accounted for more than
20% of all statins in Slovakia, Lithuania, Latvia, and certain other markets. We market six atorvastatin strengths and are
the only provider of 30 mg and 60 mg tablets in many countries. We also started marketing atorvastatin through our
subsidiary in China.
In addition to statins, we also market a hypolipemic agent Ezoleta* (ezetimibe), which has a different mechanism of action.
In Slovenia, Serbia, and the Baltic states, it remained the leading ezetimibe-based product in 2022. We also started
marketing it in Vietnam and the United Arab Emirates then.
Statins are also incorporated in our single-pill combination medicines. This product group included two single-pill
combinations of hypolipemics and ezetimibe, Co-Roswera* and Ezesimin* (ezetimibe/simvastatin), and several single-pill
combinations for the treatment of lipitension containing agents for the treatment of hyperlipidemia and hypertension. Our
lipitension medicines included: Valarox* (valsartan/rosuvastatin), a single-pill combination of statin and sartan; and two
single-pill combinations of statin and perindopril: Roxiper* (perindopril/indapamide/rosuvastatin); and Roxampex
(perindopril/amlodipine/rosuvastatin).
Other cardiovascular agents
In addition to antihypertensives and hypolipemics, we also market Bravadin* (ivabradine) indicated for treating stable
angina pectoris and chronic heart failure and Apleria* (eplerenone) classified as a diuretic, which is also indicated for
treating chronic heart failure. Bravadin* held more than a 20% market share and was the leading generic variety of
ivabradine in Regions Slovenia, Central, East, and South-East Europe, and one of the leading generic ivabradine-based
medicines in Germany. We were the only provider of eplerenone in Lithuania and Estonia.
Central nervous system
Antidepressants
2022 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.
• We were the leading producer of antidepressants in Slovenia and Estonia, and one of the leading generic producers in the
Czech Republic, Slovakia, Croatia, and the Russian Federation.
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) was among our most important antidepressants. It is indicated for the treatment of depression and
is available in 30 mg and 60 mg capsules. We are the only producer in Croatia, the Czech Republic, and several other
countries that makes duloxetine available also in 90 mg strength. Dulsevia* reached more than a 60% share in Romania,
Lithuania, and Slovakia in 2022. We record strong sales in the markets of Region West Europe. We were one of the
leading generic producers of duloxetine in Germany and surpassed all competitors in Ireland and Austria. In 2022, we
started marketing it in Moldova. Dulsevia* was the leading medicine containing duloxetine in Regions Slovenia, Central,
East, and South-East Europe. Its market share increased to more than 35% in 2022, further strengthening its position.
Elicea* (escitalopram) recorded the highest, almost 50%, sales growth of all our antidepressants in 2022. In Regions
Slovenia, Central, East, and South-East Europe, its market share increased, strengthening its position as the leading
generic escitalopram variety. In the said area, our antidepressants Asentra* (sertraline) and Lamegom* (agomelatine)
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were the leading generic varieties, while Mirzaten (mirtazapine) surpassed all competing products. We record strong sales
also in Germany, where we are one of the leading generic producers of mirtazapine. Our antidepressant range is
supplemented by Alventa* (venlafaxine). In Romania, Kazakhstan, Ireland, and several other markets, it was the leading
venlafaxine-containing antidepressant.
Antipsychotics
2022 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 top-selling medicines from this class.
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. In Regions Slovenia, Central, East, and South-East Europe, it held nearly a 15% market share and was the
leading quetiapine. The product accounted for more than a 45% market share in Latvia, Slovenia, and Slovakia. We are
the leading producer of all quetiapine prolonged-release tablets in the Russian Federation. In 2022, we started marketing
Kventiax* in Belarus.
Aryzalera* (aripiprazole), our second most important antipsychotic, was the leading generic variety in that area, whereas
our Zalasta* (olanzapine) also placed among the leading generic varieties. Aryzalera* and Zalasta* accounted for more
than a 40% market share and surpassed all competing products in the Russian Federation. We were the leading producer
of all olanzapine products in Portugal. Sales of Aryzalera* increased by more than 30% in 2022, contributing the most in
absolute terms to the increase in our antipsychotic sales.
Parnido* (paliperidone), one of our new antipsychotics, was the only generic variety of paliperidone in tablets in Region
West Europe and certain other markets. In 2022, we remained the leading generic producer of paliperidone in that
pharmaceutical form in Europe. Zypsilan* (ziprasidone) is also one of the leading generic varieties 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). We were one of the leading generic producers of this product group in Regions
Slovenia, Central, East, and South-East Europe. We achieved more than a 15% market share in Hungary, surpassing all
competitors. Our products were the leading generic varieties in Poland and Lithuania.
We recorded the highest sales of anti-Parkinson agents in Region West Europe, where we were one of the leading
pramipexole producers in Germany, and the leading producer of generic varieties of pramipexole and ropinirole in Spain.
Our products from this group are the leading generic varieties in Regions Slovenia, Central, East, and South-East Europe.
We are the leading producer of all rasagiline products in Hungary. Rolpryna SR* was the leading ropinirole in Poland,
Slovakia, Romania, and several other markets.
Anti-Alzheimer agents
Four oral agents are used to treat Alzheimer’s disease; all four are also part of our product portfolio. We market Yasnal*
(donepezil), Marixino* (memantine), Galsyo* (galantamine), and Nimvastid (rivastigmine). They are available as tablets
and capsules. Yasnal* and Nimvastid are also available as orodispersible tablets. We were the only producer of
rivastigmine in that pharmaceutical form in Regions Slovenia, Central, East, and South-East Europe. In 2022, we were
among the leading generic producers of medicines for the treatment of Alzheimer’s disease in the region. We record robust
sales in Slovenia, where we are the leading generic producer, and in Slovakia, where we outperformed all manufacturers.
We increased our market shares in the two markets in 2022 and were the top supplier of donepezil and galantamine. We
were the leading producer of memantine in Slovenia and Lithuania.
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Other central nervous system agents
In 2022, we started marketing Lacosabil* (lacosamide) indicated for various types of epilepsy. We started marketing it in
Germany, Spain, Italy, Ireland, and the Scandinavian countries. We were among the leading generic manufacturers of
lacosamide in Germany, and the only generic producer in Ireland. Pragiola* (pregabalin), also from the antiepileptic group,
is indicated primarily for neuropathic pain therapy.
Gastrointestinal tract
Proton pump inhibitors
2022 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.
• We increased our sales most notably of all competitors, reaching an almost 18% market share.
• Nolpaza (pantoprazole) was the leading proton pump inhibitor in the area.
• We ranked among the leading generic producers of esomeprazole in Europe.
Proton pump inhibitors
• We have been marketing proton pump inhibitors for more than 30 years.
• Our proton pump inhibitors are available in more than 60 countries worldwide.
pantoprazole (Nolpaza*)
rabeprazole (Gelbra*)
esomeprazole (Emanera*)
omeprazole (Ultop)
lansoprazole (Lanzul*)
Nolpaza* (pantoprazole) was the leading proton pump inhibitor, accounting for more than a 12% market share in Regions
Slovenia, Central, East, and South-East Europe. It was our most important proton pump inhibitor and ranked among our
top five products in terms of sales. In 2022, we sold more than 1 billion tablets of Nolpaza*, almost 100 million more than
the year before. The medicine accounted for more than 70% of pantoprazole-based products in the Russian Federation,
Lithuania, and Uzbekistan. Nolpaza was the leading pantoprazole-based product in those and many other countries. It
accounted for more than one-third of all proton pump inhibitors in Slovenia, Serbia, and Slovakia, and was the leading
medicine of that group in more than ten countries. Our pantoprazole was available as a non-prescription product in a few
markets.
Emanera* (esomeprazole), our second most important proton pump inhibitor, ranked among our top ten products in terms
of sales. It was the leading esomeprazole-based medicine in Poland, Czech Republic, Ireland, and many other countries,
holding more than a 50% market share in seven markets. We record strong sales in the Region West Europe. It is the
leading proton pump inhibitor in Ireland, and one of the leading generic esomeprazole varieties in Germany. Like the year
before, we were among the leading generic producers of esomeprazole in Europe also in 2022. Our esomeprazole was
available as a non-prescription product in a few markets.
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 indicated for the removal of Helicobacter pylori bacteria. It was the leading generic variety in Regions Slovenia, Central,
East, and South-East Europe, and the only bismuth-based medicine in many markets of Regions Central and South-East
Europe. It is also marketed as a non-prescription product.
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Pain relief
2022 highlights
• We were among the leading generic producers of the tramadol/paracetamol combination in Europe.
• Nalgesin* (naproxen) was the leading naproxen-based analgesic in Regions Slovenia, Central, East, and South-East Europe.
Pain relief
• We have a broad range of medications for relieving various types and intensities of pain.
• In 2022, we started marketing Doreta* (tramadol/paracetamol) dispersible tablets.
• 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*)
Doreta* (tramadol/paracetamol) is our most important analgesic. We market two strengths of Doreta*. In Hungary and
Bulgaria, we are the only provider of the tramadol/paracetamol 75 mg/650 mg combination. We were the only producer in
Europe that put prolonged-release tablets on the market in 2021, and we added to our range dispersible tablets in 2022.
We were the only producer that made them available in Poland and Slovakia. We further strengthened the position of
Doreta* as the leading tramadol/paracetamol combination in 2022 in Regions Slovenia, Central, East, and South-East
Europe. Year-on-year market share further increased, exceeding 50%. We also record strong sales in the Region West
Europe, and are the leading producer of tramadol/paracetamol combination in Germany. We put Doreta* on a new market,
Lithuania, as the only provider of that single-pill combination.
Nalgesin* (naproxen) is our second most important analgesic. It is a non-steroidal anti-inflammatory and antirheumatic
medicine (NSAID). In Regions Slovenia, Central, East, and South-East Europe, Nalgesin* was the leading naproxen-based
medicine, accounting for over a 60% market share, which we further increased in 2022. This was the leading non-steroidal
anti-inflammatory and antirheumatic medicine in Slovenia, and ranked among the leading ones in Croatia and Slovakia.
We increased Nalgesin* sales by more than 35% in 2022, and the medicine ranked among our top ten products. It is also
marketed as a non-prescription product.
Naklofen Duo* (diclofenac) and Dekenor (dexketoprofen), and two analgesics from the coxib sub-class, Roticox*
(etoricoxib) and Aclexa* (celecoxib), are also our non-steroidal anti-inflammatory and antirheumatic medicines. Our two
coxibs are the leading generic varieties in their respective product groups in Regions Slovenia, Central, East, and South-
East Europe. The market share of Roticox* further increased in 2022. It ranked first among all competing products in
Poland, Hungary and several other countries and was one of the leading generic varieties in Germany. In 2022, we started
marketing it in Azerbaijan.
Our two agents, an antidepressant Dulsevia* (duloxetine) and an antiepileptic agent Pragiola* (pregabalin), are often used
in neuropathic pain therapy. Pragiola* was the leading generic pregabalin variety in Slovenia, Austria, Moldova, and
Slovakia, while in Estonia it was the foremost of all pregabalin products, capturing a more than 50% market share. We
started marketing Pragiola* in new strengths in Poland and Estonia in 2022.
Algominal (metamizole) and Adolax* (oxycodone/naloxone) supplement our analgesic range.
Antidiabetics
We started marketing two new modern antidiabetic agents, Maysiglu* (sitagliptin) and a single-pill combination Maymetsi*
(sitagliptin/metformin). Sitagliptin is a dipeptidyl peptidase-4 (DPP-4) inhibitor. These state-of-the-art agents can be used
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in the earliest stages of diabetes either independently or in combination with other agents. Their safety profile is excellent;
they do not cause hypoglycemia, impact body weight, or increase the risk of urinary tract infections like agents from certain
other product groups. We started marketing the two agents as one of the first generic producers in Europe in more than 20
countries, including Germany, the Russian Federation, Poland, and Romania.
This product group also comprises Glypvilo* (vildagliptin), and Vimetso* (vildagliptin/metformin), a single-pill combination
added to the portfolio in 2022. We were among the first generic manufacturers to launch it in Hungary, Poland, Slovakia,
Germany, Spain and several other markets. We also extended the marketing of Glypvilo* to Poland, the Czech Republic,
Germany, etc.
Gliclada* (gliclazide), an antidiabetic agent from the group of sulphonylureas, retained the position of the leading generic
variety of gliclazide. It was the only agent of its kind available in three strengths in 2022 in Regions Slovenia, Central, East,
and South-East, where we are the leading generic producer of sulphonylureas. We also started marketing gliclazide in the
United Kingdom in 2022.
Blood and blood-forming organs
Zyllt* (clopidogrel), an antiaggregant, is our most important medicine from the product group for treating diseases of blood
and blood-forming organs. We marketed it in more than 40 countries in 2022. It was the leading generic variety of
clopidogrel in several markets, and the top-performer of all clopidogrel products in Hungary and Kyrgyzstan, holding an
over 40% market share. It also placed first in Uzbekistan. Zyllt* was the leading generic variety of clopidogrel in Regions
Slovenia, Central, East, and South-East Europe, and its market share saw a further increase in 2022.
Eliskardia* (prasugrel), which we started marketing in 2019, and Atixarso (ticagrelor), which we started marketing
in 2021, are our new antiaggregant agents. Eliskardia* was the leading generic variety of prasugrel in Slovenia. It ranked
first among all prasugrel products in Germany and Slovakia.
Xerdoxo (rivaroxaban) is one of the most advanced anticoagulants, which we started marketing in 2020 as one of the first
generic producers in Europe. In 2022, we put it on the markets of Moldova, Montenegro, and Kosovo.
Antiinfectives for systemic use
Our portfolio of antibiotics comprises medicines from various classes: macrolides, β-lactam antibiotics, fluoroquinolones,
and other antibiotics. Also, in 2022, like many years before, we remained the leading producer of fluoroquinolones and
were one of the leading producers of macrolide antibiotics in Regions Slovenia, Central, East, and South-East Europe.
Fromilid (clarithromycin) is our most important macrolide antibiotic. It has been the leading generic variety of clarithromycin
in the area. A fluoroquinolone Moloxin* (moxifloxacin) has been the leading generic variety of moxifloxacin for years.
Ciprinol (ciprofloxacin) and Nolicin (norfloxacin) are from the same product group and outperformed all competing
products. We also market a fluoroquinolone Levalox* (levofloxacin) and Azibiot (azithromycin) from the macrolide class.
Our range of β-lactam antibiotics comprises Furocef* (cefuroxime) and Betaklav* (amoxicillin/clavulanic acid).
We market four medicines for the treatment of HIV infection: Emtenovo* (emtricitabine/tenofovir); Efavemten*
(efavirenz/emtricitabine/tenofovir); Darunasta* (darunavir); and Atazam* (atazanavir). We were one of the leading generic
producers of the emtricitabine/tenofovir and efavirenz/emtricitabine/tenofovir combinations in Germany in 2022.
Urologicals
Our range of medicines indicated for benign prostatic hyperplasia includes Tanyz* and Tanyz* ERAS (tamsulosin),
Dutrys* (dutasteride), and Finpros* (finasteride), Sidarso* (silodosin), and Tadusta* (dutasteride/tamsulosin). The latter
two are our newest products. Vizarsin* (sildenafil), Tadilecto* (tadalafil), and Viavardis* (vardenafil) compose our range
of medicines for erectile dysfunction. Asolfena* (solifenacin) and Loxentia* (duloxetine) are indicated for treating urinary
incontinence. We were one of the leading generic producers of the dutasteride/tamsulosin single-pill combination in
Regions Slovenia, Central, East, and South-East Europe, and the leading generic producer of vardenafil. We were one of
the leading generic producers of silodosin and dutasteride in Germany, while in Ireland and Austria we outperformed all
producers of duloxetine. We ranked among the leading generic producers in individual markets also with other medicines
for the treatment of diseases of the urinary tract.
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Oncology
Over the past several years, we started marketing 12 oncology agents, adding another four to the range in 2022:
Lenabdor* (lenalidomide), Abiratel* (abiraterone), Sunitad* (sunitinib), and Bortezomib Krka (bortezomib).
Lenabdor* is indicated for multiple myeloma in cancer patients. In 2022, we launched it as the first generic producer in
Germany, Italy, Poland and other countries, altogether 13. It was one of the leading lenalidomide products in Germany,
the Russian Federation, Poland and several other countries.
Abiratel* is indicated for treating metastatic prostate cancer. We started marketing it among the first generic producers in
Germany, France, Spain and ten other markets. In Germany, Finland, and Slovakia, we ranked among the leading generic
providers of abiraterone.
We started marketing Sunitad* in eight countries, including Germany, France, and Slovenia. It is primarily indicated for
treating metastatic renal cell carcinoma and gastrointestinal stromal tumours. It ranked among the leading generic varieties
of sunitinib in Germany, Finland, and Slovenia.
Bortezomib Krka powder for solution for injection is indicated for treating patients with multiple myeloma. We made it
available in Ireland, Scandinavia and the Benelux.
In 2022, we extended the marketing of oncology agents as well. We started marketing Everofin* (everolimus) in Austria,
France, the Czech Republic, Slovakia, and Hungary, and Dasatinib Krka* (dasatinib) in Romania. We were one of the
leading generic producers of dasatinib in Germany and Finland, and the only generic provider of dasatinib in Slovenia and
Slovakia. Everofin* was among the leading everolimus products in the Czech Republic, Sweden, and certain other markets.
Meaxin* (imatinib), was one of the leading generic varieties in Poland, Bulgaria, etc., the leading generic variety in
Slovenia, while it was the leading of all imatinib products in Bosnia and Herzegovina.
Our oncology portfolio was supplemented by Gefitinib Krka (gefitinib), Ecansya* (capecitabine), Lortanda* (letrozole);
Escepran* (exemestane), etc.
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 is available in
tablets and as a solution for injection. We were the only provider of 20 mg and 40 mg dexamethasone tablets in Germany,
Spain, Austria, and many other markets. In these markets and throughout in Regions Slovenia, Central, East, and South-
East Europe, we remained the leading producer of dexamethasone in 2022.
Non-prescription products
In 2022, Krka Group sales of non-prescription products totalled €182.0 million, a 32.6% year-on-year increase. The
Russian Federation, Romania, and Poland recorded the strongest sales growth. Common cold and flu incidence increased
because COVID-19 pandemic restrictions were lifted, driving demand for cough and cold products, 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
2022 non-prescription product sales by therapeutic class
Sales of cough and cold products rose sharply in 2022 because COVID-19 pandemic restrictions were lifted. This product
group also comprises Septolete, our leading non-prescription product brand in 2022. Septolete is one of our top ten
products in terms of sales. In terms of absolute sales growth, the product ranked second of all our products, and its sales
increased by over 60% in 2022. Septolete Total* (benzydamine/cetylpyridinium chloride) spray and lozenges accounted
for the most substantial part of the Septolete brand. We market eucalyptus, elder-and-lemon, and honey-and-lemon
flavoured lozenges. It was the best-selling non-prescription product with effect on pharynx in Slovenia, Lithuania, Belarus,
and Uzbekistan in 2022. We started marketing it in Iceland and made the spray available in Germany.
Herbion*, our second most important non-prescription product brand, also belongs to the cough-and-cold product group.
It is one of our top 15 products in terms of sales. Its sales climbed by more than 50% year on year. Herbion was one of
0
25
50
75
100
125
150
175
0
10
20
30
40
50
60
70
Russian Federation
Slovenia
Ukraine
Uzbekistan
Romania
Kazahstan
Poland
Slovakia
Belarus
Croatia
Index
€ million
2018 2019 2020 2021 2022 Index 2022/21
51.0%
18.6%
10.5%
6.8%
6.4%
3.1%
3.6%
Cough and cold
Analgetics
Vitamins and minerals
Gastrointestinal tract and
metabolism
Cerebral and peripheral
circulation
Vasoprotectives
Other
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our leading products in terms of absolute sales growth. The brand includes herbal cough syrups for various types of cough.
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. The brand remained one of the three leading cough-and-cold product brands in Regions Slovenia, Central, East,
and South-East Europe. It remained the leading natural syrup in 2022.
Septanazal* (xylometazoline/dexpanthenol) is a nasal decongestant. It is available as spray for adults and spray for
children. In Slovenia, Lithuania, and Latvia, it was one of the leading sprays in its category, and ranked first of all competing
products in Moldova, holding an almost 20% market share. We started marketing Septanazal* in the United Arab Emirates
and Bahrain in 2022.
The naproxen-based analgesic Nalgesin* is our third most important non-prescription product brand. In 2022, it was a
non-prescription brand that presented the highest absolute growth, recording an almost 50% sales increase. Like several
consecutive years before, it remained the principal naproxen in Regions Slovenia, Central, East, and South-East Europe
also in 2022. In Croatia and Slovenia, Nalgesin was one of the leading non-steroidal anti-inflammatory drugs available as
a non-prescription product and was the leader in that product group in Slovenia. It is also marketed as a non-prescription
product.
Bilobil* contains the ginkgo leaf extract, belongs to the peripheral vasodilators product group, and is indicated for slowing
the progression of cognitive decline. The product ranked fourth among all our non-prescription products in terms of
2022 sales. It was one of the leading product brands containing ginkgo in Romania, Poland, and several other markets
and was the leading product in Slovenia, Hungary, and certain other markets.
Pikovit and Duovit are our brands of vitamins and minerals. Duovit products are intended for adults, while Pikovit products
are for children. We recorded strong sales of Pikovit, primarily in Region East Europe, where it was one of the leading
brands of vitamins and minerals for children. Accounting for an over 50% market share, it placed first of all competing
products in Uzbekistan and Kyrgyzstan.
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. It recorded the highest sales growth
in absolute terms in the Russian Federation and Portugal. Flebaven* was one of the leading diosmin-based products in
Slovenia, Estonia, and Slovakia.
Our food supplement Magnezij Krka (magnesium) is available in water-soluble granules. We supplemented the brand
with a new 400 mg strength, which we started marketing in Slovenia. We made 300 mg magnesium available in Italy and
Poland. In Slovene pharmacies, our brand was the foremost of all magnesium-based products, accounting for an over 40%
market share.
Vitamin D3 Krka (cholecalciferol) is indicated for treating and preventing vitamin D deficiency and as adjunctive therapy
in the specific treatment of osteoporosis. In 2022, we started marketing it in Armenia and Uzbekistan. Vitamin D3 Krka
was the only vitamin D
3
in tablets available on prescription or as a non-prescription product in Slovenia. It constituted a
more than 40% market share and retained the principal position among vitamin D3-containing products in pharmacies.
Nolpaza Control* (pantoprazole) and Emozul Control* (esomeprazole) are two proton pump inhibitors from the product
group for the gastrointestinal tract and metabolism. The two products are also marketed as prescription pharmaceuticals.
We started marketing them in new markets in 2022: Nolpaza Control* in Latvia, and Emozul Control* in Finland, Lithuania,
and Estonia, and as the first non-prescription esomeprazole in Hungary, Slovakia, and Spain. Nolpaza Control was the
second highest-ranking heartburn agent in Slovenia, while in Slovakia, it had a more than 25% market share, ranking it
first.
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Animal health products
In 2022, the Krka Group sales of animal health products amounted to €93.0 million, a 14.5% year-on-year climb. Sales
generated in the Russian Federation, the United Kingdom, and the Benelux contributed most to sales growth.
We use our marketing and sales network to sell our animal health products in Regions Slovenia, Central, East, and South-
East Europe and most markets of Region West Europe. 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 2022. It was
followed by products containing fipronil (Fypryst*, Fypryst* Combo), selamectin (Selehold*), enrofloxacin (Enroxil*), and
products combining pyrantel and praziquantel (Dehinel*, Dehinel* Plus).
Animal health products sales by 10 major markets
2022 animal health products sales by therapeutic class
0
25
50
75
100
125
150
0
5
10
15
20
25
30
Russian Federation
United Kingdom
France
Poland
Benelux
Germany
Ukraine
Czech Republic
Portugal
Croatia
Index
€ million
2018 2019 2020 2021 2022 Index 2022/21
55.8%
7.5%
2.8%
21.4%
5.5%
7.0%
Antiparasitics for companion
animals
Antimicrobial pharmaceuticals
for companion animals
Other products for companion
animals
Antimicrobial pharmaceuticals
for farm animals
Antiparasitics for farm animals
Other products for farm
animals
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117
We produce animal health products for farm animals and companion animals. Sales growth relies primarily on companion
animal products, which account for over 60% of animal health products.
Our most flagship companion animal product is the antiparasitic Milprazon* (milbemycin/praziquantel), which is also our
leading animal health product in terms of sales. In 2022, we launched a new pharmaceutical form, Milprazon Chewable*
film-coated flavoured tablets for dogs and cats. The new natural liver flavour increases palatability, making administration
easier. We started marketing the new product in Slovenia, Germany, the United Kingdom, Romania, and other markets,
15 in all. Total Milprazon* sales increased by more than 30% in 2022. In 2022, we placed it on the market in Switzerland.
Spot-on solutions account for a significant proportion of the companion animal product range. Fypryst* is the most
important spot-on brand and our second most important animal health product. The brand comprises Fypryst* (fipronil)
and Fypryst* Combo (fipronil/S-methoprene). Fypryst* is available in spot-on solution and cutaneous spray. We recorded
the strongest sales in Region West Europe, above all in the United Kingdom.
Selehold* (selamectin) spot-on solution is another antiparasitic agent for treating companion animals. It is used to treat
and prevent infestations with endo- and ectoparasites. We put it on the market in 2019, and in 2022 it was one of our top
three animal health products. Its sales more than doubled and it was one of our leading animal health products in terms
of absolute sales growth.
Another of our endectocides is Prinocate* (imidacloprid/moxidectin) spot-on solution. We launched it in 2020, and in 2022
its sales increased by almost 50%. It generated the strongest sales in the United Kingdom and other markets of our Region
West Europe. We made it available in Portugal in 2022.
Another spot-on solution is the antiparasitic agent, Ataxxa (imidacloprid/permethrin). This combination is used to treat
infestations with ectoparasites in dogs. We started marketing it in Greece and Finland in 2022, and on many markets
registered a new indication, i.e. the repellent activity against ticks, mosquitoes, and sand flies. As a result, we recorded a
high sales increase in 2022, up almost 70%.
Our portfolio of antiparasitic agents for companion animals includes the Dehinel* brand products. This is one of our five
leading animal health brands in terms of sales. We market Dehinel Plus* (febantel/pyrantel/praziquantel) for small dogs
and Dehinel Plus* XL (febantel/pyrantel/praziquantel) for large dogs. Our range also included flavoured tablets
Dehinel Plus* Flavour (febantel/pyrantel/praziquantel) for dogs and Dehinel* (pyrantel/praziquantel) for cats.
An analgesic Rycarfa (carprofen), available in tablets and solution for injection, and an antimicrobial agent Otoxolan
(marbofloxacin/clotrimazole/dexamethasone) ear drops also belong to our companion animal product range. Marfloxin*
(marbofloxacin) is also an antimicrobial agent. Tablets are used for treating companion animals, whereas a solution for
injection is used for farm animals.
We added to our companion animal portfolio a fixed-dose combination Cladaxxa (amoxicillin/clavulanic acid) from our
antibiotic range in 2022. Chewable tablets in three strengths are indicated for treating bacterial infections of the skin, gums,
respiratory tract, urinary tract, and intestines in cats and dogs. We made it available in the United Kingdom, the Russian
Federation, Portugal, and elsewhere, in 15 countries in all. It is one of our animal health products that contributed the most
to absolute sales growth in 2022.
Our leading antibiotic and one of our leading animal health products in terms of sales is Enroxil* (enrofloxacin). Antibiotics
Floron* (florfenicol), Doxatib (doxycycline) also ranked among our ten best-selling animal health products. Our
antimicrobials also included Trisulfon (sulfamonomethoxine/trimethoprim), Amatib (amoxicillin), and Tuloxxin
(tulathromycin), which we also made available in the Russian Federation in 2022.
Our most important antiparasitic products for farm animals were Toltarox* (toltrazuril) and Flimabend* (flubendazole).
The two products are among our top ten animal health products in terms of sales.
Ecocid* S ranks among our top ten animal health products. In 2022, we successfully marketed it for prevention against
African swine fever.
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Health resorts and tourist services
Terme Krka generated sales revenue totalling €42.6 million in 2022, a 17% year-on-year increase. 2022 was a year of
gradual economic recovery after the COVID-19 pandemic, and we recorded 321,996 overnight stays. Guests from abroad
returned, accounting for a 13% share in overall sales of services. Guests from Italy and other neighbouring countries
prevailed. The hotel annual occupancy rate reached 67%, a 7 percentage point year-on-year improvement. The three most
notable segments in the service sales structure included diverse medical wellness programmes for individual guests,
medical wellness programmes for groups of guests, and group business meetings. Sales of healthcare services generated
one-third of total revenue.
We at Terme Krka systematically develop entertainment and sports activities, medical rehabilitation, medical wellness,
and catering services, always bearing in mind the health and well-being of guests. One of the major upgrades in 2022 was
the complete refurbishment of Laguna, the boutique accommodation complex, emphasising its perfect position within the
Landscape Park Strunjan (Slovenia). Modern, elegantly redecorated rooms, apartments, suites, and a Mediterranean-style
restaurant offers guests privacy and relaxation. A new development at the complex now also offers high-rank
accommodation in a villa with three bedrooms, a kitchen, a sauna, and an extensive private patio, complete with a pool
and garden with a magnificent sea view. The boutique style of the refurbished Laguna meets the needs of demanding
guests who seek privacy and a connection with nature.
Products marketed under different brands in individual markets
Prescription pharmaceuticals
APIs
Brands
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
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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
lacosamide
Lacosabil, Lydraso
lansoprazole
Lanzul, Lansoptol
letrozole
Lortanda, Likarda
levofloxacin
Levalox, Levnibiot, Leviaben, Levaxela
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
risperidone
Torendo, Rorendo
rivaroxaban
Xerdoxo, Rivaroxia, Rivarolto
ropinirole
Rolpryna SR, Ralnea SR
rosuvastatin
Roswera, Rosuvador, Roxera, Sorvasta
rosuvastatin/ezetimibe
Co-Roswera, Coroswera, Sorvasta Plus
sertraline
Asentra, Sertrone, Sertra TAD
sildenafil
Vizarsin, Sildegra
silodosin
Sidarso, Silbesan
sitagliptin
Asiglia, Maysiglu, Sitagavia
sitagliptin/metformin
Asiglia-Met, Maymetsi, Sitagavia-Met
solifenacin
Asolfena, Solifemin
tadalafil
Tadilecto, Tadagis
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120
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
valsartan/rosuvastatin
Valarox, Ravalsyo
vardenafil
Viavardis, Vardegin
venlafaxine
Alventa, Olwexya
vildagliptin
Glypvilo, Vildabetes
vildagliptin/metformin
Vildakombi, Vimetso
ziprasidone
Zypsilan, Zypsila, Ypsila
Non-prescription products
APIs
Brands
benzydamine/cetylpyridinium chloride
Septolete, Septabene, Septafar
diosmin; diosmin/hesperidin
Flebaven, Fladios, Flebazol, Flabien
esomeprazole
Emanera, Escadra, Emozul, Esozoll
ginkgo leaf extract
Bilobil, Gingonin
Iceland moss extract
Herbion Iceland Moss, Herbisland
ivy leaf extract
Herbion Ivy Syrup, Herbihelix
magnesium citrate
Magnezij Krka, Magnesol
naproxen
Nalgesin, Analgesin, Nalgedol, Ilgesin
pantoprazole
Nolpaza Control, Sedipanto, Panto TAD
xylometazoline/dexpanthenol
Septanazal, Septanasal
Animal health products
APIs
Brands
enrofloxacin
Enroxil, Enrox, Enroxal
febantel/pyrantel/praziquantel
Dehinel Plus, Anthelmin Plus, Wormscreen
fipronil
Fypryst, Amflee, Fyperix, Fleascreen
fipronil/S-methoprene
Fypryst Combo, Amflee Combo, Fyperix Combo, Fleascreen combo
florfenicol
Floron, Fenflor
flubendazole
Flimabend, Flimabo
imidacloprid/moxidectin
Prinocate, Imoxicate
marbofloxacin
Marfloxin, Quiflox
milbemycin/praziquantel
Milprazon, Milquantel
pyrantel/praziquantel
Dehinel, Anthelmin, Wormscreen
selamectin
Selehold, Selafort
toltrazuril
Toltarox, Tolzesya
biocide
Ecocid, Oxicid
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Research and development
32
Research and development is part of our vertically integrated business model and a key element in designing and
maintaining a competitive portfolio of products. Vertical integration and connectivity of development and production know-
how are essential advantages of our development strategy. As we manage the entire process, we can introduce high-
quality, safe, and effective medicines in more than 70 markets on time.
We have adopted a development strategy and project approach to manage products in all life-cycle phases and for all our
markets. Research-and-development results and a hands-on understanding of regional and local legislative requirements
enable us to draft and manage complex registration documentation and processes efficiently and thus obtain timely product
marketing authorisations. We anticipate the necessary market-specific characteristic of a product and adapt our
development work and studies in the earliest phases of its development. By doing so, we can put our social responsibility
first and ensure a contemporary portfolio of medicines in all Krka’s markets, including the financially disadvantaged regions
or countries (low- or medium-income ), in the shortest possible time. We currently market more than 40 medicines from
the WHO Essential medicine list 2021 in middle- and low-income countries.
By monitoring trends and scientific advancements in various areas of expertise, particularly medicine, the pharmaceutical
industry, and chemistry, we can respond quickly and appropriately to development challenges, marketing requirements,
potentials, and opportunities. Increasingly complex regulatory requirements push us to introduce new, additional and
improved approaches and methods in development, and conduct new studies. We also cooperate with external partners,
including specialised companies, educational and R&D institutions in Slovenia and abroad, and in this way constantly
enhance know-how and improve development results.
Research-and-development processes involve comprehensive and complex technological, analytical, preclinical, and
clinical studies that enable us to develop complex products in innovative pharmaceutical forms. We focus on medicines
comprising a combination of two or more active substances that provide double or triple therapy to our patients in a single
pill. In addition to generics, we also develop novel innovative fixed-dose combinations of established active substances.
The surge in new combination products led us to expand our portfolio of bilayer tablets, given their ability to combine two
or more otherwise incompatible active substances.
Studies, mostly bioequivalence studies, demonstrate the safety and efficacy of all new products. All clinical trials are
conducted in line with the applicable legal requirements, good practice guidelines, the Helsinki Declaration, and European
Regulation 2016/679 (General Data Protection Regulation). This ensures safety for the subjects, transparency, ethics, and
quality research, which is also approved by regulatory and inspection bodies.
Quality is imperative for our products from early development stages onward and is therefore an integral part of each our
product from the start. We also ensure compliance of all development activities with established quality systems. We
continuously enhance and upgrade all those systems, and improve standard procedures and good practices. Regulatory
bodies conduct periodic audits and inspections to review compliance with the relevant standards.
We use simple and energy-efficient technological procedures that contribute to making our new products affordable. We
develop our products in compliance with our environmental policy and the ISO 14001 standard. We ensure that
technological procedures have a minimal environmental impact through measures to reduce our carbon footprint, water
consumption and organic solvent volumes, and by doing so, approach circular economy objectives.
Investments and accomplishments
Rapid scientific and technological progress and increasing market complexity require constant investments in know-how
and the latest equipment. They are essential for innovative approaches and the timely rollout of new products while
maintaining high quality and competitiveness in all markets. To that end, Krka allocates 10% of its annual revenue to
research and development.
32
SDG 3, SDG 12
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122
By the end of 2022, our portfolio comprised 450 authorised products in a variety of pharmaceutical forms. We now have
approximately 170 projects at different development stages in the pipeline. They will add to our range of medicines for the
most common lifestyle diseases and include innovative combination medicines for high blood pressure, blood clotting
disorders, diabetes and cancer. This will further contribute to attaining the most important United Nations’ sustainable
development goals (SDG).
33
Krka respects the intellectual property of its competitors; therefore, innovative R&D solutions drive the development of new
products. Our innovative approaches helped us to circumvent many patents and made it possible to develop new products.
In addition to innovative technological approaches, we develop innovative complex dosage forms with added value for
patients. In 2022, we filed 14 patent applications for new product solutions.
Also, in 2022, we invested in laboratory equipment, physico-chemical analytics know-how, and cell tests to develop in-
house analytical methods related to complex products, including peptides. We expanded our know-how and competences
by collaborating with various partners and verified our key development stages during expert consultations with regulatory
agencies.
We continued to digitalise data collection, processing and reporting in the R&D segment. We also continued with the
digitalisation of information and data obtained in project and regulatory processes. This ensures our compliance with
production processes, while we can actively adapt to changes in regulatory guidelines and other requirements set by
external stakeholders.
We continued with the robotisation of individual analytical and finishing 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
regulatory approval for five analytical procedures supported by automated sample preparation.
Continuing our entry into the new strategic market of China and with a view to obtaining approvals for two new products
in 2022, we employed extensive development studies on established products, properly adjusted development activities,
linked our development and manufacturing operations, all based on know-how about regulatory and marketing
requirements.
Protecting our know-how and industrial property
In 2022, we filed 14 patent applications for new technological solutions we had developed and evaluated as inventions at
the global ranking level. Based on priority applications from 2021, we submitted nine international patent applications. We
were granted three patents in different countries. Over 200 valid patents protect Krka’s technological solutions.
We filed 79 applications for Krka trademarks in Slovenia. We also filed 43 international and 10 national trademark
applications. In total, we have registered more than 1,100 trademarks in various countries.
New products and marketing authorisations of the Krka Group
In 2022, marketing authorisations were granted for 11 new products, including for products containing new active
substances teriflunomide and ranolazine approved in EU markets, and dabigatran etexilate and dapagliflozin in the
Russian market. In the cardiovascular therapeutic area, the single-pill combination of perindopril arginine and amlodipine
was granted marketing authorisation in the EU, and a combination of perindopril tert-butylamine and indapamide in China.
In China, we also received approval for a medicine containing valsartan. We also added new products to the range of self-
medication products.
Additional products were added to our portfolio in all regions. New marketing authorisations were obtained for our key
products for important indication areas, such as medicines for treating diabetes, antithrombotics, and pain relief medicines.
In 2022, we finalised 490 marketing authorisation procedures in different markets; out of which 358 were for prescription
pharmaceuticals, 22 for non-prescription products and food supplements, and 110 for veterinary products.
33
GRI 2-6
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As for APIs, we obtained a new Certificate of Suitability to the monograph of the European Pharmacopoeia (CEP) for our
losartan and rivaroxaban.
In 2022, we again devoted special attention to our well-established products and their evaluation, complementing and
adjusting them with the latest scientific findings and with regulatory and marketing requirements. We submitted registration
documentation and received marketing authorisations for more than 28,000 regulatory variations, ensuring quality and
aiding the uninterrupted supply of our products for all markets.
Prescription pharmaceuticals
We obtained marketing authorisations for nine new prescription pharmaceuticals.
Aregalu/Teriflago (teriflunomide) film-coated tablets, the drug of choice for most patients with relapsing-remitting multiple
sclerosis, were granted marketing authorisation via a decentralised procedure (DCP).
We added Dapaforse (dapagliflozin) film-coated tablets to our range of medicines for diabetes available on the Russian
market. Dapagliflozin is a sodium-glucose cotransporter-2 inhibitor (SGLT-2) and belongs to a group of most advanced
medicines indicated for treating type 2 diabetes. In addition to treating diabetes, dapagliflozin has a beneficial effect on the
kidneys and the cardiovascular system.
We developed a new synthesis process for the API tapentadol that is integrated in Apeneta/Adoben/Tapendolor
(tapentadol) prolonged-release tablets, all supported with new scientific studies in the field of synthesis and analytical
methods. The medicine is used to relieve moderate to severe chronic pain in adults.
We added a new product, Tezulix (ranolazine) prolonged-release tablets to our portfolio of cardiovascular agents.
Atherosclerosis remains a leading cause of cardiovascular morbidity and mortality. Ranolazine is used with other
medications to treat patients with chronic stable angina and progressed atherosclerosis.
A marketing authorisation was granted for Dabixom (dabigatran etexilate) hard capsules. This antithrombotic agent is
used for the treatment and prevention of atherothrombotic and thromboembolic events in adults with cardiovascular
diseases. Dabixom was granted approval in the Russian Federation. The vertical integration model was used in this
product’s manufacture. API synthesis and formulation development were the results of our know-how.
A new perindopril arginine-based product was granted a marketing authorisation. Last year, we obtained the first marketing
authorisations for products based on this new perindopril salt. This year, we added to the product group a combination of
perindopril arginine and amlodipine in a single pill, available on markets as Neoamlessini/Amlessa/
Amlessa NEO/Aramlessa/Tonarssa NEO/Dalnessaneo/Dalnessa AS/Aperneva. The perindopril arginine product is
developed and produced using our vertical integration model. It results from our know-how and is manufactured in our own
facilities. The new form of active ingredient allows for adjustments to the needs of each market.
We continued obtaining new marketing authorisations for our products in China. Based on the results of additional research
and bioequivalence studies consistent with the requirements of Chinese regulators, we obtained approvals to market our
valsartan film-coated tablets and our perindopril tert-butylamine/indapamide fixed-dose combination tablets. Both are
used to treat cardiovascular diseases.
We developed and obtained marketing authorisations for Vitamin D3 Krka (cholecalciferol) tablets in the new strength of
7,000 IU that allows the vitamin to be taken once a week.
Our medicines from important established and promising areas, particularly for antidiabetics, antithrombotics and
cardiovascular agents were granted new marketing authorisations in additional markets.
We received approval to extend marketing authorisations in European markets for the medicine for the treatment of
resistant hyperlipidemias, the fixed-dose combination Rosazimib/Co-Rosuvador (rosuvastatin/ezetimibe) film-coated
tablets.
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We obtained additional marketing authorisations via the decentralised procedure for Asigefort film-coated tablets, a fixed-
dose combination of sitagliptin and metformin.
The oncology agent Imatinib Krka (imatinib) in film-coated tablets was granted additional marketing authorisations.
Additional marketing authorisations were granted for the antipsychotic Arisppa (aripiprazole) tablets. We also concluded
registration procedures for: Amlodipine Krka (amlodipine) tablets for lowering high blood pressure;
Fromilid UNO (clarithromycin) prolonged-release tablets for the treatment of systemic infections;
Fluconazole Krka (fluconazole) hard capsules for the treatment of fungal infections; and
Monkasta (montelukast) film-coated tablets for the prevention and treatment of chronic bronchial asthma and seasonal
allergic rhinitis symptoms.
In eastern Europe, the most important approvals were those for agents from key therapeutic areas, particularly
antithrombotics, antidiabetics, cardiovascular and oncology agents, and agents from other established therapeutic classes.
We obtained a new marketing authorisation for the antithrombotic agent Rivaroxia (rivaroxaban) film-coated tablets.
We extended our range of antidiabetics by marketing authorisations granted for Asiglia (sitagliptin) film-coated tablets;
the single-pill combination Asiglia-Met (sitagliptin/metformin) film-coated tablets; and Glipvilo (vildagliptin) tablets.
We added new single-pill combinations to our cardiovascular portfolio. Our rosuvastatin-based product group was
extended after new marketing authorisations were granted for Roxatenz-Amlo (rosuvastatin/perindopril/amlodipine),
Roxera Plus/Sorvitimb (rosuvastatin/ezetimibe) film-coated tablets, and Ravalsyo (valsartan, rosuvastatin) film-coated
tablets. In eastern European countries, we received marketing authorisation for Teldipin (telmisartan/amlodipine) tablets,
extending our telmisartan product range. Marketing authorisations were granted for the single-pill combination Ramladio
(ramipril/amlodipine) capsules. We also obtained marketing authorisation for Bisoprolol Krka (bisoprolol) film-coated
tablets.
We added to our oncology range Lenalidomide Krka (lenalidomide) hard capsules indicated for treating the rare condition
of multiple myeloma in cancer patients, and Erlotinib Krka (erlotinib) and Ecansya (capecitabine) film-coated tablets.
In the analgesics group, we received marketing authorisations for Dexiax (dexketoprofen), Etoriax (etoricoxib) and Doreta
(tramadol/paracetamol) film-coated tablets.
Medicines for the treatment of central nervous system diseases, Pregabio (pregabalin) hard capsules and Dulsevia
(duloxetine) gastro-resistant capsules, were granted new marketing authorisations.
We extended our range of antibiotics by obtaining approvals for Linezolid Krka (linezolid) film-coated tablets and solutions
for infusion.
We added products containing new APIs from several important therapeutic categories to expand our portfolio in south-
eastern Europe. Marketing authorisations were granted for Maysiglu (sitagliptin) and Maymetsi (sitagliptin/metformin),
both film-coated tablets, and Gliclada (gliclazide) prolonged-release tablets, all medicines to treat diabetes.
By receiving marketing authorisation for Aryzalera (aripiprazole) tablets, we expanded our range of central nervous system
agents.
Marketing authorisations for single-pill combinations Valtricom (amlodipine/valsartan/hydrochlorothiazide), Roxampex
(perindopril/amlodipine/rosuvastatin) and Co-Roswera/Roswera combi (rosuvastatin/ezetimibe), all film-coated tablets,
extended the group of fixed-dose combinations for the treatment of cardiovascular diseases.
We received marketing authorisations for advanced antithrombotics Aboxoma (apixaban), Xerdoxo (rivaroxaban) and
Atixarso (ticagrelor) film-coated tablets.
Additionally, we obtained a marketing authorisation for our analgesic Apeneta (tapentadol) prolonged-release tablets.
Marketing authorisations were also granted for the two oncological agents Bortezomib Krka (bortezomib) powder for
solution for injection and Abiraterone Krka (abiraterone) film-coated tablets.
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Marketing authorisation for dexamethasone solution for injection in Australia made it possible to enter this overseas
market for the first time. Dexamethasone is a well-established medicine, now becoming increasingly important in the
treatment of various autoimmune diseases. It alleviates cancer symptoms, has an antiemetic action, and has, in recent
years, been included as part of COVID-19 therapies.
In the group of medicines for treating cardiovascular diseases, we received marketing authorisations for Olimestra
(olmesartan) and Ifirmasta (irbesartan), both film-coated tablets. Single-pill combinations Amaloris
(amlodipine/atorvastatin) film-coated tablets, Vasitimib (ezetimibe/simvastatin) tablets, Tolucombi
(telmisartan/hydrochlorothiazide) tablets, Telassmo (telmisartan/amlodipine) tablets, Wamlox (amlodipine/valsartan) film-
coated tablets, Ifirmacombi (irbesartan/hydrochlorothiazide) film-coated tablets, and Tenloris (losartan/amlodipine) film-
coated tablets. New marketing authorisations were granted for Ezoleta (ezetimibe) tablets, Roswera (rosuvastatin) film-
coated tablets, Nolpaza (pantoprazole) gastro-resistant tablets and powder for solution for injection, Emanera
(esomeprazole) gastro-resistant capsules, Monkasta/Montelukast TAD (montelukast) film-coated tablets and chewable
tablets, Mirzaten (mirtazapine) and Torendo Q-Tab (risperidone) orodispersible tablets, and Oprymea (pramipexole)
prolonged-release tablets.
We obtained new marketing authorisations for Linezolid Krka (linezolid) film-coated tablets, Tadilas (tadalafil) film-coated
tablets, and Doreta (tramadol/paracetamol) film-coated tablets.
We obtained new Certificates of Suitability to the monographs of the European Pharmacopoeia (CEP) for our losartan
and rivaroxaban APIs that comply with the strictest quality criteria.
Non-prescription products
We added two new products to the group of self-medication products and extended marketing authorisations for our
established products to additional markets.
Marketing approval was granted for Magnezij Krka 400 water-soluble granules. The new product is a food supplement
containing magnesium citrate and vitamin B
2
. Both active substances help reduce fatigue and exhaustion, and support
normal functioning of the nervous system. Magnesium citrate is also vital for proper muscle function. Our product does not
contain preservatives, artificial colouring agents, flavours, sweeteners, gluten, or lactose.
The first marketing authorisation was granted for sildenafil, available without prescription. By obtaining the new legal
status for this erectile dysfunction medicine, we make it more available to users.
We increased the availability of our well-established brands in the EU. The non-prescription product Dasselta control
(desloratadine) film-coated tablets was granted a marketing authorisation in Slovenia. In selected markets we received
marketing authorisations for Esozoll (esomeprazole) hard gastro-resistant capsules and Dekenor (dexketoprofen) film-
coated tablets. We introduced Magnesol 300 water-soluble granules on a new market.
Relevant studies confirmed the antiviral activity of Septabene/Septolete total (benzydamine
hydrochloride/cetylpyridinium chloride) lozenges against various viruses, including Coronaviruses.
An important approval in eastern European countries was that of Herbion Iceland moss syrup in the Russian Federation.
It is our first marketing authorisation obtained via the Mutual Recognition Procedure (MRP) in the Eurasian Economic
Union (EAEU).
We obtained marketing authorisations in new markets of eastern Europe for Vitamin D3 Krka (cholecalciferol) tablets and
Pikovit syrup. Marketing authorisations were also granted for Desloratadine Krka (desloratadine) and Sleepzone
(doxylamine) film-coated tablets, and two analgesics: Dexiax (dexketoprofen) film-coated tablets and Nalgesin (naproxen)
220 mg film-coated tablets.
Our herbal syrup Herbion Iceland Moss was granted marketing authorisations in new markets in south-eastern Europe.
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126
New approvals for Septanazal (xylometazoline/dexpanthenol) nasal spray and Septolete total (benzydamine
hydrochloride/cetylpyridinium chloride) oral spray and lozenges were granted in Region Overseas Markets.
Animal health products
In 2022, we expanded the range of our key animal health product brands and introduced them to new markets.
We extended our portfolio of products for farm animals by obtaining new marketing authorisations for Tuloxxin
(tulathromycin) solution for injection for cattle and pigs indicated for treating bovine respiratory disease and Catobevit
(butafosfan/cyanocobalamin) solution for injection, vitamin and minerals indicated for the supportive treatment of metabolic
or reproductive disorders in cattle, pigs, horses and sheep, and goats. We expanded marketing opportunities for the
Doxatib (doxycycline) powder for the preparation of medicated drinking water, indicated for treating infections in pigs and
broilers, and for the Floron (florfenicol) solution for injection, indicated for the treatment of respiratory tract infections in
cattle and pigs.
We obtained new marketing authorisations for companion animal products in additional markets. The fixed-dose
combination Cladaxxa (amoxicillin/clavulanic acid) chewable tablets in three strengths was added to our product range
marketed in the EU and Region East Europe. The product is used to treat bacterial infections of the skin, gums, respiratory
tract, urinary tract, and intestines in cats and dogs.
Additional marketing authorisations for Ataxxa/Damtix/Daclotrix (imidacloprid/permethrin) spot-on solution in four filling
volumes were granted in the EU. The product is indicated for the preventing and treating flea, tick and sand fly infestations
in dogs.
The marketing authorisation procedure was completed in Region East Europe for Enroxil (enrofloxacin) tablets for treating
infections in dogs; Dehinel Plus (febantel/pyrantel/praziquantel) tablets in two strengths indicated for deworming dogs;
Dehinel (pyrantel/praziquantel) film-coated tablets, a cat dewormer; Selafort (selamectin) spot-on solution for preventing
and treating of infestations of certain species of inner and outer parasites in dogs and cats; and Fypryst Combo (fipronil/S-
metophrene) spot-on solution for preventing and treating infestations of outer parasites in dogs and cats.
Amflee Combo (fipronil/S-methoprene) spot-on solution for preventing and treating infestations of outer parasites in dogs
and Enroxil (enrofloxacin) tablets for treating infections in dogs were added to our product portfolio in Region Overseas
Markets. A marketing authorisation was also granted for Floron Minidose (florfenicol) solution for injection, to treat
bacterial respiratory tract infections in cattle and pigs.
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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 producing active pharmaceutical ingredients and finished products. We have been increasing
production capacities and improving the cost-effectiveness of processes in Slovenia and at our subsidiaries abroad. By
controlling all product life cycle stages, we can adapt to market challenges more readily 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 introduced many alternative sources of materials to ensure uninterrupted
production and long-term volume growth.
The COVID-19 pandemic continued to pose major challenges. However, effective work organisation, the prompt rollout 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.
Through the optimal use of available resources in the controlling company and subsidiaries and through cooperation with
contractors, we manufactured and packed 16.8 billion tablets and other pharmaceutical forms in 2022. By achieving 4%
annual growth on 2021, we continued our long-term trend and pursued our strategic objective of volume growth. Actual
product manufacturing was in line with planned market needs.
Finished product manufacturing
Bulk and finished product numbers rose on the back of: 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 meet diverse customer demands.
14.3
15.2
16.5
16.2
16.8
0
2
4
6
8
10
12
14
16
18
2018 2019 2020 2021 2022
Billion pieces
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128
We continuously improved post-registration procedures for preparing packaging materials and technological documents
for production in Slovenia, at our subsidiaries abroad and contract manufacturers to ensure the timely provision of products
and 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 2022, we increased the use
of production documentation in e-format and improved process digitalisation.
Supply process
34
We mainly use self-produced raw materials for our products but also buy some in the market. In 2022, 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
unstable situation, significant shortages of incoming materials, lower manufacturing output at our partners due to soaring
energy prices, and transport issues, we provided enough raw materials for uninterrupted manufacturing 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.
Despite price hikes in the market for purchasing raw materials, we managed to maintain price increases below those
announced by the 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 the integration of our subsidiaries and optimised purchasing processes. We also strengthened established
supplier partnerships.
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 148 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 products
at various production sites in Slovenia and abroad. Doing so reduces our dependency on external suppliers in this key
supply chain segment.
We improve the cost-effectiveness of producing 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. In turn, we considerably expanded active ingredients production capacity for our vertically integrated
products. We plan to expand our capacities even further. Intensive production of active ingredients and intermediates
continued at our production sites in Novo mesto and Krško in Slovenia. Production plans for 2022 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 accounts for a significant share of production capacities. The plant
utilises cutting-edge technology, a high level of automation and robotisation supported by advanced computerised
systems. In 2022, upgrades to the plant included: several packaging lines; a 1,200-litre granulation line; a tablet press; a
coating pan and a crusher; rendering the plant fully operational. This approach helps us reinforce our competitive edge in
demanding global markets. In 2022, over 35% of total Krka Group products were manufactured at the Notol 2 plant.
We increased production at our production sites abroad. This further consolidated our position as a local manufacturer
and allowed us to supply all necessary products to local markets to benefit local stakeholders.
34
GRI 2-6, 3-3, 308-1, 414-1, SDG 3
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129
In addition to significant investments in new equipment and technology, which provide additional production capacities,
we upgraded existing machines and production lines. Upgrades and refurbishments resulted in adequate production
process cost-effectiveness and augmented digitalisation. In 2022, many production sites were heavily involved in
introducing production documentation in e-format, adding to automation and paperless operation.
To respond faster to rising product demand, strengthen our presence in international markets, and reduce production
process risks, we continued activities related to transfers of production technologies to contractual partners and expanded
the contract manufacturer network.
To raise awareness and work quality, we upgraded the Pharmaceutical Production training centre, where our employees
receive training on equipment used in all key production processes. Participants learn through the experience and
expertise of their mentors, selected from the best performing 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. At the same time, the quality of regular work improves.
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 reduced average fuel
consumption. We augmented temperature-controlled sea transport. Due to the challenging operating climate in 2022, we
looked for new transport options and efficiently transported products by road. Road transport is an alternative to 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 simplified declaration authorisation procedures.
In line with legislative changes, our transit guarantee now also applies to transit operations with Ukraine.
Suppliers
35
Our long-standing relations with business partners, including suppliers of equipment, raw and base materials, contractors,
and partners, are forged through 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. Purchasing roles and responsibilities are precisely specified, from
identifying user needs, preparing tenders, and selecting suppliers, to contracting and placing orders.
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 consider suppliers’ prices,
quality, delivery terms, reliability, regulatory compliance, compliance with our guidelines, and their social responsibility. We
pursue a policy and practice of engaging local suppliers and contractors especially when – besides acceptable prices –
responsiveness, flexibility and the frequent or constant involvement of suppliers and contractors in investment and service
processes also matter. In 2022, spending on suppliers of goods and services in Slovenia accounted for 15% of the total
Krka procurement budget.
36
35
GRI 2-6, 3-3
36
GRI 204-1, SDG 8
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130
Investments
37
In 2022, the Krka Group allocated €106.0 million to investments, of that €79.5 million to the controlling company and
€26.5 million to subsidiaries We primarily invested in our production and development plants to extend facilities and
upgrade technologies, quality management, and our production and distribution centres worldwide.
In Slovenia and abroad, we made multiple investments in new production equipment and upgraded systems and
instruments, increasing our production capacities and enhancing product quality. Lengthy permit procedures stalled
funding; hence 2022 investments were lower than planned. The slow-down in investments was partly caused by a shortage
of electronic components on the global markets, extending delivery terms for certain machines and equipment.
We place a strong emphasis on the values of sustainable development and factor in environmental standards, and indirect
and direct environmental impacts, as part of all investment projects. The approved equipment complies with the best
available technology for environmental protection and energy efficiency, and guarantees safe and efficient operations.
2018–2022 Krka Group investments
In 2022, we invested primarily in finished product manufacturing, information and documentation management systems,
intangible assets, and infrastructure. The investments contribute to the coordinated functioning of our research and
development, production and control, which embody the essential advantages of our vertically integrated business model.
Investments accounted for 6.2% of sales revenue generated in 2022.
37
GRI 2-6, SDG 9
96
113
77
66
106
0
2
4
6
8
10
12
0
20
40
60
80
100
120
2018 2019 2020 2021 2022
%
€ million
Investments in € million
% of sales value
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131
Structure of 2022 Krka Group investments
Production and capacity upgrades
After more than 20 years of continued operations, we upgraded water supply systems and automated washing systems in
the oldest section of the Notol plant in compliance with cGMP guidelines. We renovated the format tool washing room,
where we plan to replace two worn-out washers in 2023. We invested €2.4 million in installing a thermal oxidiser for waste
gas treatment. In line with our strategy, we allocated €38.2 million to replace and overhaul worn-out packaging lines over
the next two years. We plan to invest €6.1 million in increasing production line capacity and €11.3 million in upgrading and
increasing granulation capacity at the plant. We also plan to upgrade the logistics system. The two-year investment is
estimated at €12 million.
In the Solid Dosage 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 spent
€17 million on room refurbishment and procurement of technological equipment.
We finished several investments to upgrade the capacities for research, development and analyses in our development-
and-control laboratories. They totalled €8.3 million.
We increased production capacities for granulation and packaging at the Ljutomer plant (Slovenia). We have started
installing personnel and material airlocks at the old section of the plant. The investment is estimated at €16.4 million.
At our Slovenian Beta Šentjernej plant, we upgraded the systems and equipment in compliance with ATEX standards and
increased the production capacity for the preparation of dry granules. The investment totalled €2.4 million.
Preparation works started in April for the construction of Paviljon 3 in Novo mesto (Slovenia). The multi-purpose building
will house an extension for our microbiology laboratory and additional rooms for Supply Chain Management and other
organisational units. Construction of the six-storey building is estimated at €19.3 million.
Increasing API development and production capacities
We plan to build new facilities for developing and producing active pharmaceutical ingredients (APIs) in Krško, Slovenia.
Based on project documentation and an IED OVD environmental impact assessment, we obtained the integral building
permit for the Sinteza 2 plant and laboratories for chemical analyses (Slovene: Kemijsko-analitski center). The
environmental permit has also been granted, and construction works are scheduled to start after the permit becomes final.
The Sinteza 2 plant will be our second plant for API production in Krško. We plan to build other small technology and
58%
2%
14%
5%
21%
Finished product manufacturing
API production
Infrastructure facilities and systems
Tourism infrastructure
Documentation and information
technology systems and
equipment, intangible non-current
assets and other fixed assets
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132
infrastructure facilities required for uninterrupted production processes. The investment estimated at €163 million pursues
our strategy of vertical integration from product development to their production.
Investments outside Slovenia
The installation of the secondary packaging line in the production and distribution centre in Jastrebarsko (Croatia) is set to
increase production capacities for solid forms of animal health products. The investment into modernising the facilities and
systems will allow us to set up additional facilities for Quality Management and Information Technology. The investment is
estimated at €3.5 million.
At TAD Pharma (Germany), we plan to refurbish the old section of the office building to increase its energy efficiency, and
revamp the conference hall and the reception room. We apportioned €1.7 million to the investment.
New projects
Project design is being drafted for a €29 million investment in a new production line for sterile solutions. We plan to extend
the Sterile Products plant. The extension will house a new line, doubling production capacity for animal health products.
At the Ločna site in Novo mesto, an access control system will be set up to regulate access to car parks in front of the
office building, at the northern gate, and behind the Notol plant. A fire-water retention basin (ZD4) and a bicycle shelter in
front of the office building will be constructed as part of the project.
Terme Krka
We completed a full-scale renovation of the accommodation block at the Laguna Hotel in Strunjan, including reconstruction
of the building, refurbishment of the restaurant and reception area, and conversion of six rooms above the restaurant into
apartments and the conference hall into a premium-rate accommodation block. The investment totalled €3.2 million.
At Hotel Svoboda, we are completely renovating the indoor aquatic therapy pool, the outdoor pool, and the terrace, with
further plans to modernise and expand the hotel restaurant. The investment was estimated at €2.1 million.
There are plans for a €2.5 million reconstruction of the 4th and 5th floor of Hotel Vital at the Dolenjske Toplice health resort,
and a €6 million renovation of the new Vitarium hotel and refurbishment of pools at the Šmarješke Toplice health resort.
In 2022, the subsidiary Terme Krka earmarked €5.2 million for investments.
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133
Quality
38
Our fundamental strategic orientation in terms of quality is to ensure quality by continuously improving our products,
processes and services. To this end, we pursue effective quality system performance, which requires responsible
management of safety, health, the environment, information security and personal data protection, data integrity, and
business continuity. We maintain flexibility, react quickly to new developments, market needs and legal requirements,
make investments, and roll out advanced work systems and suitable control methods to meet various client requirements.
In addition, we demonstrate the continued suitability of products, processes, and services. We systematically address
quality-related risks and opportunities to achieve sustainable development. Meticulous planning, employee quality culture
and continuous development pave the way for further improvements.
Various aspects of our operations are managed uniformly to achieve optimal business targets and implement services
effectively. This demonstrates our attitude to quality, environment, safety and health, information security, personal data
protection, and business continuity. The quality system complies with the principles of good pharmaceutical practices
(GxP), requirements of ISO 9001, ISO 14001, ISO 45001, ISO/IEC 27001 and ISO 22301 standards, HACCP principles,
and MDR (Medical Device Regulation). The system is implemented to ensure product quality, safety and efficacy.
Regulatory inspections, partner audits and regular certification of our systems by SIQ (Slovenian Institute of Quality and
Metrology) enhance corporate credibility and strengthen customer trust. In 2022, we again upgraded the system in line
with the relevant legislation and guidelines. Testament to the system’s compliance is the renewal of relevant certificates.
A centralised information and document management system supports the quality system. The system is regularly
upgraded through digitalisation and other measures, ensuring data in documents and electronic records are credible,
easily accessible and protected, lending transparency to our processes and products. We use this approach to conduct
analyses and observe trends to ensure sound support for improving process and service efficiency and product quality.
Our data management system embodies the ethical principles of personal integrity and staff responsibility to perform their
work diligently and on framework quality guidelines, operating procedures and controls integrated into IT systems and
organisational processes.
Integrated management sistem
Continuous improvements dictated by principles, standards, quality guidelines, and the PDCA (Plan-Do-Check-Act)
approach drive progress and upgrades in all areas of the company’s operations. We systematically manage processes
from purchasing, research and development, production of active ingredients and finished products, distribution, marketing
38
GRI 3-3, 416-2
GXP
ISO
9001
ISO
45001
ISO/IEC
27001
HACCP
MDR
ISO
22301
ISO
14001
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134
and sales to monitoring customer satisfaction by employing the vertical integration business model. Customer satisfaction
and sustained business success remain our key objectives going forward. Quality is a cornerstone of all our products and
services throughout their life cycles and all Krka employees’ work attitude. This is our key advantage and the foundation
for ensuring product quality, safety and efficacy.
Quality management
The baselines for establishing and developing the quality system are defined in Krka Group’s Quality Policy, our framework
document on quality, and Krka Group’s guidelines and instructions in line with legislation, good practices and standards.
We monitor all related developments and systematically roll them out across our processes. We are committed to
continuously upgrading the quality system to enhance process and service efficiency.
The established key processes with suitable resources help us deliver on our quality objectives. Our most important
resources are our employees, who understand the importance of quality. They undergo continuous training and constantly
upgrade their qualifications in quality management. This fosters a strong awareness of the importance of quality in all
processes. We cooperate with experts from various fields to identify improvement opportunities, develop innovative
approaches, and introduce new developments.
Processes can only be implemented correctly in buildings and facilities fit for purpose. Before a new investment project is
launched or a reconstructed building is made operational, the new or reconstructed building is checked for compliance
with all applicable good practice requirements. The Agency for Medicinal Products and Medical Devices of the Republic
of Slovenia (JAZMP) must verify new investment projects, some major reconstructions and similar projects before being
green-lighted. The vast number of projects demonstrates large-scale investment in new plants and departments, new or
reconstructed rooms, new production and laboratory equipment, etc. Major projects in 2022 included establishing the
packaging room in the Notol 2 plant, moving the small-scale production and increasing production capacity for bulk
products in the Notol 2 plant, and setting up new laboratories for GC/TLC analysis.
We ensure suitable conditions in all processes by qualifications and validations of investment and computer projects,
technological and laboratory equipment, utilities, air-conditioning systems, technological procedures, cleaning procedures,
and transport conditions and by equipment calibrations and maintenance.
We maintain data integrity, especially regarding completeness, persistence, availability, legibility, accuracy, origin and
descriptiveness, and ensure regulatory compliance. There is considerable emphasis on developing and deploying
information systems and installing and managing laboratory and production equipment. We ensure source data integrity
through validations and qualifications of equipment, change control and deviation management.
Quality is integrated at the earliest stages of research and development to produce a 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 studies, we use new tools and apply 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 users and their adherence.
We set up a system for ensuring the quality of clinical studies and the safety of patients and volunteers participating in
studies. We ensure quality through: highly qualified personnel, use of adequate equipment and computer systems, risk
management, careful screening of contractual partners, clinical study performance monitoring, reporting on patient safety
and safety of all other participants in clinical studies, and the deviation investigation system.
The pharmacovigilance system ensures the safety of medicinal products for use in human and veterinary medicine by
complying with the requirements of the EU and third countries, and the internal quality system requirements. 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 where our investigational medicinal products are used. 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.
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Our quality system for active ingredients and other incoming materials complies with good practice standards. We ensure
compliance of incoming materials through registration documents, internal regulations, and chemical production
procedures. Our systematic approach to quality management at our suppliers contributes to the marginal number of
incoming material batches with complaints. Despite the volatile situation around the supply of incoming materials, supply
reliability remained unchanged.
Product and process quality control
39
Our finished product and API production builds on in-house technology. We control the critical stages of the production
process, and examine and assess documents for every product batch separately to confirm our medicines are
manufactured in compliance with the marketing authorisation requirements, prescribed procedures, and good
manufacturing practice guidelines. Organisational units involved in research and development, procurement, production,
control, product distribution and quality assurance cooperate in quality assurance processes. Process, packaging and
cleaning validations ensure the compliance of technological procedures applied in bulk product manufacturing, finished
product packaging, and production equipment cleaning. We develop product control strategies that include quality
attributes to ensure the adequate and reproducible quality of our products. We closely follow and assess the quality
attributes to identify any risks. Assessments of production processes and quality attributes are the basis for preparing
annual Product Quality Reviews (PQR) and reports on continuous process verification. We prepare them in compliance
with the latest standards and guidelines on pharmaceutical production using advanced statistical tools and report systems.
Safety of medicinal products is a key feature, which we deliver by ensuring quality of active pharmaceutical ingredients
and finished products. Regulatory bodies, particularly those in the EU, closely examine safety issues. They have recently
been focusing on impurities with carcenogenic potential. They also issue guidelines and adopt measures related to certain
active pharmaceutical ingredients and products. We apply all their guidelines and measures to ensure compliance of our
products.
By February 2019, we had implemented measures to prevent falsified medicinal products from entering the legal supply
chain. Our medicines have safety features placed on their packaging. They consist of a unique identifier (serialisation),
which prevents a falsified medicinal product from being dispensed, and an anti-tampering device, which allows the
verification of whether the product’s packaging has been tampered with. In addition to serialisation, products intended for
certain countries must be shipped in labelled transport boxes and pallets (aggregation) for improved medicinal product
traceability and control from the producer to the user.
In 2022, we introduced a safety feature system for medicinal products for the markets of Uzbekistan, Bahrain, and the
United Arab Emirates. Kazakhstan, Kyrgyzstan, Kuwait, the Russian Federation (for animal health products and food
supplements), and India (for APIs) have also announced requirements to introduce the system in the year ahead. In 2022,
there were no reports about falsification or safety the feature non-compliance. In 2023, we plan to start manufacturing
medicinal products for the Chinese market, which also requires safety features on medicinal products, product serialisation,
and aggregation.
Before a material or finished product batch can be certified and/or released, a batch sample undergoes laboratory quality
control. Our qualified personnel analyses samples in regular quality control using calibrated or qualified laboratory
equipment and validated or verified analytical methods. This ensures the integrity and completeness of results, which we
confirm through internal verification procedures. The number of samples analysed annually corresponds to the production
plans, which depend on market demand. In 2022, the number of samples increased year over year.
Regarding sales and production requirements, we carefully plan and coordinate activities for the timely certification of
materials and finished products. The person responsible for releasing medicinal products authorised by JAZMP certifies
each batch before its market release. We also continually monitor the stability of APIs and marketed products and
guarantee their compliance with the specifications throughout their shelf lives.
We measure our work performance by regularly monitoring quality indicators. Feedback from our customers and users is
a critical indicator. We track and thoroughly investigate their complaints, opinions and suggestions and respond to them
39
GRI 2-27, SDG 16
Annual Report 2022 – Business Report
136
as soon as possible. The ratio of batches with complaints lodged over the last five years as a total of all released finished
product batches is marginal, with no upward trend despite rising production volumes.
There has been no upward trend in recalls over the past five years. In 2022, we made three recalls. Even where the impact
of defects on product quality, safety, and efficacy was minimal, we implemented the recalls in line with our responsibility
to always deliver high-quality medicinal products to our users. Recalls are made in collaboration with marketing
authorisation holders (MAHs) and competent authorities for medicinal products in individual countries. We test the
effectiveness of the recall procedure in mock recalls.
We constantly monitor the quality of our products on the market, collecting and evaluating data on a medicine’s safety
throughout its life cycle, before and after obtaining marketing authorisation, and during its daily use. We continuously
manage risks and provide the correct information to healthcare providers and users of our medicines.
Competent regulatory bodies and our partners supervise the quality system. We also conduct internal audits of the system.
We manufacture and market products in various countries, meaning we are subject to inspections by different regulatory
authorities and inspection bodies. In Slovenia, JAZMP supervises medicinal products and medical devices intended for
the EU, whereas the Health Inspectorate of the Republic of Slovenia (ZIRS) monitors cosmetic products, foodstuffs, and
food supplements. The Chemicals Office of the Republic of Slovenia controls biocidal products and compliance with good
laboratory practice principles, while the Administration of the Republic of Slovenia for Food Safety, Veterinary Sector and
Plant Protection (UVHVVR) controls feed additives and distribution of veterinary medicinal products. 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 2022, the number of inspections and audits on the Krka Group level remained roughly the same as the year before.
JAZMP, which regularly inspects medicinal product and API manufacturing processes, medicinal product distribution,
clinical trials, and pharmacovigilance, conducted two verifications of new API manufacturing processes, one verification of
new rooms for physico-chemical laboratories, and regular inspections of the production of sterile, semi-liquid, solid, and
liquid dosage forms, and laboratories for quality control and development of analytical procedures. Regular inspections
facilitate renewals of good manufacturing practice (GMP) and good distribution practice (GDP) certificates, which confirm
that the manufacture and distribution of medicines and APIs comply with good practice principles and guidelines. Regular
supervision by the Chemicals Office of the Republic of Slovenia confirms our compliance with good laboratory practice
(GLP) principles.
Our medicines are also marketed in non-EU states where national requirements apply. Certain countries do not recognise
European GMP certificates, meaning competent national regulatory bodies conduct national inspections. In 2022, we
passed inspections by regulatory bodies of the Republic of Yemen and the Russian Federation. Following inspections by
the Russian State Institute of Drugs and Good Practices (SID&GP), we were granted new GMP certificates applicable to
the entire Eurasian Economic Union (EAEU). The certificates issued by the EAEU apply to manufacture of medicinal
products and APIs and allow us to apply for marketing authorisations and market medicinal products in the EAEU member
states.
Our experts took part in European, EAEU, and Chinese inspections conducted at our subsidiaries and main contractual
partners. The control over operations and quality management in product manufacture, testing, and distribution, clinical
trial monitoring, and pharmacovigilance inspections contribute significantly to integrated quality management, product
safety and efficacy, and risk management in all areas.
Our partners conduct audits in the Krka Group companies every year to verify good practice compliance,
pharmacovigilance system suitability, and contract compliance.
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Inspections in the Krka Group
In 2022, the Krka Group passed all inspections and audits and was granted all relevant authorisations and certificates.
Competent authorities for medicinal products also conduct quality control of marketed products. Every year, a certain
number of products is subject to their control procedures to verify product quality. The results of all controls in 2022 were
compliant and confirmed the efficiency of internal controls within the quality system.
Information security and personal data protection
Our information security management system (ISMS) is ISO/IEC 27001 certified and regularly reviewed by way of self-
inspections, audits, and inspections. In 2022, we passed the system recertification audit, with the certificate now valid
until 2025. We regularly assess risks related to information sources and employ state-of-the-art technologies to protect
our systems from external attacks. Krka subsidiaries actively pursue the guidelines of the controlling company set out in
the Information Security Policy and Rules on Personal Data Protection. This ensures a uniform ISMS across all Krka Group
companies.
We regularly monitor certain personal data processing procedures and align them 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 using cookies
on websites. We established and rolled out an internal General Data Protection Regulation (GDPR) 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 employee training and awareness
campaigns. In 2022, we focused on raising awareness among all Krka Group employees about phishing attacks through
demonstrations 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, and control systems. The expected minimum availability of critical (production, documentation, business, and e-
mail) 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.
34
35
23
35
21
0
5
10
15
20
25
30
35
40
2017 2018 2019 2020 2021
Number of inspections
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Business continuity
The business continuity management system (BCMS) complies with the ISO 22301 standard. Its purpose 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. The BCMS operates according to the adopted strategy and policy and is regularly updated.
Essential parts of the BCMS include procedures for optimising our resilience to damaging incidents, incident management
procedures, and business continuity plans for crisis management. The BCMS forms an integral part of comprehensive risk
management at the Company. In 2022, we rolled out the system at our production subsidiaries. We regularly control it
through internal audits and inspections.
In 2022, we checked the implementation of the BCMS strategy, focusing 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 the nine critical processes identified in the Business Impact Analysis. This honed
the skills of employees tasked with managing emergencies, directing damage limitation activities, and rapidly getting
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 significant 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.
Materiality assessment process
We build the trust of stakeholders by engaging them, understanding their viewpoints and addressing their expectations,
and acting on their feedback and initiatives. We consider these in our strategic directions and day-to-day business
operations, geared towards creating lasting value for our stakeholders.
Management approach
We determine materiality by applying an integrated approach to Krka Group risk management and strategic planning.
Many experts in finance, investor relations, compliance, quality management, health and safety at work, environmental
protection, public relations, human resources, marketing, sales, pharmaceutical R&D, corporate performance
management, purchasing, information technology, internal audit, and electric power supply are involved in the process.
In 2021, we conducted a thorough materiality assessment for the first time to identify topics particularly relevant for Krka,
its stakeholders and the wider community. An interdisciplinary sustainability project team led the process of updating the
list of our main stakeholders and identifying material ESG topics relevant for the Krka Group. Their boundaries and
stakeholders’ expectations were verified in in-depth discussions with 17 experts representing our stakeholder groups. This
added a new dimension to the systematic consideration of their interests and allowed us to anticipate future trends and
topics from the perspective of external stakeholders. We conducted analyses and identified seven groups of 33 material
ESG topics. The Management Board of Krka considered and approved all the aspects mentioned above. The results are
presented in the Krka Group materiality matrix below.
Policy, strategic objective and indicator compliance
In 2022, we made an important step forward in integrating ESG perspectives in our strategic planning and business
operations in line with the Krka Group key strategic objectives up to 2026. We used the materiality assessment findings to
update policies in key areas and adopt strategic objectives in sustainability-relevant domains. The fundamental objective
of integrating the Krka Group sustainability principles and sustainable governance approaches into management
processes and business decisions is to heighten awareness of sustainability-related risks and opportunities that could help
improve their management and the success of our business operations going forward.
The adopted ESG Policy of the Krka Group refers to the controlling company and all our subsidiaries and identifies our
priority areas and management approaches. It demonstrates our commitment to applying sustainability principles and
encouraging their integration in business processes across Krka’s value chain. The Policy was discussed and adopted by
Krka’s Supervisory Board and Management Board and published on SEOnet of the Ljubljana Stock Exchange, ESPI of
the Warsaw Stock Exchange, and Krka’s website.
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Updated materiality assessment
40
Dynamics in our environment and our effort to promote sustainability culture saw us update the assessment of key
environmental, social and governance impacts that Krka has on its stakeholders and the assessment of external impacts
on Krka business operations. We conducted a qualitative survey among financial analysts and a quantitative survey within
the Krka Group, which involved more than 1,200 employees. The assessment also considered the results of regular
satisfaction surveys among end users and interactions with key stakeholders. Our sustainability project team conducted
an internal assessment of external impacts in collaboration with 20 experts in our key business areas. On the initiative of
the Management Board member responsible for sustainability issues, the Management Board discussed and adopted the
process and the revised materiality assessment in terms of external impacts on our business operations and our impacts
on key stakeholders after obtaining consent from the interdisciplinary sustainability project team.
We identified two new material topics and repositioned certain ESG perspectives due to changes in the environment. The
materiality matrix presents impact assessments in terms of double materiality and the position of material ESG topics. We
also considered material topics in aligning the scope and content of disclosures.
Disclosures in the Annual Report fully apply indicators of GRI (Global Reporting Initiative) Standards and certain indicators
of SASB (Sustainability Accounting Standards Board) Standards for the pharmaceutical industry. They are disclosed in
relevant sections of the Annual Report, as indicated in the footnotes and the GRI content index. We also identified the
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 because our core business can contribute to it significantly.
Main sustainable development goals from the Krka Group perspective
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 Krka Group subsidiaries, reference
to the Group is made in the text. The indicators will be upgraded and further applied to other Group subsidiaries. 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.
41
Any queries regarding the Annual Report can be sent to letno.porocilo@krka.biz.
42
40
GRI 3-1, 3-2
41
GRI 2-2, 2-3, 2-4, 3-2
42
GRI 2-3
Annual Report 2022 – Sustainable Development
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Key stakeholder groups and approach to stakeholder engagement
43
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 meeting 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
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
43
GRI 2-29
Annual Report 2022 – Sustainable Development
142
Material ESG topics and their six groups
44
Topic groups
Topics
Product quality and patient safety
• Quality, safety and efficacy of products and APIs
• Integrated quality management system
• Fair disclosure of adverse reactions, product labelling, and anti-counterfeiting
• Animal welfare
Talent attraction and retention
• Recruitment, development and talent management
• Employee diversity, inclusion and participation
• Employee health, safety and well-being
Good leadership and governance
practices
• Resilient and flexible vertically integrated business model
• Legislative and regulatory compliance
• Management diversity, independence and competence
• Sustainability linked remuneration
• Information security
• Prosperous business operations and financial strength
• Supply chain and business continuity
• Contribution to local community development
Accessible healthcare
• Patient-tailored product portfolio
• Affordable medicines
• R&D and culture of innovation
• Efficient registration procedures
• Expert support for health professionals
• Initiatives to raise awareness of healthy lifestyles and identification of widespread
diseases
• Uninterrupted supply of medicines
Planet and climate change
• Management of carbon emissions
• Waste management
• Efficient use of energy and natural resources
• Management of hazardous materials
• Product life-cycle management
Compliance, integrity and
transparency
• Ethics in clinical trials and R&D
• Anti-corruption
• Comprehensive and accessible reporting
• Fair marketing and sales practices
• Human rights
• Tax policy and transparency
44
GRI 3-2
Annual Report 2022 – Sustainable Development
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Materiality matrix of the Krka Group
ESG topics are divided into six groups. Their significance for stakeholders and impact on the Krka Group operations are presented on the left. Individual ESG topics most relevant
for stakeholders or considered to have a major impact on Krka Group operations are presented on the right.
Annual Report 2022 – Sustainable Development
144
Employees
A responsible attitude to employees entails sound and professional employee management throughout their employment
at the Krka Group. We foster a stimulating working environment in which the goals and needs of individuals may be linked
to the Group’s objectives and contribute to the development of our employees’ skills, competencies and careers. Special
emphasis is placed on attracting and retaining talent to ensure that the company remains successful going forward.
Krka received the 2022 MEGA Acceleration (MEGA pospešek 2022) Award, the highest recognition for remarkable
achievements in intergenerational activities, cooperation and integration at workplace in the Slovenian competition
recognising employers who are actively working towards intergenerational cooperation. Our project on the wide-ranging
programme for promoting intergenerational cooperation made us the worthy winner of the award.
Planet GV and the Slovenian institute for knowledge management and talent development Sofos presented us with the
TOP Education Management certificate acknowledging our above-average investment in employee education and
development.
New hires continued, as we recruited over 1,600 new employees. We intensified educational activities and increased the
number of hours of training per employee. Despite our comprehensive health and safety at work system, the workplace
injury rate slightly increased, yet the injuries were mainly minor.
The Krka Group operates in more than 70 countries with diverse cultural settings. We ensure equal opportunities for our
employees regardless of gender, race, religion, sexual orientation, nationality or other cultural differences. We build our
common culture on the principles of diversity, inclusion and participation. We respect human rights as enshrined in
internationally recognised principles and guidelines, including the United Nations’ Universal Declaration of Human Rights.
We abide by statutory regulations and standards related to human rights wherever we operate. We are committed to 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.
45
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 at the Krka Group subsidiaries. This increases the scope
of compiled data, and is set to be expanded further 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 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 showed that Krka employees have a sense of loyalty
to the Company and are eager to achieve the set goals, and confirmed Krka’s corporate social responsibility and adherence
to high ethical standards. We used the survey findings to make improvements, which will contribute to an even more
efficient and creative environment.
45
GRI 3-3
Annual Report 2022 – Sustainable Development
145
Key data about employees
46
31 Dec 2022
Number of regular employees
11,598 of which 54.8% in Slovenia
Number of agency workers
994 (7.9% of total personnel)
Employees covered by collective bargaining agreements
62%
Average age
39.1 years
Female employees
60.1%
Female employees in management positions
50.8%
Permanent employees
88.1% (women 87.4% and men 89.2%)
2022 employment index
Index 2022/21
Krka in Slovenia
101
Krka’s representative offices abroad
104
Company
101
Subsidiaries abroad
99
Terme Krka
108
Krka Group
101
Agency workers
105
We hired 1,639 new employees, accounting for 13% of total Krka Group headcount. Employee turnover of the Krka Group
was 11%.
2022 new employee hires by age group, gender and region
47
Rate of new employee
hires
Age groups
Under 30 years old
47.5%
30–50 years old
48.9%
Over 50 years old
3.6%
Gender
Male
38%
Female
62%
Region
Slovenia (including Terme Krka)
32.3
South-East Europe
10.9%
East Europe
30.5%
Central Europe
18.6%
West Europe
7.4%
Overseas Markets
0.3%
46
GRI 2-7, 2-8, 2-30, 405-1, SDG 5
47
GRI 401-1
Annual Report 2022 – Sustainable Development
146
Employee structure by region (including agency workers) as at 31 December 2022
48
Educational structure
The Krka Group employs 200 persons holding a doctoral degree, and 389 persons holding a master’s degree or
specialisation. In total, 5,944 employees, or 51% of Krka employees, have at least university-level qualifications. One of
the pillars of Krka’s human resource policy is continuous work to improve educational structure. We are aware that only
our experts’ high level of qualifications allows us to respond to the demands of a highly competitive market quickly and
effectively.
Krka Group employees by education level at the end of 2022
31 Dec 2022
Higher professional, university degree or higher (level VII or higher)
66.7%
Vocational college degree (level VI)
2.6%
Secondary school education (level V)
22.5%
Other (less than level V)
8.2%
Employee education and development
49
Development requirements inform our know-how development and upskilling programmes. We identify them through our
competency-based system for various work areas. Competencies are a good starting point for recruiting new employees
and for designing training and skills development programmes, and evaluating them. We provide our employees with
various opportunities to 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. We encourage lifelong education, which contributes to successful work, career
advancement, professional development, and personal growth. We plan our educational and training programmes and
implement them systematically.
Quality comprised a significant proportion of our educational activities in 2022. We recorded 156,732 hours of training on
quality. Our employees also learn about the most recent and significant developments at higher-education institutions,
institutes and other educational organisations in Slovenia and abroad. As many as 506 Krka employees were part-time
students, of whom 37 were pursuing postgraduate studies to obtain a specialisation, master’s, or doctoral degree.
48
GRI 2-7
49
GRI 3-3, SDG 8
58.0%
5.6%
22.3%
9.6%
4.2%
0.3%
Slovenia (including Terme
Krka)
South-East Europe
East Europe
Central Europe
West Europe
Overseas Markets
Annual Report 2022 – Sustainable Development
147
We are the only company in Slovenia to offer six national vocational qualification programmes for the pharmaceutical
industry. These programmes are also available to employees of pharmacies and other pharmaceutical companies.
In 2022, as many as 127 Krka employees 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.
50
The Krka appraisal interview is an important tool enabling effective leadership, identification of potentials, motivation and
development of employees. Managers and employees use it to exchange information and share knowledge, review goals,
openly discuss the main tasks and expectations relating to work and career development, and plan future work and
professional development.
51
Krka has more than 60 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. We place a considerable emphasis on designing training programmes on people
management, conflict resolution, and effective and respectful communication.
A combination of traditional forms of training and e-learning and e-testing has played a crucial role given Krka’s widely
dispersed international organisation. Our employees have access to a web video library with various professional and
personal development resources, including language courses, courses on time management, priority setting, project
management, resilience and other topics.
2022 key data on employee education in the Krka Group
52
2022
Average training hours per employee
44.8
Proportion of revenue allocated for education
0.40%
Average cost of training per employee (€)
588
Hours of training on human rights
1,787
Proportion of employees trained on human rights
28%
We offer scholarships to those students who demonstrate interest, talent and high competence for working in the Krka
Group. We systematically work with them and provide them with the opportunity to gain experience. They can learn about
Krka and the company’s working processes and also prove and develop their skills and competencies during their
internship. We assist students and junior researchers with their theses. Our employees run courses in undergraduate and
master’s study programmes and help design their content. At the end of 2022, Krka had 68 scholarship students, 27 of
whom graduated in 2022 and started working at Krka. We also work with secondary schools and faculties in providing
obligatory work placements. By working with faculties and schools and offering scholarships, we can identify potential new
hires and talents and manage risks related to the lack of experts on the labour market more easily.
Key and promising employees
We systematically train key and promising employees and try to identify them early in their careers.
We provide training, mentoring and coaching to prepare them for the most challenging and pivotal roles.
Highly promising employees with less than one year of service at Krka are invited to a workshop, where we test their
abilities in various individual and group task settings. We also use this method when selecting candidates for challenging
roles and for internal transfers of employees to other roles to determine their motivation, insight and capacity to cooperate.
We offer identified key and promising employees and young talents several programmes to support their individual
development. The programmes of Krka Leadership School are complemented by coaching and action learning.
50
GRI 404-3
51
GRI 404-3
52
GRI 404-1
Annual Report 2022 – Sustainable Development
148
Key and promising employees
At the Group level, we also run a programme for expert and project teams focused on communication skills, teamwork and
project work, learning about and exchanging Krka’s good practices, networking between employees from various
backgrounds, and employees’ personal development. New employees and employees who take on roles carrying greater
responsibility learn about their tasks through mentoring. A special form of international mentorship is used to systematically
develop promising employees.
Rewarding and motivation
All Krka Group employees are included in reward and recognition systems, which we use to systematically recognise good
work and strong performance. They encourage dedication and motivation and praise excellence and loyalty.
We organise the Krka Awards Day, our traditional event where our best employees receive recognitions and awards and
our most loyal employees are presented with long-service awards and special recognition awards. After two years of social
restrictions, we held the 2022 Krka Award ceremony for all recipients again. We awarded the best employees and the best
managers in organisational units and the Krka Group as a whole, and the best employees in the sales and marketing
network, in regulatory affairs, and other fields.
Encouraging innovation
In 2022, as many as 380 useful proposals and improvements were submitted, and we awarded 373 proposals put forward
by 365 employees.
Useful proposals and improvements lead to continuous improvement of the quality system and hence the integrated
management system, generate savings, and improve efficiency. We try to inspire our employees to resolve issues related
to the 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 through campaigns, meetings, recognitions, and awards. The most useful proposals and
improvements are also recognised at the Krka Awards Day.
Digitalisation in human resources
We upgrade our human resource information system by introducing new solutions. In 2022, we optimised and digitalised
our human resource processes, mainly those that are uniform in the entire Krka Group.
Selection process
Key and promising employees – 14.3% 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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We augmented our digitalised time management system, which now includes a solution for submitting and approving
absence, arrival and departure requests. The system is operational across all organisational units. We successfully
launched the e-recruitment system at our subsidiaries in Croatia and Hungary. We have also continued to digitalise the
Krka appraisal interview process and the employee education and development system.
Health and safety at work
53
We ensure a safe and healthy work environment for all our employees and contractors of the Krka Group. Every new
project and technological solution incorporates the latest health and safety at work and fire prevention developments.
The Management Board adopted the policy on health and safety at work in line with Krka’s strategic goals. The
implemented system of health and safety at work complies with the ISO 45001 standard and is fully incorporated into
Krka’s integrated management system. External auditors verify its performance every year, and we regularly conduct
internal audits of the system. At the Company level, we have a health and safety at work team responsible for preparing,
implementing, and executing key objectives and programmes approved by the Management Board, and for reporting to
the Management Board regularly. Health and safety at work workgroups operate in organisational units and production
sites and comprise an authorised certified HSW officer from Safety and Health.
Workers covered by ISO 45001 system
We continuously adopt safety measures to manage workplace risks and improve the working environment. We prepare
risk assessments for all new or modified technological procedures. More information about risks related to health and
safety at work is available in ‘Risk management’, subsection ‘Employee risks’.
We organise regular occupational health and safety training, which is mandatory for all employees. The training is
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 that employees 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 employees
to correct and safe working practices. 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 assessed in regular safety audits in all organisational units and production sites. We also gather
information by managing safety incidents, near misses and accidents and take all necessary corrective and preventive
actions if any deviations are identified.
53
GRI 3-3, GRI 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7
5,017
5,407
5,702
5,715
5,789
1,200
1,114
973
952
1,017
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2018 2019 2020 2021 2022
Employees Agency workers, students
Annual Report 2022 – Sustainable Development
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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.
Care for health is a common task of all employees, managers, professional services, and occupational medicine doctors.
The Works Council and both trade unions are also incorporated into the system. We update our Health Promotion Plan
every year and prepare it dynamically considering proposals and initiatives put forward by all employees, agency and
student workers. They can 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
or outside regular work hours.
Various activities that help reduce sick leave have been in place in the Krka Group. We adopted many sanitary, health and
organisational measures to prevent the introduction and spread of viral infections and to ensure uninterrupted work
processes. In 2022, the sick leave rate was 7.8%, up 0.9 percentage points on 2021. The number of sick days and
childcare leave days increased. There were 5.1% of Krka employees on parental leave, which they can take in compliance
with their national legislation.
54
At the Company, 5.0% of employees have a registered work-related disability. We adjust their workplaces to enable them
to do their jobs in line 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 use the LTIFR (Lost Time Injury Frequency Rate) indicator to measure the incidence rate of workplace accidents,
which refers to the number of workplace accidents resulting in three or more days’ absence from work per one million
hours worked. In 2022, there were no fatalities as a result of work-related injury or cases of work-related ill-health. The
LTIFR reached 4.06, up 19% on the previous year. Injuries were mainly minor and involved hits, cuts and slips. One injury
required absence of more than 6 months. 70% of accidents involved men, and 30% involved women, with no significant
age group representation.
55
LTIFR indicator by year for Krka employees and agency workers
56
In 2022, we recorded no major safety incidents that might cause a fire or a major spillage of hazardous chemicals or impact
manufacturing processes.
54
GRI 401-3
55
GRI 403-9
56
GRI 403-9
3.06
3.91
3.27
3.41
4.06
0
1
2
3
4
5
2018 2019 2020 2021 2022
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151
Our employees undergo regular trainings on fire protection. We conducted 65 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 our business operations. We also tested the coordination and efficiency of internal
and external intervention teams and Krka first aid and medical teams. The Fire Safety Unit and the Industrial Fire Brigade
mobilise if any incident occurs.
Number of drills and emergency exercises
Health and safety at work systems 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
Inclusive communication leads to regular information exchange and contributes to a productive business environment, a
strong organisational culture, and employee loyalty.
The members of the Works Council, who represent all organisational units, 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 Works Council representatives brief employees about the past year’s operating
results, plans for the current year, development strategy, and other news. Employees can ask questions and give
proposals.
If employees wish to speak with the President of the Management Board, they can do so by sending an e-mail or making
an appointment to see him in person.
Internal corporate communication takes place simultaneously through various internal media and tools.
51
61
45
49
65
0
10
20
30
40
50
60
70
2018 2019 2020 2021 2022
Annual Report 2022 – Sustainable Development
152
Corporate communication media and tools in the Krka Group
The Bilten weekly
bulletin
The Krkanet intranet
portal
The Utrip internal
magazine
E-mails sent from the
Krkaš.si e-mail
address
Information screens
Notice boards at
manufacturing and
other sites
Internal campaigns
Online events
Initiatives (Your
Effectiveness Counts,
Krka’s Mobility Plan)
Official Krka profiles
on social media
(Instagram, LinkedIn,
and YouTube)
Employees learn about important corporate guidelines at internal events and in communication campaigns. 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. We have recently added Krka’s
official social media profiles to our corporate communication tools. We use them to post key information and information
about our operations’ impacts on society.
Internal communication tools abroad include local issues of the Utrip (Puls) and Bilten (Bulletin) in national languages, and
the KRKA Bulletin, our quarterly e-newsletter in English and Russian for our markets without local publications in national
languages. We inform our employees about local and important corporate news and campaigns via e-mailings and
Krkanet. Employees in key markets use intranet portals (Krkanet) in their national languages. 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
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.
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 bioequivalence
studies and research in pre-authorisation phases and support post-authorisation clinical research. Clinical research with
Krka medicines helps health professionals make the right and reliable decisions and contributes to treatment success and
medical advances. We ensure high quality, transparency and ethics in clinical research by complying with legal regulations,
good clinical practice guidelines and the Helsinki Declaration.
We differentiate two groups of users of our products: patients and other end users; and health professionals, healthcare
providers and direct customers. Their trust is built on responsible and professional communication and providing all
necessary information about our products in compliance with the relevant legislation.
57
Patients
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 in certain therapeutic areas to help users alleviate
symptoms. We are optimising digital communication channels and improving information to address the concerns and
needs of our end users. We also create digital content to promote healthy lifestyles. All our product information complies
with relevant regulations and is pre-approved by the competent regulatory body in each country, e.g. in Slovenia, the
Agency for Medicinal Products and Medical Devices of the Republic of Slovenia. No incidents of non-compliance
concerning product information were identified in 2022.
58
57
GRI 3-3
58
GRI 417-1, 417-2, SDG 3
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153
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 appropriate measures for the safe use of medicines comply with European legislation and
regulations in other countries where Krka holds marketing authorisations.
In 2022, we launched an entirely redesigned and updated corporate website with a new section Health Matters and
additional information on our products, their development and production, and quality assurance. Our eZdravje portal is
an important source of diverse and credible information on health in Slovenia. We also support certain web portals set up
by professional associations to provide health-related information to the general public.
Patients can only be included in clinical research after expressing their willingness to participate freely and voluntarily.
Investigators inform them about the course of the research 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 personal
data breaches in 2022. We apply good pharmacovigilance practices in monitoring and reporting adverse events. Results
of clinical trials are published in the EU Clinical Trials Register to support their transparency.
59
Over 350,000 patients from 27 countries have participated in over 150 post-authorisation clinical studies with our key
medicinal products from the main therapeutic classes. In 2022, the final report was prepared for Blossom, the international
randomised clinical trial with pregabalin (Pragiola*) and duloxetine (Dulsevia*). The trial took place in five countries and
included 254 patients with painful diabetic peripheral neuropathy. The trial findings confirmed that Pragiola* and Dulsevia*
relieve pain in patients with neuropathic pain and help reduce symptoms of insomnia and related stress. The trial also
confirmed the good tolerability of both medications.
* Products marketed under different product brand names in individual markets are marked with an asterisk and listed on pages 118–120. Products
can also be marketed under the corporate trademark in individual markets.
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 in product development, production, sales and marketing. We adhere to 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. 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 2022.
60
Direct customers include distributors, pharmacy chains, hospitals, and pharmaceutical companies. We regularly conduct
online satisfaction surveys among our direct customers to determine their general level of satisfaction, their satisfaction
with our products, sales personnel, order processing and fulfilment, and complaint procedures. After thoroughly analysing
their reviews and proposals, we set measurable goals, adopt relevant actions, and monitor their performance in the next
survey.
In 2022, the response rate was 83%, down 3 percentage points compared to the year before. The satisfaction index of
slightly less than 93% was the highest over the last five years. The respondents attached the highest importance to order
fulfilment, actual delivery times, and complaint response times. Other aspects of customer satisfaction also recorded high
average scores.
61
59
GRI 418-1
60
GRI 417-3
61
GRI 2-29
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Indirect customers or health professionals, i.e. doctors, veterinarians and pharmacists, prescribe, recommend, and
dispense our products representing a crucial link with patients and other end users. We regularly inform them about our
products, enabling them to make informed decisions about which product is most suitable for their patients and users. We
maintain direct contact with them in 42 countries, and provide them with 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 by organising and supporting
professional and educational meetings where they can build on their know-how, learn about new guidelines, exchange
opinions and experiences, and network. Meetings take place in various countries where Krka is present with its products.
In 2022, most took place in person, and only some were organised as online or hybrid meetings.
Physicians and pharmacists can access educational information on our thematic web pages, which we constantly upgrade.
In Slovenia, we redesigned our web portal for healthcare professionals Krka for Knowledge and launched it in 2022.
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.
Special emphasis is placed on their understanding and compliance with ethical standards, standards of work, and legal
and other regulations. We also ensure they have good communication skills.
Feedback and opinions obtained through daily contact and independent market research are important in providing high
quality, safe and effective medicines. IQVIA data for Poland, our second-largest market, showed that cardiologists ranked
us the most visible company, with medical specialists from 18 specialist areas of medicine and general practitioners placing
us among the most visible. Ipsos Comcon data for the Russian Federation, our major market, indicated that general
practitioners and cardiologists ranked us first for prescriptions.
We take an active part in the changing professional, scientific and regulatory environment by participating in various
professional and industry associations in Slovenia, the European Union and other countries.
Corporate social responsibility
We are aware of our operations’ impacts on the society as we are an international pharmaceutical group and one of the
largest companies in Slovenia. We manage them responsibly, adhering to our strategic guidelines and policies. We foster
integrated and responsible social development, scientific research, intergenerational and interdisciplinary cooperation,
adherence to diversity principles, and healthy lifestyles. We support projects related to health and the quality of life. We
maintain long-term partnerships through sports, culture, healthcare, science, education, and humanitarian actions.
We identify the needs of the community through regular contacts, long-term partnerships, annual meetings with our
partners, and the process of preparing new sponsorship and donation contracts. Our sponsorship and donation committee
examines sponsorship and donation applications. In 2022, we fulfilled all agreed obligations.
62
We allocated 0.20% of our sales revenue to sponsorships and donations and helped more than 450 institutions,
associations, and organisations achieve their goals.
63
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 15 were recognised for their achievements. We expressed our appreciation to nine representatives of clubs,
associations and institutions for their invaluable contribution.
62
GRI 3-3
63
GRI 201-1
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155
Encouraging new scientific discoveries
64
We support projects that advance the work of various educational and scientific institutions and deepen the expertise of
highly skilled professionals. They are designed to upgrade infrastructure and provide scholarships, above-standard
educational activities, research work, and participation at national and international competitions.
We attract young talent in research through Krka Prizes. Over the past 52 years, we have awarded 3,044 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 the call for secondary school research papers, pupils handed in 43 research papers. We
awarded 19 Krka Prizes and 23 recognitions for their research work. In the call for graduate and post-graduate research
papers, we received 101 research papers and awarded Krka Prizes to 31 young researchers. Five of them received Krka
Grand Prizes for their exceptional research work. We also presented the students with 35 special commendations and
35 recognitions. Among the recipients, 20 held doctoral degrees. The research papers covering theoretical and
experimental issues and employing a multidisciplinary approach have been constantly improving in terms of quality and
variety.
In 2022, we supported major projects at ten primary schools and kindergartens and contributed to school funds for talented
pupils. We also supported several end-of-year celebrations at primary and secondary schools. Our contribution to the
Janez Drnovšek Scholarship Fund, named after a prominent Slovenian politician, showed our support for the Fund’s
activities for the fifth consecutive time.
In 2022, the Slovene Science Foundation, our long-time sponsorship recipient, organised the 24th Slovene Science
Festival, which attracted participants from around the world.
Charity and volunteering
Volunteering and charity have become inseparable parts of our organisational culture. In 2012, all our charity and
volunteering actions were united under Krka’s Week of Charity and Volunteering. This campaign is organised in all
countries where Krka has its subsidiaries and representative offices. In 2022, 850 Krka employees volunteered to
participate in the campaign.
Our charity impact over the nine years of Krka’s Week of Charity and Volunteering
The campaign united 9,181 Krka volunteers in acts of kindness.
We collected 29.4 tonnes of clothes, food, books, toys, personal hygiene products and other necessities for the Red Cross and the
Slovenian Karitas charity.
We donated 1,013 litres of blood.
We spent time with the residents of 12 various institutions, associations and primary schools for children with special needs.
We socialised with the residents of 37 retirement homes, organised workshops and cultural events for them.
We helped prepare more than 6,900 food packages (or 54 tonnes of food) and sort 6 tonnes of clothes at the Red Cross and the
Karitas charity.
We collected almost 3.7 tonnes of pet food and helped at pet shelters and the Ljubljana ZOO.
We hosted almost 19,000 visitors and Krka employees at Krka.
We encourage our employees to volunteer through sponsorship boards of non-profit institutions and by providing supplies.
In 2022, we supported two particular institutions: the retirement home in Novo mesto and the Novo mesto Dragotin Kette
Primary School for children with special needs. We have supported the retirement home since its establishment 42 years
ago and the school since the establishment of the Krka sponsorship board 45 years ago.
In 2022, we presented the 11th consecutive Volunteer of the Year Award and thanked 152 Krka employees who donated
blood 10 to 100 times.
64
GRI 203-1, 203-2, SDG 4, SDG 8
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156
Support for healthcare institutions
65
Providing medicines to treat modern-day common diseases is one of our top goals. We continuously complement and
upgrade our product range to respond to other needs of patients and challenges in their treatment.
In line with our goal to provide affordable treatment, we donate to healthcare institutions while complying with applicable
laws. Our donations towards the purchase of modern medical devices help improve the quality of health care services,
diagnostics, and patient treatment.
In 2022, we donated 32 portable bedside ultrasound machines to general medical clinics in Slovenia, bringing the total to
82 bedside ultrasound machines over the last two years. The donation also included necessary training for the doctors.
We donated two incubators to the Division of Gynaecology and Obstetrics at the University Medical Centre Ljubljana. The
two state-of-the-art machines ensure that premature babies and sick newborns get the best possible care and the medical
staff the support they need. The donation exceeded €100,000.
Support for patient associations and societies
66
We work with patient associations and societies because we appreciate their contribution to the quality of treatment and
patient safety. Among others, we supported two projects: What Does Your Heart Beat for?, a campaign run by the
Slovenian Hypertension Society and the Slovenian Society of Cardiology, and Neuropathic Pain, a project managed by
the Slovenian Association for Pain Management.
Partnership in sports
We promote many sporting activities to foster healthy lifestyles. We primarily support local clubs and associations
encouraging young people to take up recreational or professional sports. We donate funds to purchase sports equipment
for schools and other organisations that promote a healthy lifestyle.
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. We have also supported recreational and sporting activities under Krka Retirees Society since
its establishment in 2000.
Through our campaign Caring for Your Health – Together We Scale the Heights, we carried out maintenance work on
17 signposted Krka 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 a 37-year-long
collaboration. In 2022, we arranged the fifth consecutive trip to Planica for 443 children and their mentors from five primary
special education schools and four primary school branches to see the qualifications for the final competition.
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.
Dedicated to culture
We strive to bring culture closer to our employees and the local and wider community.
65
SDG 3, SDG 5
66
SDG 4
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157
In 2022, we supported the publication of 10 books and hosted four cultural evenings. We staged the Krka Cultural Evening
at the church housing the Galerija Božidar Jakac gallery in Kostanjevica na Krki for the sixteenth year running.
We also supported the artistic work of the Slovenian pianist Meta Fajdiga and the Slovenian violinist Patricija Avšič, both
giving impressive performances at Krka cultural events. Our long-lasting partnership with the Cankarjev dom cultural and
congress centre in Ljubljana led to the performance by the Berliner Philharmoniker, one of the world’s best orchestras, at
the centre.
We supported other cultural societies, institutions and events, among them the Galerija Božidar Jakac gallery in
Kostanjevica na Krki, Pihalni orkester Krka brass band, the Novo mesto Anton Podbevšek Teater theatre, Festival
Ljubljana cultural and art institution, the Slovenian Reading Badge Society, the Slavic Society of Dolenjska and Bela
krajina, the 54th international PEN Writers’ Meeting organised by the Slovene PEN Centre, and the Cankar Award for the
best original literary work. Krka’s Culture and Arts Society has a prominent role in fostering culture. To mark its 50th
anniversary, the Society organised a performance by Krka’s mixed choir and Krka Octet. The Society also arranged the
43rd Dolenjska Book Fair, 18 exhibitions of works by Slovenian and foreign artists, and eight Theatre Club meetings.
Support for non-governmental organisations
67
Every year, we support several non-profit, non-governmental and non-political organisations and their initiatives,
particularly those by the Red Cross and the Slovenian Karitas charity.
We responded to the Karitas charity’s call to help Ukraine and made two donations of our medicines worth €200,000 in
March.
Krka has been the main sponsor of the People in Need Fund of the Regional Branch of the Red Cross in Novo mesto for
several years. We worked with humanitarian organisations and made several substantial donations to help 15 families and
individuals in need. Our executive managers also made a contribution to the Regional Branch of the Red Cross in Novo
mesto to help a family with three children from Novo mesto.
Together with the local Association of Friends of Youth Mojca in Novo mesto, we gave presents to more than 2,500 children
from three municipalities in the Dolenjska region and children of Krka employees.
We maintained our association with the Chain of Good People project launched by the Association of Friends of Youth
Ljubljana Moste-Polje. The association helps families in need in Slovenia. We have been working together with the Novo
mesto Occupational Activity Centre for several years. The centre’s residents also prepared New Year gifts for our company
in 2022.
We provided material and financial support to firefighting departments. We contributed towards the purchase of new fire
engines and equipment and the renovation of fire stations of 16 fire departments and firefighting agencies in Slovenia. We
also helped 46 fire departments to raise funds by preparing promotional material. We sponsored the 100th anniversary of
Ljubljana Fire Brigade, the largest and the oldest professional fire brigade in Slovenia, and were a silver sponsor of the
Fire Fighter’s Olympic in Celje, organised by the Slovenian Firefighters Association. Our male and female firefighting teams
took part in the event and achieved good results.
In July, more than 10 Krka Volunteer Industrial Fire Service members helped fight wildfires in Slovenia’s Carst region.
They joined their colleagues from local volunteer fire departments. Eight professional Krka Industrial Fire Brigade
firefighters also helped in this major operation.
Social responsibility projects
If you need further information on social responsibility projects, please e-mail us at 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.
67
GRI 201-1, 203-1
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158
Natural environment
We reduce the environmental impacts of our operations by introducing sustainable solutions, something we factor in
throughout the product life cycle. We are committed to climate change mitigation and adaptation, rational use of energy
and all natural resources, transition to the circular economy, emission and waste reduction, and biodiversity conservation.
Bearing this in mind, we ensure healthy working conditions for our employees and the wider community. We took a step
forward as regards the environmental dimension of sustainability in 2022. We optimised paper use by improving patient
information leaflet design, setting up a renewable energy supply, improving separate waste collection systems, reducing
waste volume in collaboration with a major supplier, and setting up a returnable packaging system. We follow the guidelines
on environmentally sound management in the entire Krka Group.
2022 environmental milestones
We cut the specific energy use, measured in TJ per billion product units, by 6% on average over the past few years.
We reduced our carbon footprint by 320 t CO
2
-eq per year through our energy efficiency improvement projects
We reduced paper use by 9 tonnes by optimising the patient information leaflet design.
We substituted 4.3% of river water used to supply cooling towers with rainwater.
We reduced disposable waste by 13%.
A total of 492 tonnes of waste composites were sent for processing, from which the contractor recovered 206 tonnes of aluminium
and 255 tonnes of plastic.
We set strategic ESG goals, which commit us to reducing our carbon footprint, increasing renewable energy, cutting specific waste
volume, and ensuring efficient use of energy, water and other resources.
We handed over more than 94% of total waste for processing or energy recovery, increased waste separation by 6%, and
decreased disposable waste by 13%. Year on year, our total waste increased by 5%, matching the increase in production
volume. We maintained total water consumption at the 2021 level. Year on year, drinking water consumption increased
by 4.8% to 676,482 m
3
, while river water consumption decreased by 3.9% to 785.135 m
3
. The production increased, so
total wastewater generated increased by 3%, while total environmental load units (ELUs) for wastewater treatment
increased by 13.5% on 2021.
Environmental management system and policies
68
The updated 2022–2026 business strategy and ESG Policy of the Krka Group adopted in 2022 restated 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. We set up our comprehensive environmental management system in compliance with the
ISO 14001 standard 21 years ago. The Environmental Management System (EMS) certificate committed us to reducing
all our environmental impacts, while the revised edition of the ISO 14001:2015 standard committed us to integrating
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, which is specified in the internal
document Environmental Management System. Employees of Environmental Protection carry out tasks at the operational
level. The system’s goals are: a high level of environmental protection throughout the product life cycle; constant reduction
of our environmental impact; compliance; and attainment of the corporate environmental objectives. 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 a new technology, a production process or
a product might lead to a significant environmental burden. If a risk of this kind is identified for a product in the pre-
development phase, the product is discontinued. For products in the development phase, we consider options to replace
substances posing major environmental hazards, while for products in the production phase, we adopt additional measures
to mitigate their environmental impacts.
68
GRI 2-23, 2-24, 2-25, 3-3
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159
We collect and analyse data about the environmental management system using 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 system’s suitability and efficiency and highlight improvement opportunities.
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.
The environmental policy and ESG Policy of the Krka Group also commit us to responsible environmental operations. To
monitor progress, we have set measurable strategic goals. The two policies and strategic ESG goals, which include
environmental goals, are available on the company website www.krka.si.
All our activities comply with the requirements of the Environmental Protection Act and implementing regulations. 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 relevant legislation. Environmental
legislation composes an extensive part of the European acquis. 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. A management review deals with the achievement of goals and the implementation of
programmes. The Committee is also responsible for the periodic identification of environmental aspects. These include
the impacts of our products and services throughout their life cycles. Environmental Protection and the Committee assess
identified environmental risks within environmental planning, which are also integrated into business continuity, quality,
and risk assessments of contractual partners.
We control compliance with legislative and regulatory requirements and environmental protection permits by regularly
monitoring air, water, soil and noise emissions and electromagnetic radiation, waste assessments, and regular checks of
reservoirs, equipment, and transport of hazardous substances. We manage any deviations in compliance with internal
standards and introduce necessary corrective measures.
Local community members and other stakeholders can use the complaint system to file a complaint, a question or a
suggestion relating to environmental protection. Publicly available information on environmental protection and contact
details are published on www.krka.si, which was completely updated and extended with ESG topics.
Environmental compliance
69
All our activities comply with environmental laws, permits, ISO 14001, guidelines and EU directives. We control
environmental compliance by regularly monitoring all environmental impacts. We recorded five deviations from legal
threshold values in wastewater discharge in 2022. We properly examined them in compliance with the environmental
programme and internal standards and carried out relevant corrective measures, reducing the load units below threshold
values.
The Inspectorate of the Republic of Slovenia for the Environment and Spatial Planning inspected our production plant in
Krško, Slovenia. They established no irregularities or regulatory non-compliance. Based on wastewater monitoring results
from Ločna (Novo mesto, Slovenia) and Ljutomer (Slovenia), the Inspectorate requested an explanation about permanent
flow monitoring and the number of conducted measurements. Following our explanation, the Inspectorate issued decisions
to discontinue the proceedings. We received no improvement notices after the inspection procedure and incurred no costs.
The Inspectorate issued a decision in 2019 ordering us to take wastewater treatment measures at our Krško plant. We
have been implementing the remedial actions as part of our Sinteza 2 project. The project is at the final environmental
protection permit stage.
69
GRI 2-27, 413-1
Annual Report 2022 – Sustainable Development
160
We recorded a noise complaint at Dunajska 65 in Ljubljana, Slovenia. We discovered a generator set, which was in
operation occasionally, to be the noise source. We installed silencers, reducing noise to acceptable levels. We informed
the petitioner accordingly.
We received a decision about a change in the environmental protection permit for our Šentjernej (Slovenia) plant, which
sets down the conditions for wastewater discharge into the public sewer system. We are managing the environmental
procedures for changing the environmental permit for our Ločna (Novo mesto, Slovenia) plant in accordance with the
Slovenian Environmental Protection Act (ZVO-2).
Environmental protection costs
Over the last five years, we have allocated more than €48 million to environmental protection, of that €12 million in 2022.
Direct costs amounted to €7.7 million and included costs of wastewater discharge and treatment, waste management,
waste air treatment, noise reduction, monitoring costs, environmental levies and other direct environmental protection
costs. We invested €4.3 million in environmental protection programmes to further reduce environmental impacts.
Water
70
Clean drinking water, which must meet strict chemical and microbiological quality requirements, is essential for the
pharmaceutical industry. We devote much effort to preserving the quality of water bodies at our production sites. Drinking
water quality also depends on seasonal fluctuations and precipitation. We closely monitor gage height in order to ensure
optimal performance of pharmaceutical water preparation machines and that drinking water quality remains within the
threshold values. All water systems at Krka are managed in compliance with Good Manufacturing Practice (GMP) and the
HACCP system. We reduce system failures by planned preventive maintenance in accordance with equipment
manufacturers’ recommendations, our experience, legislative requirements, and standards.
Wastewater that comes from rinsing the machines for preparation of pharmaceutical water and does not contain chemicals
is reused to prepare 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 supply network. We replace the missing quantities with pharmaceutical water
stored in reservoirs for that purpose.
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 flow rate total and
consumption total at the plant input and main user points. We can immediately identify any increase or deviation in drinking
water consumption, investigate the underlying reasons, and take all necessary measures. We draw up monthly drinking
water consumption reports. We encourage our employees to drink tap water or from drinking fountains. We save on
average 10% of drinking water by tap jet regulators.
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 water supply utility. Water is additionally purified
depending on its purported use, most commonly using sophisticated membrane technologies. Preventive maintenance,
machine operation monitoring, and technological improvements ensure consistent water quality, extended useful life of
the equipment, decreased water and chemical consumption, and reduced waste generation.
At Krka, we maintained the 2021 water consumption level despite a significant increase in production volume in 2022.
River water use decreased by 3.9%, while drinking water consumption increased by 4.8%. We upgraded automated
washing systems at the Notol plant, increasing the efficiency of drinking water and detergent use.
70
GRI 3-3, 303-1, 303-2
Annual Report 2022 – Sustainable Development
161
River water consumption declined by 3.9% compared to 2021. Approximately 50% 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 replaced 6,955 m
3
or 4.3% of river water for cooling systems with rainwater, a 1.3%
year-on-year increase.
Drinking and river water use
71
Energy
Our main energy resources are:
• Natural gas;
• Electric power; and
• Fuel oil as back-up fuel.
The electric power supply comes from the public utility electricity grid, in-house generators powered by renewable sources
such as the solar power station, and the natural gas-fired cogeneration plant.
Energy management system
72
Energy management strategy is incorporated into Krka’s integrated management system and drafted in accordance with
the principles of ISO 50001 Energy Management System. It is integrated into the corporate strategy and comprises various
activities and actions for achieving cost-related and environmental objectives. The Committee for Monitoring
Environmental Aspects is responsible for the periodic identification of energy-related aspects in accordance with
ISO 14001, bye-laws and policies. In this way, we manage and upgrade our processes based on sustainable development
and circular economy principles to maintain a high level of environmental protection.
Energy management system incorporates:
• A corporate energy manager who supervises and coordinates the work of energy operators;
• Energy operators in production plants in Slovenia and abroad; and
• All employees are committed to efficient and rational energy use pursuant to the environmental policy.
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 2022, we started upgrading it to the latest version,
including machine learning. Please see the ‘Energy efficiency projects’ section for more information.
71
GRI 303-3, 303-5
72
GRI 3-3
685
785
938
817
785
656
614
685
644
676
0
100
200
300
400
500
600
700
800
900
1,000
2018 2019 2020 2021 2022
m
3
thousand
River water Drinking water
Annual Report 2022 – Sustainable Development
162
Multi-year survey of implemented measures and their effects on energy management
73
In accounting for an average simple payback period, we consider only measures taken exclusively for economic viability.
Simple payback periods significantly decreased in 2022 compared to the past five-year period.
Specific use of energy
74
Specific use of energy portrays production costs in consideration of the physical volume of production.
We reduced specific energy use in correlation to production costs by 10% 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 costs
We reduced specific energy use in correlation to production volume by 2% year over year thanks to many activities geared
towards efficient energy use, energy efficiency investment, and energy-efficient maintenance.
73
GRI 302-4
74
GRI 302-3
2,814
2,310
1,490
2,583
2,360
627
1,145
1,530
820
705
0
1
2
3
4
5
6
0
500
1,000
1,500
2,000
2,500
3,000
2018 2019 2020 2021 2022
Years
MWh, € thousand
Average annual savings (MWh)
Total investment (€ thousand)
Average simple payback period (years)
1.80
1.60
1.55 1.55
1.41
1.88
1.66
1.62 1.62
1.52
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2018 2019 2020 2021 2022
MJ/€ of production costs
Specific use of energy/Production cost (LHV) Specific use of energy/Production cost (HHV)
Annual Report 2022 – Sustainable Development
163
Specific use of energy by production volume
Energy efficiency projects
We pay special attention to energy efficiency, which is reflected in the continuous improvement of specific use of energy.
In recent years, systematic measures and investments have returned average electricity and natural gas savings of more
than 50 GWh or emission savings of 17,000 t CO
2
-eq per year. In 2022, all energy efficiency projects generated savings
of 2,360 MWh and reduced our emissions by 320 t CO
2
.
Waste heat recovery from regenerative thermal oxidation
We completed the introduction of a new regenerative thermal oxidation system by using waste heat from flue gases for
the first time, which proved to be fine. According to our estimates, this additional system will save 1,500 MWh of natural
gas per year.
Upgrading the energy management information system
We started upgrading our energy management information system, which will support even more advanced analyses and
accurate monitoring of our environmental goal achievements. One of the key objectives is the introduction of machine
learning into energy processes. This advanced technological solution allows easy control over the efficiency of production,
processes, energy and other media consumption in a large system, which includes 2,000 measurement points. It allows
for energy efficiency screening of individual processes, speeding up our response in case of unexpected changes.
Waste heat recovery
We use waste heat as a by-product from various processes, e.g. from the compressor station, flue gases from steam
boilers, vapours from the steam boiler system, and condensed heat from cooling units, and cogeneration, to prepare
heating water. Thanks to this, natural gas for heat generation decreased by 54% or 24 GWh. We recorded an unexpected
failure of the cogeneration system, increasing the electricity consumption from the power grid, while the proportion of
recovered waste heat declined.
Replacement of FLUO lighting with LED lights
We drew up an internal strategy for the Krka Group for transition to LED lamps. We replaced either a part of or all
fluorescent lamps with LED lamps. This upgrade improved the illumination of rooms and work surfaces at Ločna (Novo
mesto, Slovenia). Annual electricity savings are estimated at 300 MWh.
83
79
75 75
72
87
83
78 78
77
0
10
20
30
40
50
60
70
80
90
2018 2019 2020 2021 2022
TJ/Billion units
Specific use of energy/Production volume (LHV) Specific use of energy/Production volume (HHV)
Annual Report 2022 – Sustainable Development
164
Biodiversity
75
Biodiversity in Slovenia is among the greatest in the European Union. Slovenia covers only 0.004% of the Earth’s total
surface area. However, it is home to more than one per cent of all known species and more than two per cent 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 natural world’s ecological, biotic and landscape features.
We raise employee awareness of the importance of biodiversity at internal training courses. We comply with the strictest
environmental requirements for the existing buildings and newly planned ones. 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.
The area around the Krka River is an ecologically important area (EIA) and protected as a Natura 2000 site because it is
an important natural habitat of several water and riparian plant and animal species, especially fish, amphibians and birds.
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, thick-shelled river mussel, olm, and the
European otter and beaver. The river water collection 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.
All Krka production facilities are concentrated within their respective sites and do not sprawl into ecologically sensitive
areas. The areas of our Ljutomer, Šentjernej, Bršljin, and Krško plants (all Slovenia) are not included in the Natura 2000
network. All wastewater is treated appropriately at the municipal wastewater treatment plants in Ljutomer, Šentjernej, Novo
mesto, and the Vipap (all Slovenia) wastewater treatment plant in Krško so that we do not endanger biodiversity with our
emissions.
Transport
76
In 2022, we organised transport for over 11,000 shipments of finished products, raw materials and packaging materials.
Total mileage by our own vehicles surpassed 2.1 million km, and fuel consumption totalled 585,000 litres. We continued
to modernise our fleet of vehicles and organised training for drivers.
We use state-of-the-art vehicles for road transport with environmentally sound engines. We supply products to distant
markets primarily by sea or by air. Transport is organised through our in-house transport department. We use our own
vehicles or employ contractual carriers. Most of our products are delivered to European and Asian markets. To ensure
uninterrupted supplies of medicines, we continued transporting goods by road between Shanghai (China) and Novo mesto
(Slovenia), which proved to be an excellent alternative to transport by air. Despite additional restrictions in the transit
countries and air and maritime transport difficulties, transport went unhindered. Towards the end of the year, we changed
to maritime transport when circumstances permitted.
We closely and regularly follow and comply with the requirements of the laws governing the transport of pharmaceutical
products and ensure we 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.
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.
75
GRI 3-3, 304-2, 304-4
76
SDG 12
Annual Report 2022 – Sustainable Development
165
Our fleet comprises 19 vehicles. We modernised it in 2022 by adding three new full trailers and ordered another three
semi-trailers. They are scheduled for delivery in the first half of 2023. 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 have 14 electric and two hybrid vehicles in our carpool. Based on our vehicle acquisition
strategy, we plan to replace at least 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.
We participated in the European Mobility Week with our Krka Car-Free Day campaign for the seventh consecutive year.
In 2022, the campaign ran in 11 subsidiaries. Sustainable commuting has become a habit of Krka employees. Many of our
employees in Slovenia, 40% of them, live more than 40 km away from the company. The number of employees who
carshare is rising, which helps reduce the environmental impact, increases traffic safety, and improves air quality. Green
mobility should be safe, so we regularly inform our employees of health and safety recommendations and campaigns, and
encourage them to follow them on their way to work. To encourage our employees to commute by bike, we set up bicycle
parking lots for at our facilities in Slovenia. We have 50 bicycle parking lots in Ločna (Novo mesto, Slovenia) and plan to
build a new bicycle parking station. The bicycle parking capacity will increase by more than 40% and provide more secure
bicycle parking. We also encourage using alternative and less environmentally harmful modes of commuting as part of
Krka’s Mobility Plan.
Emissions
Wastewater
77
We use various physical, chemical and biological processes to completely and effectively 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 set down in individual 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 the 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 pose an increased environmental risk.
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 to save production water. Whenever possible, we use raw materials and excipients
less harmful to water. We 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
surface water. Wastewater in Ločna, Novo mesto (Slovenia), is treated at our advanced in-house industrial wastewater
treatment plant using the best available technologies to meet the requirements. Wastewater from off-site plants is treated
at highly efficient municipal wastewater treatment plants.
The Ločna plant generates industrial and municipal wastewater, which we treat at the in-house biological wastewater
treatment plant. Unpolluted cooling water is discharged into the Krka River through a cooling and rainwater discharge
77
GRI 303-2, 303-4, SDG 12
Annual Report 2022 – Sustainable Development
166
system. Over the past few years, the biological wastewater treatment plant was upgraded, and technology professionally
managed, so the quality of effluents is high and in compliance with all legal requirements. In 2022, we treated 790,548 m3
of wastewater, or 11,730 m3 more than the year before. Organic pollution expressed by chemical oxygen demand was
cleaned in 92.6%, while removal of organic pollution expressed by biochemical oxygen demand within 5 days reached
99%. Cooling wastewater volume totalled 422,761 m3, up 16,454 m3 on 2021.
Our Bršljin (Slovenia) plant generates industrial and municipal wastewater, which is discharged by the public sewerage
system and treated at the municipal wastewater treatment plant in Novo mesto. In 2022, we generated a total of 22,092 m
3
of wastewater.
Our plant in Šentjernej (Slovenia) generates industrial and municipal wastewater. Effluents are discharged by the public
sewerage system and treated at the common municipal wastewater treatment plant in Šentjernej. In 2022, we generated
a total of 16,250 m
3
of wastewater.
Our plant in Ljutomer generates industrial, municipal, and cooling wastewater. Effluents are discharged by the public
sewerage system and treated at the common municipal wastewater treatment plant in Ljutomer. In 2022, we generated a
total of 22,057 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 2022, we generated a total of 30,411 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 the permit has been obtained.
Total environmental load units (ELU) increased by 213 ELU or 13.5% on 2021 due to higher production volume and
therefore greater wastewater load at wastewater treatment plants.
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.
1,286
1,737
1,241
1,371
1,584
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2018 2019 2020 2021 2022
Enviromental load units (ELU)
Annual Report 2022 – Sustainable Development
167
Waste
78
Waste management complies with the waste management plan and instructions, which consider legal requirements and
set out technical and organisational measures and waste management goals. We factor in extended producer
responsibility in common plans for managing waste medicines and packaging waste. We ensure the collection and
appropriate processing of packaging materials and the 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 ISO 14001:2015. Our priority is to prevent waste
generation through:
• Downsizing packaging units;
• Using returnable packaging;
• Developing improved technological and production procedures;
• Using recovered solvents;
• Reusing pallets; and
• Many other measures.
We reduced paper use in 2022 by 9 tonnes by optimising the patient information leaflet design, decreasing emissions by
2.6 t CO
2
-eq. We constantly optimise pack sizes and packaging material weight to reduce purchasing costs and waste
packaging volume. We set up a returnable packaging system with our supplier in 2022. This allows us to reuse 42 tonnes
of packaging materials and reduce emissions by 111 t CO
2
-eq through reuse in line with circular economy principles.
We manage unavoidable waste comprehensively. We prioritise their preparation for reuse. 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 preparing it for reuse. This is another way in which we contribute to the circular economy principles. 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 2022, we collected 492 tonnes of waste composites in total,
from which an approved contractor recovered 206 tonnes of aluminium and 255 tonnes of plastics and handed them over
for recycling. We handed over 108 t of organic waste to obtain renewable energy sources, reducing emissions by almost
1 t CO
2
-eq.
Year on year, we reduced the volume of disposable waste by 13% or 98 tonnes, notwithstanding the increase in production,
and increased the proportion of waste handed over to recycling by 6% or 151 tonnes.
Risks related to the reception and removal of certain types of waste in Slovenia persisted in 2022. 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.
78
GRI 3-3, 306-1, 306-2, SDG 12
Annual Report 2022 – Sustainable Development
168
Recyclable waste
79
Waste for biological processing
80
79
GRI 306-4
80
GRI 306-4
2,422 2,422
2,327
2,381
2,532
0
500
1,000
1,500
2,000
2,500
3,000
2018 2019 2020 2021 2022
Tonnes
1,187
1,308
1,618
1,231
1,447
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2018 2019 2020 2021 2021
Tonnes
Annual Report 2022 – Sustainable Development
169
Waste disposed at landfills
Waste for incineration
81
Noise
We minimise noise emissions using 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 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. Results of monitoring conducted by authorised contractors in 2022 confirm
that all implemented measures were effective and noise levels complied with legislative requirements. We received a
single complaint about noise at our site in Ljubljana. Please see the subsection ‘Environmental compliance’ for details.
Air emissions
82
Effective reduction of air emissions is one of our priorities in environmental protection and climate change mitigation. We
comply with the EU actions to implement the European Green Deal, legal requirements, and the pharmaceutical industry's
81
GRI 306-5
82
GRI 3-3, SDG 13
824
802
791
763
665
0
100
200
300
400
500
600
700
800
900
2018 2019 2020 2021 2022
Tonnes
5,491
6,047
7,329
6,480
6,786
0
2,000
4,000
6,000
8,000
2018 2019 2020 2021 2022
Tonnes
Annual Report 2022 – Sustainable Development
170
strict requirements to prevent 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 best available
technology allows.
We remove organic compounds from waste air using advanced thermal oxidisers. The fourth thermal oxidation device was
put to use in 2022 at our production site in Ločna (Novo mesto, Slovenia). 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.
Slovenia has a problem with occasional excessive air pollution with harmful 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 over 99.7% of all particulate matter.
For the first time in 2022, we calculated, according to Greenhouse Gas Protocol (GHG) Scope 1 and Scope 2, the carbon
footprint for the Krka Group from 1 January 2019 until 31 December 2021 inclusive.
In 2019 and 2020, indirect emissions from the electricity consumption from the power grid accounted for the largest
proportion of greenhouse gases (53.4% in 2019 and 53.1% in 2020). Greenhouse emissions from fuel combustion in
stationary machines owned by the Krka Group were at 31.7% in 2019 and 34.4% in 2020, the next biggest pollutant. The
third biggest pollution source was at 12.9% in 2019 and 9.8% in 2020 – engine combustion generated by means of
transport (trucks, vans, cars) owned by the Krka Group. We recorded a significant drop in total greenhouse gas emissions,
primarily from Scope 2. This resulted from our transition to zero carbon electricity sources in 2021, which reduced our
annual CO
2
-eq on average by 45,000 tonnes. Direct emissions from burning fuel and harmful substances from cooling
devices (Scope 2) accounted for most of the CO
2
-eq emissions in 2022. They fell 9% short of the 2021 values despite
increased production.
Carbon footprint
83
Since 2021, all our energy consumers in Slovenia have been using exclusively zero-carbon energy sources. 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.
As our production site in Ločna (Novo mesto, Slovenia) 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.
In 2022, the Krka Group as a whole recorded a 49% decrease in CO
2
emissions on the reference year 2019. We reduced
year-on-year Scope 1 emissions by 11% and Scope 2 emissions by 2% according to GHG.
84
The Krka Group had decided to reduce natural gas consumption because of the exceptional situation on the energy
markets and the EU’s need to fill gas storage facilities before the start of winter in 2022. This was possible at our production
sites equipped with the back-up fuel generators. We significantly decreased consumption of natural gas, which was in line
with the EU’s recommendations to plan for reduction of natural gas consumption. For this reason, consumption of extra-
light fuel oil sharply increased, so also air emissions of SO
2
and NO
x
went up.
2019–2022 Krka Group carbon footprint relative to revenue, employee total, and production volume
85
2022
2021
2020
2019
Carbon footprint/Revenue (kg CO
2
-eq/€)
0.042
0.051
0.089
0.096
Carbon footprint/Employee total (t CO
2
-eq/Employee)
6.28
6.90
11.78
12.48
Carbon footprint/Physical production volume
(t Co
2
-eq/billion units)
4,326.5
4,930.9
8,304.1
9,428.4
83
GRI 305-1, 305-2
84
GRI 305-5
85
GRI 305-4
Annual Report 2022 – Sustainable Development
171
2019–2022 Krka Group total greenhouse emissions according to GHG (Scope 1 and Scope 2)
86
Action plan
We calculated our Scope 1 and Scope 2 carbon footprints and prepared the Krka Group’s action plan for the reduction of
GHG emissions by 2025, 2030, and 2050 accordingly to reduce CO
2
emissions and for the EU to become climate neutral
by 2050.
Chronology of performance and set goals by 2050
The Krka Group’s objective by 2050 is to decarbonise transport vehicles and transport in general and become a carbon
neutral business in terms of electricity and natural gas supplies. We intend to adjust the action plan to reduce the total
Krka Group carbon footprint to develop new technologies and energy sources (RES, helium, etc.).
86
GRI 305-1, 305-2, SDG 12
66,225
63,672
64,192
57,059
77,067
73,345
15,688
15,625
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2019 2020 2021 2022
GHG air emissions (Co2
-eq)
Scope 1 Scope 2
143,312
137,017
79,880
72,684
Action plan for Krka Group total carbon footprint reduction
Carbon footprint reduction by 71% until 2030 on 2019 reference year
Krka Group carbon neutral operations
by 2050 in three key impact areas:
• Power supply (Scope 2)
• Natural gas and other fuel supplies
(Scope 1)
• Cars and cargo transport
Krka Group
total GHG
emissions
(Scope 1 and
Scope 2)
143,312 t CO
2
-eq
Krka Group
total GHG
emissions
(Scope 1 and
Scope 2)
72,686 t CO
2
-eq
Krka Group
total GHG
emissions
(Scope 1 and
Scope 2)
reduction by 1,290
t CO
2
-eq
Krka Group
total GHG
emissions
(Scope 1 and
Scope 2)
reduction by
11,270 t CO
2
-eq
2019
2022
2025
2030
2050
Annual Report 2022 – Sustainable Development
172
Electromagnetic radiation (EMR)
We constantly follow relevant legislation and carry out required measurements. 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 identified high- and low-frequency electromagnetic radiation at Ločna, our main Slovenian facility in Novo mesto, as
follows:
• Mobile phone base stations;
• Signal amplifier systems inside buildings;
• Transformer stations;
• 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.
There are no mobile phone base stations at our other production and business sites in Slovenia, 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, signage, and billboards. We separately measure
electric power consumption for outdoor lighting at our major sites.
We are aware of the impact of light pollution. To address it, we responsibly started upgrading outdoor lighting seven years
ago and have essentially reduced total rated electric power over that time. In 2022, 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 transfer good environmental protection guidelines and practices to all subsidiaries through permanent cooperation,
information exchange, and investment. We 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 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, which is due for upgrading in 2023. Wastewater from other production plants and companies
is discharged to modern municipal wastewater treatment plants.
To reduce emissions, we install highly efficient absolute filtration devices on units emitting particulate matter. We transfer
good practices in rational energy and water use to subsidiaries. We conducted a detailed energy audit at our subsidiary
Terme Krka, which determined the savings potential of 1,579 MWh, a total annual emission reduction by 599 t CO
2
-eq.
The average simple payback period of the proposed investment is three years.
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 saving energy, paper, and separate waste
collection.
Responsible environmental management forms a part of 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, as well as
Annual Report 2022 – Sustainable Development
173
environmental sustainability topics. In 2022, 2,801 employees from Krka in Slovenia attended environment-related training
courses. We arranged a special training course for 74 experts from pharmaceutical development, because best effects
can be achieved at the product development stage by selecting raw materials with the lowest environmental load, and in
production.
We had to make all the related content available online due to the COVID-19 pandemic. We also intend to include
employees from abroad in the education about environmental protection and sustainable development. In 2022, we drew
up various language versions of the content in e-format.
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.
Responsible care for society and the environment calls for good relationships with local community stakeholders,
especially with our immediate neighbours, because we impact their living space and quality of life. We maintain an ongoing
open dialogue with them, resulting in good relations. Every other year we organise a traditional meeting with them,
informing them of our actions, results and environmental protection plans. We learn what the locals think and consider this
when planning environmental goals and programmes. The most recent 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 plan to hold a meeting in 2023.
Annual Report 2022 – Sustainable Development
174
GRI content index
Statement of use
The Krka Group has reported in accordance with the GRI Standards for the period from 1 January 2022 to 31 December 2022.
GRI 1 used
GRI 1: Foundation 2021
Applicable sector standards
No applicable sector standards were available when the Annual Report was drafted.
GENERAL DISCLOSURES
GRI
standard
Disclosure
Page
Chapter
Omissions and notes
GRI 2: General Disclosures 2021
The organization and its reporting practices
2-1
Organizational details
10
13
80
At a glance
Krka in global markets
Share trading and shareholding
2-2
Entities included in the organization’s sustainability reporting
140
Sustainable development, About the report
2-3
Reporting period, frequency and contact point
140
Sustainable development, About the report
2-4
Restatements of information
140
Sustainable development, About the report
2-5
External assurance
Krka has not yet decided on
external assurance in line
with the GRI Standards.
Activities and workers
2-6
Activities, value chain and other business relationships
7
80–81
88
101–120
122
128
129
130
Krka Group financial highlights
Share trading and shareholding
Sales by region
Product and service groups
Investments and accomplishments
Supply process
Suppliers
Investments
2-7
Employees
145-146
Employees
Data capturing does not
include reporting under
2-7-b-iii because the
disclosure is not relevant for
the Krka Group.
2-8
Workers who are not employees
145
Employees
Annual Report 2022 – Sustainable Development
175
Governance
2-9
Governance structure and composition
17
32
34
Corporate governance statement
Composition of Supervisory Board of Krka as at
31 December 2022
Composition of Management Board as at
31 December 2022
2-10
Nomination and selection of the highest governance body
17
32
34
Corporate governance statement
Composition of Supervisory Board of Krka as at
31 December 2022
Composition of Management Board as at
31 December 2022
2-11
Chair of the highest governance body
32
34
Composition of Supervisory Board of Krka as at
31 December 2022
Composition of Management Board as at
31 December 2022
2-12
Role of the highest governance body in overseeing the management of impacts
34
Composition of Management Board as at
31 December 2022
2-13
Delegation of responsibility for managing impacts
54
Sustainability management of the Krka Group
2-14
Role of the highest governance body in sustainability reporting
38
Non-financial statement
2-15
Conflicts of interest
34
Composition of Management Board as at
31 December 2022
2-16
Communication of critical concerns
28
Corporate compliance and integrity
2-17
Collective knowledge of the highest governance body
34
Composition of Management Board as at
31 December 2022
2-18
Evaluation of the performance of the highest governance body
Supervisory Board Report
Published on the Krka website.
2-19
Remuneration policies
Supervisory Board Report
Published on the Krka website.
2-20
Process to determine remuneration
Supervisory Board Report
Published on the Krka website.
2-21
Annual total compensation ratio
In line with the remuneration policy,
fixed remuneration is determined as
a multiple of the average salary of
Krka employees in the last three
months. These multiples are
determined by the Supervisory
Board upon the appointment of the
Management Board and differ
based on the extent of areas of
work that each member of the
Management Board covers.
Multiple ten (10) is applied for the
President of the Management
Board.
Annual Report 2022 – Sustainable Development
176
Strategy, policies and practices
2-22
Statement on sustainable development strategy
3
Statement by the President of the Management
Board
2-23
Policy commitments
27–28
30
50
158
Corporate compliance and integrity
Human rights in business operations
Krka Group development strategy
Natural environment
2-24
Embedding policy commitments
28
30
158
Corporate compliance and integrity
Human rights in business operations
Natural environment
2-25
Processes to remediate negative impacts
158
Natural environment
2-26
Mechanisms for seeking advice and raising concerns
28
Corporate compliance and integrity
2-27
Compliance with laws and regulations
135
159
Quality
Natural environment
2-28
Membership associations
30
Contributions and other spending
Stakeholder engagement
2-29
Approach to stakeholder engagement
81
141
153
Communication with investors
Sustainable development
Health professionals, healthcare providers and
direct customers
2-30
Collective bargaining agreements
145
Employees
GRI 3: Material Topics 2021
3-1
Process to determine material topics
54
140
Krka Group development strategy
Materiality assessment process
3-2
List of material topics
140
140
142
Materiality assessment process
Sustainable development, About the report
Sustainable development
ECONOMY
GRI 201: Economic Performance 2016
3-3
Management of material topics
50
Krka Group development strategy
201-1
Direct economic value generated and distributed
7
154, 157
210
Krka Group financial highlights
Corporate social responsibility
Employee benefits
201-3
Defined benefit plan obligations and other retirement plans
210
Employee benefits
GRI 203: Indirect Economic Impacts 2016
3-3
Management of material topics
152
Corporate social responsibility
203-1
Infrastructure investments and services supported
155, 157
Corporate social responsibility
203-2
Significant indirect economic impacts
155
Corporate social responsibility
Annual Report 2022 – Sustainable Development
177
GRI 204: Procurement Practices 2016
3-3
Management of material topics
129
Suppliers
204-1
Proportion of spending on local suppliers
129
Suppliers
GRI 205: Anti-corruption 2016
3-3
Management of material topics
28
Corporate compliance and integrity
205-1
Operations assessed for risks related to corruption
29
Integrity plan
205-2
Communication and training about anti-corruption policies and procedures
28
Corporate compliance and integrity
Data capturing does not include
the number of hours.
205-3
Confirmed incidents of corruption and actions taken
28
Corporate compliance and integrity
Data capturing includes
reported suspected incidents.
GRI 206: Anti-competitive Behavior 2016
3-3
Management of material topics
28
Corporate compliance and integrity
206-1
Legal actions for anti-competitive behavior, anti-trust, and monopoly practices
221
21. Provisions
207: Tax 2019
3-3
Management of material topics
31
Internal controls and risk management relating to
financial and tax reporting
207-1
Approach to tax
31
Internal controls and risk management relating to
financial and tax reporting
207-2
Tax governance, control, and risk management
31
Internal controls and risk management relating to
financial and tax reporting
207-3
Stakeholder engagement and management of concerns related to tax
31
Internal controls and risk management relating to
financial and tax reporting
207-4
Country-by-country reporting
84
Performance analysis
Data capturing includes effective
tax rate.
ENVIRONMENT
GRI 302: Energy 2016
3-3
Management of material topics
161
Energy
302-1
Energy consumption within the organization
8
Krka’s sustainable development indicators
302-3
Energy intensity
162
Specific use of energy
302-4
Reduction of energy consumption
162
Energy management system
GRI 303: Water and Effluents 2018
3-3
Management of material topics
160
Water
303-1
Interactions with water as a shared resource
160
Water
303-2
Management of water discharge-related impacts
160
165
Water
Emissions, Wastewater
303-3
Water withdrawal
161
Drinking and river water use
303-4
Water discharge
155
Emissions, Wastewater
303-5
Water consumption
161
Drinking and river water use
Annual Report 2022 – Sustainable Development
178
GRI 304: Biodiversity 2016
3-3
Management of material topics
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
3-3
Management of material topics
169
Emissions
305-1
Direct (Scope 1) GHG emissions
170–171
Emissions
305-2
Energy indirect (Scope 2) GHG emissions
170–171
Emissions
305-4
GHG emissions intensity (emissions per unit produced)
170
Emissions
305-5
Reduction of GHG emissions
170
Emissions
305-6
Emissions of ozone-depleting substances (ODS)
9
Krka’s sustainable development indicators
305-7
Nitrogen oxides (NO
X
), sulfur oxides (SO
X
), and other significant air emissions
9
Krka’s sustainable development indicators
GRI 306: Waste 2020
3-3
Management of material topics
167
Waste
306-1
Waste generation and significant waste-related impacts
167
Waste
306-2
Management of significant waste-related impacts
167
Waste
306-3
Waste generated
8
Krka’s sustainable development indicators
306-4
Waste diverted from disposal
168
Waste
306-5
Waste directed to disposal
169
Waste
GRI 308: Supplier Environmental Assessment 2016
3-3
Management of material topics
128
Supply process
308-1
New suppliers that were screened using environmental criteria
128
Supply process
Data capturing includes the
number of screenings using all
criteria.
SOCIAL
GRI 401: Employment 2016
3-3
Management of material topics
144
Employees
401-1
New employee hires and employee turnover
145
Employees
Data capturing includes
employee turnover at the Krka
Group level.
401-3
Parental leave
150
Health and safety at work
Data capturing includes the
share of employees who took
parental leave.
GRI 403: Occupational Health And Safety 2018
3-3
Management of material topics
149–151
Health and safety at work
403-1
Occupational health and safety management system
149–151
Health and safety at work
Annual Report 2022 – Sustainable Development
179
403-2
Hazard identification, risk assessment, and incident investigation
149–151
Health and safety at work
403-3
Occupational health services
149–151
Health and safety at work
403-4
Worker participation, consultation, and communication on occupational health
and safety
149–151
Health and safety at work
403-5
Worker training on occupational health and safety
149–151
Health and safety at work
403-6
Promotion of worker health
149–151
Health and safety at work
403-7
Prevention and mitigation of occupational health and safety impacts directly
linked by business relationships
149–151
Health and safety at work
403-9
Work-related injuries
150
Health and safety at work
GRI 404: Training and Education 2016
3-3
Management of material topics
146
Employee education and development
404-1
Average hours of training per year per employee
147
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
147
Employee education and development
GRI 405: Diversity and Equal Opportunity 2016
3-3
Management of material topics
146
Employees
405-1
Diversity of governance bodies and employees (gender, age group, minority,
other indicators of diversity)
32
34
145
Composition of Supervisory Board of Krka as at
31 December 2022
Composition of Management Board as at
31 December 2022
Employees
Data capturing includes
categorisation by gender and
education.
GRI 406: Non-discrimination 2016
3-3
Management of material topics
29
Management approach to non-discrimination
406-1
Incidents of discrimination and corrective actions taken
29
Management approach to non-discrimination
GRI 413: Local Communities 2016
3-3
Management of material topics
158
Natural environment
413-1
Operations with local community engagement, impact assessments, and
development programs
159
Natural environment
GRI 414: Supplier Social Assessment 2016
3-3
Management of material topics
128
Supply process
414-1
New suppliers that were screened using social criteria
128
Supply process
Data capturing includes the
number of screenings using all
criteria.
GRI 415: Public Policy 2016
3-3
Management of material topics
30
Contributions and other spending
415-1
Political contributions
30
Contributions and other spending
Annual Report 2022 – Sustainable Development
180
GRI 416: Customer Health and Safety 2016
3-3
Management of material topics
133
Quality
416-2
Incidents of non-compliance concerning the health and safety impacts of
products and services
133
Quality
GRI 417: Marketing and Labeling 2016
3-3
Management of material topics
152
Patients and other customers
417-1
Requirements for product and service information and labeling
152–153
Patients
417-2
Incidents of non-compliance concerning product and service information and
labeling
152–153
Patients
417-3
Incidents of non-compliance concerning marketing communications (including
advertising, promotion, and sponsorship)
153
Patients
GRI 418: Customer Privacy 2016
3-3
Management of material topics
152
Patients and other customers
418-1
Substantiated complaints concerning breaches of customer privacy and losses of
customer data
153
Patients
2022 Annual Report – Financial Report
181
FINANCIAL REPORT
2022 Annual Report – Financial Report
182
Contents
Introduction to Financial Statements .......................................................................................................... 183
Statement of Compliance ............................................................................................................................. 184
Consolidated Financial Statements of the Krka Group ............................................................................. 185
Consolidated Statement of Financial Position ........................................................................................................... 185
Consolidated Income Statement ............................................................................................................................... 186
Consolidated Statement of Other Comprehensive Income........................................................................................ 186
Consolidated Statement of Changes in Equity .......................................................................................................... 187
Consolidated Statement of Cash Flows..................................................................................................................... 189
Notes to the Consolidated Financial Statements ....................................................................................................... 190
Independent Auditor's Report .................................................................................................................................... 242
Financial Statement of Krka, d.d., Novo mesto .......................................................................................... 250
Statement of Financial Position ................................................................................................................................. 250
Income Statement ..................................................................................................................................................... 251
Statement of Other Comprehensive Income ............................................................................................................. 251
Statement of Changes in Equity ................................................................................................................................ 252
Statement of Cash Flows .......................................................................................................................................... 254
Notes to the Financial Statements ............................................................................................................................. 255
Independent Auditor's Report .................................................................................................................................... 309
2022 Annual Report – Financial Report
183
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 11th Annual General Meeting held on 6 July 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 2022 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 KPMG Slovenija, 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.
2022 Annual Report – Financial Report
184
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 2022.
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 2023
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
2022 Annual Report - Financial Report
185
Consolidated Financial Statements of the Krka Group
Consolidated Statement of Financial Position
€ thousand
Notes
31 Dec 2022
31 Dec 2021
Index
2022/21
Assets
Property, plant and equipment
11
101
Intangible assets
12
98
Loans
13
192
Investments
14
102
Deferred tax assets
15
115
Other non-current assets
103
Total non-current assets
105
Assets held for sale
100
Inventories
16
121
Contract assets
78
Trade receivables
17
86
Other receivables
17
94
Loans
13
3
Investments
14
34
Cash and cash equivalents
18
325
Total current assets
107
Total assets
106
Equity
Share capital
19
100
Treasury shares
19
-124,566
-114,541
109
Reserves
19
132
Retained earnings
19
110
Total equity holders of the controlling company
111
Non-controlling interests
19
143
Total equity
111
Liabilities
Provisions
21
85
Deferred income
22
88
Trade payables
23
0
Lease liabilities
27
93
Deferred tax liabilities
15
98
Total non-current liabilities
81
Trade payables
23
108
Lease liabilities
27
109
Income tax payables
401
Contract liabilities
24
126
Other current liabilities
25
45
Total current liabilities
92
Total liabilities
89
Total equity and liabilities
106
The accompanying Notes form an integral part of the consolidated financial statements and are to be read in conjunction with them.
2022 Annual Report - Financial Report
186
Consolidated Income Statement
€ thousand
Notes
2022
2021
Index
2022/21
Revenue
110
- Revenue from contracts with customers
4
110
- Other revenue
139
Cost of goods sold
-743,060
-674,594
110
Gross profit
109
Other operating income
5
81
Selling and distribution expenses
-349,111
-305,870
114
- Whereof net impairments and write-offs of receivables
-1,875
-1,048
179
R&D expenses
-162,580
-154,559
105
General and administrative expenses
-90,688
-87,367
104
Operating profit
107
Financial income
9
293
Financial expenses
9
-5,806
-12,082
48
Net financial result
680
Profit before tax
119
Income tax expense
10
-69,411
-54,267
128
Net profit
118
Attributable to:
- Equity holders of the controlling company
117
- Non-controlling interests
-1,064
Basic earnings per share (€)
20
118
Diluted earnings per share (€)
20
118
The accompanying Notes form an integral part of the consolidated financial statements and are to be read in conjunction with them.
Consolidated Statement of Other Comprehensive Income
€ thousand
Notes
2022
2021
Index
2022/21
Net profit
118
Other comprehensive income for the year
Other comprehensive income reclassified to
profit or loss at a future date
Translation reserve
19
82
Net other comprehensive income reclassified to profit or
loss at a future date
82
Other comprehensive income that will not be reclassified to
profit or loss at a future date
Change in fair value of financial assets
14
2
Restatement of post-employment benefits
21
386
Deferred tax effect
15
-3,417
-1,622
211
Net other comprehensive income that will not be
reclassified to profit or loss at a future date
216
Total other comprehensive income for the year (net of tax)
138
Total comprehensive income for the year (net of tax)
120
Attributable to:
- Equity holders of the controlling company
120
- Non-controlling interests
-139
The accompanying Notes form an integral part of the consolidated financial statements and are to be read in conjunction with them.
2022 Annual Report - Financial Report
187
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
Balance at 1 Jan 2022
-114,541
-22,077
-98,274
Net profit
Total other comprehensive income
for the year (net of tax)
-1,937
-505
Total comprehensive income for the
year (net of tax)
-1,937
-139
Transactions with owners,
recognised in equity
Formation of other profit reserves
under the resolution of the AGM
-71,800
Transfer of previous periods' profit to
retained earnings
-293,952
Repurchase of treasury shares
-10,025
-10,025
-10,025
Formation of reserves for treasury
shares
-10,025
Dividends paid
-175,025
-175,025
-175,025
Acquisition of non-controlling interests
Total transactions with owners,
recognised in equity
-10,025
-303,977
-185,050
-178,898
Balance at 31 Dec 2022
-124,566
-85,919
The accompanying Notes form an integral part of the consolidated financial statements and are to be read in conjunction with them.
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188
€ 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
Balance at 1 Jan 2021
-99,279
-35,059
-111,512
Net profit
-1,064
Total other comprehensive income
for the year (net of tax)
-2,404
Total comprehensive income for 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 periods' 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
Balance at 31 Dec 2021
-114,541
-22,077
-98,274
The accompanying Notes form an integral part of the consolidated financial statements and are to be read in conjunction with them.
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189
Consolidated Statement of Cash Flows
€ thousand
Notes
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit
Adjustments for:
- Amortisation/Depreciation
11,12
- Net foreign exchange differences
-224
- Net write-offs and allowances for inventories
- Net impairments and write-offs of receivables
- Investment income
-15,817
-5,699
- Investment expenses
- Income on financing activities
-39
- Interest expenses and other financial expenses
- Income tax expense
10
Operating profit before changes in net current assets
Change in trade receivables
-84,752
Change in inventories
16
-117,946
-22,755
Change in trade payables
23
Change in provisions
21
-4,272
-2,647
Change in deferred income
22
-827
-929
Change in other current liabilities
-1,410
Income tax paid
-56,892
-64,329
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
11
-87,905
-65,914
Purchase of intangible assets
12
-6,827
-6,213
Proceeds from non-current loans
Payments for non-current loans
-42,690
-26,674
Net proceeds from/payments for current loans
-137,277
Proceeds from sale of non-current investments
Payments for acquiring non-current investments
-32,970
-92,138
Proceeds from sale of current investments
Payments for acquiring current investments
-121,621
-144,805
Proceeds from derivatives
Payments for derivatives
-10,459
Net cash flows from investing activities
-372,637
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid
-4,179
-366
Lease liabilities paid
27
-3,926
-3,515
Dividends and other profit shares paid
28
-175,044
-155,907
Repurchase of treasury shares
19
-10,025
-15,262
Proceeds from payment of non-controlling interests
Net cash flow from financing activities
-187,022
-169,850
Net increase/decrease in cash and cash equivalents
-156,390
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate fluctuations on cash held
Closing balance of cash and cash equivalents
The accompanying Notes form an integral part of the consolidated financial statements and are to be read in conjunction with them.
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Notes to the Consolidated Financial Statements
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 number: 5043611000.
The consolidated financial statements for the year ended 31 December 2022 refer to the Krka Group consisting of the
controlling company and its subsidiaries in Slovenia and abroad. A list of subsidiaries, members of the Krka Group, is
included in Note 31 ‘Profile of the Krka Group’.
pharmaceuticals, non-prescription products), animal health products, and health resorts and tourist services.
1. Basis for compiling the financial statements
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 additional provisions required by the Companies Act (ZGD-1).
The consolidated financial statements were approved by the Company Management Board on 28 March 2023.
Basis of measurement
The consolidated 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 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 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
controlling 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,
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new and additional information that may be available, as well as experience. Each year the Krka Group verifies the need
for impairment of the 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 11 ‘Impairment testing of non-current 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 4 ‘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.
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 Group recognises financial income and expenses on these sales using the appropriate discount rate.
• Note 12 ‘Impairment testing of the TAD Pharma 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 this Note.
• Note 17 ‘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. For all customers whose receivables are insured by
an insurance company or other first-class insurance, insurance is taken into account when assessing the amount
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of impairments. Hence, allowances of receivables due from individual customer are calculated by means of an
algorithm that includes all the above criteria.
• Note 21 ‘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 21 ‘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 Krka 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 Krka 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.
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 Krka 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
Krka Group in the reporting period.
New standards and interpretations effective from 1 January 2022
Amendments to IFRS 3 – Business Combinations, IAS 16 – Property, Plant and Equipment, IAS 37 – Provisions,
Contingent Liabilities and Contingent Assets and Annual Improvements 2018-2020.
The amendments are effective for annual periods beginning on or after 1 January 2022. Early application is permitted.
IASB has published the following limited amendments to IFRSs.
• The amendments to IFRS 3 – Business Combinations are intended to update the reference to the core framework
of financial reporting standards in IFRS 3, but do not change the accounting requirements for accounting for
business combinations.
• The amendments to IAS 16 – Property, Plant and Equipment prohibit an entity from deducting from the cost of
property, plant and equipment the proceeds from the sale of products during the period that the asset is being
prepared for its intended use. An entity recognises the proceeds from the sale and the related costs in profit or loss.
• The amendments to IAS 37 – Provisions, Contingent Liabilities and Contingent Assets specify the costs that an
entity considers in determining the cost of completing a contract when deciding whether the contract is onerous.
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• The 2018-2020 Annual Improvements provide for some minor amendments to IFRS 1 – First-time Adoption of
International Financial Reporting Standards, IFRS 9 – Financial Instruments, IAS 41 – Agriculture and illustrative
examples to IFRS 16 – Lease.
The management has assessed the impact of the amendments and established that 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.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains and losses arising from intra-group 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.
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
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. 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.
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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 for assets and liabilities, 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.
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, derivatives, loans and investments.
Initial recognition and measurement
Krka Group's financial assets are upon initial recognition classified 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 Krka 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 Krka Group has
applied the practical expedient are measured at the transaction price determined under IFRS 15 (refer to accounting
policies Revenue from contracts with customers).
In order for financial assets to be classified and measured at amortised cost or fair value through other comprehensive
income, 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 the level of an individual
instrument.
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The Krka 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.
If the Group selects a business model that aims to collect contractual cash flows, it values its financial assets (debt
instruments) at amortised cost. If the Krka Group acquires financial assets (debt instruments) with the objective of collecting
contractual cash flows and for sale, then they are measured at fair value through other comprehensive income by recycling
cumulative gains and losses. If the Krka Group does not choose any of these business models, it measures its financial
assets (debt instruments) at fair value through profit or loss. Financial assets that are in accordance with IAS 32 – Financial
Instruments and are not held for trading purposes, are classified as equity instruments at fair value through other
comprehensive income without recycling cumulative gains and losses after derecognition.
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 Krka 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 Krka Group 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.
Krka Group's investments in debt securities, which include only low credit risk government bonds, are classified as financial
assets at amortised cost.
The Krka 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)
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 transferred to profit or loss.
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Financial assets at fair value through OCI (equity instruments)
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 section ‘Impairment – financial assets’.
Financial liabilities
Financial liabilities consist mainly of loans, payables to suppliers and other liabilities. Lease liabilities and employee
benefits are treated separately (refer to accounting policies in the Leases and Employee benefits expense 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).
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.
The Krka Group includes in the cost of property, plant and equipment also borrowing costs that are directly attributable to
the acquisition, construction or production of the asset under construction. Borrowing costs related to the acquisition or
construction of the relevant assets are capitalised if they relate to the acquisition of a significant asset and the construction
or preparation for use of the relevant assets takes more than six months.
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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:
− management and administrative facilities 60 years,
− production and warehouse facilities 40 years,
− other from 15 to 20 years,
• for property, plant and equipment:
− production equipment 5 to 20 years,
− laboratory equipment 10 years,
− other equipment 5 years,
• for furniture 5 years,
• for computer equipment 4 to 6 years,
• for means of transportation 5 to 15 years.
Leases
At contract conclusion, 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
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 Krka 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.
Upon initial recognition, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the
lease payments made.
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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. change of 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.
For short-term leases and leases where the leased asset is of low value, the Krka Group applies the practical expedient
allowed by the standard and recognises lease payments as an expense on a straight-line basis over the lease term. The
practical expedient is applied to leases with a lease term of less than one year and leases where the cost of the new
leased asset is less than €5,000.
The Krka Group recognises a right-of-use property, plant and equipment asset and a lease liability at the inception of the
lease (i.e. the date the leased 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 by the Krka Group on a straight-line basis over the shorter of the estimated lease
term or the estimated useful lives of the assets.
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 and is tested for impairment once a year.
Trademark
The TAD Pharma trademark is treated by the Krka Group as an intangible asset with a useful life of 50 years and is
reviewed annually for impairment.
Research and development
Development costs are not capitalised because the Krka Group does not distinguish between the research and
development phases. All costs related to own research and development activities are recognised in profit or loss as
incurred.
Other intangible assets
Other intangible assets that are acquired by the Krka Group, which have finite useful lives, are measured at cost less
accumulated amortisation and accumulated impairment losses (refer to the accounting policy Impairment).
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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. 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 written-down through profit and loss.
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 weighted average cost. 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.
Impairment of assets
Financial assets
The Krka 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 Krka 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
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 Krka Group applies a simplified approach in calculating ECLs. Trade
receivables that do not have a significant financing component or for which the Krka Group applies a practical expedient
(contracts with a term of one year or less) are measured at the transaction price determined in accordance with IFRS 15,
less the amount of any impairment losses.
The Krka Group does not track changes in credit risk, but instead recognises a loss allowance based on a lifetime ECL at
each reporting date. The Krka 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
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using uniform methodology applicable to the Krka Group and in consideration of the probability or assessed probability of
receivable settlement by the debtors.
Impairments of investments
For investments that include government bonds measured at amortised cost, the Krka Group measures expected credit
losses annually.
Except when a 12-month expected credit loss is recognised, the Krka Group recognises an allowance for credit losses in
an amount equal to the expected credit loss over the life of the financial instrument. A 12-month expected credit loss is
recognised by:
• debt securities that are determined to have low credit risk at the reporting date; and debt securities that are
determined to have low credit risk at the reporting date; and
• other debt securities and bank balances for which the credit risk (i.e. the risk of default in the expected life of the
financial instrument) has not increased significantly since initial recognition.
The Krka Group considers a debt security to have low credit risk if its credit risk rating is equivalent to the globally
understood definition of ‘investment grade’ or equivalent to a rating of Baa2 or above by Moody's or BBB- or above by
Standard & Poor's.
The Krka Group monitors changes in credit risk by tracking published external credit ratings. The probabilities of default
(PD), both 12-month and over the life of the financial instrument, are based on information provided by the external credit
rating agency. The loss given default (LGD) ratios, which reflect the assumed recovery rate, are also provided by the
external credit rating agencies.
Non-financial assets
The carrying amounts of the Krka 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.
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 into the smallest cash-generating units, which are the smallest
groups of assets that generate 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 of an asset or a cash-generating unit is recognised when its carrying amount exceeds its recoverable
amount. Impairment is recognised in the income statement. A loss recognised in a cash-generating unit as a result of
impairment is allocated by first reducing the carrying amount of goodwill allocated to the cash-generating unit and then to
the other assets of the unit (group of units) in proportion to the carrying amount of each asset in the unit.
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.
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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 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 Krka 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 Krka 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 Krka 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.
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The Krka 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 Krka Group 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 Krka 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 Krka 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 Krka 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 Krka 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 Krka 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 Krka 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
for compiling the financial statements of the financial statements section.
Significant financing component
In some cases, the Krka Group receives current advances from its customers. Using the practical expedient in IFRS
15.63, the Krka 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 Krka 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.
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Trade receivables
A receivable represents the Krka 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).
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Krka 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 Krka Group performs under the
contract.
Right-of-return assets
Right-of-return assets represent the Krka 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 Krka 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). It is
measured at the amount the Krka Group ultimately expects it will have to return to the customer.
The Krka 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
Income from government grants is initially recognised when there is reasonable assurance that the grant will be received
and that the Krka Group will comply with the attached conditions. Income 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. Income 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.
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Income tax expense
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
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 Gropu presents basic earnings per share (EPS) data. EPS is calculated by dividing the profit or loss attributable
to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted EPS
is equal to basic EPS, because the Krka Group has not issued any dilutive or potentially dilutive instruments.
Segment reporting
An operating segment is a distinguishable component of the Krka 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 European Union (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).
Revenue 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.
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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
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 application was
permitted. In response to the COVID-19 pandemic, the IASB delayed the effective date of the amendments by one year,
until 1 January 2024, to allow companies sufficient time to implement the changes to the classification of liabilities. 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. 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
2022 Annual Report – Financial Report
206
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.
Amendments to IFRS 16 Leases: Lease Liability in sale and Leaseback
The amendments are effective for annual periods beginning on or after 1 January 2024. Early application is permitted. The
amendments affect how a vendor-lessee accounts for variable lease payments in sale and leaseback transactions. They
introduce a new accounting model for variable payments and require vendor-lessees to reassess and potentially adjust
sale and leaseback transactions entered into from 2019.
The amendments confirm the following:
• on initial recognition, the seller-lessee includes variable lease payments when measuring the lease liability arising
from sale and leaseback transactions;
• after initial recognition, the vendor-lessee applies the general requirements for subsequent accounting for a lease
liability by recognising no gain or loss in respect of the right-of-use right that it retains.
The seller-lessee may adopt different approaches to meet the new subsequent measurement requirements. These
amendments do not change the accounting for leases other than those arising in sale and leaseback transactions.
Management has assessed the impact of the amendments on the financial statements of the Krka Group and believes
that they will not have a material impact on them.
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3. Segment reporting
The Krka Group reports in terms of certain geographical segments. Revenue 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
€ thousand
European Union
South-Eastern
Europe
Eastern Europe
Total segment
reporting
Other
Eliminations
Total
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Revenue from sales to non-group
customers
904,135
851,210
93,316
88,481
623,549
547,916
1,621,000
1,487,607
96,453
78,195
1,717,453
1,565,802
Revenue from sales to intra-group
customers
382,540
333,268
60,170
56,414
605,779
537,934
1,048,489
927,616
36,933
17,219
-1,085,422
-944,835
Total revenue
1,286,675
1,184,478
153,486
144,895
1,229,328
1,085,850
2,669,489
2,415,223
133,386
95,414
-1,085,422
-944,835
1,717,453
1,565,802
Other operating income
7,985
11,005
54
46
416
307
8,455
11,358
742
18
9,197
11,376
Operating expenses
-754,190
-713,409
-64,222
-61,607
-454,408
-386,483
-1,272,820
-1,161,499
-72,619
-60,891
-1,345,439
-1,222,390
Intra-group operating expenses, including
elimination of profits
-382,541
-333,268
-60,170
-56,414
-605,778
-537,934
-1,048,489
-927,616
-36,933
-17,219
1,085,422
944,835
Operating profit
157,929
148,806
29,148
26,920
169,558
161,740
356,635
337,466
24,576
17,322
0
0
381,211
354,788
Interest income
2,127
249
7
4
787
216
2,921
469
890
351
3,811
820
Intra-group interest income
995
544
0
0
0
0
995
544
0
1
-995
-545
Interest expenses
-1,114
-366
-15
-11
-127
-113
-1,256
-490
-5
-5
-1,261
-495
Intra-group interest expenses
-995
-545
0
0
0
0
-995
-545
0
0
995
545
Net financial result
-1,249
-1,104
47
-155
46,275
5,891
45,073
4,632
6,789
2,997
51,862
7,629
Income tax expense
-31,076
-26,730
-5,237
-3,963
-30,101
-21,634
-66,414
-52,327
-2,997
-1,940
-69,411
-54,267
Net profit
125,604
120,972
23,958
22,802
185,732
145,997
335,294
289,771
28,368
18,379
0
0
363,662
308,150
Investments
90,600
54,623
579
363
14,627
10,619
105,806
65,605
168
781
105,974
66,386
Depreciation of property, plant and
equipment
70,443
71,651
2,073
2,004
21,454
22,591
93,970
96,246
2,964
2,443
96,934
98,689
Depreciation of the right-of-use assets
2,828
2,502
110
105
660
600
3,598
3,207
87
66
3,685
3,273
Amortisation of intangible assets
4,182
4,261
334
351
2,249
1,989
6,765
6,601
300
274
7,065
6,875
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Total assets
2,069,151
1,917,518
64,802
57,976
463,008
492,729
2,596,961
2,468,223
90,539
68,765
2,687,500
2,536,988
Non-current assets exclusive of deferred
tax assets
922,872
898,811
5,357
5,112
99,916
87,801
1,028,145
991,724
43,110
36,445
1,071,255
1,028,169
Total liabilities
360,495
404,832
15,854
23,358
129,136
150,975
505,485
579,165
43,506
38,738
548,991
617,903
2022 Annual Report – Financial Report
208
4. Revenue from contracts with customers
Itemisation of revenue from contracts with customers
€ thousand
2022
2021
Revenue from contracts with customers (products)
1,665,990
1,523,823
Revenue from contracts with customers (health resorts and tourist services)
42,552
36,465
Revenue from contracts with customers (materials)
3,988
1,978
Total revenue from contracts with customers
1,712,530
1,562,266
Revenue from contracts with customers by region
€ thousand
2022
2021
Region Slovenia
60,495
56,415
Region South-East Europe
224,523
209,166
Region East Europe
623,377
547,778
Region Central Europe
364,154
351,501
Region West Europe
327,343
305,246
Region Overseas Markets
66,098
53,717
Total
1,665,990
1,523,823
In Ukraine, our fourth largest market, we have sold €95,213 thousand of products in 2022 (2021: €96,419 thousand), which
represents 5.6% of Krka Group's total sales.
In the Russian Federation, which is Krka's largest single market, we have sold €387,017 thousand of products in 2022
(2021: €332,899 thousand), representing 22.7% of Krka Group's total sales. Demand for our products is adequate.
Revenue from contracts with customers by product groups
€ thousand
2022
2021
Prescription pharmaceuticals
1,390,972
1,305,316
Non-prescription products
181,977
137,250
Animal health products
93,041
81,257
Total
1,665,990
1,523,823
All revenue from contracts with customers of health resorts and tourist services are generated in Slovenia.
Contract-related balances
Trade receivables are outlined in Note 17 ‘Trade and other receivables’, while liabilities from contracts with customers in
Note 24 ‘Current liabilities from contracts with customers’. The Krka Group recognised assets from contracts with
customers in the amount of €420 thousand (2021: €437 thousand) and liabilities from contracts in the amount of
€10,858 thousand (2021: €7,766 thousand in 2021). The recognised assets and liabilities under contracts with customers
are set out in the consolidated statement of financial position.
Right-of-return liabilities
The Krka Group recognised right-of-return liabilities in the amount of €146,853 thousand (2021: €116,965 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
2022 Annual Report – Financial Report
209
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.
Transfers of control depend on terms and conditions of an individual contract. Generally, the transfer occurs when the
customer accepts the goods in accordance with Incoterms 2021 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, which could be
recognised as assets.
5. Other operating income
€ thousand
2022
2021
Reversal of non-current provisions
2,256
5,116
Reversal of deferred income
1,118
1,229
Gains on sale of property, plant and equipment and intangible assets
1,736
1,161
Other operating income
4,087
3,870
Total other operating income
9,197
11,376
Other operating income also includes income from government grants relating to the curbing of the COVID-19 pandemic
in the amount of €235 thousand (2021: €618 thousand) and the aid received in connection with the increase in energy
prices in the amount of €656 thousand (no such grant was recorded in 2021).
6. Costs by nature
€ thousand
2022
2021
Cost of goods and materials
540,206
394,891
Cost of services
249,574
229,106
Employee benefits expense
469,576
441,476
Amortisation and depreciation
107,684
108,837
Net write-offs and allowances for inventories
20,321
20,738
Net impairments and write-offs of receivables
1,875
1,048
Formation of provisions for lawsuits
20
563
Other operating expenses
34,923
34,716
Total costs
1,424,179
1,231,375
Change in the value of inventories of finished products and work in progress
-78,740
-8,985
Total
1,345,439
1,222,390
2022 Annual Report – Financial Report
210
7. Employee benefits expense
87
€ thousand
2022
2021
Gross wages and salaries and continued pay
364,441
339,342
Social security contributions
26,368
25,003
Pension insurance contributions
51,187
46,601
Payroll tax
705
784
Post-employment benefits and other non-current employee benefits
3,888
7,799
Other employee benefits expense
22,987
21,947
Total employee benefits expense
469,576
441,476
Post-employment benefits and other non-current employee benefits are detailed in Note 21 ‘Provisions’. Other employee
benefits include primarily vacation bonuses and commuting allowances.
8. Other operating expenses
€ thousand
2022
2021
Grants and assistance for humanitarian and other purposes
1,752
1,548
Environmental protection expenditures
6,025
5,161
Other taxes and levies
21,933
21,264
Loss on sale and write-offs of property, plant and equipment and intangible assets
965
2,754
Other operating expenses
4,248
3,989
Total other operating expenses
34,923
34,716
Other levies include €18,125 thousand (2021: €17,320 thousand) of various taxes and levies paid on pharmaceuticals and
fees paid to associates in individual foreign countries for pursuing promotional activities.
9. Financial income and financial expenses
€ thousand
2022
2021
Net foreign exchange gains
43,586
15,145
Interest income
3,811
820
Derivatives income
9,096
2,968
– Realised revenue
8,847
2,002
– Fair value change
249
966
Income from dividends
702
691
Other financial income
473
87
Total financial income
57,668
19,711
Interest expenses
-1,261
-495
– Interest paid
-960
-199
– Interest expenses on lease liabilities
-301
-296
Derivatives expenses
0
-10,459
– Realised expenses
0
-10,459
Other financial expenses
-4,545
-1,128
Total financial expenses
-5,806
-12,082
Net financial result
51,862
7,629
The net financial result in 2022 improved over the previous period mostly on the account of net foreign exchange
differences recorded in the amount of €44,233 thousand. In 2022, Krka continued its policy of partial hedging against
87
GRI 201-1, 201-3
2022 Annual Report – Financial Report
211
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 2022 €1 = RUB 78.4308 and on 31 December 2021 €1 = RUB 85.3004).
Detailed information on the risk of changes in foreign exchange rates can be found in Note 29 ‘Financial Instruments and
Financial Risks’.
10. Income tax expense
Adjustment to the effective tax rate
€ thousand
2022
2021
Current income tax
79,477
53,767
Deferred tax
-10,066
500
Total income tax expense
69,411
54,267
Profit before tax
433,073
362,417
Income tax for both years calculated at the rate of 19%
82,284
68,859
Tax on reduced income
-3,252
-3,231
Tax on non-deductible expenses
4,518
3,190
Income tax from tax incentives
-19,336
-16,028
Tax on increase/decrease of costs for taxable purposes
2,855
2,071
Effect of different tax rates
1,631
603
Other
711
-1,197
Total income tax expense
69,411
54,267
Effective tax rate
16.0%
15.0%
Investments in R&D and investment relief represent the major share of tax incentives.
11. Property, plant and equipment
€ thousand
31 Dec 2022
31 Dec 2021
Land
40,721
40,590
Buildings
356,784
359,244
Equipment
294,308
313,227
Property, plant and equipment being acquired
76,139
48,833
Right-of-use assets
11,384
11,763
Total property, plant and equipment
779,336
773,657
The largest investments in the controlling company were in 2022 earmarked for increasing the capacity of the OTO plant,
i.e. €15,162 thousand (2021: €2,548 thousand) and for renovating the Notol`s packaging unit i.e. €6,712 thousand (a new
investment in 2022). Another €4,999 thousand (2021: €3,606 thousand) was earmarked for IT and telecommunication
projects, €3,958 thousand (2021: €1,265 thousand) for the investment in the new packaging unit at Notol 2 and
€3,406 thousand (new investment in 2022) for replacing the cladding boilers at Notol.
As for the subsidiaries, the largest investment was allocated to increase production capacity in the subsidiary Krka-Rus in
the Russian Federation, amounting to €13,218 thousand (2021: €5,564 thousand). €3,300 thousand (2021:
€179 thousand) was invested in renovating the accommodation facility within the Hotel Laguna in the Terme Krka.
The majority of the right-of-use asset refers to the right of using assets relating to buildings in the amount of Tax on
increase/decrease of costs for taxable purposes €8,033 thousand (2021: €8,487 thousand).
2022 Annual Report – Financial Report
212
Movement of property, plant and equipment (PPE)
€ thousand
Land
Buildings
Equipment
PPE being
acquired
Right-of-use
assets
Total
Purchase cost
Balance at 1 Jan 2021
40,290
848,025
1,209,544
41,727
16,508
2,156,094
Additions
0
0
0
61,125
0
61,125
Capitalisations – transfer from PPE
being acquired
336
8,165
45,356
-53,857
0
0
Capitalisations – IFRS 16 Leases
0
0
0
0
3,871
3,871
Disposals, impairments, deficit,
surplus
-80
-723
-18,310
-907
-1,135
-21,155
Translation reserve
44
4,087
5,214
776
172
10,293
Transfers, reclassifications
0
0
-8
-31
0
-39
Balance at 31 Dec 2021
40,590
859,554
1,241,796
48,833
19,416
2,210,189
Balance at 1 Jan 2022
40,590
859,554
1,241,796
48,833
19,416
2,210,189
Additions
0
0
0
99,147
0
99,147
Capitalisations – transfer from PPE
being acquired
102
21,885
50,382
-72,369
0
0
Capitalisations – IFRS 16 Leases
0
0
0
0
3,648
3,648
Disposals, impairments, deficit,
surplus
-19
-1,805
-23,883
0
-1,327
-27,034
Translation reserve
48
4,656
3,879
570
77
9,230
Transfers, reclassifications
0
-240
301
-42
0
19
Balance at 31 Dec 2022
40,721
884,050
1,272,475
76,139
21,814
2,295,199
Accumulated depreciation
Balance at 1 Jan 2021
0
-471,898
-872,122
0
-4,945
-1,348,965
Depreciation
0
-27,560
-71,129
0
-3,273
-101,962
Disposals, deficit, surplus
0
423
17,835
0
641
18,899
Transfers, reclassifications
0
0
5
0
0
5
Translation reserve
0
-1,275
-3,158
0
-76
-4,509
Balance at 31 Dec 2021
0
-500,310
-928,569
0
-7,653
-1,436,532
Balance at 1 Jan 2022
0
-500,310
-928,569
0
-7,653
-1,436,532
Depreciation
0
-26,874
-70,060
0
-3,685
-100,619
Disposals, deficit, surplus
0
1,363
22,946
0
919
25,228
Transfers, reclassifications
0
-25
-40
0
0
-65
Translation reserve
0
-1,420
-2,444
0
-11
-3,875
Balance at 31 Dec 2022
0
-527,266
-978,167
0
-10,430
-1,515,863
Carrying amount
Balance at 1 Jan 2021
40,290
376,127
337,422
41,727
11,563
807,129
Balance at 31 Dec 2021
40,590
359,244
313,227
48,833
11,763
773,657
Balance at 1 Jan 2022
40,590
359,244
313,227
48,833
11,763
773,657
Balance at 31 Dec 2022
40,721
356,784
294,308
76,139
11,384
779,336
No capitalised borrowing costs relate to the items of property, plant and equipment in 2022.
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 26 ‘Contingent Liabilities and Commitments’.
The movements and lease liabilities recognised in profit or loss are presented in Notes 27 ‘Leases’ and 29 ‘Financial
Instruments and Risk’.
2022 Annual Report – Financial Report
213
Impairment testing of the cash-generating unit Russian Federation
The Krka Group has production and distribution facilities in the Russian Federation, where production is carried out at Krka
RUS, while distribution is carried out through Krka Farma. Both companies together constitute the cash-generating unit
(CGU) Russian Federation. The carrying amount of property, plant and equipment allocated to the cash-generating unit is
€86,527 thousand (2021: €74,461 thousand).
The Russian-Ukrainian situation has increased uncertainty, which has led to a significant increase in the weighted average
cost of capital in the financial markets. Consequently, management has assessed the recoverable amount of the assets
allocated to the Russian Federation CGU. The recoverable amount of the CGU is based on the value in use calculated by
discounting the future cash flows generated by the continued use of the CGU. The Krka Group's current strategy does not
envisage the sale of production capacity in the Russian Federation and does not foresee the payment of dividends in the
foreseeable future.
The five-year projection of the CGU's performance until 2027 uses a discount rate of 14.0%, while for the residual value
the discount rate is set at 12.1%. Based on the impairment assessment performed, it was concluded that there is no need
to impair the CGU Russian Federation.
12. Intangible assets
€ thousand
31 Dec 2022
31 Dec 2021
Goodwill
42,644
42,644
Trademark
34,047
34,918
Software
14,685
15,216
Other intangible assets
7,468
7,590
– Long-term deferred operating costs
715
645
– Development-related projects
5,738
6,633
– Emission coupons
1,015
312
Intangible assets being acquired
3,706
3,933
Total intangible assets
102,550
104,301
Goodwill arose on the acquisition of subsidiaries TAD Pharma in Germany (€42,277 thousand) and Krka Pharma in Austria
(€367 thousand). The item of trademark refers mostly to the trademark of TAD Pharma (€33,922 thousand).
2022 Annual Report – Financial Report
214
Movement of intangible assets (IA)
€ thousand
Goodwill
Trademark
Concessions,
trademarks
and licences
Other IA
IA being
acquired
Total
Purchase cost
Balance at 1 Jan 2021
42,644
42,629
72,383
62,772
4,487
224,915
Additions
0
0
0
0
5,261
5,261
Transfer from IA being acquired
0
0
3,548
1,317
-4,865
0
Disposals, deficit, surplus
0
0
-55
-596
-952
-1,603
Transfers, reclassifications
0
0
-6
0
2
-4
Translation reserve
0
0
37
209
0
246
Balance at 31 Dec 2021
42,644
42,629
75,907
63,702
3,933
228,815
Balance at 1 Jan 2022
42,644
42,629
75,907
63,702
3,933
228,815
Additions
0
0
0
0
6,827
6,827
Transfer from IA being acquired
0
0
3,893
2,917
-6,810
0
Disposals, deficit, surplus
0
0
-869
-2,016
-238
-3,123
Transfers, reclassifications
0
0
132
-190
0
-58
Translation reserve
0
0
62
179
-6
235
Balance at 31 Dec 2022
42,644
42,629
79,125
64,592
3,706
232,696
Accumulated amortisation
Balance at 1 Jan 2021
0
-6,841
-56,435
-54,268
0
-117,544
Amortisation
0
-870
-4,279
-1,726
0
-6,875
Disposals, deficit, surplus
0
0
41
65
0
106
Transfers, reclassifications
0
0
6
-4
0
2
Translation reserve
0
0
-24
-179
0
-203
Balance at 31 Dec 2021
0
-7,711
-60,691
-56,112
0
-124,514
Balance at 1 Jan 2022
0
-7,711
-60,691
-56,112
0
-124,514
Amortisation
0
-871
-4,486
-1,708
0
-7,065
Disposals, deficit, surplus
0
0
833
722
0
1,555
Transfers, reclassifications
0
0
-43
101
0
58
Translation reserve
0
0
-53
-127
0
-180
Balance at 31 Dec 2022
0
-8,582
-64,440
-57,124
0
-130,146
Carrying amount
Balance at 1 Jan 2021
42,644
35,788
15,948
8,504
4,487
107,371
Balance at 31 Dec 2021
42,644
34,918
15,216
7,590
3,933
104,301
Balance at 1 Jan 2022
42,644
34,918
15,216
7,590
3,933
104,301
Balance at 31 Dec 2022
42,644
34,047
14,685
7,468
3,706
102,550
Impairment testing of cash generating units that include goodwill
For the purpose of impairment testing, goodwill arising on the acquisition of TAD Pharma amounting to €42,277 thousand
has been allocated to two cash-generating units (CGUs) i.e. to CGU TAD Pharma in the amount of €30,989 thousand and
to CGU Krka (controlling company) in the amount of €11,288 thousand.
Cash-generating unit TAD Pharma
The recoverable amount of the CGU TAD Pharma is based on the value in use calculated by discounting the future cash
flows generated by the continued use of the CGU. The five-year financial plans of CGU TAD Pharma were used, with a
projected five-year average growth rate of earnings before interest, taxes, amortisation of 1.7% (previous year's projected
five-year average growth rate: 10.0%), the discount rate is 6.6% (2021: 6.8%) and the annual growth rate of the free cash
flow at residual value is 2.0% (2021: 2.0%). The annual growth rate of free cash flow was determined on the basis of long-
2022 Annual Report – Financial Report
215
term inflation estimates. The values assigned to the key assumptions represent management's best estimate of future
industry trends and were based on historical data obtained from both internal and external sources.
The estimated recoverable amount of the cash-generating unit exceeds its carrying amount and therefore there is no need
to impair the cash-generating unit.
Cash-generating unit Krka (controlling company)
The recoverable amount of the CGU Krka is based on the value in use calculated by discounting the future cash flows
generated by the continued use of the CGU. The five-year financial plans of CGU Krka were used, with a projected five-
year average growth rate of earnings before interest, taxes, amortisation of 1.7% (previous year's projected five-year
average growth rate: 4.8%), the discount rate is 8.0% (2021: 7.9%) and the annual growth rate of the free cash flow at
residual value is 2.0% (2021: 2.0%). The annual growth rate of free cash flow was determined on the basis of long-term
inflation estimates. The values assigned to the key assumptions represent management's best estimate of future industry
trends and were based on historical data obtained from both internal and external sources.
Based on the goodwill impairment assessment performed, it was concluded that there is no need to impair CGU Krka.
13. Loans
€ thousand
31 Dec 2022
31 Dec 2021
Non-current loans
77,539
40,300
– Loans to others
47,539
40,300
– Deposits granted to banks
30,000
0
Current loans
6,327
192,360
– Portion of non-current loans maturing next year
4,559
1,826
– Loans to others
23
321
– Deposits granted to banks
2
190,264
– Current interest receivables
1,743
-51
Total loans
83,866
232,660
Non-current loans include a loans by a subsidiary in China for the construction of a production plant for an amount of
€35,335 thousand (2021: €27,798 thousand), as well as housing loans granted by the controlling company and certain
subsidiaries to employees in accordance with the internal rules. The loan in China has a maturity of 7 years from the first
disbursement and a grace period for repayment of 2.5 years from the first disbursement. The loan is secured by
a guarantee from Ningbo Menovo Pharmaceutical Co. Ltd, which is the owner of the borrowing company Ningbo Menovo
Tiankang Pharmaceutical Co., Ltd, and a mortgage on the borrower's immovable property.
14. Investments
€ thousand
31 Dec 2022
31 Dec 2021
Non-current investments
110,770
108,883
– Investments at fair value through OCI (equity instruments)
15,989
15,861
– Investments at amortised cost (debt instruments)
94,781
93,022
Current investments including derivatives
52,437
155,448
–Investments at amortised cost (debt instruments)
50,697
113,987
– Derivatives
1,740
1,491
– Other current investments at fair value through profit or loss (debt instruments)
0
39,970
Total investments
163,207
264,331
Investments at fair value through other comprehensive income comprised €877 thousand of investments in shares and
interests in companies in Slovenia (2021: €1,002 thousand), and €15,112 thousand of investments in shares of companies
2022 Annual Report – Financial Report
216
located abroad (2021: €14,859 thousand). Investments at amortised cost include investments in Slovenian government
bonds which amounted to €6,533 thousand (2012: €4,455 thousand), while investments in foreign government bonds
amounted to €138,945 thousand (2021: €202,554 thousand).
Movement of financial assets
€ thousand
Financial assets at
fair value through
OCI
Investments at
amortised cost
Investments at fair
value through profit
or loss
Balance at 1 Jan 2021
10,420
0
0
Increase
0
205,946
40,000
Foreign exchange differences
0
1,063
0
Adjustment to market value
5,441
/
-30
Balance at 31 Dec 2021
15,861
207,009
39,970
Balance at 1 Jan 2022
15,861
207,009
39,970
Increase
0
54,083
0
Decrease
0
-119,265
-40,000
Foreign exchange differences
0
3,651
0
Adjustment to market value
128
/
30
Balance at 31 Dec 2022
15,989
145,478
0
Increases in financial assets comprise new acquisitions and imputed interest, while decreases comprise coupons received,
imputed interest and disposals due to the investment's maturity. Adjustments of non-current investments at fair value
through OCI were recognised in other comprehensive income in the amount of €128 thousand (2021: €5,441 thousand).
Exchange differences on investments at amortised cost of €3,651 thousand (2021: €1,063 thousand) are recognised in
financial income.
15. Deferred tax assets and deferred tax liabilities
€ thousand
Assets
Liabilities
2022
2021
2022
2021
Investments, property, plant and equipment and intangible assets
332
367
11,925
12,316
Investments at fair value through OCI
1,708
1,727
2,490
2,466
Inventories
34,540
24,378
0
-37
Receivables
11,766
10,242
0
0
Dividends
33
19
0
0
Provisions for post-employment benefits and other non-current
employee benefits
8,704
13,398
0
0
Transfer of tax loss
344
575
0
0
Total
57,427
50,706
14,415
14,745
Offsetting
-3,657
-3,823
-3,657
-3,823
Net
53,770
46,883
10,758
10,922
2022 Annual Report – Financial Report
217
€ thousand
Balance
at
1 Jan
2021
Recognised
in income
statement
Translation
reserve
Recognised
in OCI
Balance
at
31 Dec
2021
Recognised
in income
statement
Translation
reserve
Recognised
in OCI
Balance
at
31 Dec
2022
Investments, property,
plant and equipment
and intangible assets
-12,206
296
-39
0
-11,949
417
-61
0
-11,593
Investments at fair
value through OCI
295
0
0
-1,034
-739
-19
0
-24
-782
Inventories
30,547
-6,208
76
0
24,415
10,218
-93
0
34,540
Receivables
4,693
5,290
259
0
10,242
967
557
0
11,766
Dividends
14
5
0
0
19
14
0
0
33
Provisions for post-
employment
benefits and other
non-current
employee benefits
13,642
347
-3
-588
13,398
-1,300
-1
-3,393
8,704
Transfer of tax loss
805
-230
0
0
575
-231
0
0
344
Total
37,790
-500
293
-1,622
35,961
10,066
402
-3,417
43,012
Unrecognised deferred tax on account of tax losses of subsidiaries amounted to €484 thousand at the year-end of 2022
(2021: €850 thousand). The unrecognised deferred tax liability for unpaid dividends from subsidiaries amounts to
€13,675 thousand (2021: €10,831 thousand).
16. Inventories
€ thousand
31 Dec 2022
31 Dec 2021
Materials
230,094
188,994
Work in progress
125,925
104,640
Finished products
169,510
152,597
Merchandise
8,297
7,299
Advances for inventories
19,506
2,177
Total inventories
553,332
455,707
The increase in inventories is the result of adapting to uncertain market conditions. By carefully planning our inventories
and maintaining safety stocks, we ensure that we always have access to the intermediate goods that we require to produce
our finished products. The planning of inventories of intermediate goods is based on sales forecasts. We also ensure
optimal and adequate stocks of finished products throughout the distribution chain.
The net write-downs and write-offs of inventories recorded among operating expenses amounted in the reporting period
to €20,321 thousand (2021: €20,738 thousand).
The Krka Group does not pledge inventories as collateral.
17. Trade and other receivables
€ thousand
31 Dec 2022
31 Dec 2021
Current trade receivables
402,730
467,764
Current receivables due from others
27,728
29,564
Total trade and other receivables
430,458
497,328
The net amount of the write-offs and impairment of receivables disclosed in operating expenses amounted in 2022 to
€1,875 thousand (2021: €1,048 thousand).
2022 Annual Report – Financial Report
218
96.1% of trade receivables were insured with a credit insurer, by taking into account 86.7% of the deductible (98.5% were
insured as at 31 December 2021, by taking into account 89.8% of the deductible).
Current trade receivables
€ thousand
Gross value
Allowances for
receivables
Net value at
31 Dec 2022
Net value at
31 Dec 2021
Trade receivables due from domestic customers
11,605
39
11,566
12,212
Trade receivables due from foreign customers
432,180
38,520
393,660
456,377
Deferred income from contracts with foreign customers
-2,496
0
-2,496
-825
Total current trade receivables
441,289
38,559
402,730
467,764
Current receivables due from others
Current receivables due from others relate primarily to receivables due from the State. Income tax credits amounted to
€1,644 thousand (2021: €3,057 thousand), while the remaining €16,570 thousand relate to other receivables due by the
State (2021: €17,368 thousand).
Advances for services were recorded at €2,304 thousand (2021: €2,442 thousand) at the year-end of 2022.
18. Cash and cash equivalents
€ thousand
31 Dec 2022
31 Dec 2021
Cash in hand
64
30
Bank balances
518,870
159,808
Total cash and cash equivalents
518,934
159,838
19. Equity
Share capital
The share capital of the Company in the amount of €54,732 thousand is represented by 32,793,448 ordinary no-par value
shares. There is solely one class of share. The share capital is fully paid in.
Treasury shares
At the 26th 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, the Company 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.
2022 Annual Report – Financial Report
219
Pursuant to paragraphs 3 and 4, Article 381 of the Companies Act (ZGD-1), 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
No. of shares
Weighted average
share price
(€)
Value of treasury
shares
(€ thousand)
Balance at 31 Dec 2020
1,541,774
99,279
Repurchases in 2021
142,134
107.38
15,262
Balance at 31 Dec 2021
1,683,908
114,541
Repurchases in 2022
101,941
98.35
10,025
Balance at 31 Dec 2022
1,785,849
124,566
The performed repurchases of treasury shares refers to repurchases that were recorded in individual years. A subscription
fee is included in the weighted average price of shares. The amount paid, including commission, is deducted from the total
capital as treasury shares until such shares are withdrawn, reissued or sold.
The repurchases of treasury shares in 2022 in terms of days are outlined in Note 35 to the financial statements of Krka,
d.d., Novo mesto ‘Repurchase of treasury shares’.
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 as at the balance sheet date to €124,566 thousand and increased by
€10,025 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 2022 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 €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 2022, 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
2022 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. Statutory reserves are available for drawdown.
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 €24,747 thousand and amounted to €2,670 thousand
as at 31 December 2022. The cumulative change is due to a €128 thousand increase in the fair value of financial assets
through OCI (equity instruments); a decrease for the impact of deferred taxes of €3,417 thousand and an increase due to
the restatement of post-employment benefits of €28,036 thousand.
Compared to the previous period, the value of the translation reserve increased by €12,355 thousand and amounted to
–€85,919 thousand as at 31 December 2022. 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.
2022 Annual Report – Financial Report
220
Retained earnings
Retained earnings grew based on the majority shareholder's profit of €363,296 thousand. On the other hand, they declined
as a result of allocation of accumulated profit to dividend payment amounting to €175,025 thousand in accordance with
the resolution adopted by the 28th Annual General Meeting on 7 July 2022; an additional formation of reserves for treasury
shares in total of €10,025 thousand on account of the share repurchase by the controlling company in 2022 and changes
in provisions for termination benefits amounting to €1,937 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 €19 thousand of dividends paid in respect of
previous periods (2021: €11 thousand).
Dividends per share
In 2022, the declared gross dividend per share was €5.63 (2021: €5.00).
Non-controlling interests
Krka holds a 60-percent holding in Ningbo Krka Menovo Pharmaceutical Co. Ltd., with Ningbo Menovo Pharmaceutical
Co., Ltd. having a 40-percent holding. The following table summarises information about the company before any intra-
group spin-offs. In 2022, the shareholders increased the company's share capital in the amount of €15,380 thousand, in
proportion to their respective shareholdings.
€ thousand
2022
2021
Non-controlling interest
40%
40%
Non-current assets
40,521
33,813
Current assets
20,626
5,082
Non-current liabilities
0
-7
Current liabilities
-11,416
-4,189
Net assets
49,731
34,699
Net assets, attributable to the non-controlling interest
19,893
13,879
Revenue
29,634
14,543
Net profit
915
-2,661
Other comprehensive income
0
0
Total comprehensive income
915
-2,661
Net profit, attributable to the non-controlling interest
366
-1,064
Other comprehensive income, attributable to the non-controlling interest
-505
1,265
20. Earnings per share
Basic earnings per share amounted to €11.69 in 2022 and increased by 18% over the previous year, when it amounted to
€9.92. The calculation of earnings per share took into account the profit for the period attributable to the controlling interests
in the amount of €363,296 thousand (2021: €309,214 thousand). The weighted average number of shares was accounted
for in the calculation for both years i.e. 31,070,960 shares for 2022, and 31,185,323 shares for 2021. The average number
of shares is calculated from the daily share balances during the year, less treasury shares.
Diluted earnings per share equal the basic earnings per share as the Krka Group has not issued any dilutive or contingently
dilutive instruments.
2022 Annual Report – Financial Report
221
21. Provisions
Movement of provisions in 2022
€ thousand
Balance at
31 Dec 2021
Transfer
Formation
Utilisation
Reversal
Translation
reserve
Balance at
31 Dec 2022
Provisions for lawsuits
577
10,000
20
0
0
0
10,597
Provisions for post-
employment benefits
104,429
0
-18,966
-3,898
-1,807
-8
79,750
Provisions for other non-
current employee benefits
19,854
0
-1,857
-1,442
-341
-5
16,209
Other provisions
1,293
0
719
-1,225
-108
0
679
Total provisions
126,153
10,000
-20,084
-6,565
-2,256
-13
107,235
Movement of provisions in 2021
€ thousand
Balance at
31 Dec 2021
Formation
Utilisation
Reversal
Translation
reserve
Balance at
31 Dec 2022
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 2014, the European Commission found that Krka had infringed Article 101 of the Treaty on the Functioning of the EU,
thereby distorting competition on the EU market for perindopril, and imposed a fine of €10,000 thousand on Krka. Krka
paid the fine within the time limit set by the Commission. However, as it considered that its conduct did not infringe
competition law rules, it brought an action against the decision before the EU General Court, which ruled in favour of Krka
in December 2018.
88
The General Court's decision is not yet final and the Commission has lodged an appeal against it within the appeal period,
which will be decided by the European Court of Justice. In 2022, Krka transferred the value from non-current operating
liabilities to provisions for lawsuits.
The controlling company and its subsidiaries were in 2022 involved in intellectual property disputes and other areas of law
(civil, labour, administrative disputes, etc.). The total value of the claims against Krka is estimated at €1,324 thousand.
The Krka Group has formed provisions of €597 thousand for this purpose. The reversal of provisions is disclosed in
Note 5 ‘Other operating income’.
Provisions for obligations to employees arising from post-employment and other non-current benefits are based on
actuarial calculation using the following assumptions:
• a discount rate that depends on the average duration of the liability in each company – for the Company, an
annual discount rate of 3.91% is used, which is the yield on 10-year Eurozone high quality corporate bonds at the
end of November 2022 (2021: 1. 27%), for subsidiaries different annual discount rates are used, ranging between
3.14% and 6.75% (2021: from 0.78% and 3.60%);
• currently applicable amounts of retirement benefits and anniversary bonuses as defined by internal rules;
88
GRI 206-1
2022 Annual Report – Financial Report
222
• staff turnover depending primarily upon the employees' age (3.0% for up to 30 years; 2.0% for 31 to 40 years;
0.5% for 41 to 50 years; 0.2% for 51 to 60 years);
• mortality rates calculated on the basis of most recent mortality tables available;
• the 2.00% increase in salaries (2021: 2.00%).
Liabilities for post-employment benefits
€ thousand
2022
2021
Balance at 1 Jan
104,429
109,698
Current service costs (CSC)
5,824
6,602
Interest costs (IC)
1,300
796
Post-employment benefits paid
-3,897
-4,526
Staff departures (reversal)
-1,807
-1,382
Actuarial surplus/deficit, whereof:
-26,099
-6,759
– Change in financial assumptions
-28,492
-7,973
– Experience
2,393
1,214
Balance at 31 Dec
79,750
104,429
Sensitivity analysis for post-employment and other benefits
Discount rate
Increase in wages and
salaries
Change in
percentage points
percentage points
Change by
0.5
–0.5
0.5
–0.5
Impact on liabilities (€ thousand)
-4,879
5,358
5,435
-4,990
22. Deferred income
€ thousand
Balance at
31 Dec 2021
New deferred
income
received
Reversal of
deferred
income
Balance at
31 Dec 2022
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
1,058
0
-215
843
Grants received from the budget for the Dolenjske and Šmarješke
Toplice health resorts and Golf Grad Otočec
3,320
266
-355
3,231
Grants received from the European Regional Development Fund
(Farma GRS)
2,376
0
-521
1,855
Subsidy for acquisition of electric drive vehicles
3
0
-1
2
Property, plant and equipment received free of charge
12
13
-12
13
Emission coupons
10
10
-10
10
Subsidy for the purchase of joinery
93
0
-1
92
Subsidy for acquisition of other equipment
3
0
-1
2
Reserve fund assets (eko fund)
0
2
-2
0
Total deferred income
6,875
291
-1,118
6,048
Production of pharmaceuticals in the new Notol 2 Plant and Farma GRS projects are partly funded by the EU 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 2007-2013 period; 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.
2022 Annual Report – Financial Report
223
The amounts of deferred income are decreased by the proportionate share of depreciation of assets to which the grants
refer and by any other types of expenses incurred.
23. Trade payables
€ thousand
31 Dec 2022
31 Dec 2021
Non-current trade payables
0
10,000
Current trade payables
140,837
130,011
Payables to domestic suppliers
55,799
46,767
Payables to foreign suppliers
85,038
83,244
Total trade payables
140,837
140,011
24. Current contract liabilities
€ thousand
31 Dec 2022
31 Dec 2021
Refund liabilities
146,853
116,965
– Bonuses and volume rebates
145,924
114,795
– Rights of return
929
2,170
Contract liabilities
10,857
7,765
– Contract liabilities – deferred income
1,290
1,101
– Contract liabilities – advances from other customers
9,567
6,664
Total current contract liabilities
157,710
124,730
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.
25. Other current liabilities
€ thousand
31 Dec 2022
31 Dec 2021
Payables to employees – gross salaries, other receipts and charges
69,812
67,978
Liabilities under repurchase transactions (repo-type operations)
0
102,234
Other
16,556
19,820
Total other current liabilities
86,368
190,032
The item ‘Other’ also includes current liabilities to the State on account of VAT payable in the amount of €10,557 thousand
(2021: €13,261 thousand) and other current liabilities to the State totalling to €4,268 thousand (2021: €4,133 thousand).
26. Contingent liabilities and commitments
€ thousand
31 Dec 2022
31 Dec 2021
Guarantees issued
17,291
16,019
Other
1,935
976
Total contingent liabilities
19,226
16,995
Among the guarantees issued, the largest items are the performance guarantee for the supply of products awarded in
tenders in Italy, amounting to €12,000 thousand, and the guarantee for the TAD Pharma credit line, amounting to
€3,000 thousand.
2022 Annual Report – Financial Report
224
Based on the contracts that had been signed in connection with the on-going investments, the balance of Krka’s
commitments for acquisition of property, plant and equipment amounted at the end of 2022 to €82,801 thousand of (2021:
€45,539 thousand).
27. 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:
• office premises, 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 movements
during the period
€ thousand
Carrying amounts of lease liabilities under
interest-bearing loans and borrowings and
movements during the period
Balance at 1 Jan 2021
11,833
Increase/Decrease
3,473
Interest
296
Lease payments
-3,515
Translation reserve
70
Balance at 31 Dec 2021
12,157
– Current lease liabilities
3,433
– Non-current lease liabilities
8,724
Balance at 1 Jan 2022
12,157
Increase/Decrease
3,305
Interest
301
Lease payments
-3,926
Translation reserve
4
Balance at 31 Dec 2022
11,841
– Current lease liabilities
3,752
– Non-current lease liabilities
8,089
The maturity analysis of lease liabilities is disclosed in Note 29 ‘Financial instruments and financial risks’.
Amounts recognised in the income statement
€ thousand
2022
2021
Depreciation of right-of-use assets
3,685
3,273
Interest expenses on lease liabilities
301
296
Expenses relating to current leases
1,134
1,357
Total amount recognised in income statement
5,120
4,926
2022 Annual Report – Financial Report
225
28. Financial liabilities
Movement of financial liabilities in 2022
€ thousand
Balance at
31 Dec 2021
Monetary
changes
Non-
monetary
changes
Other
Balance at
31 Dec 2022
Dividends
1,322
-175,044
175,025
0
1,303
Leases
12,157
-3,926
3,309
301
11,841
Liabilities under repurchase transactions
(repo-type operations)
102,234
-101,762
0
-472
0
Total
115,713
-280,732
178,334
-171
13,144
Movement of financial liabilities in 2021
€ thousand
Balance at
31 Dec 2020
Monetary
changes
Non-
monetary
changes
Other
Balance at
31 Dec 2021
Dividends
1,335
-155,907
155,896
-2
1,322
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
-57,130
159,439
236
115,713
29. Financial instruments and financial risks
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 670 of such customers at the end of 2022, 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
4 categories (an assessment of the buyer's profitability, payment habits and payment discipline, an assessment of the
buyer's financial statements, a qualitative assessment of the sales staff and an assessment of country risk) each of which
carries 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.
2022 Annual Report – Financial Report
226
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 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 is a low share of
receivable write-offs and impairments in view of 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.
The credit risk environment was due to the challenges related to the COVID-19 pandemic and the heightened situation in
Ukraine, the Russian Federation and Belarus very challenging in 2022. We paid particular attention to these markets and
further strengthened our activities to manage trade receivables. The credit risk management performance in 2022 was
favourable. At the year-end, the value of trade receivables was 14% lower than at the beginning of the year, while the
amount of overdue and unpaid receivables remained within a range acceptable to 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 2022 was less than 0.11% 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 2022
31 Dec 2021
Loans
13
83,866
232,660
Investments at amortised cost (debt instruments)
14
145,478
207,009
Trade receivables
17
402,730
467,764
Cash and cash equivalents
18
518,934
159,838
Total
1,151,008
1,067,271
As for the financial assets exposed to credit risk, the loans and trade receivables are presented separately.
The loans include a €30,000 thousand deposit with a maturity of over one year with a Slovenian bank with a high credit
rating. The loan in the amount of €35,335 thousand for production facilities in China and housing loans for Krka employees
represent a limited credit risk for the Krka Group.
Investments at amortised cost (debt instruments) represent investments in non-current and current bonds of EU countries.
They are classified as a low credit risk financial instrument because their credit risk rating is equivalent to the globally
understood definition of 'investment grade', which is equivalent to a rating of Baa2 or above by Moody's or BBB- or above
by Standard & Poor's.
The majority of Krka Group's cash and cash equivalents are represented by the parent company's bank balances and
deposits with maturities of less than 90 days with banks in the EU with a high credit rating (P-1 according to Moody's). A
smaller proportion of cash and cash equivalents is represented by the bank balances of the subsidiaries' foreign bank
accounts, earmarked for regular payments.
2022 Annual Report – Financial Report
227
Loans by geographical region
€ thousand
31 Dec 2022
31 Dec 2021
Region Slovenia
43,817
101,727
Region South-East Europe
107
114
Region East Europe
163
159
Region Central Europe
199
262
Region West Europe
381
102,302
Region Overseas Markets
39,199
28,096
Total
83,866
232,660
Trade receivables by geographical region
€ thousand
31 Dec 2022
31 Dec 2021
Region Slovenia
11,568
12,214
Region South-East Europe
78,859
80,178
Region East Europe
143,635
240,641
Region Central Europe
72,534
58,109
Region West Europe
90,545
71,966
Region Overseas Markets
5,589
4,656
Total
402,730
467,764
As at 31 December 2022, €132 thousand of receivables were outstanding from Ukrainian customers (as at 31 December
2021, receivables in the amount of €39,159 thousand were outstanding, which were almost fully closed with customer
payments during 2022). In 2022, advance payments have been agreed with all Ukrainian customers.
The value of receivables from Russian customers as at 31 December 2022 and 31 December 2021 amounted to
€120,137 thousand and €181,661 thousand, respectively. The lower receivables balance is due to factoring carried out by
the Russian subsidiary Krka Farma LLC with Russian banks.
Age analysis of loans as at the reporting date
€ thousand
Gross value at
31 Dec 2022
Allowance at
31 Dec 2022
Gross value at
31 Dec 2021
Allowance at
31 Dec 2021
Not past due
83,861
0
232,650
0
Past due up to 20 days
-1
0
0
0
Past due from 21 to 50 days
1
0
1
0
Past due from 51 to 180 days
1
0
2
0
Past due more than 180 days
4
0
7
0
Total
83,866
0
232,660
0
Age analysis of trade receivables as at the reporting date
€ thousand
Gross value at
31 Dec 2022
Allowance at
31 Dec 2022
Net value at
31 Dec 2022
Gross value at
31 Dec 2021
Allowance at
31 Dec 2021
Net value at
31 Dec 2021
Not past due
394,575
685
393,890
457,944
487
457,457
Past due up to 20 days
6,618
45
6,573
7,011
39
6,972
Past due from 21 to 50 days
372
16
356
2,341
80
2,261
Past due from 51 to 180 days
862
58
804
95
46
49
Past due more than 180 days
38,862
37,755
1,107
37,922
36,897
1,025
Total
441,289
38,559
402,730
505,313
37,549
467,764
The Krka Group agrees extended terms with certain customers. If Krka Group did not extend payment terms to some of
its customers, receivable maturity structure would be as follows at the reporting date: not past due €364,673 thousand
(2021: €400,150 thousand); past due up to 20 days €21,125 thousand (2021:€43,046 thousand); past due between 21
2022 Annual Report – Financial Report
228
and 50 days €10,136 thousand (2021: €22,462 thousand); past due between 51 and 180 days €2,806 thousand (2021:
€104 thousand); and past due more than 180 days €3,458 thousand (2021: €1,610 thousand).
Age analysis of receivables due from customers in the Russian Federation as at the reporting date
€ thousand
Gross value
at
31 Dec 2022
Allowance
31 Dec 2022
Net value at
31 Dec 2022
Gross value
at
31 Dec 2021
Allowance
31 Dec 2021
Net value at
31 Dec 2021
Not past due
120,406
269
120,137
181,813
178
181,635
Past due up to 20 days
0
0
0
26
0
26
Past due from 21 to 50 days
0
0
0
0
0
0
Past due from 51 to 180 days
0
0
0
0
0
0
Past due more than 180 days
0
0
0
0
0
0
Total
120,406
269
120,137
181,839
178
181,661
Due to the decrease in receivables from customers in the Russian Federation, the high percentage of secured receivables,
which amounted to 90.9% and 72.4% if taking into account the own participation (at 31 December 2021 all receivables
were secured and 90% if taking into account the own participation 90%) and the good payment discipline of the customers,
the allowance for doubtful debts towards Russian customers has not been increased with respect to 2021. None of the
receivables as at 31 December 2022 was past due.
Movement of allowances for trade receivables
€ thousand
2022
2021
Balance at 1 Jan
37,549
37,286
Formation of allowance
2,054
1,550
Write-off of receivables
-700
-957
Impairment reversal
-352
-334
Collected written-off receivables
-1
-16
Effect of exchange rate differences
9
20
Balance at 31 Dec
38,559
37,549
Liquidity risk
Business partners value Krka for its excellent financial discipline and stable cash flows. In 2022, we settled all financial
liabilities regularly. Krka Group exposure to liquidity risk was low.
The Krka Group has agreements with two banks for the allowed negative balance on transaction accounts for a total
amount of €5,688 thousand (in 2021, the Krka Group had agreements with two banks for a total amount of
€5,415 thousand). As there were no negative balances on transaction accounts at 31 December 2022, the bank overdraft
remained fully unused.
As at 31 December 2022, Krka Group had an undrawn credit facility of €20,000 thousand (2021: €20,000 thousand).
At the end of 2022, the Krka Group recorded excess liquidity, primarily as cash at bank or deposits with commercial banks
with high credit ratings. The increase in excess liquid assets in 2022 is due to the excess of positive cash flow from
operating and investing activities over financing uses.
The European Central Bank started to gradually increase key interest rates in the second half of 2022. Low-risk cash
investments have thus started to yield positive returns. In line with our internal investment diversification rules and taking into
account interest rate, liquidity, credit and currency risks, we deposited most of our cash surpluses with commercial banks.
The controlling company manages liquidity risk centrally for the entire Krka Group. The controlling company finances
subsidiaries through intra-group loans. Any potential cash surpluses are deposited with the controlling company. Excess
cash from all Krka Group companies is transferred to the controlling company's master account either automatically daily
2022 Annual Report – Financial Report
229
(cash pooling) or manually through individual bank transfers. This allows for cash management optimisation, currency risk
mitigation, an overview of liquidity of all Krka Group companies, and enhanced security of cash transactions.
The Krka Group also reported favourable and stable liquidity ratios at the end of 2022.
Maturity of financial liabilities
Financial liabilities in terms of maturity are outlined in the tables below.
Maturity of financial liabilities as at 31 December 2022
€ thousand
Carrying
amount
Contractual cash flows
Total
Up to 6
months
6 – 12
months
1 – 2
years
2 – 5
years
5 – 10
years
Financial liabilities
Lease liabilities
11,841
12,406
1,980
1,923
2,842
4,771
890
Trade payables excluding advances
140,837
140,837
140,837
0
0
0
0
Contract liabilities excluding advances
145,924
145,924
145,924
0
0
0
0
Other liabilities excluding amounts owed
to the State, to employees and advances
7,478
7,478
7,478
0
0
0
0
Total financial liabilities
306,080
306,645
296,219
1,923
2,842
4,771
890
Total derivative financial liabilities
0
0
0
0
0
0
0
Total
306,080
306,645
296,219
1,923
2,842
4,771
890
Maturity of financial liabilities as at 31 December 2021
€ thousand
Carrying
amount
Contractual cash flows
Total
Up to 6
months
6 – 12
months
1 – 2
years
2 – 5
years
5 – 10
years
Financial liabilities
Lease liabilities
12,157
12,805
1,838
1,778
3,152
4,620
1,417
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
Repo liability
102,234
102,234
102,234
0
0
0
0
Other liabilities excluding amounts owed
to the State, to employees and advances
3,546
3,546
3,546
0
0
0
0
Total financial liabilities
362,743
363,391
352,424
1,778
3,152
4,620
1,417
Total derivative financial liabilities
0
0
0
0
0
0
0
Total
362,743
363,391
352,424
1,778
3,152
4,620
1,417
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 Krka 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 recorded purchase orders.
The Russian rouble is the largest currency position of the Krka Group at 39% at the end of 2022. The position in roubles
has increased compared to the beginning of 2022. As of April 2022, the rouble currency position could no longer be
2022 Annual Report – Financial Report
230
reduced by derivatives, which was the key reason for its increase. The rouble position arises from trade receivables on
the Russian market.
The significance of the Russian sales market, the size of the currency exposure and the volatile value of the Russian
rouble are the reasons why we pay special attention to the risk management of the Russian rouble. Due to the lower
availability of financial instruments, we put more emphasis on natural methods of reducing exposure in 2022.
In contrast to other currencies, we report an excess of liabilities over assets in US dollars from ordinary operations i.e. a
short currency position. The exposure to the US dollar is mainly derived from the purchase of raw materials and supplies.
Taking into account the liquid US dollar financial assets and the forward contracts for the purchase of US dollars, which
totally neutralise the short currency position from operating activities, the US dollar exposure at the end of 2022 represents
approximately 5% of the Krka Group's total currency exposure.
The exposure to the Romanian leu, which represented 15% of the currency position at the end of 2022, arises from trade
receivables resulting from longer payment terms in the country. The exposure to the Polish zloty is a result of trade
receivables and production capacity that we have in Poland and represents 13% of the currency position.
Other currencies, including the Swedish krona, the Macedonian denar, the Kazakh tenge, the Serbian dinar, the British
pound, the Czech koruna, the Ukrainian hryvnia and the Hungarian forint, accounted for 28% of Krka Group's total currency
position.
The value of the rouble in euro terms increased by 8.8% from the beginning to the end of 2022, and was on average 18.7%
higher than in 2021.
The value of the US dollar denominated in euro increased by 6.2% from the beginning to the end of 2022, on average
12.3% higher than in 2021. The impact of the change in the value of the US dollar on Krka Group's net financial result was
neutralised by financial instruments.
The Ukrainian hryvnia has lost around 20% of its value against the euro since the beginning of the Russian invasion of
Ukraine. We are not directly exposed to currency risks in Ukraine because we sell in euro.
The Polish zloty has been fairly stable, depreciating by 1.8% from the beginning to the end of 2022, while its average value
was 2.6% lower than in 2021. The Romanian leu and the Croatian kuna, which were in the ERM in 2022, have been very
stable. The value of the British pound decreased in 2022. The contribution of these currencies to Krka Group's net financial
result was small.
The Krka Group generally eliminates currency risks through natural methods, primarily by increasing purchases and
payables in the currencies in which it invofices sales. Where this is not possible, financial instruments are used or the risk
is left unhedged. As a rule, forward contracts are used for hedging.
In 2022, we continued our policy of partially hedging the Russian rouble and US dollar risk with financial instruments. In
the first quarter of 2022, we had partially hedged the Russian rouble risk with forward contracts, but this was no longer
possible from April 2022 onwards. The appreciation of the rouble against the euro resulted in net foreign exchange gains.
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 2022. Due to the short currency position, the dollar strengthening had a negative financial impact on
the Krka Group result. In 2022 however, this was largely offset by income from the US dollar hedging instruments.
To hedge the risk of changes in the EUR/USD currency pair and to hedge additional risks in 2023, forward contracts of
the controlling company with a principal amount of $45,000 thousand and a maturity of less than 2 months were open at
the year-end of 2022.
2022 Annual Report – Financial Report
231
Exposure to the risk of foreign exchange rate fluctuations
€ thousand
31 Dec 2022
EUR*
RUB
PLN
USD
RON
Loans
44,244
86
17
0
31
Trade receivables
101,451
137,966
50,293
5,819
46,991
Cash and cash equivalents
454,565
29,846
2,674
7,682
538
Current trade payables
-109,248
-4,385
-1,914
-9,753
-485
Financial position exposure (net)
491,012
163,513
51,069
3,748
47,075
*EUR is the functional currency and does not represent exposure to foreign currency risk.
€ thousand
31 Dec 2021
EUR*
RUB
PLN
USD
RON
Loans
204,071
69
211
0
31
Trade receivables
118,062
198,121
44,803
5,093
44,213
Cash and cash equivalents
87,416
6,497
3,104
44,169
1,075
Non-current operating liabilities
-10,000
0
0
0
0
Current trade payables
-101,305
-8,566
-2,058
-9,129
-283
Financial position exposure (net)
298,244
196,121
46,060
40,133
45,037
*EUR is the functional currency and does not represent exposure to foreign currency risk.
Significant exchange rates
Average exchange rate*
Final exchange rate*
2022
2021
2022
2021
RUB
73,43
87,15
78,43
85,30
PLN
4,69
4,57
4,68
4,60
USD
1,05
1,18
1,07
1,13
RON
4,93
4,92
4,95
4,95
*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 December
and equal the reference exchange rates of the ECB effective on the last day of the year. Since the end of March 2022, the
Bloomberg exchange rate is used to convert the Russian rouble.
Sensitivity analysis
A 1% change in the value of these currencies against euro as at 31 December 2022 or 31 December 2021 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 cash and cash equivalents
denominated in the local currencies.
Impact on profit or loss before tax
2022
2021
Currency fluctuations
+1%
–1%
+1%
–1%
RUB
1,635
-1,635
1,961
-1,961
PLN
511
-511
461
-461
USD
37
-37
401
-401
RON
471
-471
450
-450
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.
2022 Annual Report – Financial Report
232
Interest rate risk
Interest rate risk is defined as the risk that the Krka Group will incur an increase in its cost of long-term funding or a
decrease in its income on non-current investments as a result of changed market interest rates.
The risk of changes in interest rates on current financial resources and current investments is managed within the Krka
Group's liquidity risks.
Krka Group had no non-current borrowings in 2022.
Exposure to interest rate risk
€ thousand
31 Dec 2022
31 Dec 2021
Financial instruments at a fixed rate of interest
485,123
232,701
Financial assets
485,123
232,701
Financial liabilities
0
0
Financial instruments at a variable rate of interest
30,000
10
Financial assets
30,000
10
Financial liabilities
0
0
Analysis of the cash flow’s sensitivity by applying the variable interest rate
A 100 basis-point increase in the variable interest rate for 2022 would have increased the profit or loss by €300 thousand
decrease in 2021 (a decrease in the interest rate by 100 basis points would decrease the profit or loss by €300 thousand).
An increase of 100 basis points in the variable interest rate would increase the 2021 profit or loss by
€0.1 thousand (a decrease of the interest rate by 100 basis points would decrease the profit or loss by €0.1 thousand).
The analysis, which is carried out in the same way for both years, assumes that all variables, in particular the exchange
rate, remain constant.
Capital management
The primary objective of the Krka Group's capital management is to ensure a high credit rating and adequate funding ratios
to ensure the appropriate development of its business and to maximise value for its shareholders. By managing and
adjusting its capital structure, the Krka Group aims to keep pace with changes in the economic environment. Dividends
are paid once a year in line with the strategic dividend growth policy. The Krka Group has no specific employee ownership
targets and no share option plan.
There were no changes in approach to capital management in 2022 or 2021.
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 and other current payables less cash and cash equivalents.
Financial leverage ratio
€ thousand
31 Dec 2022
31 Dec 2021
Trade payables and other current liabilities
384,915
454,773
Cash and cash equivalents
518,934
159,838
Net indebtedness
-134,019
294,935
Equity
2,138,509
1,919,085
Equity and net indebtedness
2,004,490
2,214,020
Financial leverage (debt/equity) ratio
-6.7%
13.3%
2022 Annual Report – Financial Report
233
Fair value
The following table shows the carrying amounts and fair values of financial assets and financial liabilities. The table does
not include disclosures about the fair values of financial assets and liabilities not measured at fair value, where the carrying
amount is a reasonable approximation of fair value.
€ thousand
31 Dec 2022
31 Dec 2021
Carrying amount
Fair value
Carrying amount
Fair value
Non-current financial assets
Loans
77,539
40,300
Investments at fair value through OCI
15,989
15,989
15,861
15,861
Investments at amortised cost
94,781
93,022
Current financial assets
Loans
6,327
192,360
Investments through profit or loss
0
0
39,970
39,970
Investments at amortised cost
50,697
113,987
Derivatives
1,740
1,740
1,491
1,491
Trade receivables
402,730
467,764
Cash and cash equivalents
518,934
159,838
Non-current financial liabilities
Trade payables
0
-10,000
Lease liabilities
-8,089
-8,724
Current financial liabilities
Lease liabilities
-3,752
-3,433
Trade payables excluding advances
-140,837
-130,011
Contract liabilities excluding advances
-145,924
-114,795
Liabilities under repurchase transactions
(repo-type operations)
0
-102,234
Other current liabilities excluding amounts owed
to the State, to employees and advances
-7,478
-3,546
Total
862,657
17,729
751,850
57,322
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.
Fair value of assets
€ thousand
31 Dec 2022
31 Dec 2021
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets at fair value
Investments at fair value through OCI
14,602
0
1,387
15,989
14,474
0
1,387
15,861
Investments through profit or loss
0
0
0
0
39,970
0
0
39,970
Derivatives
0
0
1,740
1,740
0
0
1,491
1,491
Total assets at fair value
14,602
0
3,127
17,729
54,444
0
2,878
57,322
2022 Annual Report – Financial Report
234
30. Related party transaction
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 0.1195% of voting rights. Members of the Supervisory Board of the controlling company held
3347 shares i.e. 0.0102% of total equity or 0.0108% of voting rights. Directors of subsidiaries held 4207 shares or 0.0128%
of the total equity or 0.0136% 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 2022
31 Dec 2021
No. of
shares
Equity share
(%)
Share in
voting
rights
(%)
No. of
shares
Equity share
(%)
Share in
voting
rights
(%)
Members of the Management Board
Jože Colarič
22,500
0,0686
0,0726
22,500
0.0686
0.0723
Aleš Rotar
13,915
0,0424
0,0449
13,915
0.0424
0.0447
Vinko Zupančič
120
0,0004
0,0004
120
0.0004
0.0004
David Bratož
0
/
/
0
/
/
Milena Kastelic
505
0,0015
0,0016
505
0.0015
0.0016
Total Members of the Management Board
37,040
0,1129
0,1195
37,040
0.1129
0.1191
Members of the Supervisory Board
(owner representatives)
Jože Mermal
0
/
/
0
/
/
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
/
/
Mojca Osolnik Videmšek
617
0,0019
0,0020
617
0.0019
0.0020
Boris Žnidarič
0
/
/
0
/
/
Members of the Supervisory Board
(employee 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
/
/
Total Members of the Supervisory Board
3,347
0,0102
0,0108
3,347
0.0102
0.0108
Total
40,387
0,1232
0,1302
40,387
0.1232
0.1298
Treasury shares were eliminated from the calculation of voting rights (1,785,849 treasury shares as at 31 December 2022
and 1,683,908 as at 31 December 2021).
Remuneration paid to groups of persons (gross)
€ thousand
31 Dec 2022
31 Dec 2021
Members of the Management Board in the controlling company
4,163
3,560
Managers of subsidiaries
2,839
2,682
Members of the Supervisory Board in the controlling company
274
303
Members of the Supervisory and Management Boards in subsidiaries
1
1
Total gross remuneration paid to groups of persons
7,277
6,546
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
2022 Annual Report – Financial Report
235
differ from the remuneration shown in the Report on Remuneration of the Members of the Management Board and
Supervisory Board of the Company for 2022, 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 2022 amounted to €13,825 thousand
(2021: €13,091 thousand).
Remuneration paid to Management Board members in the controlling company in 2022
€ thousand
Salary – fixed part
Salary – variable part
Total
Gross
Net payout
Net fringe
benefits
and other
earnings
Gross
Net
Gross
Net
Jože Colarič
521
214
19
849
341
1,370
574
Aleš Rotar
390
165
15
549
221
939
401
Vinko Zupančič
311
132
16
457
184
768
332
David Bratož
333
142
16
449
181
782
339
Milena Kastelic
219
94
13
85
35
304
142
Total remuneration paid to Members
of the Management Board
1,774
747
79
2,389
962
4,163
1,788
€ thousand
Net fringe benefits and other earnings
Executive
health
insurance
Supplementary
pension
insurance
Anniversary
bonuses
Other
bonuses
Refund of
work-related
costs
Pay for
annual leave
Total
Jože Colarič
10.00
2.89
3.18
1.19
0.04
1.92
19.23
Aleš Rotar
5.00
2.89
0.00
3.87
1.02
1.92
14.70
Vinko Zupančič
5.00
2.89
0.00
5.31
0.84
1.92
15.97
David Bratož
5.00
2.89
0.00
5.59
1.03
1.92
16.43
Milena Kastelic
5.00
2.89
1.92
0.06
1.09
1.92
12.88
Total remuneration paid to
Members of the Management
Board
30.00
14.45
5.11
16.02
4.01
9.62
79.20
Remuneration paid to Management Board members in the controlling company in 2021
€ thousand
Salary – fixed part
Salary – variable part
Total
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 remuneration paid to Members
of the Management Board
1,514
637
48
2,046
854
3,560
1,539
2022 Annual Report – Financial Report
236
€ thousand
Net fringe benefits and other earnings
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 remuneration paid to
Members of the Management
Board
0.00
14.10
1.34
17.77
4.17
9.90
47.28
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 2022
€ thousand
Basic pay for
exercising the
function
Attendance fees
Commuting
allowances
Total
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Members of the Supervisory
Board (owner representatives)
Jože Mermal
30.00
21.82
1.65
1.20
0.00
0.00
31.65
23.02
Matej Lahovnik
27.75
20.18
2.75
2.00
0.85
0.62
31.35
22.80
Borut Jamnik
28.13
20.46
3.25
2.36
0.00
0.00
31.38
22.82
Julijana Kristl
26.25
19.09
2.59
1.88
0.41
0.30
29.25
21.27
Mojca Osolnik Videmšek
26.25
19.09
3.25
2.36
0.43
0.31
29.93
21.76
Boris Žnidarič
28.13
20.46
2.59
1.88
0.43
0.31
31.15
22.65
Members of the Supervisory
Board (employee representatives)
0.00
0.00
Franc Šašek
27.75
20.18
3.25
2.36
0.00
0.00
31.00
22.54
Tomaž Sever
26.25
19.09
2.59
1.88
0.43
0.32
29.27
21.29
Mateja Vrečer
26.25
19.09
2.31
1.68
0.00
0.00
28.56
20.77
Total remuneration paid to
Members of the Supervisory
Board
246.76
179.46
24.23
17.60
2.55
1.86
273.54
198.92
In accordance with a resolution adopted at the 27th 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.
2022 Annual Report – Financial Report
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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 payouts of extra fees for the performance of his/her duties in a financial year,
until the total amount of such payouts 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.
2022 Annual Report – Financial Report
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Loans to groups of persons
€ thousand
Balance
Repayments
31 Dec 2022
31 Dec 2021
2022
2021
Members of the Management Board in the
controlling company
0
0
0
0
Managers of subsidiaries
26
37
37
10
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
26
37
37
10
Loans to staff employed under individual employment contracts amounted to €152 thousand at 31 December 2022 (2021:
€179 thousand). In 2022, repayments of loans by staff employed under individual employment contracts reached
€27 thousand (2021: €26 thousand).
2022 Annual Report – Financial Report
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31. Profile of the Krka Group
Ownership
share
Value of share
capital at
31 Dec 2022
(in thousand)
Currency
Headcount at
31 Dec 2022
Headcount at
31 Dec 2021
Controlling company
Krka, d. d., Novo mesto
100%
54,732
EUR
6320
6228
Subsidiaries
TERME KRKA, d. o. o., Novo mesto, Slovenia
100%
14,753
EUR
592
548
KRKA-FARMA d.o.o., Zagreb, Croatia
100%
143,027
HRK
204
184
KRKA ROMANIA S.R.L., Bucharest, Romania
100%
37
RON
160
144
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
100%
65
RSD
93
77
KRKA-FARMA DOOEL, Skopje, North Macedonia
100%
49,021
MKD
45
44
KRKA Bulgaria EOOD, Sofia, Bulgaria
100%
20
BGN
74
74
KRKA HELLAS E.P.E., Athens, Greece
100%
10
EUR
17
16
KRKA FARMA, d.o.o., Sarajevo, Sarajevo, Bosnia and
Herzegovina
100%
20
BAM
1
1
Krka-Rus LLC, Istra, Russian Federation
100%
5,361,375
RUB
569
525
KRKA FARMA LLC, Istra, Russian Federation
100%
753,875
RUB
1356
1427
KRKA UKRAINE LLC, Kiev, Ukraine
100%
100
UAH
367
395
LLC ´KRKA Kazakhstan´, Almaty, Kazakhstan
100%
14
USD
97
93
KRKA – POLSKA Sp. z.o.o., Warsaw, Poland
100%
17,490
PLN
656
660
KRKA ČR, s. r. o., Prague, Czech Republic
100%
100
CZK
166
173
KRKA Magyarország Kft., Budapest, Hungary
100%
44,880
HUF
158
174
KRKA Slovensko, s.r.o., Bratislava, Slovakia
100%
10
EUR
121
113
UAB KRKA Lietuva, Vilnius, Lithuania
100%
10
EUR
53
55
SIA KRKA Latvija, Riga, Latvia
100%
10
EUR
37
39
TAD Pharma GmbH, Cuxhaven, Germany
100%
6,650
EUR
200
215
KRKA Sverige AB, Stockholm, Sweden
100%
150
SEK
6
7
KRKA Pharma GmbH, Vienna, Austria
100%
37
EUR
20
21
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
100%
10
EUR
48
46
KRKA FARMACÉUTICA, S.L., Madrid, Spain
100%
10
EUR
64
62
KRKA Farmaceutici Milano, S.r.l., Milan, Italy
100%
10
EUR
62
69
KRKA France Eurl, Paris, France
100%
10
EUR
35
41
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
100%
1
EUR
9
11
KRKA Belgium, SA, Brussels, Belgium
100%
300
EUR
17
21
KRKA Finland Oy, Espoo, Finland
100%
3
EUR
16
17
KRKA UK Ltd, London, United Kingdom
100%
1
GBP
16
14
123 Acurae Pharma GmbH, Cuxhaven, Germany
100%
25
EUR
0
0
Ningbo Krka Menovo Pharmaceutical Co. Ltd., China
60%
455,642
CNY
19
17
KRKA USA LLC, Wilmington, USA
100%
10
USD
0
0
KRKA GCC L.L.C., Dubai, United Arab Emirates*
100%
-
AED
0
0
Total
11,598
11,511
The subsidiary KRKA GCC L.L.C. in Dubai, United Arab Emirates, was incorporated on 14 September 2022, with the share
capital in the amount of AED 36,700 (€9,000 thousand) being paid up on 12 January 2023.
The subsidiary Terme Krka, d.o.o. had a 100% interest in Golf Grad Otočec, d.o.o., at 31 December 2022; the subsidiary
KRKA France Eurl had a 100-percent equity nterest in HCS bvba in Belgium. The Chinese company Ningbo Menovo
Pharmaceutical Co. Ltd. has a 40-percent holding in the company Ningbo Krka Menovo Pharmaceutical Ltd., China.
2022 Annual Report – Financial Report
240
32. Situation in Ukraine and the Russian Federation
We conduct our business activities in Ukraine and the Russian Federation, which are part of the Eastern Europe sales
region, through three subsidiaries and our parent company Krka, d.d., Novo mesto.
Krka's subsidiary in Ukraine is only involved in marketing. It does not carry out distribution and production activities and
therefore had no receivables from customers outside the Group, but had other assets of €1,658 thousand (2021:
€2,492 thousand), the largest item whereof are property, plant and equipment (office premises and vehicles). The Krka
Group has no significant exposure to credit risk (Note 29 ‘Credit risk‘) and no exposure to foreign exchange risk (Note 29
‘Foreign exchange risk‘). The subsidiary in Ukraine had 367 employees at the end of 2022 and 395 employees at the end
of 2021. Ukraine is our fourth largest market (Note 4 ‘Revenue from contracts with customers‘).
We have two subsidiaries in the Russian Federation. Krka-Rus LLC is engaged in the manufacture of pharmaceuticals. It
produces the vast majority of all the products we sell on the Russian market. Production there runs smoothly. Krka Farma
LLC is engaged in marketing and sales activities. The Russian Federation is Krka's largest single market (Note 4 ‘Revenue
from contracts with customers‘).
The companies have various forms of physical assets - business and production premises, equipment, vehicles, stocks of
raw materials and supplies, finished goods and other assets. As indicators of impairment existed, an impairment test was
performed on the assets (Note 11 ‘Property, plant and equipment‘). It indicated that the value of the assets did not require
impairment. The Krka Group's assets (excluding trade receivables) in the two Krka subsidiaries in the Russian Federation
amounted to €172,461 thousand and €133,968 thousand as at 31 December 2022 and 31 December 2021, respectively.
The situation is closely monitored and continuously adjusted in the different areas of the business. Demand for our products
is adequate. We have put in place additional controls on receivables and are closely monitoring the liquidity of our business
partners so that we can adjust our activities immediately in the event of any payment delays (Note 29 ‘Credit risk‘). In line
with our business continuity plan, we have immediately started to implement the necessary activities to ensure
uninterrupted production in the future. The largest increases compared to the previous year are in inventories, property,
plant and equipment and cash. As at 31 December 2022, the number of employees in the Russian Federation subsidiaries
was 1,925, compared to 1,952 at the end of 2021. The exposure to foreign exchange rate risk is disclosed in
Note 29 ‘Foreign exchange risk‘).
In 2022, all payments between the subsidiaries in the Russian Federation and the parent company were made without
specificity. The payment of dividends from companies in the Russian Federation is not prohibited, but it is subject to
conditions or lengthy procedures. Special requests are required and are treated by the Russian government (Ministry of
Finance) in accordance with the going concern principle in respect of the subsidiary that is to pay the dividend. Given that
these are pharmaceutical companies, we consider that the Russian Federation has an interest in their continued operation.
33. Educational structure of the Krka Group employees
2022
2021
Average
headcount
Share
(%)
Average
headcount
Share
(%)
PhD
204
1.8
206
1.8
MSc
390
3.4
397
3.4
University education
5330
46.1
5313
45.9
Higher professional education
1773
15.3
1727
14.9
Vocational college education
313
2.7
306
2.6
Secondary school education
2591
22.4
2613
22.6
Skilled workers
833
7.2
859
7.4
Unskilled workers
135
1.1
160
1.4
Total (average for the year)
11,569
100.0
11,581
100.0
2022 Annual Report – Financial Report
241
34. Transactions with audit firms
The contract value of the audit of the Krka Group was €557 thousand (2021: €494 thousand) in 2022.
The contract value of auditing the financial statements performed in 2022 by the audit firm KPMG Slovenija, d.o.o. was
€118 thousand and includes the verification of the compliance of the electronic financial statements with the requirements
of the Delegated Regulation No 2019/815 on a single electronic reporting format (ESEF). KPMG Slovenija also performs
the verification of the Report on Remuneration of Members of Management and Supervision, which has to be verified in
accordance with the requirements of the legislation. The contract value of verifying the Report on the Management Board's
remuneration amounted to €9 thousand. The contract value of the audit services provided by the companies within the
KPMG network for the consolidated financial statements of the Krka Group amounts to €207 thousand.
35. Event after the reporting date
The 2022 financial statements were not impacted by the event after the end of the period.
Repurchase of treasury shares
From 1 January 2023 to 20 March 2023, we acquired 25,852 of treasury shares. At the end of this period, Krka held
1,811,701 treasury shares (5.525% of total shares).
2022 Annual Report – Financial Report
242
Independent Auditor's Report
2022 Annual Report – Financial Report
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250
Financial Statement of Krka, d.d., Novo mesto
Statement of Financial Position
€ thousand
Notes
31 Dec 2022
31 Dec 2021
Index
2022/21
Assets
Property, plant and equipment
10
566,780
569,391
100
Intangible assets
11
24,960
25,628
97
Investments in subsidiaries
12
355,763
346,444
103
Loans
13
56,013
31,010
181
Investments
14
110,769
108,882
102
Deferred tax assets
15
8,666
12,742
68
Other non-current assets
643
627
103
Total non-current assets
1,123,594
1,094,724
103
Assets held for sale
41
41
100
Inventories
16
492,978
394,323
125
Contract assets
0
300
0
Trade receivables
17
357,889
424,588
84
Other receivables
17
12,639
17,381
73
Loans
13
6,669
195,459
3
Investments
14
52,437
155,448
34
Cash and cash equivalents
18
470,297
144,981
324
Total current assets
1,392,950
1,332,521
105
Total assets
2,516,544
2,427,245
104
Equity
Share capital
19
54,732
54,732
100
Treasury shares
19
-124,566
-114,541
109
Reserves
19
279,760
246,424
114
Retained earnings
19
1,850,866
1,689,527
110
Total equity
2,060,792
1,876,142
110
Liabilities
Provisions
22
96,608
113,136
85
Deferred income
23
2,816
3,546
79
Trade payables
24
0
10,000
0
Lease liabilities
2,909
2,101
138
Total non-current liabilities
102,333
128,783
79
Trade payables
24
194,143
178,143
109
Borrowings
21
53,524
55,092
97
Lease liabilities
1,033
987
105
Income tax payables
25,660
4,611
556
Contract liabilities
25
21,687
19,477
111
Other current liabilities
26
57,372
164,010
35
Total current liabilities
353,419
422,320
84
Total liabilities
455,752
551,103
83
Total equity and liabilities
2,516,544
2,427,245
104
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
2022 Annual Report – Financial Report
251
Income Statement
€ thousand
Notes
2022
2021
Index
2022/21
Revenue
1,553,514
1,381,367
112
– Revenue from contracts with customers
3
1,544,409
1,374,765
112
– Other revenue
9,105
6,602
138
Cost of goods sold
-663,332
-614,832
108
Gross profit
890,182
766,535
116
Other operating income
4
4,699
6,660
71
Selling and distribution expenses
-301,319
-271,425
111
– Whereof net impairments and write-offs of receivables
-1,548
-50
3.096
R&D expenses
-158,292
-150,232
105
General and administrative expenses
-77,400
-78,213
99
Operating profit
357,870
273,325
131
Financial income
8
57,744
24,714
234
Financial expenses
8
-3,356
-12,083
28
Net financial result
54,388
12,631
431
Profit before tax
412,258
285,956
144
Income tax expense
9
-64,043
-40,740
157
Net profit
348,215
245,216
142
Basic earnings per share (€)
20
11.21
7.86
143
Diluted earnings per share (€)
20
11.21
7.86
143
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
2022
2021
Index
2022/21
Net profit
348,215
245,216
142
Other comprehensive income that will not be reclassified to
profit or loss at a future date
Change in fair value of financial assets
14
128
5,441
2
Restatement of post-employment benefits
22
24,691
6,438
384
Deferred tax effect
15
-3,334
-1,645
203
Net other comprehensive income that will not be
reclassified to profit or loss at a future date
21,485
10,234
210
Total other comprehensive income for the year (net of tax)
21,485
10,234
210
Total comprehensive income for the year (net of tax)
369,700
255,450
145
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
2022 Annual Report – Financial Report
252
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
Balance at 1 Jan 2022
54,732
-114,541
114,541
105,897
14,990
30,000
-19,004
1,370,902
88,671
229,954
1,876,142
Net profit
0
0
0
0
0
0
0
0
0
348,215
348,215
Total other comprehensive income for the year
(net of tax)
0
0
0
0
0
0
23,311
0
-1,826
0
21,485
Total comprehensive income for the year
(net of tax)
0
0
0
0
0
0
23,311
0
-1,826
348,215
369,700
Transactions with owners, recognised in equity
Formation of other profit reserves under the resolution
of the AGM
0
0
0
0
0
0
0
71,800
-71,800
0
0
Transfer of previous periods' profit to retained
earnings
0
0
0
0
0
0
0
0
229,954
-229,954
0
Repurchase of treasury shares
0
-10,025
0
0
0
0
0
0
0
0
-10,025
Formation of reserves for treasury shares
0
0
10,025
0
0
0
0
0
0
-10,025
0
Dividends paid
0
0
0
0
0
0
0
0
-175,025
0
-175,025
Total transactions with owners, recognised in
equity
0
-10,025
10,025
0
0
0
0
71,800
-16,871
-239,979
-185,050
Balance at 31 Dec 2022
54,732
-124,566
124,566
105,897
14,990
30,000
4,307
1,442,702
69,974
338,190
2,060,792
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
2022 Annual Report – Financial Report
253
€ 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
Balance 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 for the year
(net of tax)
0
0
0
0
0
0
12,375
0
–2,141
0
10,234
Total comprehensive income for the year
(net of tax)
0
0
0
0
0
0
12,375
0
–2,141
245,216
255,450
Transactions with owners, recognised in equity
Formation of other rprofit reserves under the
resolution of the AGM
0
0
0
0
0
0
0
90,812
–90,812
0
0
Transfer of previous periods' profit 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
Balance 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.
2022 Annual Report – Financial Report
254
Statement of Cash Flows
€ thousand
Notes
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit
348,215
245,216
Adjustments for:
145,291
143,567
– Amortisation/Depreciation
10, 11
82,216
84,863
– Net foreign exchange differences
-6,490
-3,634
– Net write-offs and allowances for inventories
14,194
17,287
– Net impairments and write-offs of receivables
1,548
50
– Investment income
-12,990
-10,118
– Investment expenses
-60
12,951
– Income on financing activities
0
-3
– Interest expenses and other financial expenses
2,830
1,431
– Income tax expense
9
64,043
40,740
Operating profit before changes in net current assets
493,506
388,783
Change in trade receivables
70,231
-10,847
Change in inventories
16
-112,849
-22,432
Change in trade payables
24
7,501
41,785
Change in provisions
22
-3,289
-1,128
Change in deferred income
23
-730
-841
Change in other current liabilities
-4,386
2,567
Income tax paid
-42,251
-49,648
Net cash flow from operating activities
407,733
348,239
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
1,656
403
Dividends received
631
668
Proportionate profit of subsidiaries
0
5,419
Proceeds from sale of property, plant and equipment
2,971
1,391
Purchase of property, plant and equipment
10
-61,771
-48,851
Purchase of intangible assets
11
-6,570
-4,836
Acquisition of subsidiaries and a share of non-controlling interests net of
financial assets acquired
12
-9,319
-7,824
Refunds of subsequent contributions to subsidiaries
12
0
992
Proceeds from non-current loans
5,726
6,670
Payments for current loans
-31,708
-2,795
Net proceeds from/payments for current loans
190,432
-137,558
Proceeds from sale of non-current investments
4,941
20
Payments for acquiring non-current investments
-32,946
-92,155
Proceeds from sale of current investments
153,804
102,292
Payments for acquiring current investments
-121,621
-153,780
Proceeds from derivatives
8,847
2,002
Payments for derivatives
0
-10,459
Net cash flows from investing activities
105,073
-338,401
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid
-1,856
-444
Net proceeds from/payments for current borrowings
29
-1,758
8,703
Lease liabilities paid
28
-1,124
-991
Dividends and other profit shares paid
29
-175,044
-155,907
Repurchase of treasury shares
34
-10,025
-15,262
Net cash flow from financing activities
-189,807
-163,901
Net increase/decrease in cash and cash equivalents
322,999
-154,063
Cash and cash equivalents at beginning of year
144,981
296,398
Effect of foreign exchange rate fluctuations on cash held
2,317
2,646
Closing balance of cash and cash equivalents
470,297
144,981
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
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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 number: 5043611000.
The financial statements of the Company refer to the year ended 31 December 2022.
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 for compiling the financial statements
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’)
adopted by the European Union, and in compliance with additional provisions required by the Companies Act (ZGD-1).
The financial statements were approved by the Krka Management Board on 28 March 2023.
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 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; revenue 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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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 3 ‘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 Company 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 Company 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, the Company 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, the Company 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, the Company
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 contracts, 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 Company assesses whether there is a
constraint on variable consideration. Based on past experience, business forecasts and current economic
conditions, the Company 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.
The Company recognises financial income and expenses on these sales using the appropriate discount rate.
• Note 12 ‘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. The Company found no need for impairment of investments in
subsidiaries as at 31 December 2022.
• Note 17 ‘Impairment testing of receivables’
On the financial statement preparation (quarterly and annually), the Company 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. For all customers whose receivables are insured by an insurance
company or other first-class insurance, insurance is taken into account when assessing the amount of impairments.
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
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257
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 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 the 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 wholly
within the control of the Company. 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.
2. Significant accounting policies
The Company 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 2022
Amendments to IFRS 3 - Business Combinations, IAS 16 - Property, Plant and Equipment, IAS 37 - Provisions, Contingent
Liabilities and Contingent Assets and Annual Improvements 2018-2020.
The amendments are effective for annual periods beginning on or after 1 January 2022. Early application is permitted.
IASB has published the following limited amendments to IFRSs.
• The amendments to IFRS 3 – Business Combinations are intended to update the reference to the core framework
of financial reporting standards in IFRS 3, but do not change the accounting requirements for accounting for
business combinations.
• The amendments to IAS 16 – Property, Plant and Equipment prohibit an entity from deducting from the cost of
property, plant and equipment the proceeds from the sale of products during the period that the asset is being
prepared for its intended use. An entity recognises the proceeds from the sale and the related costs in profit or loss.
• The amendments to IAS 37 – Provisions, Contingent Liabilities and Contingent Assets specify the costs that an
entity considers in determining the cost of completing a contract when deciding whether the contract is onerous.
• The 2018-2020 Annual Improvements provide for some minor amendments to IFRS 1 – First-time Adoption of
International Financial Reporting Standards, IFRS 9 – Financial Instruments, IAS 41 – Agriculture and illustrative
examples to IFRS 16 – Lease.
The management has assessed the impact of the amendments and believes they had no significant impact on the
consolidated financial statements of the Company.
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258
Foreign currencies
Foreign currency transactions
Transactions and balances in foreign currencies are translated to the euro (the functional currency of the Company) 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 for assets and liabilities, 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.
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, derivatives, loans and investments and
investments in subsidiaries (refer to accounting policies Investments in subsidiaries).
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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 Company'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.
The Company'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.
If Company selects a business model that aims to collect contractual cash flows, it values its financial assets (debt
instruments) at amortised cost. If the Company acquires financial assets (debt instruments) with the objective of collecting
contractual cash flows and for sale, then they are measured at fair value through other comprehensive income by recycling
cumulative gains and losses. If the Company does not choose any of these business models, it measures its financial
assets (debt instruments) at fair value through profit or loss. Financial assets that have the characteristics of an equity
instrument in accordance with IAS 32 – Financial Instruments, are classified as equity instruments at fair value through
other comprehensive income without recycling cumulative gains and losses after derecognition.
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.
The Company's investments in debt securities, which include only low credit risk government bonds, are classified as
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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)
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)
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 section‘Impairment – financial assets’.
Financial liabilities
Financial liabilities consist mainly of loans, payables to suppliers and other liabilities. Lease liabilities and employee
benefits are treated separately (refer to accounting policies in the Leases and Employee benefits expense 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 Company derecognises a financial liability if the
obligations set out in the contract are fulfilled, cancelled or expired.
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.
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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.
The Company includes in the cost of property, plant and equipment also borrowing costs that are directly attributable to
the acquisition, construction or production of the asset under construction. Borrowing costs related to the acquisition or
construction of the relevant assets are capitalised if they relate to the acquisition of a significant asset and the construction
or preparation for use of the relevant assets takes more than six 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:
− management and administrative facilities 60 years,
− production and warehouse facilities 40 years,
− other from 15 to 20 years,
• for property, plant and equipment:
− production equipment 5 to 20 years,
− laboratory equipment 10 years,
− other equipment 5 years,
• for furniture 5 years,
• for computer equipment 4 to 6 years,
• for means of transportation 5 to 15 years.
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.
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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
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 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. change of 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.
For short-term leases and leases where the leased asset is of low value, the Company applies the practical expedient
allowed by the standard and recognises lease payments as an expense on a straight-line basis over the lease term. The
practical expedient is applied to leases with a lease term of less than one year and leases where the cost of the new
leased asset is less than €5,000.
The Company recognises a right-of-use property, plant and equipment asset and a lease liability at the inception of the
lease (i.e. the date the leased 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 by the Company on a straight-line basis over the shorter of the estimated lease term or the estimated useful
lives of the assets.
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.
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Intangible assets
Research and development
Development costs are not capitalised because the Company does not distinguish between the research and development
phases. 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
through profit or loss.
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.
Impairment of assets
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.
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).
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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.
Except when a 12-month expected credit loss is recognised, the Company recognises an allowance for credit losses in an
amount equal to the expected credit loss over the life of the financial instrument. A 12-month expected credit loss is
recognised by:
• debt securities that are determined to have low credit risk at the reporting date; and debt securities that are
determined to have low credit risk at the reporting date; and
• other debt securities and bank balances for which the credit risk (i.e. the risk of default in the expected life of the
financial instrument) has not increased significantly since initial recognition.
The Company considers a debt security to have low credit risk if its credit risk rating is equivalent to the globally understood
definition of ‘investment grade’ or equivalent to a rating of Baa2 or above by Moody's or BBB- or above by Standard &
Poor's.
The Company monitors changes in credit risk by tracking published external credit ratings. The probabilities of default
(PD), both 12-month and over the life of the financial instrument, are based on information provided by the external credit
rating agency. The loss given default (LGD) ratios, which reflect the assumed recovery rate, are also provided by the
external credit rating agencies.
Non-financial assets
The carrying amounts of the Company’s non-financial assets, except for inventories and deferred tax 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.
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. These are the smallest groups of assets that generate
cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets
An impairment of an asset or cash-generating unit is recognised when its carrying amount exceeds its recoverable amount.
Impairment is recognised in the income statement. A loss recognised in a cash-generating unit as a result of impairment
is allocated by first reducing the carrying amount of goodwill allocated to the cash-generating unit and then to the other
assets of the unit (group of units) in proportion to the carrying amount of each asset in the unit.
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.
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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.
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, the Company 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.
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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
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, 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.
2022 Annual Report – Financial Report
267
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.
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. The described accounting policy applies also to the variable consideration.
Government grants
Income 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. Income 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. Income
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.
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268
Income tax expense
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
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 by the weighted average number of ordinary shares outstanding during the period. Diluted EPS
is equal to basic EPS, because the Company has not issued any dilutive or potentially dilutive instruments.
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.
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 application was
permitted. In response to the COVID-19 pandemic, the IASB delayed the effective date of the amendments by one year,
until 1 January 2024, to allow companies sufficient time to implement the changes to the classification of liabilities. The
amendments help promoting consistency in applying the requirements by helping entities determine whether, in the
2022 Annual Report – Financial Report
269
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.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 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.
Amendments to IFRS 16 Leases: Lease Liability in Sale and Leaseback
The amendments are effective for annual periods beginning on or after 1 January 2024. Early application is permitted. The
amendments affect how a vendor-lessee accounts for variable lease payments in sale and leaseback transactions. They
introduce a new accounting model for variable payments and require vendor-lessees to reassess and potentially adjust
sale and leaseback transactions entered into from 2019.
The amendments confirm the following:
• on initial recognition, the seller-lessee includes variable lease payments when measuring the lease liability arising
from sale and leaseback transactions;
• after initial recognition, the vendor-lessee applies the general requirements for subsequent accounting for a lease
liability by recognising no gain or loss in respect of the right-of-use right that it retains.
The seller-lessee may adopt different approaches to meet the new subsequent measurement requirements. These
amendments do not change the accounting for leases other than those arising in sale and leaseback transactions.
2022 Annual Report – Financial Report
270
Management has assessed the impact of the amendments on the Company's financial statements and believes that they
will not have a material impact on them.
3. Revenue from contracts with customers
Itemisation of revenue from contracts with customers
€ thousand
2022
2021
Revenue from contracts with customers (products)
1,356,075
1,211,494
Revenue from contracts with customers (materials)
188,334
163,271
Total revenue from contracts with customers
1,544,409
1,374,765
Revenue from contracts with customers by region
€ thousand
2022
2021
Region Slovenia
60,503
56,421
Region South-East Europe
220,624
205,491
Region East Europe
387,489
320,973
Region Central Europe
351,191
336,699
Region West Europe
284,593
246,350
Region Overseas Markets
51,675
45,560
Total
1,356,075
1,211,494
In Ukraine, our third largest market, we have sold €95,213 thousand of products in 2022 (2021: €96,419 thousand), which
represents 7.0% of the Company's total sales.
In the Russian Federation, which is Krka's largest single market, we have sold €150,791 thousand of products in 2022
(2021: €106,818 thousand), representing 11.1% of the Company's total sales. Demand for our products is adequate.
Revenue from contracts with customers by product groups
€ thousand
2022
2021
Prescription pharmaceuticals
1,104,323
1,017,273
Non-prescription products
163,482
118,527
Animal health products
88,270
75,694
Total
1,356,075
1,211,494
Contract balances
Trade receivables are described in Note 17 ‘Trade and other receivables’, while liabilities recognised from contracts with
customers in Note 25 ‘Current liabilities from contracts with customers’. The Company has not recognised assets from
contracts with customers (2021: €300 thousand) while liabilities from contracts were recognised in the amount of
€8,593 thousand (2021: €5,839 thousand). Recognised assets and liabilities arising from contracts with customers are
reported in the statement of financial position.
Right-of-return liabilities
The Company recognised right-of-return liabilities as accrued bonuses, volume rebates and discounts on products sold to
other customers in the amount €13,094 thousand (2021: €13,638 thousand).
2022 Annual Report – Financial Report
271
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 2021 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 Company incurred no costs on acquisition or fulfilment of contracts with customers, which could be
recognised as an item of asset.
4. Other operating income
€ thousand
2022
2021
Reversal of non-current provisions
1,827
3,332
Reversal of deferred income
755
870
Gains on sale of property, plant and equipment and intangible assets
352
515
Revaluation operating revenue – leases
0
3
Other operating income
1,765
1,940
Total other operating income
4,699
6,660
Other operating income also includes income from government grants relating to the curbing of the COVID-19 pandemic
in the amount of €156 thousand (2021: €489 thousand) and the aid received in connection with the increase in energy
prices in the amount of €180 thousand (no such grant was recorded in 2021).
5. Costs by nature
€ thousand
2022
2021
Cost of goods and materials
487,124
388,639
Cost of services
331,940
307,464
Employee benefits expense
317,362
305,192
Amortisation and depreciation
82,216
84,863
Net write-offs and allowances for inventories
14,194
17,287
Net impairments and write-offs of receivables
1,548
50
Formation of provisions for lawsuits
0
543
Other operating expenses
25,048
25,053
Total costs
1,259,432
1,129,091
Change in the value of inventories of finished products and work in progress
-59,089
-14,389
Total
1,200,343
1,114,702
2022 Annual Report – Financial Report
272
6. Employee benefits expense
€ thousand
2022
2021
Gross wages and salaries and continued pay
247,046
234,331
Social security contributions
16,763
16,173
Pension insurance contributions
33,189
31,079
Post-employment benefits and other non-current employee benefits
3,264
7,020
Other employee benefits
17,100
16,589
Total employee benefits expense
317,362
305,192
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.
Compulsory pension and disability insurance (comprising both the employee’s and the employer’s contribution) payable
amounted in 2022 to €61,399 thousand (2021: €57,825 thousand).
Supplementary pension insurance contributions amounted to €9,546 thousand in 2021 (2021: €8,913 thousand).
7. Other operating expenses
€ thousand
2022
2021
Grants and assistance for humanitarian and other purposes
1,551
1,409
Environmental protection expenditures
4,414
3,653
Other taxes and levies
15,904
15,040
Revaluation operating expenses on property, plant and equipment and intangible
assets
818
2,506
Other operating expenses
2,361
2,445
Total other operating expenses
25,048
25,053
Other levies include €13,854 thousand (2021: €13,100 thousand) of various taxes and levies paid on pharmaceuticals and
fees paid to associates in individual foreign countries for pursuing promotional activities.
8. Financial income and financial expenses
€ thousand
2022
2021
Net foreign exchange gains
45,105
15,111
Interest income
2,369
501
Derivatives income
9,096
2,968
– Realised revenue
8,847
2,002
– Fair value change
249
966
Income from dividends and other profit shares
702
6,075
– Dividends
702
691
– Profits of subsidiaries
0
5,384
Other financial income
472
59
Total financial income
57,744
24,714
Interest expenses
-1,718
-513
– Interest paid
-1,669
-466
– Interest expenses on lease liabilities
-49
-47
Derivatives expenses
0
-10,459
– Realised expenses
0
-10,459
Other financial expenses
-1,638
-1,111
Total financial expenses
-3,356
-12,083
Net financial result
54,388
12,631
2022 Annual Report – Financial Report
273
The net financial result in 2022 improved mainly due to a better result from the net foreign exchange differences in the
amount of €41,757 thousand. In 2022, the Company continued its policy of partial hedging against rouble-related risk and
the US dollar with financial instruments. The largest impact was caused by the exchange rate of the rouble (final exchange
rate on 31 December 2022 €1 = RUB 78.4308 and on 31 December 2021 €1 = RUB 85.3004).
Detailed information on the risk of changes in foreign exchange rates can be found in Note 30 ‘Financial Instruments and
Financial Risks’.
9. Income tax expense
Adjustment to effective tax rate
€ thousand
2022
2021
Current income tax
63,301
40,905
Deferred tax
742
-165
Total income tax expense
64,043
40,740
Profit before tax
412,258
285,957
Income tax for both years calculated at the rate of 19%
78,329
54,332
Tax on reduced income
-133
-1,137
Tax on non-deductible expenses
2,677
2,529
Income tax from tax incentives
-17,588
-15,664
Tax on increase/decrease of costs for taxable purposes
758
680
Total income tax expense
64,043
40,740
Effective tax rate
15.5%
14.2%
Investments in R&D and investment relief represent the major share of tax incentives.
10. Property, plant and equipment
€ thousand
31 Dec 2022
31 Dec 2021
Land
28,010
28,010
Buildings
243,918
248,550
Equipment
238,871
255,165
Property, plant and equipment being acquired
52,107
34,621
Right-of-use assets
3,874
3,045
Total property, plant and equipment
566,780
569,391
The largest investments in the controlling company were in 2022 earmarked for increasing the capacity of the OTO plant
i.e. €15,162 thousand (2021: €2,548 thousand), and for renovating the Notol`s packaging unit €6,712 thousand (a new
investment in 2022). Another €4,999 thousand (2021: €3,606 thousand) was earmarked for IT and telecommunications-
related projects, €3,958 thousand (2021: €1,265 thousand) for the investment in the new packaging unit at Notol 2 and
€3,406 thousand (new investment in 2022) for replacing the cladding boilers at Notol.
The majority of the right-of-use asset refers to the right of using assets relating to buildings in the amount of
€3,858 thousand (2021: €3,026 thousand).
2022 Annual Report – Financial Report
274
Movement of property, plant and equipment (PPE)
€ thousand
Land
Buildings
Equipment
PPE being
acquired
Right-of-use
assets
Total
Purchase cost
Balance at 1 Jan 2021
27,703
618,791
1,037,419
30,263
4,050
1,718,226
Additions
0
0
0
44,657
0
44,657
Capitalisations – transfer from PPE
being acquired
307
6,104
33,031
-39,442
0
0
Capitalisations – IFRS 16 Leases
0
0
0
0
1,320
1,320
Disposals, impairments, deficit,
surplus
0
-683
-12,167
-857
-259
-13,966
Transfers, reclassifications
0
0
8
0
0
8
Balance at 31 Dec 2021
28,010
624,212
1,058,291
34,621
5,111
1,750,245
Balance at 1 Jan 2022
28,010
624,212
1,058,291
34,621
5,111
1,750,245
Additions
0
0
0
72,970
0
72,970
Capitalisations – transfer from PPE
being acquired
0
16,122
39,362
-55,484
0
0
Capitalisations – IFRS 16 Leases
0
0
0
0
1,918
1,918
Disposals, impairments, deficit,
surplus
0
-636
-17,131
0
-257
-18,024
Transfers, reclassifications
0
-240
298
0
0
58
Balance at 31 Dec 2022
28,010
639,458
1,080,820
52,107
6,772
1,807,167
Accumulated depreciation
Balance at 1 Jan 2021
0
-354,935
-757,623
0
-1,199
-1,113,757
Depreciation
0
-21,115
-57,188
0
-955
-79,258
Disposals, deficit, surplus
0
388
11,691
0
88
12,167
Transfers, reclassifications
0
0
-6
0
0
-6
Balance at 31 Dec 2021
0
-375,662
-803,126
0
-2,066
-1,180,854
Balance at 1 Jan 2022
0
-375,662
-803,126
0
-2,066
-1,180,854
Depreciation
0
-20,360
-55,104
0
-1,062
-76,526
Disposals, deficit, surplus
0
507
16,314
0
230
17,051
Transfers, reclassifications
0
-25
-33
0
0
-58
Balance at 31 Dec 2022
0
-395,540
-841,949
0
-2,898
-1,240,387
Carrying amount
Balance at 1 Jan 2021
27,703
263,856
279,796
30,263
2,851
604,469
Balance at 31 Dec 2021
28,010
248,550
255,165
34,621
3,045
569,391
Balance at 1 Jan 2022
28,010
248,550
255,165
34,621
3,045
569,391
Balance at 31 Dec 2022
28,010
243,918
238,871
52,107
3,874
566,780
In 2021 and 2022, the Company did not make any investments that would have met the criteria for capitalised borrowing
costs.
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 Note 30 ‘Financial
Instruments and Risks’.
2022 Annual Report – Financial Report
275
11. Intangible assets
€ thousand
31 Dec 2022
31 Dec 2021
Software
14,334
14,800
Other intangible assets
7,007
6,899
– Long-term deferred operating costs
282
95
– Development-related projects
5,710
6,492
– Emission coupons
1,015
312
Intangible assets being acquired
3,619
3,929
Total intangible assets
24,960
25,628
Movement of intangible assets (IA)
€ thousand
Concessions,
trademarks
and licences
Other IA
IA being
acquired
Total
Purchase cost
Balance at 1 Jan 2021
84,150
27,970
4,450
116,570
Additions
0
0
4,836
4,836
Transfer from IA being acquired
3,274
1,130
-4,404
0
Disposals, deficit, surplus
-14
-527
-953
-1,494
Transfers, reclassifications
-6
-2
0
-8
Balance at 31 Dec 2021
87,404
28,571
3,929
119,904
Balance at 1 Jan 2022
87,404
28,571
3,929
119,904
Additions
0
0
6,570
6,570
Transfer from IA being acquired
3,771
2,870
-6,641
0
Disposals, deficit, surplus
-858
-1,982
-239
-3,079
Transfers, reclassifications
-54
-4
0
-58
Balance at 31 Dec 2022
90,263
29,455
3,619
123,337
Balance at 1 Jan 2021
-68,588
-20,089
0
-88,677
Amortisation
-4,022
-1,583
0
-5,605
Transfers, reclassifications
6
0
0
6
Balance at 31 Dec 2021
-72,604
-21,672
0
-94,276
Balance at 1 Jan 2022
-72,604
-21,672
0
-94,276
Amortisation
-4,202
-1,488
0
-5,690
Disposals, deficit, surplus
823
708
0
1,531
Transfers, reclassifications
54
4
0
58
Balance at 31 Dec 2022
-75,929
-22,448
0
-98,377
Carrying amount
Balance at 1 Jan 2021
15,562
7,881
4,450
27,893
Balance at 31 Dec 2021
14,800
6,899
3,929
25,628
Balance at 1 Jan 2022
14,800
6,899
3,929
25,628
Balance at 31 Dec 2022
14,334
7,007
3,619
24,960
2022 Annual Report – Financial Report
276
12. Investments in subsidiaries
Movement of investments in subsidiaries
€ thousand
Investments in subsidiaries
Purchase cost
Balance at 1 Jan 2021
348,603
Establishment of new companies
25
Subsequent payments
7,799
Refunds of subsequent contributions
-992
Balance at 31 Dec 2021
355,435
Balance at 1 Jan 2022
355,435
Acquisition of equity interest
91
Subsequent payments
9,228
Balance at 31 Dec 2022
364,754
Accumulated depreciation
Balance at 1 Jan 2021
–8,991
Balance at 31 Dec 2021
–8,991
Balance at 1 Jan 2022
–8,991
Balance at 31 Dec 2022
–8,991
Carrying amount
Balance at 1 Jan 2021
339,612
Balance at 31 Dec 2021
346,444
Balance at 1 Jan 2022
346,444
Balance at 31 Dec 2022
355,763
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 December 2022.
Impairment testing of investments in subsidiaries KRKA-RUS LLC and KRKA FARMA LLC
In the Russian Federation, the Company is the owner of the subsidiary Krka-Rus, which in engaged in production activities,
and of Krka Farma, which carries out distribution activities. Both investments constitute a single cash-generating unit.
The carrying amount of the investment in Krka-Rus is €118,916 thousand (2021: €118,916 thousand), whereas the
carrying amount of the investment in Krka Farma is recorded at €15,170 thousand (2021: €15,170 thousand).
The Russian-Ukrainian situation has increased uncertainty, which has also resulted in a significant increase in the weighted
average cost of capital. As a consequence, management has assessed the value in use of the two investments in the
subsidiaries. The value in use is calculated by discounting the future cash flows of the subsidiaries. Company's current
strategy does not envisage the sale of the two subsidiaries in the Russian Federation and does not foresee the payment
of dividends in the foreseeable future.
In the five-year projection of the operating cash flows of the subsidiaries until 2027, a discount rate of 14.0% is applied,
while for the residual value a discount rate of 12.1% is set. Based on the impairment assessment performed, it was
concluded that there is no need to impair the investments in the subsidiary.
2022 Annual Report – Financial Report
277
Shareholdings in subsidiaries
€ thousand
Ownership
share (%)
Share capital
Value of share in
subsidiaries
31 Dec 2022
31 Dec 2022
31 Dec 2022
31 Dec 2021
KRKA-RUS LLC, Istra, Russian Federation
100%
68,358
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 Co. Ltd., Ningbo, China
60%
61,923
35,642
26,414
KRKA-FARMA d.o.o., Zagreb, Croatia
100%
18,978
19,738
19,738
KRKA – POLSKA Sp. z.o.o., Warsaw, Poland
100%
3,737
18,697
18,697
KRKA FARMA LLC, Istra, Russian Federation
100%
9,612
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%
3
1,003
1,003
KRKA-FARMA DOOEL, Skopje, North Macedonia
100%
796
802
802
KRKA Belgium, SA, Brussels, Belgium
100%
300
376
285
KRKA Magyarország Kft., Budapest, Hungary
100%
112
184
184
123 Acurae Pharma GmbH, Cuxhaven, Germany
100%
25
25
25
KRKA Sverige AB, Stockholm, Sweden
100%
14
16
16
LLC ´KRKA Kazakhstan´, Almaty, Kazakhstan
100%
13
11
11
KRKA Bulgaria EOOD, Sofia, Bulgaria
100%
10
10
10
KRKA FARMA, d.o.o., Sarajevo, Sarajevo, Bosnia and Herzegovina
100%
10
10
10
KRKA FARMACÉUTICA, S.L., Madrid, Spain
100%
10
10
10
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
KRKA GCC L.L.C., Dubai, United Arab Emirates*
100%
/
/
/
Total
185,436
355,763
346,444
* The subsidiary KRKA GCC L.L.C. in Dubai, United Arab Emirates, was incorporated on 14 September 2022, with the
share capital in the amount of AED 36,700 (€9,000 thousand) being paid up on 12 January 2023.
The subsidiary Terme Krka, d.o.o. had a 100% interest in Golf Grad Otočec, d.o.o., at 31 December 2022; 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 in the company Ningbo Menovo Pharmaceutical Ltd.
2022 Annual Report – Financial Report
278
13. Loans
€ thousand
31 Dec 2022
31 Dec 2021
Non-current loans
56,013
31,010
– Loans to subsidiaries
14,100
18,850
– Loans to others
11,913
12,160
– Deposits granted to banks
30,000
0
Current loans
6,669
195,459
– Portion of non-current loans maturing next year
5,140
4,163
– Loans to subsidiaries
888
1,055
– Loans to others
23
23
– Deposits granted to banks
0
190,264
– Current interest receivables
618
-46
Total loans
62,682
226,469
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 2022, the interest rate ranged from 0.0870% to 1.687%.
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 0.281% and 3.652% in 2022 (2021: between 0.269% and 0.367%). The maximum repayment period is 15 years.
Loans to subsidiaries including related current interest receivable
€ thousand
31 Dec 2022
31 Dec 2021
Non-current loans to subsidiaries
14,100
18,850
TERME KRKA, d.o.o., Novo mesto, Slovenia
14,100
16,800
KRKA Farmaceutici Milano, S.r.l., Milan, Italy
0
2,000
KRKA Bulgaria EOOD, Sofia, Bulgaria
0
50
Current loans to subsidiaries, inclusive of the current amounts of non-current
loans
4,349
3,559
TERME KRKA, d.o.o., Novo mesto, Slovenia
2,502
2,500
KRKA Farmaceutici Milano S.r.l., Milano, Italy
890
0
Krka France Eurl, Paris, France
601
2
SIA KRKA Latvija, Riga, Latvia
115
115
KRKA HELLAS E.P.E., Athens, Greece
100
365
HCS bvba*, Edegem, Belgium
74
33
KRKA Bulgaria EOOD, Sofia, Bulgaria
50
0
TAD Pharma GmbH, Cuxhaven, Germany
9
1
Krka FARMACÉUTICA, S.L., Madrid, Spain
2
0
KRKA Finland Oy, Espoo, Finland
1
462
KRKA Sverige AB, Stockholm, Sweden
1
1
KRKA Belgium, SA, Brussels, Belgium
1
0
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
1
0
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
1
0
KRKA Pharma GmbH, Dunaj, Austria
1
0
123 Acurae Pharma GmbH, Cuxhaven, Germany
0
80
Total loans to subsidiaries
18,449
22,409
* Subsidiary Krka France Eurl holds a 100% stake in HCS bvba.
The repayment period of the non-current loan to the subsidiary Terme Krka was 18 months as at the reporting date.
2022 Annual Report – Financial Report
279
14. Investments
€ thousand
31 Dec 2022
31 Dec 2021
Non-current investments
110,769
108,882
– Investments at fair value through OCI (equity instruments)
15,988
15,860
– Investments at amortised cost (debt instruments)
94,781
93,022
Current investments including derivatives
52,437
155,448
– Investments at amortised cost (debt instruments)
50,697
113,987
– Derivatives
1,740
1,491
– Other current investments at fair value through profit or loss (debt instruments)
0
39,970
Total investments
163,206
264,330
Investments at fair value through other comprehensive income (OCI) comprised €876 thousand of investments in shares
and interests in companies in Slovenia (2021: €1,001 thousand), and €15,112 thousand of investments in shares of
companies located abroad (2021: €14,859 thousand). Investments at amortised cost include investments in Slovenian
government bonds which amounted to €6,533 thousand (2021: €4,455 thousand), while investments in foreign
government bonds amounted to €138,945 thousand (2021: €202,554 thousand).
Movement of financial assets
€ thousand
Financial assets at
fair value through
OCI
Investments at
amortised cost
Investments at fair
value through profit
or loss
Balance at 1 Jan 2021
10,419
0
0
Increase
0
205,946
40,000
Foreign exchange differences
0
1,063
0
Adjustment to market value
5,441
/
-30
Balance at 31 Dec 2021
15,860
207,009
39,970
Balance at 1 Jan 2022
15,860
207,009
39,970
Increase
0
54,083
0
Decrease
0
-119,265
-40,000
Foreign exchange differences
0
3,651
0
Adjustment to market value
128
/
30
Balance at 31 Dec 2022
15,988
145,478
0
Increases in financial assets comprise new acquisitions and imputed interest, while decreases comprise coupons received,
imputed interest and disposals due to the investment's maturity. Adjustments of non-current investments at fair value
through OCI were recognised in other comprehensive income in the amount of €128 thousand in the reporting period
(2021: €5,441 thousand). Foreign exchange differences on investments at amortised cost amounting to €3,651 thousand
(2021: €1,063 thousand) are recognised in financial income.
2022 Annual Report – Financial Report
280
15. Deferred tax assets and deferred tax liabilities
€ thousand
Assets
Liabilities
2022
2021
2022
2021
Investments at fair value through OCI
1,708
1,727
2,490
2,466
Receivables
1,687
1,484
0
0
Dividends
33
19
0
0
Provisions for post-employment benefits and other non-current
employee benefits – the merger effect
7,728
11,978
0
0
Total
11,156
15,208
2,490
2,466
Offsetting
-2,490
-2,466
-2,490
-2,466
Net
8,666
12,742
0
0
€ thousand
Balance at
1 Jan
2021
Recognised
in income
statement
Recognised
in OCI
Balance at
31 Dec
2021
Recognised
in income
statement
Recognised
in OCI
Balance at
31 Dec 2022
Investments at fair value through
OCI
295
0
-1,034
-739
-19
-24
-782
Receivables
1,447
37
0
1,484
203
0
1,687
Dividends
14
5
0
19
14
0
33
Provisions for post-employment
benefits and other non-current
employee benefits – the merger
effect
12,466
123
-611
11,978
-940
-3,310
7,728
Total
14,222
165
-1,645
12,742
-742
-3,334
8,666
The relevant amount of deferred tax assets and liabilities was calculated using the 19% income tax rate.
16. Inventories
€ thousand
31 Dec 2022
31 Dec 2021
Materials
215,961
183,593
Work in progress
122,864
89,744
Finished products
122,144
108,124
Merchandise
12,711
10,773
Advances for inventories
19,298
2,089
Total inventories
492,978
394,323
The increase in inventories is the result of adapting to uncertain market conditions. By carefully planning our inventories
and maintaining safety stocks, we ensure that we always have access to the intermediate goods that we require to produce
our finished products. The planning of inventories of intermediate goods is based on sales forecasts. We also ensure
optimal and adequate stocks of finished products throughout the distribution chain.
The write-downs and write-offs of inventories to their net realisable value amounted to €14,194 thousand in 2022 and
€17,287 thousand in 2021.
The Company does not pledge inventories as security for a liability.
2022 Annual Report – Financial Report
281
17. Trade and other receivables
€ thousand
31 Dec 2022
31 Dec 2021
Current trade receivables
357,889
424,588
– Receivables due from subsidiaries
196,166
234,064
– Receivables due from customers other than Group companies
161,723
190,524
Current receivables for other dividends
171
99
Current receivables due from others
12,468
17,282
Total trade and other receivables
370,528
441,969
97.3% of receivables due from customers other than Group companies were insured with a credit insurer, by taking into
account 87.6% of the deductible (99.2% of such receivables were insured as at 31 December 2021, by taking into account
89.3% of the deductible).
Current trade receivables
Current trade receivables due from subsidiaries
€ thousand
31 Dec 2022
31 Dec 2021
KRKA-RUS LLC, Istra, Russian Federation
76,254
104,394
KRKA FARMA LLC, Istra, Russian Federation
36,260
52,541
Krka Sverige AB, Stockholm, Sweden
16,395
16,508
KRKA - POLSKA, Sp. z.o.o., Warsaw, Poland
10,128
8,763
LLC ‘KRKA Kazakhstan‘, Almaty, Kazakhstan
9,981
7,667
KRKA-FARMA DOOEL, Skopje, North Macedonia
9,792
8,750
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
8,406
9,098
KRKA FARMACEUTICI MILANO S.r.l., Milan, Italy
5,701
3,843
KRKA UK Ltd, London, United Kingdom
4,307
244
KRKA Finland Oy, Espoo, Finland
4,080
3,175
KRKA Belgium, SA, Brussels, Belgium
3,120
1,301
KRKA-FARMA d.o.o., Zagreb, Croatia
2,516
3,091
TAD Pharma GmbH, Cuxhaven, Germany
2,403
4,558
KRKA France Eurl, Paris, France
1,948
5,384
KRKA FARMACÉUTICA, S.L., Madrid, Spain
1,456
605
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
1,301
1,360
KRKA Pharma GmbH, Wienna, Austria
861
1,026
Ningbo Krka Menovo Pharmaceutical Co. Ltd., Ningbo, China
417
200
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
334
1,137
123 Acurae Pharma GmbH, Cuxhaven, Germany
278
0
Receivables due from other Krka Group companies
228
419
Total current trade receivables due from subsidiaries
196,166
234,064
Current trade receivables due from customers other than Group companies
€ thousand
Gross value
Allowances
for
receivables
Net value at
31 Dec 2022
Net value at
31 Dec 2021
Current trade receivables due from domestic customers other than
Group companies
9,323
13
9,310
10,381
Current trade receivables due from foreign customers other than
Group companies
190,326
35,428
154,898
180,913
Deferred revenue from contracts with foreign customers
-2,485
0
-2,485
-770
Total current trade receivables due from customers other than
Group companies
197,164
35,441
161,723
190,524
2022 Annual Report – Financial Report
282
The net amount of the receivable write-offs and impairment disclosed in operating expenses amounted in 2022 to
€1,548 thousand (2021: €50 thousand).
Current receivables due from others
Most of current receivables due from others in the total amount of €12,468 thousand (2021: €17,282 thousand) include
primarily receivables due from the State, whereof VAT receivables amounted to €4,346 thousand (2021:
€10,227 thousand).
Advances for services were recorded at €859 thousand (2021: €777 thousand).
18. Cash and cash equivalents
€ thousand
31 Dec 2022
31 Dec 2021
Cash in hand
0
1
Bank balances
470,297
144,980
Total cash and cash equivalents
470,297
144,981
19. Equity
Share capital
The share capital of the Company in the amount of €54,732 thousand is represented by 32,793,448 ordinary no-par value
shares. The Company has solely one class of share. The share capital was fully paid in.
Treasury shares
At the 26th 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 the Company 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, the Company 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 (ZGD-1), 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.
2022 Annual Report – Financial Report
283
Repurchase of treasury shares
No. of shares
Weighted average
share price
(€)
Value of treasury
shares
(€ thousand)
Balance at 31 Dec 2020
1,541,774
99,279
Repurchases in 2021
142,134
107.38
15,262
Balance at 31 Dec 2021
1,683,908
114,541
Repurchases in 2022
101,941
98.35
10,025
Balance at 31 Dec 2022
1,785,849
124,566
The performed repurchases of treasury shares refers to repurchases that were recorded in individual years. A subscription
fee is included in the weighted average price of shares. The amount paid, including commission, is deducted from the total
capital as treasury shares until such shares are withdrawn, reissued or sold.
The repurchases of treasury shares in 2022 in terms of days are outlined in Note 35 ‘Repurchase of treasury shares’.
Reserves
The Company'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 as at the balance sheet date to €124,566 thousand and increased by €10,025
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
recorded at €105,897 thousand as at 31 December 2022 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 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 2022, the value of share premium remained unchanged.
Legal reserves may be formed up to 30% of the share capital for the coverage of possible future losses. They amounted
to €14,990 thousand as at 31 December 2022 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 Company 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. Statutory reserves are available for drawdown.
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 €23,311 thousand and amounted to €4,307 thousand
as at 31 December 2022. The cumulative change is due to a €128 thousand increase in the fair value of financial assets
through OCI (equity instruments); an increase due to the restatement of post-employment benefits of €26,517 thousand
and a decrease for the impact of deferred taxes of €3,334 thousand.
Retained earnings
Retained earnings grew based on the profit of €348,215 thousand. On the other hand, they declined as a result of allocation
of accumulated profit to dividend payment (€175,025 thousand) in accordance with the resolution adopted by the 28th
Annual General Meeting on 7 July 2022; an additional formation of reserves for treasury shares in total of €10,025 thousand
on account of the treasury share repurchase in 2022 and changes in provisions for termination benefits amounting to
€1,826 thousand.
2022 Annual Report – Financial Report
284
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 €19 thousand of dividends paid in respect of
previous periods (2021: €11 thousand).
Dividends per share
In 2022, the declared gross dividend per share was €5.63 (2021: €5.00).
Distributable profit
The table below is presented in €, unlike all other tables in the financial report hereof, where data is expressed in €
thousand.
€
2022
2021
Compulsory appropriation of profit
Net profit
348,215,048.50
245,216,436.23
– 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
-10,025,534.49
-15,261,862.79
– Allocation to statutory reserves
0.00
0.00
Profit after compulsory appropriation
338,189,514.01
229,954,573.44
– Formation of other profit reserves under the resolution of the Management and
Supervisory Boards
0.00
0.00
Surplus of profit
338,189,514.01
229,954,573.44
Identification of distributable profit
– Surplus of profit
338,189,514.01
229,954,573.44
– Profit brough forward
69,973,616.13
88,670,552.72
Distributable profit
408,163,130.14
318,625,126.16
20. Earnings per share
Basic earnings per share amounted to €11.21 in 2022 and increased by 43% over the previous year, when it amounted to
€7.86. The calculation of earnings per share took into account the profit in the amount of €348,215 thousand (2021:
€245,216 thousand). The weighted average number of shares was accounted for in the calculation for both years i.e.
31,070,960 shares for 2022, and 31,185,323 shares for 2021. The average number of shares is calculated from the daily
share balances during the year, less treasury shares.
Diluted earnings per share equal the basic earnings per share as the Company has not issued any dilutive or contingently
dilutive instruments.
21. Borrowings
€ thousand
31 Dec 2022
31 Dec 2021
Current borrowings
53,524
55,092
– Borrowings from subsidiaries
53,375
55,068
– Current interest payable
149
24
Total borrowings
53,524
55,092
2022 Annual Report – Financial Report
285
Borrowings from subsidiaries, including current interest payable
€ thousand
31 Dec 2022
31 Dec 2021
Current borrowings from subsidiaries
53,524
55,092
TAD Pharma GmbH, Cuxhaven, Germany
48,467
51,960
KRKA Sverige AB, Stockholm, Sweden
2,174
0
KRKA FARMACÉUTICA, S.L., Madrid, Spain
1,365
1,211
KRKA Belgium, SA, Brussels, Belgium
927
8
TERME KRKA, d. o. o., Novo mesto, Slovenia
424
1,575
KRKA Pharma GmbH, Vienna, Austria
144
337
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
18
0
KRKA Finland Oy, Espoo, Finland
3
0
KRKA France Eurl, Paris, France
1
1
123 Acurae Pharma GmbH, Cuxhaven, Germany
1
0
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
0
0
Total
53,524
55,092
Current loans were raised in euro for a period of up to one year and were not specifically collateralised.
22. Provisions
Movement of provisions in 2022
€ thousand
Balance at
31 Dec 2021
Transfer
Formation
Utilisation
Reversal
Balance at
31 Dec 2022
Provisions for lawsuits
543
10,000
0
0
0
10,543
Provisions for post-employment
benefits
93,963
0
-18,123
-3,345
-1,597
70,898
Provisions for other non-current
employee benefits
18,630
0
-1,851
-1,382
-230
15,167
Total provisions
113,136
10,000
-19,974
-4,727
-1,827
96,608
Movement of provisions in 2021
€ thousand
Balance at
31 Dec 2021
Formation
Utilisation
Reversal
Balance at
31 Dec 2022
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 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
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 2014, the European Commission found that Krka had infringed Article 101 of the Treaty on the Functioning of the EU,
thereby distorting competition on the EU market for perindopril, and imposed a fine of €10,000 thousand on Krka. Krka
paid the fine within the time limit set by the Commission. However, as it considered that its conduct did not infringe
competition law rules, it brought an action against the decision before the EU General Court, which ruled in favour of Krka
in December 2018.
2022 Annual Report – Financial Report
286
The General Court's decision is not yet final and the Commission has lodged an appeal against it within the appeal period,
which will be decided by the European Court of Justice. In 2022, the Company transferred the value from non-current
operating liabilities to provisions for lawsuits.
The Company was in 2022 involved in intellectual property disputes and other areas of law (civil, labour, administrative
disputes, etc.). The total value of the claims against Krka is estimated at €227 thousand. The Company has formed
provisions of €543 thousand for this purpose. The reversal of provisions is disclosed in Note 4 ‘Other operating income’.
Provisions for obligations to employees arising from post-employment and other non-current benefits are based on
actuarial calculation using the following assumptions:
• 3.91% annual discount rate, which is the yield on 10-year high quality corporate bonds in the euro area at end-
November 2022 (1.27% discount rate used in 2021); Bloomberg was used as data source;
• currently applicable amounts of retirement benefits and anniversary bonuses as defined by internal rules;
• staff turnover depending primarily upon the employees' age (3.0% for up to 30 years; 2.0% for 31 to 40 years;
0.5% for 41 to 50 years; 0.2% for 51 to 60 years);
• mortality rates calculated on the basis of most recent mortality tables available;
• the 2.00% increase in salaries (2021: 2.00%).
Liabilities for post-employment benefits
€ thousand
2022
2021
Balance at 1 Jan
93,963
98,516
Current service costs (CSC)
5,364
6,030
Interest costs (IC)
1,204
726
Post-employment benefits paid
-3,344
-3,879
Staff departures (reversal)
-1,598
-992
Actuarial surplus/deficit, whereof:
-24,691
-6,438
– Change in financial assumptions
-27,006
-7,562
– Experience
2,315
1,124
Balance at 31 Dec
70,898
93,963
Sensitivity analysis for post-employment and other benefits
Discount rate
Increase in wages and
salaries
Change in
percentage points
percentage points
Change by
0.5
–0.5
0.5
–0.5
Impact on liabilities (€ thousand)
-4,721
5,185
5,261
-4,828
2022 Annual Report – Financial Report
287
23. Deferred income
€ thousand
Balance at
31 Dec 2021
New deferred
income
received
Reversal of
deferred
income
Balance at
31 Dec 2022
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
1,058
0
-215
843
Subsidy for acquisition of electric drive vehicles
3
0
-1
2
Property, plant and equipment received free of charge
3
13
-4
12
Emission coupons
10
10
-10
10
Subsidy for the purchase of joinery
93
0
-1
92
Subsidy for acquisition of other equipment
3
0
-1
2
Grants received from the European Regional Development Fund
(Farma GRS)
2,376
0
-521
1,855
Reserve fund assets (eko fund)
0
2
-2
0
Total deferred income
3,546
25
-755
2,816
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 income are decreased by the proportionate share of depreciation of assets to which the grants
refer and by any other types of expenses incurred.
24. Trade payables
€ thousand
31 Dec 2022
31 Dec 2021
Non-current trade payables
0
10,000
Current trade payables
194,143
178,143
Payables to subsidiaries
87,559
79,391
Payables to domestic suppliers
52,271
43,654
Payables to foreign suppliers
54,313
55,098
Total trade payables
194,143
188,143
2022 Annual Report – Financial Report
288
Payables to subsidiaries
€ thousand
31 Dec 2022
31 Dec 2021
KRKA-FARMA d.o.o., Zagreb, Croatia
24,912
21,116
KRKA FARMA LLC, Istra, Russian Federation
17,555
17,042
Ningbo Krka Menovo Pharmaceutical Co. Ltd., China
5,306
1,466
KRKA – POLSKA Sp. z.o.o., Warsaw, Poland
5,009
6,612
KRKA ROMANIA S.R.L., Bucharest, Romania
4,689
4,459
Krka-Rus LLC, Istra, Russian Federation
3,761
2,403
KRKA ČR, s. r. o., Prague, Czech Republic
3,686
3,190
TAD Pharma GmbH, Cuxhaven, Germany
3,507
2,886
KRKA UKRAINE LLC, Kiev, Ukraine
3,199
3,081
KRKA Magyarország Kft., Budapest, Hungary
2,779
2,872
KRKA Slovensko, s.r.o., Bratislava, Slovakia
2,124
2,124
KRKA Farmaceutici Milano, S.r.l., Milan, Italy
1,799
873
UAB KRKA Lietuva, Vilnius, Lithuania
1,556
1,431
KRKA France Eurl, Paris, France
1,331
3,622
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
1,060
866
SIA KRKA Latvija, Riga, Latvia
772
681
KRKA Bulgaria EOOD, Sofia, Bulgaria
740
766
KRKA Pharma GmbH, Vienna, Austria
602
143
KRKA FARMACÉUTICA, S.L., Madrid, Spain
531
455
KRKA-FARMA DOOEL, Skopje, North Macedonia
512
461
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
512
475
LLC ´KRKA Kazakhstan´, Almaty, Kazakhstan
506
767
KRKA HELLAS E.P.E., Athens, Greece
293
322
KRKA Finland Oy, Espoo, Finland
286
249
KRKA Sverige AB, Stockholm, Sweden
154
176
KRKA Belgium, SA, Brussels, Belgium
115
427
KRKA UK Ltd, London, United Kingdom
95
68
HCS bvba, Edegem, Belgium*
70
77
KRKA FARMA, d.o.o., Sarajevo, Sarajevo, Bosnia and Herzegovina
48
213
TERME KRKA, d. o. o., Novo mesto
31
43
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
18
24
KRKA USA LLC, Wilmington, USA
1
1
Total payables to subsidiaries
87,559
79,391
* Subsidiary Krka France Eurl holds a 100% stake in HCS bvba.
25. Current contract liabilities
€ thousand
31 Dec 2022
31 Dec 2021
Refund liabilities
13,094
13,638
– Bonuses and volume rebates
13,094
13,638
Contract liabilities
8,593
5,839
– Contract liabilities – advances from other customers
8,593
5,839
Total current contract liabilities
21,687
19,477
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.
2022 Annual Report – Financial Report
289
26. Other current liabilities
€ thousand
31 Dec 2022
31 Dec 2021
Payables to employees – gross salaries, other receipts and charges
55,304
53,446
Liabilities under repurchase transactions (repo-type operations)
0
102,234
Other
2,068
8,330
Total other current liabilities
57,372
164,010
The item ‘Other’ also includes current liabilities to the State on account of VAT payable in the amount of €739 thousand
(2021: €6,284 thousand).
27. Contingent liabilities and commitments
€ thousand
31 Dec 2022
31 Dec 2021
Guarantees issued
15,195
13,695
Other
1,935
976
Total contingent liabilities
17,130
14,671
Among the guarantees issued, the largest items are the performance guarantee for the supply of products awarded in
tenders in Italy, amounting to €12,000 thousand, and the guarantee for the TAD Pharma credit line, amounting to €3,000
thousand.
Based on the contracts that had been signed in connection with the on-going investments, the balance of Company's
commitments for acquisition of property, plant and equipment amounted at the year-end of 2022 to €74,610 thousand of
(2021: €27,787 thousand).
28. 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, the Company applied the practical
expedient provided by the Standard.
2022 Annual Report – Financial Report
290
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
Balance at 1 Jan 2021
2,822
Increase/Decrease
1,210
Interest
47
Lease payments
-991
Balance at 31 Dec 2021
3,088
– Current lease liabilities
987
– Non-current lease liabilities
2,101
Balance at 1 Jan 2022
3,088
Increase/Decrease
1,929
Interest
49
Lease payments
-1,124
Balance at 31 Dec 2022
3,942
– Current lease liabilities
1,033
– Non-current lease liabilities
2,909
The maturity analysis of lease liabilities is disclosed in Note 30 ‘Financial instruments and financial risks’.
Amounts recognised in the income statement
€ thousand
2022
2021
Depreciation of right-of-use assets
1,062
956
Interest expenses on lease liabilities
49
47
Expenses relating to current leases
1
39
Expenses relating to leases of low-value assets
12
6
Total amount recognised in income statement
1,124
1,048
29. Financial liabilities
Movement of financial liabilities in 2022
€ thousand
Balance at
31 Dec 2021
Monetary
changes
Non-monetary changes
Balance at 31
Dec 2022
Additions/
disposals
Other
Borrowings
55,068
-1,758
0
65
53,375
Interest on borrowings
24
-1,856
1,981
0
149
Dividends
1,322
-175,044
175,025
0
1,303
Leases
3,088
-1,124
1,929
49
3,942
Liabilities under repurchase
transactions
(repo-type operations)
102,234
-101,762
0
-472
0
Total
161,736
-281,544
178,935
-358
58,769
Liabilities under repurchase transactions (repo-type operations) are presented in Note 26 ‘Other current liabilities’.
2022 Annual Report – Financial Report
291
Movement of financial liabilities in 2021
€ thousand
Balance at
31 Dec 2020
Monetary
changes
Non-monetary changes
Balance at
31 Dec 2021
Additions/
disposals
Other
Borrowings
46,317
8,703
0
48
55,068
Interest on borrowings
28
-444
440
0
24
Dividends
1,335
-155,907
155,896
-2
1,322
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
-46,347
157,546
35
161,736
30. Financial instruments and financial risks
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. 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 risk
mitigation 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 4 categories (an assessment of the buyer's profitability, payment habits and payment discipline, an assessment of the
buyer's financial statements, a qualitative assessment of the sales staff and an assessment of country risk) each of which
carries 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 the Company and other Krka Group companies engaged in sales monitor available limits and
overdue receivables. Control is exercised for each shipment of 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.
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 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 is a low share of
receivable write-offs and impairments in view of Company's sales.
2022 Annual Report – Financial Report
292
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.
The credit risk environment was due to the challenges related to the COVID-19 pandemic and the heightened situation in
Ukraine, the Russian Federation and Belarus very challenging in 2022. We paid particular attention to these markets and
further strengthened our activities to manage trade receivables. The credit risk management performance in 2022 was
favourable. At the year-end, the value of trade receivables due from Company's customer was 16% lower than at the
beginning of the year, while the amount of overdue and unpaid receivables remained within a range acceptable to Krka.
Credit risk exposure
The carrying amount of financial assets represents the largest exposure to credit risk as illustrated below:
€ thousand
Notes
31 Dec 2022
31 Dec 2021
Loans
13
62,682
226,469
Investments at amortised cost (debt instruments)
14
145,478
207,009
Trade receivables including those due from subsidiaries
17
357,889
424,588
Cash and cash equivalents
18
470,297
144,981
Total
1,036,346
1,003,047
As for the financial assets exposed to credit risk, the loans, trade receivables and receivables due from subsidiaries are
presented separately.
The loans include a €30,000 thousand deposit with a maturity of over one year with a Slovenian bank with a high credit
rating.
Investments at amortised cost (debt instruments) represent investments in non-current and current bonds of EU countries.
They are classified as a low credit risk financial instrument because their credit risk rating is equivalent to the globally
understood definition of 'investment grade', which is equivalent to a rating of Baa2 or above by Moody's or BBB- or above
by Standard & Poor's.
The majority of Krka's cash and cash equivalents refer to bank balances and deposits with maturities of less than 90 days
with banks in the EU with a high credit rating (P-1 according to Moody's).
Loans by geographical region
€ thousand
31 Dec 2022
31 Dec 2021
Region Slovenia
60,419
121,027
Region South-East Europe
150
415
Region East Europe
40
41
Region Central Europe
121
115
Region West Europe
1,952
104,871
Region Overseas Markets
0
0
Total
62,682
226,469
Trade receivables including those due from subsidiaries by geographical region
€ thousand
31 Dec 2022
31 Dec 2021
Region Slovenia
9,359
10,452
Region South-East Europe
81,760
83,873
Region East Europe
141,775
222,183
Region Central Europe
68,088
56,348
Region West Europe
50,955
46,877
Region Overseas Markets
5,952
4,855
Total
357,889
424,588
2022 Annual Report – Financial Report
293
Age analysis of loans as at the reporting date
€ thousand
Gross value at
31 Dec 2022
Allowance at
31 Dec 2022
Gross value
31 Dec 2021
Allowance at
31 Dec 2021
Not past due
62,673
0
226,456
0
Past due up to 20 days
0
0
0
0
Past due from 21 to 50 days
2
0
1
0
Past due from 51 to 180 days
2
0
3
0
Past due more than 180 days
5
0
9
0
Total
62,682
0
226,469
0
Age analysis of trade receivables as at the reporting date
€ thousand
Gross value
at
31 Dec 2022
Allowance at
31 Dec 2022
Net value at
31 Dec 2022
Gross value
at
31 Dec 2021
Allowance at
31 Dec 2021
Net value at
31 Dec 2021
Not past due
346,743
182
346,561
409,494
187
409,307
Past due up to 20 days
3,000
16
2,984
7,384
14
7,370
Past due from 21 to 50 days
2,782
8
2,774
4,597
67
4,530
Past due from 51 to 180 days
4,789
27
4,762
2,361
0
2,361
Past due more than 180 days
36,016
35,208
808
35,317
34,297
1,020
Total
393,330
35,441
357,889
459,153
34,565
424,588
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 €343,445 thousand (2021:
€404,494 thousand); past due up to 20 days €2,892 thousand (2021: €9,223 thousand); past due between 21 and 50 days
€5,634 thousand (2021: €6,905 thousand); past due between 51 and 180 days €2,759 thousand (2021: €2,360 thousand);
and past due more than 180 days €3,158 thousand (2021: €1,606 thousand).
Age analysis of receivables due from customers in the Russian Federation as at the reporting date
€ thousand
Gross value
at
31 Dec 2022
Allowance at
31 Dec 2022
Net value at
31 Dec 2022
Gross value
at
31 Dec 2021
Allowance at
31 Dec 2021
Net value at
31 Dec 2021
Not past due
331
0
331
3.405
0
3.405
Past due up to 20 days
0
0
0
0
0
0
Past due from 21 to 50 days
0
0
0
0
0
0
Past due from 51 to 180 days
0
0
0
0
0
0
Past due more than 180 days
0
0
0
0
0
0
Total
331
0
331
3.405
0
3.405
All receivables in the Russian Federation were secured and, taking into account the own participation, the share of secured
receivables was 80% (at 31 December 2021 all receivables were secured and, taking into account the own participation,
the share of secured receivables was 90%). None of the receivables as at 31 December 2022 was past due.
Liquidity risk
Business partners value Krka for its excellent financial discipline and stable cash flows. In 2022, we settled all financial
liabilities regularly. Company's exposure to liquidity risk was low.
The Company has agreements with two banks for the allowed negative balance on transaction accounts for a total amount
of €5,688 thousand (in 2021, the Company had agreements with two banks for a total amount of €5,415 thousand). As there
were no negative balances on transaction accounts at 31 December 2022, the bank overdraft remained fully unused.
As at 31 December 2022, the Company had an undrawn credit facility of €20,000 thousand (2021: €20,000 thousand).
2022 Annual Report – Financial Report
294
At the end of 2022, the Company recorded excess liquidity, primarily as cash at bank or deposits with commercial banks
with high credit ratings. The 2022 increase in excess liquidity resulted from surplus of cash flow from operating and
investing activities over financing uses.
The European Central Bank started to gradually increase key interest rates in the second half of 2022. Low-risk cash
investments have thus started to yield positive returns. In line with our internal investment diversification rules and taking
into account interest rate, liquidity, credit and currency risks, we deposited most of our cash surpluses with commercial
banks.
The Company manages liquidity risk centrally for the entire Krka Group. Subsidiaries are financed through intra-group
loans and any potential cash surpluses are deposited with the controlling company. Excess cash from all Krka 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 Krka Group companies, and enhanced security of cash transactions.
The Company's liquidity ratios remain favourable and stable at the end of 2022.
Maturity of financial liabilities
Financial liabilities in terms of maturity are outlined in the tables below.
Maturity of financial liabilities as at 31 December 2022
€ thousand
Carrying
amount
Contractual cash flows
Total
Up to 6
months
6 – 12
months
1 – 2
years
2 – 5
years
5 – 10
years
Financial liabilities
Other current loans
53,524
53,524
53,524
0
0
0
0
Lease liabilities
3,942
4,095
555
529
892
1,932
187
Trade payables excluding advances
194,143
194,143
194,143
0
0
0
0
Contract liabilities excluding advances
13,094
13,094
13,094
0
0
0
0
Other liabilities excluding amounts owed
to the State, to employees and advances
1,328
1,328
1,328
0
0
0
0
Total financial liabilities
266,031
266,184
262,644
529
892
1,932
187
Total derivative financial liabilities
0
0
0
0
0
0
0
Total
266,031
266,184
262,644
529
892
1,932
187
Maturity of financial liabilities as at 31 December 2021
€ thousand
Carrying
amount
Contractual cash flows
Total
Up to 6
months
6 – 12
months
1 – 2
years
2 – 5
years
5 – 10
years
Financial liabilities
Other current loans
55,092
55,092
55,092
0
0
0
0
Lease liabilities
3,088
3,217
530
497
665
1,278
247
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
Repo liability
102,234
102,234
102,234
0
0
0
0
Other liabilities excluding amounts owed
to the State, to employees and advances
2,046
2,046
2,046
0
0
0
0
Total financial liabilities
354,241
354,370
351,683
497
665
1,278
247
Total derivative financial liabilities
0
0
0
0
0
0
0
Total
354,241
354,370
351,683
497
665
1,278
247
2022 Annual Report – Financial Report
295
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 Krka 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 recorded purchase orders.
The value of the rouble in euro terms increased by 8.8% from the beginning to the end of 2022, on average 18.7% higher
than in 2021.
The value of the US dollar in euro terms rose by 6.2% from the beginning to the end of 2022, and was on average 12.3%
higher than in 2021. The impact of the change in the value of the US dollar on Krka Group's net financial result was
neutralised by financial instruments.
The Ukrainian hryvnia has lost around 20% of its value against the euro since the beginning of the Russian invasion of
Ukraine.
The Polish zloty has been fairly stable, depreciating by 1.8% from the beginning to the end of 2022, while its average value
was 2.6% lower than in 2021. The Romanian leu and the Croatian kuna, which were in the ERM in 2022, have been very
stable. The value of the British pound decreased in 2022. The contribution of these currencies to Krka Group's net financial
result was small.
The Company generally eliminates currency risks through natural methods, primarily by increasing purchases and
payables in the currencies in which it invoices sales. Where this is not possible, financial instruments are used or the risk
is left unhedged. As a rule, forward contracts are used for hedging.
In 2022, we continued our policy of partially hedging the Russian rouble and US dollar risk with financial instruments. In
the first quarter of 2022, we had partially hedged the Russian rouble risk with forward contracts, but this was no longer
possible from April 2022 onwards. The appreciation of the rouble against the euro resulted in net foreign exchange gains.
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 2022. Due to the short currency position, the dollar strengthening had a negative financial impact on
the Krka Group result. In 2022 however, this was largely offset by income from the US dollar hedging instruments.
To hedge the risk of changes in the EUR/USD currency pair and to hedge additional risks in 2023, forward contracts of
the controlling company with a principal amount of $45,000 thousand and a maturity of less than 2 months were open at
the year-end of 2022.
Exposure to the risk of foreign exchange rate fluctuations
€ thousand
31 Dec 2022
EUR*
RUB
PLN
USD
RON
Loans
62,682
0
0
0
0
Trade receivables
98,656
125,927
45,732
5,575
46,991
Cash and cash equivalents
451,763
49
823
7,665
528
Borrowings
-53,524
0
0
0
0
Current trade payables
-165,283
-2,455
-5,172
-9,246
-4,642
Financial position exposure (net)
394,293
123,520
41,384
3,994
42,877
*EUR is the functional currency and does not represent exposure to foreign currency risk.
2022 Annual Report – Financial Report
296
€ thousand
31 Dec 2021
EUR*
RUB
PLN
USD
RON
Loans
226,469
0
0
0
0
Trade receivables
128,233
176,785
42,897
5,118
44,213
Cash and cash equivalents
85,394
1,217
1,295
44,156
994
Borrowings
-55,092
0
0
0
0
Non-current operating liabilities
-10,000
0
0
0
0
Current trade payables
-131,638
-19,493
-6,957
-8,564
-4,438
Financial position exposure (net)
243,366
158,509
37,235
40,709
40,770
*EUR is the functional currency and does not represent exposure to foreign currency risk.
Significant exchange rates
Average exchange rate*
Final exchange rate*
2022
2021
2022
2021
RUB
73.43
87.15
78.43
85.30
PLN
4.69
4.57
4.68
4.60
USD
1.05
1.18
1.07
1.13
RON
4.93
4.92
4.95
4.95
*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 December
and equal the reference exchange rates of the ECB effective on the last day of the year. Since the end of March 2022, the
Bloomberg exchange rate is used to convert the Russian rouble
Sensitivity analysis
A 1% change in the value of these currencies against euro as at 31 December 2022 or 31 December 2021 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 cash and cash equivalents
denominated in the local currencies.
€ thousand
Impact on profit or loss before tax
2022
2021
Currency fluctuations
+1%
–1%
+1%
–1%
RUB
1,235
-1,235
1,585
-1,585
PLN
414
-414
372
-372
USD
40
-40
407
-407
RON
429
-429
408
-408
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 the Company’s non-current
borrowings and investments.
The interest rate risk with current borrowings and current investments is managed as part of the Krka Group's liquidity risk.
In 2022, the Company raised non-current borrowings only from subsidiaries.
2022 Annual Report – Financial Report
297
Exposure to interest rate risk
€ thousand
31 Dec 2022
31 Dec 2021
Financial instruments at fixed rate of interest
464,464
226,043
Financial assets
464,464
226,043
Financial liabilities
0
0
Financial instruments at variable rate of interest
-22,775
-54,596
Financial assets
30,600
472
Financial liabilities
-53,375
-55,068
Analysis of the cash flow’s sensitivity by applying the variable interest rate
A 100 basis point increase in the variable interest rate for 2022 would reduce the result by €228 thousand (a decrease of
the interest rate by 100 basis point would increase the result by €228 thousand). An increase of 100 basis points in the
variable interest rate would reduce the 2021 result by €546 thousand (a decrease of the interest rate by 100 basis points
would increase the result by €546 thousand). The analysis, which is carried out in the same way for both years, assumes
that all variables, in particular the exchange rate, remain constant.
A detailed schedule of current borrowings is presented below.
Current borrowings
€ thousand
31 Dec 2022
31 Dec 2021
Current borrowings inclusive of current portion of non-current borrowings
53,375
55,068
– Other borrowings
53,375
55,068
Current borrowings exclusive of current portion of non-current borrowings
53,375
55,068
Average balance of current borrowings
54,222
50,693
Interest paid in the financial year
720
280
Other costs of raising current borrowings
0
0
Average effective cost of current borrowings
1.33%
0.55%
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
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 2022 or 2021.
The Company monitors capital using a gearing ratio, which is net debt divided by total net debt plus total equity. Within net
debt, the Company includes interest bearing borrowings and trade and other current payables less cash and cash
equivalents.
2022 Annual Report – Financial Report
298
Financial leverage ratio
€ thousand
31 Dec 2022
31 Dec 2021
Borrowings
53,524
55,092
Trade payables and other current liabilities
273,202
371,630
Cash and cash equivalents
470,297
144,981
Net indebtedness
-143,571
281,741
Equity
2,060,792
1,876,142
Equity and net indebtedness
1,917,221
2,157,883
Financial leverage (debt/equity) ratio
-7.5%
13.1%
Fair value
The following table shows the carrying amounts and fair values of financial assets and financial liabilities. The table does
not include disclosures about the fair values of financial assets and liabilities not measured at fair value, where the carrying
amount is a reasonable approximation of fair value.
€ thousand
31 Dec 2022
31 Dec 2021
Carrying amount
Fair value
Carrying amount
Fair value
Non-current financial assets
Loans
56,013
31,010
Investments at fair value through OCI
15,988
15,988
15,860
15,860
Investments at amortised cost
94,781
93,022
Current financial assets
Loans
6,669
195,459
Investments through profit or loss
0
0
39,970
39,970
Investments at amortised cost
50,697
113,987
Derivatives
1,740
1,740
1,491
1,491
Trade receivables
357,889
424,588
Cash and cash equivalents
470,297
144,981
Non-current financial liabilities
Trade payables
0
-10,000
Lease liabilities
-2,909
-2,101
Current financial liabilities
Borrowings
-53,524
-55,092
Lease liabilities
-1,033
-987
Trade payables excluding advances
-194,143
-178,143
Contract liabilities excluding advances
-13,094
-13,638
Liabilities under repurchase transactions
(repo-type operations)
0
-102,234
Other current liabilities excluding amounts owed
to the State, to employees and advances
-1,328
-2,046
Total
788,043
17,728
696,127
57,321
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.
There were no transfers between fair value levels in 2022.
2022 Annual Report – Financial Report
299
Fair value of assets
€ thousand
31 Dec 2022
31 Dec 2021
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets at fair value
Investments at fair value through OCI
14,602
0
1,386
15,988
14,474
0
1,386
15,860
Investments through profit or loss
0
0
0
0
39,970
0
0
39,970
Derivatives
0
0
1,740
1,740
0
0
1,491
1,491
Total assets at fair value
14,602
0
3,126
17,728
54,444
0
2,877
57,321
31. Related party transactions
Intra-group transactions
Transactions (turnover) with subsidiaries in 2022 are presented below.
€ thousand
Sales
Purchases
Borrowings
Loans
TERME KRKA, d. o. o., Novo mesto, Slovenia*
334
656
0
0
KRKA-FARMA d.o.o., Zagreb, Croatia
7,736
27,592
0
0
KRKA ROMANIA S.R.L., Bucharest, Romania
104
18,887
0
0
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
29,361
4,173
0
0
KRKA-FARMA DOOEL, Skopje, North Macedonia
24,591
1,882
0
0
KRKA Bulgaria EOOD, Sofia, Bulgaria
56
3,307
0
0
KRKA HELLAS E.P.E., Athens, Greece
16
1,487
0
0
KRKA FARMA, d.o.o., Sarajevo, Sarajevo, Bosnia and Herzegovina
4
480
0
0
Krka-Rus LLC, Istra, Russian Federation
167,101
12,554
0
0
KRKA FARMA LLC, Istra, Russian Federation
146,322
58,225
0
0
KRKA UKRAINE LLC, Kiev, Ukraine
144
12,830
0
0
LLC ´KRKA Kazakhstan´, Almaty, Kazakhstan
20,860
2,896
0
0
KRKA – POLSKA Sp. z.o.o., Warsaw, Poland
30,280
27,480
0
0
KRKA ČR, s. r. o., Prague, Czech Republic
155
12,397
0
0
KRKA Magyarország Kft., Budapest, Hungary
60
10,891
0
0
KRKA Slovensko, s.r.o., Bratislava, Slovakia
297
7,562
0
0
UAB KRKA Lietuva, Vilnius, Lithuania
26
4,613
0
0
SIA KRKA Latvija, Riga, Latvia
21
3,011
0
0
KRKA Finland Oy, Espoo, Finland
12,901
1,706
0
0
TAD Pharma GmbH, Cuxhaven, Germany
71,710
10,854
0
0
KRKA Sverige AB, Stockholm, Sweden
36,354
1,967
0
0
KRKA Pharma GmbH, Vienna, Austria
8,347
1,633
0
0
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
17,100
1,942
0
0
KRKA FARMACÉUTICA, S.L., Madrid, Spain
12,491
2,767
0
0
KRKA Farmaceutici Milano, S.r.l., Milan, Italy
15,247
7,587
0
0
KRKA France Eurl, Paris, France**
5,954
5,220
0
40
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
8,048
95
0
0
KRKA Belgium, SA, Brussels, Belgium
12,921
771
0
0
KRKA UK Ltd, London, United Kingdom
15,504
773
0
0
123 Acurae Pharma GmbH, Cuxhaven, Germany
913
0
0
485
Ningbo Krka Menovo Pharmaceutical Co. Ltd., China
847
20,126
0
0
KRKA USA LLC, Wilmington, USA
0
7
0
0
Total
645,805
266,371
0
525
* Including the subsidiary Golf Grad Otočec, d.o.o.
** Including the subsidiary HCS bvba
2022 Annual Report – Financial Report
300
The transactions between the Company and the above-mentioned subsidiaries were based on sales contracts, which
included rendering products and services at market prices.
Loans received and granted do not include turnover from daily automatic cash pooling.The balance of loans to subsidiaries
is presented in Note 13 ‘Loans’, the balance of borrowings from subsidiaries is presented in Note 21 ‘Borrowings’, the
balance of receivables due from subsidiaries is presented in Note 17 ‘Trade receivables’ and the balance of current trade
payables to subsidiaries is presented in Note 24 ‘Trade and other payables’.
Data on groups of persons
By the end of the year, members of the Management Board of the Company held 37,040 Krka shares i.e. 0.1129% of total
equity or 0.1195% of voting rights.
Members of the Supervisory Board of the Company held 3347 shares i.e. 0.0102% of total equity or 0.0108% 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 2022
31 Dec 2021
No. of
shares
Equity share
(%)
Share in
voting
rights
(%)
No. of
shares
Equity share
(%)
Share in
voting
rights
(%)
Members of the Management Board
Jože Colarič
22,500
0.0686
0.0726
22,500
0.0686
0.0723
Aleš Rotar
13,915
0.0424
0.0449
13,915
0.0424
0.0447
Vinko Zupančič
120
0.0004
0.0004
120
0.0004
0.0004
David Bratož
0
/
/
0
/
/
Milena Kastelic
505
0.0015
0.0016
505
0.0015
0.0016
Total Members of the Management Board
37,040
0.1129
0.1195
37,040
0.1129
0.1191
Members of the Supervisory Board
(owner representatives)
Jože Mermal
0
/
/
0
/
/
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
/
/
Mojca Osolnik Videmšek
617
0.0019
0.0020
617
0.0019
0.0020
Boris Žnidarič
0
/
/
0
/
/
Members of the Supervisory Board
(employee 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
/
/
Total Members of the Supervisory Board
3,347
0.0102
0.0108
3,347
0.0102
0.0108
Total
40,387
0.1232
0.1302
40,387
0.1232
0.1298
Treasury shares were eliminated from the calculation of voting rights (1,785,849 treasury shares as at 31 December 2022
and 1,683,908 as at 31 December 2021).
2022 Annual Report – Financial Report
301
Remuneration paid to groups of persons (gross)
€ thousand
31 Dec 2022
31 Dec 2021
Members of the Management Board
4,163
3,560
Member of the Supervisory Board
274
303
Total gross remuneration paid to groups of persons
4,437
3,863
Remuneration paid to members of the Company`s Management Board 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 shown in
the Report on Remuneration of the Members of the Management Board and Supervisory Board of the Company for 2022,
where they are shown by payments in each year.
Gross earnings paid to persons employed under individual employment contracts in 2022 amounted to €12,571 thousand
(2021: €11,919 thousand).
Remuneration paid to Management Board members in 2022
€ thousand
Salary – fixed part
Salary – variable part
Total
Gross
Net payout
Net fringe
benefits
and other
earnings
Gross
Net
Gross
Neto
Jože Colarič
521
214
19
849
341
1,370
574
Aleš Rotar
390
165
15
549
221
939
401
Vinko Zupančič
311
132
16
457
184
768
332
David Bratož
333
142
16
449
181
782
339
Milena Kastelic
219
94
13
85
35
304
142
Total remuneration paid to Members
of the Management Board
1,774
747
79
2,389
962
4,163
1,788
€ thousand
Net fringe benefits and other earnings
Executive
health
insurance
Supplementary
pension
insurance
Anniversary
bonuses
Other
bonuses
Refund of
work-related
costs
Pay for
annual leave
Total
Jože Colarič
10.00
2.89
3.18
1.19
0.04
1.92
19.23
Aleš Rotar
5.00
2.89
0.00
3.87
1.02
1.92
14.70
Vinko Zupančič
5.00
2.89
0.00
5.31
0.84
1.92
15.97
David Bratož
5.00
2.89
0.00
5.59
1.03
1.92
16.43
Milena Kastelic
5.00
2.89
1.92
0.06
1.09
1.92
12.88
Total remuneration paid to
Members of the Management
Board
30.00
14.45
5.11
16.02
4.01
9.62
79.20
Remuneration paid to Management Board members in 2021
€ thousand
Salary – fixed part
Salary – variable part
Total
Gross
Net payout
Net fringe
benefits
and other
earnings
Gross
Net
Gross
Neto
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 remuneration paid to Members
of the Management Board
1,514
637
48
2,046
854
3,560
1,539
2022 Annual Report – Financial Report
302
€ thousand
Net fringe benefits and other earnings
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 remuneration paid to
Members of the Management
Board
0.00
14.10
1.34
17.77
4.17
9.90
47.28
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 2022
€ thousand
Basic pay for
exercising the
function
Attendance fees
Commuting
allowances
Total
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Members of the Supervisory
Board (owner representatives)
Jože Mermal
30.00
21.82
1.65
1.20
0.00
0.00
31.65
23.02
Matej Lahovnik
27.75
20.18
2.75
2.00
0.85
0.62
31.35
22.80
Borut Jamnik
28.13
20.46
3.25
2.36
0.00
0.00
31.38
22.82
Julijana Kristl
26.25
19.09
2.59
1.88
0.41
0.30
29.25
21.27
Mojca Osolnik Videmšek
26.25
19.09
3.25
2.36
0.43
0.31
29.93
21.76
Boris Žnidarič
28.13
20.46
2.59
1.88
0.43
0.31
31.15
22.65
Members of the Supervisory
Board (employee representatives)
0.00
0.00
Franc Šašek
27.75
20.18
3.25
2.36
0.00
0.00
31.00
22.54
Tomaž Sever
26.25
19.09
2.59
1.88
0.43
0.32
29.27
21.29
Mateja Vrečer
26.25
19.09
2.31
1.68
0.00
0.00
28.56
20.77
Total remuneration paid to
Members of the Supervisory
Board
246.76
179.46
24.23
17.60
2.55
1.86
273.54
198.92
In accordance with a resolution adopted at the 27th Annual General Meeting on 8 July 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.
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
2022 Annual Report – Financial Report
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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 Seprvisory Board 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 2021 and 2022, the members of the Management Board and the Supervisory Board, the employee representatives, did
not receive any loans from the Company.
Loans to staff employed under individual employment contracts amounted to €152 thousand at 31 December 2022 (2021:
€179 thousand). In 2022, repayments of loans by staff employed under individual employment contracts reached
€27 thousand (2021: €26 thousand). The loans to the above-mentioned persons are meant for housing purposes.
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32. Situation in Ukraine and the Russian Federation
We conduct our business activities in Ukraine and the Russian Federation, which are part of the Eastern Europe sales
region, through three subsidiaries and our controlling company Krka, d.d., Novo mesto.
Krka’s subsidiary in Ukraine is only involved in marketing. It does not carry out distribution and production activities and
therefore had no receivables from customers outside the Krka Group, but had other assets of €1,658 thousand
(2021: €2,492 thousand), the largest item whereof are property, plant and equipment (office premises and vehicles). The
Company has no significant exposure to credit risk (Note 30 ‘Credit risk‘) and no exposure to foreign exchange risk (Note
30 ‘Foreign exchange risk’). At the end of 2022, the number of employees in the Ukrainian subsidiary was 367, and at the
end of 2021 it was 395. Ukraine is one of the Company's important markets (Note 3 ‘Revenue from contracts with
customers‘).
We have two subsidiaries in the Russian Federation. Krka-Rus LLC is engaged in the manufacture of pharmaceuticals. It
produces the vast majority of all the products we sell on the Russian market. Production there runs smoothly. Krka Farma
LLC is engaged in marketing and sales activities. In line with our business continuity plan, we have immediately started to
implement the necessary activities to ensure uninterrupted production in the future. The largest increases compared to the
previous year are in inventories, property, plant and equipment and cash. As at 31 December 2022, the number of
employees in the Russian Federation subsidiaries was 1,925, compared to 1,952 at the end of 2021. The exposure to
foreign exchange rate risk is disclosed in Note 30 ‘Foreign exchange risk‘. The Russian Federation is the Company's
largest single market (Note 3 ‘Revenue from contracts with customers‘).
As at 31 December 2022, the Company's investment in the subsidiary in Ukraine amounted to €9 thousand and the
investments in the subsidiary in the Russian Federation totalled to €134,086 thousand. In 2022, the Company did not
increase its investments in its subsidiaries in Ukraine and the Russian Federation. The Russian-Ukrainian situation has
increased uncertainty, which has also resulted in a significant increase in the weighted average cost of capital (discount
rate), which management has determined to be an indicator of impairment. After performing an impairment test, it was
concluded that there was no need for impairment (Note 12 ‘Investments in subsidiaries‘).
As at 31 December 2022, the Company recorded €162 thousand of receivables from customers and subsidiaries in Ukraine
(2021: €39,194 thousand), whereof €30 thousand from the subsidiary (2021: €35 thousand) and €132 thousand from
customers outside the Krka Group (2021: €39,159 thousand). As for the Russian Federation, the Company recorded
€143,005 thousand of receivables due from customers and subsidiaries (2021: €160,340 thousand), whereof €142,674
thousand to subsidiaries (2021: €156,935 thousand) and €331 thousand from customers outside the Krka Group
(2021: €3,405 thousand) (Note 30 ‘Credit risk‘). The exposure to exchange rate risk is outlined in Note 30 ‘Foreign
exchange rate risk‘.
In 2022, all payments between the subsidiaries in the Russian Federation and the controlling company were made without
specificity. The payment of dividends from companies in the Russian Federation is not prohibited, but it is subject to
conditions or lengthy procedures. Special requests are required, which are treated by the Russian government (Ministry
of Finance) in accordance with the going concern principle in relation to the subsidiary that is to pay the dividends. Given
that these are pharmaceutical companies, we consider that the Russian Federation has an interest in their continued
operation.
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33. Educational structure of employees
2022
2021
Average
headcount
Share
(%)
Average
headcount
Share
(%)
PhD
170
2.7
169
2.7
MSc
264
4.2
268
4.3
University education
2,015
32.2
1,947
31.4
Higher professional education
871
13.9
846
13.7
Vocational college education
263
4.2
257
4.1
Secondary school education
1,900
30.4
1,905
30.7
Skilled workers
697
11.2
716
11.5
Unskilled workers
74
1.2
96
1.6
Total (average for the year)
6,254
100.0
6,204
100.0
34. Transactions with the audit firms
The contract value of auditing the financial statements performed in 2022 by the audit firm KPMG Slovenija, d.o.o. was
€118 thousand and includes the verification of the compliance of the electronic financial statements with the requirements
of the Delegated Regulation No 2019/815 on a single electronic reporting format (ESEF). KPMG Slovenija also performs
the verification of the Report on Remuneration of Members of Management and Supervision, which has to be verified in
accordance with the requirements of the legislation. The contract value of verifying the Report on the Management Board's
remuneration amounted to €9 thousand.
The contract value of the audit services performed in 2021 by the audit firm ERNST & YOUNG, Revizija, poslovno
svetovanje, d.o.o. was €118 thousand.
The cost of the audit performed by ERNST & YOUNG in 2022 was €71 thousand (2021: €114 thousand) and the cost of
the audit performed by KPMG Slovenija was €54 thousand (no such cost in 2021).
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35. Repurchase of treasury shares
Repurchase of Krka treasury shares in 2022 by date
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)
3 Jan 2022
1,089
118.69
129
22 Aug 2022
925
99.87
92
29 Sep 2022
1,372
85,97
118
4 Jan 2022
1,073
118.38
127
23 Aug 2022
849
99.14
84
30 Sep 2022
1,374
85,89
118
5 Jan 2022
981
119.61
117
24 Aug 2022
787
98.36
77
3 Oct 2022
1,529
86,12
132
6 Jan 2022
735
119.35
88
25 Aug 2022
898
99.57
89
4 Oct 2022
1,131
87,02
98
7 Jan 2022
989
118.19
117
26 Aug 2022
941
99.07
93
5 Oct 2022
1,524
88,84
135
10 Jan 2022
800
117.94
94
29 Aug 2022
511
98.21
50
6 Oct 2022
1,100
89,93
99
11 Jan 2022
1,002
119.19
119
30 Aug 2022
846
98.78
84
7 Oct 2022
1,781
90,11
160
12 Jan 2022
688
119.19
82
31 Aug 2022
852
98.86
84
10 Oct 2022
1,802
89,64
162
28 Jan 2022
1,085
115.03
125
1 Sep 2022
876
98.43
86
11 Oct 2022
1,646
90,11
148
31 Jan 2022
1,329
115.61
154
2 Sep 2022
450
97.98
44
12 Oct 2022
475
90,58
43
1 Feb 2022
1,392
115.94
161
5 Sep 2022
885
96.10
85
13 Oct 2022
1,902
90,36
172
2 Feb 2022
1,466
115.22
169
6 Sep 2022
932
95.79
89
14 Oct 2022
779
91,20
71
3 Feb 2022
1,523
115.14
175
7 Sep 2022
400
94.55
38
17 Oct 2022
1,919
91,06
175
4 Feb 2022
1,563
114.73
179
8 Sep 2022
962
93.90
90
17 Nov 2022
1,053
96,51
102
9 Feb 2022
1,562
115.33
180
9 Sep 2022
1,022
94.59
97
18 Nov 2022
454
98,51
45
10 Feb 2022
1,581
114.28
181
12 Sep 2022
601
93.30
56
21 Nov 2022
1,234
98,14
121
11 Feb 2022
1,182
114.28
135
13 Sep 2022
855
93.95
80
22 Nov 2022
1,269
95,88
122
14 Feb 2022
1,649
110.80
183
14 Sep 2022
324
92.55
30
23 Nov 2022
695
94,32
66
21 Jul 2022
1,275
95.42
122
15 Sep 2022
734
93.67
69
24 Nov 2022
1,244
94,78
118
22 Jul 2022
1,196
96.09
115
16 Sep 2022
1,037
93.05
96
25 Nov 2022
1,247
94,59
118
25 Jul 2022
1,349
96.65
130
19 Sep 2022
1,166
92.86
108
28 Nov 2022
919
92,75
85
26 Jul 2022
1,228
96.91
119
20 Sep 2022
946
92.53
88
29 Nov 2022
210
94,15
20
27 Jul 2022
1,328
97.47
129
21 Sep 2022
1,153
92.18
106
30 Nov 2022
1,402
93,90
132
28 Jul 2022
1,338
97.54
131
22 Sep 2022
1,161
91.73
106
1 Dec 2022
1,426
93,93
134
16 Aug 2022
1,094
99.36
109
23 Sep 2022
1,105
90.85
100
2 Dec 2022
1,417
94,15
133
17 Aug 2022
967
99.88
97
26 Sep 2022
1,147
88.82
102
5 Dec 2022
1,003
94,49
95
18 Aug 2022
874
99.96
87
27 Sep 2022
1,216
87.64
107
6 Dec 2022
350
94,44
33
19 Aug 2022
350
99.96
35
28 Sep 2022
1,319
86.53
114
7 Dec 2022
1,377
94,69
130
2022 Annual Report – Financial Report
307
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)
8 Dec 2022
1.374
94.86
130
14 Dec 2022
590
93.32
55
20 Dec 2022
985
93,10
92
9 Dec 2022
1.085
94.41
102
15 Dec 2022
975
93.59
91
21 Dec 2022
995
93,14
93
12 Dec 2022
1.074
94.29
101
16 Dec 2022
1,005
93.32
94
22 Dec 2022
973
93,04
91
13 Dec 2022
1.063
93.69
100
19 Dec 2022
600
93.22
56
Total
purchases
in 2022
101,941
98,35
10,025
The average share price includes also the commission paid.
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308
36. Event after the reporting date
The 2022 financial statements were not impacted by the event after the end of the period.
Acquisition of treasury shares
From 1 January 2023 to 20 March 2023, we acquired 25,852 of treasury shares. At the end of this period, Krka held
1,811,701 treasury shares (5.525% of total shares).
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Independent Auditor's Report
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SIGNING OF THE 2022 ANNUAL REPORT AND ITS CONSTITUENT
PARTS
President and members of Krka's Management Board are aware of the content of the integral parts of the 2022 Annual
Report of Krka and the Krka Group, and hence the 2022 Annual Report in its entirety. 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