Krka, d. d., Novo mesto
2023
ANNUAL REPORT
2
Contents
INTRODUCTION ................................................................................................................................................. 3
Statement by the President of the Management Board ................................................................................................. 3
Financial highlights ........................................................................................................................................................ 9
Krka’s sustainable development indicators .................................................................................................................. 12
At a glance................................................................................................................................................................... 14
2023 highlights ............................................................................................................................................................ 18
Subsequent events ...................................................................................................................................................... 21
BUSINESS REPORT ........................................................................................................................................ 22
Corporate governance statement ................................................................................................................................ 22
Non-financial statement ............................................................................................................................................... 43
Krka Group development strategy ............................................................................................................................... 60
2024 macroeconomic forecast .................................................................................................................................... 68
Risk management ........................................................................................................................................................ 72
Investor and share information .................................................................................................................................... 92
Performance analysis .................................................................................................................................................. 95
Marketing and sales .................................................................................................................................................. 101
Product and service groups ....................................................................................................................................... 115
Research and development ....................................................................................................................................... 134
Production and supply chain ..................................................................................................................................... 139
Investments ............................................................................................................................................................... 142
Quality ....................................................................................................................................................................... 145
SUSTAINABLE DEVELOPMENT................................................................................................................... 151
Materiality assessment process ................................................................................................................................ 151
ESG score ................................................................................................................................................................. 153
About the Report ....................................................................................................................................................... 153
Employees ................................................................................................................................................................. 157
Patients and other customers .................................................................................................................................... 165
Corporate social responsibility ................................................................................................................................... 168
Natural environment .................................................................................................................................................. 171
GRI content index ...................................................................................................................................................... 189
FINANCIAL REPORT ..................................................................................................................................... 197
Introduction to the financial statements ..................................................................................................................... 199
Statement of compliance ........................................................................................................................................... 200
Consolidated financial statements of the Krka Group ................................................................................................ 201
Financial statement of Krka, d. d., Novo mesto ......................................................................................................... 269
SIGNING OF THE 2023 ANNUAL REPORT AND ITS CONSTITUENT PARTS ........................................... 339
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 a 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.
>
2023 Annual Report – Introduction
3
INTRODUCTION
Statement by the President of the Management Board
1
Dear shareholders, business partners and employees,
We meticulously plan and execute our business strategy, recognising its critical significance for our sustained growth and
survival within the competitive landscape of generic pharmaceuticals. The Krka Group’s stable business and sustainable
growth over numerous years serve as evidence that the path we are pursuing is indeed the right one. Business indicators
for 2023 suggest we successfully navigated risks and significantly boosted our sales. We capitalised on market conditions
effectively, generating record revenue of €1.8 billion for the Krka Group.
Record sales and EBITDA
The year 2023 proved to be dynamic for our company, the pharmaceutical industry, and the economy at large, rendering
the business environment across most sales and purchasing markets susceptible to fluctuations. We are content with our
ability to identify numerous opportunities and successfully leverage them despite facing various challenges, thanks to our
responsiveness and adaptability.
Last year, the Krka Group generated €1,806.4 million in sales, a 5% year-on-year rise, surpassing the 2023 sales targets,
and created the highest EBITDA to date, totalling €504.2 million, up 3% on 2022. Net profit amounted to €313.7 million,
and ROE to 14.5%.
The development potential of generic pharmaceutical markets is promising, as generic pharmaceuticals enhance
healthcare accessibility and contribute to the sustainability of national health systems. The increasing demand for our
products stems from their innovative nature and superior quality. In 2023, we manufactured and packed 16.9 billion solid
forms, marking our highest production volume to date. We are pleased that despite the complexity of purchase markets,
we managed to further shorten the average lead time from order placement to product deliveries to our customers and, in
turn, significantly increased process flexibility throughout our supply chain. We are purposefully fostering a culture of
adaptability and agility within our organisation, leveraging it as a cornerstone of our competitive edge.
Once more, we have received confirmation that maintaining top quality in medicinal products remains paramount for
gaining competitive advantages in the market. In-house analyses show that our vertically integrated business model
delivers top-quality medicinal products and supports our agility and flexibility. Our foremost commitment lies in continuously
developing and producing innovative, high-quality generic pharmaceuticals marketed under our brand names. Our
marketing and sales teams have a thorough understanding of the expectations of our patients, the expert community, and
buyers, enabling us to tailor our product portfolio to their needs.
A leading provider of generic medicines across numerous markets
We strive to expand the availability of our medicines across various markets, enhancing our adaptability to diverse
economic conditions worldwide. With one of the most robust marketing and sales networks among pharmaceutical firms
in our established markets, we ensure widespread access to our products. We have also effectively handled sales across
the majority of western European markets via our network. In 2023, we exported 94% of products to over 70 markets
spanning six regions. Our presence is strong in Slovenia and markets in eastern, central, western, and southeastern
Europe, as well as overseas.
Region East Europe remained the leading region in 2023 and generated sales of €594 million. Sales totalled €346.8 million
in the Russian Federation, our biggest single market in size. Sales denominated in the national currency presented
15% growth, while sales volume increased by 7% year on year. Even so, sales value converted into euro decreased
by 10% due to Russian rouble depreciation. We ranked second among foreign providers of generic medicines, capturing
a 2% market share in the country, and outperformed the market growth rate.
1
GRI 2-22
2023 Annual Report – Introduction
4
In Ukraine, one of our key markets, we encountered several challenges in 2023. Despite this, we recorded sales of
€83.4 million, equivalent to 88% of total sales generated the previous year, making us the country’s second-largest foreign
provider of generic medicines by market share.
We recorded strong sales in Belarus, Mongolia, Armenia, and Azerbaijan, where our product sales generated €57.2 million,
up 17%. We were the second-largest foreign provider of generic medicines in Belarus. Product sales also increased in
Kazakhstan, Moldova, and Kyrgyzstan, reaching €42 million, up 8% on 2022. In Uzbekistan, Georgia, Tajikistan, and
Turkmenistan, our product sales totalled €64.6 million, up 21%.
Region Central Europe generated product sales totalling €397.1 million, up 9%. We increased sales in all markets. We
experienced the highest increase in sales in Poland, elevating it by €12.7 million to €180.8 million. Lithuania recorded the
highest relative growth, reaching 20%. Poland is one of our key markets, where we were the third-largest foreign provider
of generic medicines.
We were also satisfied with our sales growth in Czechia, another key market. Product sales totalled €60.9 million, a 9%
year-on-year increase. We ranked fourth among foreign providers of generic medicines. In Hungary, we ranked second
among primarily foreign providers of generic medicines. We generated sales of €52.3 million, an 11% year-on-year
increase, which made Hungary one of our largest markets in the region. Product sales in Slovakia, another key and fourth-
largest regional market, generated €42.8 million, up 6% on 2022. We ranked fourth among all providers of generic
medicines.
The markets of Region West Europe are collectively regarded as one of our key markets. Regional sales amounted to
€369.6 million in 2023, a 13% year-on-year increase. Germany remained our most important regional market, where we
ranked eighth among all foreign providers of generic medicines, recording product sales of €105.9 million, up 20%
on 2022.
In Italy, Portugal, and Spain, product sales amounted to €88.7 million, up 11% year on year. In Scandinavia, our product
sales totalled €62.9 million. We were among the leading generic providers of many products in Sweden, Finland, Norway,
and Denmark. We recorded quick growth in the markets of the United Kingdom, Ireland, and Austria, where total sales
saw a 21% year-on-year increase, reaching €46.4 million. France and the Benelux recorded a 4% year-on-year decrease,
generating sales total of €53.1 million.
Region South-East Europe generated product sales of €249.3 million, up 11% on 2022. We increased sales in all markets.
Product sales in Romania, one of our key markets and the largest regional market, increased by 15% to €72.4 million. We
ranked fourth among foreign providers of generic medicines in the country. Croatia is another key market. Capturing a 3.5%
market share, we ranked second among foreign providers of generic medicines, fourth among all providers of generic
medicines, and second among animal health product manufacturers. Croatian sales totalled €46 million, up 12% on 2022.
Serbia recorded €37.5 million in sales and growth of 16%, positioning the country third among regional markets.
Furthermore, we excelled in solidifying our presence in Bulgaria, North Macedonia, Bosnia and Herzegovina, Kosovo,
Albania, Montenegro, and Greece.
In the domestic market, one of our key markets, we captured a 7.3% market share, raking us first among all providers of
generic medicines. Krka manufactured one-fifth of all medicines sold in Slovenia. Sales of products and services amounted
to €113.8 million in 2023. Product sales were valued at €66.1 million, up 9%. Effective business operations contributed to
10% growth, with Terme Krka, our subsidiary specialising in tourism and health resort services, also playing a significant
role in this achievement.
We have been experiencing growing success beyond our traditional markets as well. Region Overseas Markets generated
€75.2 million in sales, a 14% year-on-year rise. All four regional sales offices recorded growth: the Middle East, Far East
and Africa, China, and the Americas.
2023 Annual Report – Introduction
5
Krka’s products trusted by over 100 million people
Our most important product group are prescription pharmaceuticals. They generated €1,469.4 million in revenue, up
almost 6% on 2022. Our reliable supplies establish us as an essential partner in treating the most common diseases.
Accounting for over 50% of our product portfolio, cardiovascular agents serve as the cornerstone, with therapies for the
central nervous system and gastrointestinal tract following closely behind. Our pain relievers, antidiabetics, oncology
agents, and medicines for treating blood and blood-forming organs have further solidified their position within our portfolio.
More than 100 million people trust our medicines. Every day, we contribute to enhancing the lives of people diagnosed
with hypertension and hyperlipidemia, depression, anxiety, dementia, heartburn, stomach problems, pain, diabetes,
cancer, and many others. In 2023, we launched several new products containing generic active ingredients, also in
combination form, added new pharmaceutical forms or pack sizes to the existing range, and launched them on new
markets.
We are experiencing strong sales in our non-prescription product category and continue to expand its range. They
generated €177.3 million in sales last year. Cough and cold products accounted for over 50% of overall non-prescription
product sales, followed by pain relievers, vitamins and minerals.
Our animal health products have also become more firmly established. In 2023, Krka Group sales of products for farm and
companion animals amounted to €104.6 million, a 12.5% year-on-year climb. The Russian Federation, Poland, and
Germany recorded the highest growth, primarily owing to companion animal products, which accounted for over 70% of
overall sales.
We finalised nearly 700 registration procedures last year
Our product development relies on scientific research findings and data obtained from our research and development
studies. We integrate modern methods into the development of new products and continuously enhance existing ones.
Over 800 experts across diverse fields contribute to advancing our development portfolio with state-of-the-art equipment
and innovative methods.
Last year, our portfolio expanded by 14 new products, including ten prescription pharmaceuticals and two veterinary
medicines. Additionally, two products were added to our consumer health and food supplement range. By the end of 2023,
our portfolio comprised nearly 500 authorised products in a variety of pharmaceutical forms.
We currently have approximately 170 projects in the pipeline to ensure new product launches by 2035. We intend to add
more than 20 products to extend our portfolio of cardiovascular agents and antidiabetics. We also focus on medicines for
treating blood and blood-forming organs and cancer.
One of our primary sustainable development goals is to ensure widespread access to contemporary medicines, aligning
with the right to medical care as outlined in the Universal Declaration of Human Rights. Last year, we finalised
698 marketing authorisation procedures, including 497 for prescription pharmaceuticals and nine for non-prescription
products, directly facilitating access to medications for patients across multiple markets. With a primary focus on expanding
our animal product portfolio, we finalised 192 procedures in the animal health segment.
We prioritise product quality in all our development projects. At the same time, we also look to minimise the environmental
impact of technological processes, reduce our carbon footprint, and align with circular economy objectives whenever
feasible.
We address rising market demands through investments
We continued our investments in new production equipment and process upgrades to reduce our response times further
and improve quality, in line with the increasing demand for our products. We rearranged our development-and-control
laboratories to improve working conditions for our researchers. We allocated €131.9 million to investments, including
€111.8 million to the controlling company, and €20.2 million to subsidiaries. We invested primarily in the production of
finished products, digitalisation of systems, intangible assets, and infrastructure.
2023 Annual Report – Introduction
6
At our central site in Novo mesto, Slovenia, we replaced and upgraded packaging lines at Notol, our primary solid-form
production, and installed a new high-capacity tablet press at Notol 2, another solid-form production plant. We invested
€26 million in OTO, the Solid Dosage Products plant in Novo mesto, Slovenia, to increase capacities for compression
mixture preparation and granulation in the tablet compression process and in logistic capacities. We increased granulation
and packaging capacities at the Ljutomer lozenge production plant in Slovenia. We installed an inspection machine to
increase production capacity for uncoated lozenges and a robotic cell to optimise packaging. The construction of Paviljon 3,
a six-story building housing microbiology laboratories and other facilities, in Novo mesto, Slovenia, was nearing
completion. The investment was worth €19.3 million. We installed a new line in the production and distribution centre in
Jastrebarsko, Croatia, to increase production capacities for veterinary solid dosage forms by one quarter.
We established a joint venture with a local partner in India
We have maintained a successful partnership with our Indian collaborator, Laurus Labs Ltd., for several years. Last year,
we opted to fortify our partnership by pooling our know-how and resources, laying the groundwork for establishing a joint
venture named Krka Pharma Pvt. Ltd., headquartered in Hyderabad. In January 2024, we signed the incorporation
contract. Registered capital of up to €50 million will be paid in gradually as needed. Additionally, we plan to progressively
expand our business activities.
Laurus Labs, a research-driven pharmaceutical and biotechnology company established in 2005, is a global player in its
portfolio of selected APIs. The company provides integrated development and manufacturing services, from the clinical
stage of pharmaceutical development to commercial production. We believe that our joint venture with Krka’s 51% and
Laurus’s 49% stakes will deliver synergies and enable both companies to extend their product portfolios and enter new
markets, consolidating their status in the global market.
We managed business and financial risks
In 2023, the foreign exchange risk heightened due to the significant volatility of the Russian rouble, which constitutes the
majority of Krka’s currency exposure. Payments effected in the Russian rouble significantly mitigated the risk. We also
successfully managed trade receivables, and hence the long currency position. Insurance against currency risk for the
Russian rouble was not attainable. We were not exposed to currency risk in Ukraine.
We finance our business operations using our cash flows, which proved especially advantageous during the period of
increasing interest rates and limited liquidity in 2023. While many companies experienced occasional disruptions in their
supply chains, the Krka Group sustained sufficient inventories thanks to its strong liquidity position. Business operations
continued without interruption primarily due to the vertically integrated business model, relatively short supply chains
established with long-term business partners, and the ongoing search for new competitive suppliers.
The energy commodities market has been notably unpredictable in recent years. Krka effectively navigated the situation
through timely forward purchasing of energy commodities. Additionally, in 2023, we optimised estimated billing powers
and secured a purchase contract for carbon-free electricity supplies in 2024 and 2025 at competitive prices. Prices for
energy commodities, raw materials, utility supplies, technological equipment, and various services remained volatile. To
mitigate this risk, we engaged new or additional suppliers.
Our ESG score positions us as one of the leading pharmaceutical companies
Our ESG score validates the effectiveness of our sustainable business practices and ESG governance within the Krka
Group. S&P Global, one of the leading international credit and ESG rating agencies, assessed Krka’s ESG compliance
in 2023. In November 2023, Krka scored 50 out of 100 in the 2023 S&P Global Corporate Sustainability Assessment. We
take pride in our achievement of placing among the top 10% (out of 348) of the world’s highest-ranking pharmaceutical
companies, following several years of systematically integrating sustainability into our business processes. Our scores
were 60 out of 100 in the governance dimension, 42 out of 100 in the environmental dimension, and 41 out of 100 in the
social dimension.
At the 25th Energy Experts Conference held in April 2023, the panel declared Krka as the most energy-efficient company,
which reaffirms our commitment to upholding the highest standards in environmental protection also. Krka earned the title
in both the expert jury’s assessment and among internet users, attributed to our complex, efficient, and sustainable
2023 Annual Report – Introduction
7
management of energy and natural resources, leading to reductions in the specific use of energy and greenhouse gas
emissions. In 2023, one of our employees was honoured with the Environmental Sustainability Manager of the Year award.
We took home the Most Reputable Employer in Slovenia award once again
The labour market landscape remained challenging throughout the year. Above all, active head-hunting and our reputation
among job seekers were instrumental in recruiting the top-tier employees. We also intensified our educational activities
and once again received the TOP Education Management Certificate at the Edutainment 2023 convention. The certificate
is awarded to Slovenian companies that make above-average investments in employee education and development.
In 2023, we were once again honoured by MojeDelo.com as the most reputable employer in Slovenia. This marked our
seventh time receiving the award.
At the end of 2023, the Krka Group employed 12,753 persons, including 973 agency workers. We employed 1,827 persons
to drive the expansion of our business with their know-how and skills. Last year, the number of employees in Krka increased
by 3% and in the Krka Group by 2%.
Krka share price rose almost 20%
In 2023, we allocated 56.3% of the consolidated net profit attributable to equity holders of the controlling company
generated in 2022 for dividend payout. Gross dividend per share increased by 17.2%. We paid out dividends of €6.60 gross
per share, the highest to date.
We made efforts to ensure quality communication with shareholders and analysts, providing transparent and regular
updates on significant business events and performance results, along with clear information about Krka’s strategy and
plans. In 2023, we participated in 13 investment conferences with investors from more than 15 countries. We organised
three webcasts to present our quarterly business reports. We also hosted Krka Investor Day and held conference calls
with more than 100 investors.
At the December 2023 investor conference, we received the Best Investor Relations Award among all companies listed
on the Ljubljana and Zagreb Stock Exchanges for the fourth time.
We revised the five-year Krka Group development strategy
As part of the routine biannual updates, the Management and Supervisory Boards revised the 2024–2028 Krka Group
Development Strategy, further enhancing all aspects essential for the successful development, production, and sales of
the Krka Group’s innovative generic pharmaceuticals under corporate product brands.
Our strategic objective for the next five years is to achieve an average growth of at least 5% in both sales volume and
sales value, and above-average sales growth against market dynamics. We aim to reinforce our position or place among
the leading providers of generic pharmaceuticals under our brand names in individual markets and selected therapeutic
categories.
We aim to strengthen and optimise our vertically integrated business model, which provides us with a significant
competitive edge. The model will further ensure high product quality, safety, and efficacy standards and the best business
performance possible. We are committed to maintaining a focus on the long-term profitability of our products. We aim to
achieve a targeted EBITDA margin averaging at least 25% over the next five years.
We plan to extend our operations, partly by engaging contractual partners in developing and producing certain APIs and
finished products, while maintaining continuous quality assurance. We aim to continue fostering organic growth and
complement it with long-term partnerships and targeted acquisitions.
We strive to maintain a focus on products from our well-established therapeutic categories for chronic diseases.
Additionally, our updated strategy places particular emphasis on our new antidiabetic and oncology agents.
We plan to continue developing complex products that provide us with a significant competitive edge. These include many
combinations of active substances, new pharmaceutical forms, strengths, and innovative delivery systems. Our product
2023 Annual Report – Introduction
8
portfolio includes 150 single-pill combinations, more than that of any other manufacturer. Physicians frequently prescribe
them to simplify therapy and enhance patient compliance, thereby improving treatment outcomes. Combination products
allow for better life cycle management and significantly higher added value than mono-component medicines, even though
their development and tests are considerably more complex and expensive. Apart from cost reduction, this approach also
contributes to environmental conservation by reducing energy consumption and packaging materials. Additionally, it
facilitates transportation optimisation, aligning with our set ESG goals.
Over the next five years, we plan to allocate 10% of revenue to research and development, with an average annual
investment of €140 million. The revised strategy places increased emphasis on digitalisation and enhances Krka Group
sustainability governance. We plan to maintain consistency in our dividend policy over the next five years and allocate at
least 50% of net profit attributable to equity holders to dividends. Furthermore, our strategy includes meeting the financial
demands of the Krka Group for investments and acquisitions on an annual basis.
We plan to sustain our growth in 2024
Our target for 2024 is to reach €1,850 million in sales for Krka Group products and services, with exports to account for
94% of total sales. Prescription pharmaceuticals are expected to remain the most important product category, accounting
for 81% of total sales. Our target is for net profit to surpass €310 million. The total number of employees in Slovenia and
abroad is projected to rise by 3%. The Company plans to invest more than €150 million primarily in expanding production
and development facilities, infrastructure, and technological upgrades.
***
Krka’s 2023 performance results confirm the significance of diligence, know-how and perseverance in reaching objectives.
We plan to maintain this approach throughout the anniversary year of 2024. We have been fostering our values for seventy
years, leveraging them for the collective good and Krka’s growth. Krka’s extraordinary wealth lies in our exceptional
experts, premium products, and diverse market presence. I am steadfast in my belief that we will continue to earn and
maintain the trust of our shareholders and customers. As we celebrate our 70th anniversary, we have every reason to take
pride in our past achievements while simultaneously looking forward to a future brimming with new opportunities.
Jože Colarič
President of the Management Board and CEO
2023 Annual Report – Introduction
9
Financial highlights
Alternative performance measures
In this annual report, the Krka Group applies alternative performance measures specified in the European Securities and
Markets Authority (ESMA) guidelines. The selected measures additionally disclose the Group and Krka performance.
Values are measured in € thousand, except where specifically indicated that the measure is shown in €. Proportions are
presented in percentages or as ratios between two categories.
Alternative performance measure
Calculation method
Criteria for measure selection
Earnings before interest, tax,
depreciation and amortisation
(EBITDA)
Operating profit
(EBIT) + Depreciation/Amortisation
Indicates company performance in its core
operations and is a close approximation of
cash flows from operating activities;
Is the main source of shareholder returns
and allows comparison of business
performance regardless of the financing
structure and company business capital
intensity.
Operating profit (EBIT)
Operating income – Operating expenses
Is the performance indicator of company
core operations;
Allows comparison of business
performance regardless of the financing
structure.
Investments
Purchase of property, plant and
equipment + Purchase of intangible assets
Indicates assets held for acquisition,
maintenance and upgrade of tangible fixed
assets for increasing the scope of
operations and further development of the
Krka Group.
EBITDA margin
Earnings before interest, tax, depreciation
and amortisation (EBITDA)/Revenue
Exhibits relative performance of company
core operations and is used to compare
business performance with other
companies, excluding the financing
structure and capital intensity of company’s
operations.
EBIT margin
Operating profit (EBIT)/Revenue
Exhibits company pricing policy and ability
to control operating costs;
Exhibits relative performance of company
core operations, excluding the financing
structure.
EBT margin
Profit before tax (EBT)/Revenue
Exhibits relative company performance,
including the financial result.
Net profit margin (ROS)
Net profit/Revenue
Exhibits overall company performance.
Return on equity (ROE)
Net profit/(Equity as at 1 Jan + Equity as at
31 Dec)/2
Exhibits company efficiency in generating
profits based on shareholder's equity;
Exhibits efficiency in terms of increasing
company value for the shareholders.
Return on assets (ROA)
Net profit/(Assets as at 1 Jan + Assets as at
31 Dec)/2
Exhibits efficiency of company's total asset
management;
The higher the number, the more efficient
company operations.
Liabilities/Equity
Current liabilities + Non-current liabilities /
Equity
Indicates debt-to-equity ratio;
Is an important metric for monitoring
company capital adequacy and can be
used to assess the extent of company
reliance on external debt financing.
2023 Annual Report – Introduction
10
Alternative performance measure
Calculation method
Criteria for measure selection
Research and Development expenses
as a percentage of revenue
R&D expenses/Revenue
Exhibits Krka Group’s development
orientation; is a strategic measure.
Gross dividend per share
Dividend per share for the previous period
per the AGM resolution
Exhibits shareholders’ participation in the
company’s profit.
Price/Earnings ratio (P/E)
Closing price on the Ljubljana Stock
Exchange as at 31 Dec/Earnings per share
(EPS)
Exhibits how much investors in the market
are willing to pay per €1 of company’s
earnings;
Estimates the value of the company and its
shares in the market.
Book value per share
Equity as at 31 Dec/Total number of shares
issued
Exhibits the share price arising from the
book value of equity.
Price/Book value (P/B)
Closing price on the Ljubljana Stock
Exchange as at 31 Dec/Book value
Compares company’s share price in the
market and its book value at a particular
date. Indicates potential share overvaluing
or undervaluing.
Market capitalisation (year-end)
Closing price on the Ljubljana Stock
Exchange as at 31 Dec X Total number of
shares issued
Indicates the Krka Group market value
relative to the company share price on the
Ljubljana Stock Exchange.
Current ratio
Current assets/Current liabilities
Exhibits company current liquidity and/or
ability to settle current liabilities.
Quick ratio
(Current assets – Inventories)/Current
liabilities
Exhibits company current liquidity and/or
ability to settle current liabilities, excluding
inventories.
Acid test ratio
(Investments + Cash and cash
equivalents)/Current liabilities
Exhibits company current liquidity and/or
ability to settle current liabilities, including
most liquid assets only.
Receivables turnover ratio
Net credit sales/Average receivables
Measures how many times a year a
company collects its average receivable
balance, indicating company liquidity;
Quantifies company effectiveness as per
trade receivable management; Includes
information on the average payment term of
all company customers.
Dividend payout ratio
Gross dividend per share for the
year/Earnings per share from the previous
year
Exhibits percentage of net profit paid to
shareholders via dividends and not retained
by a company to reinvest in core operations
or to pay off debt.
Dividend yield
Gross dividend per share/Share price as at
31 December on the Ljubljana Stock
Exchange
Exhibits dividend yield for dividend
beneficiaries relative to share market price.
Gearing ratio
(Borrowings + Trade payables + Current
liabilities from contracts with
customers + Other current liabilities – Cash
and cash equivalents)/Equity
Exhibits equity financing and indicates the
financial risk level associated with
company;
An important ratio of company capital
adequacy.
Net cash flow from operating activities
Calculation shown in the ‘Statement of cash
flows’.
Exhibits cash flow generated by the
company from operating activities before
investment and financial decisions and the
related proceeds and payments.
2023 Annual Report – Introduction
11
Krka Group financial highlights
2
€ thousand
2023
2022
2021
2020
2019
Revenue
1,806,391
1,717,453
1,565,802
1,534,941
1,493,409
– Of that revenue from contracts with customers (products
and services)
1,798,969
1,708,542
1,560,288
1,529,959
1,489,080
Earnings before interest, tax, depreciation and amortisation
(EBITDA)
1
504,215
488,895
463,625
502,432
385,437
Operating profit (EBIT)
2
399,621
381,211
354,788
390,744
274,195
Profit before tax (EBT)
367,126
433,073
362,417
338,992
284,368
Net profit
313,732
363,662
308,150
288,949
244,272
Non-current assets (year-end)
1,059,267
1,125,025
1,075,052
990,998
1,041,833
Current assets (year-end)
1,705,024
1,562,475
1,461,936
1,244,544
1,142,785
Equity (year-end)
2,181,766
2,138,509
1,919,085
1,751,812
1,667,516
Non-current liabilities (year-end)
149,218
132,130
162,674
172,796
160,905
Current liabilities (year-end)
433,307
416,861
455,229
310,934
356,197
R&D expenses
178,582
162,580
154,559
153,447
152,421
Investments
131,932
105,974
66,386
76,613
112,568
RATIOS
2023
2022
2021
2020
2019
EBITDA margin
27.9%
28.5%
29.6%
32.7%
25.8%
EBIT margin
22.1%
22.2%
22.7%
25.5%
18.4%
EBT margin
20.3%
25.2%
23.1%
22.1%
19.0%
Net profit margin (ROS)
17.4%
21.2%
19.7%
18.8%
16.4%
Return on equity (ROE)
3
14.5%
17.9%
16.8%
16.9%
15.2%
Return on assets (ROA)
4
11.5%
13.9%
12.9%
13.1%
11.7%
Liabilities/Equity
0.267
0.257
0.322
0.276
0.310
R&D expenses/Revenue
9.9%
9.5%
9.9%
10.0%
10.2%
NUMBER OF EMPLOYEES
2023
2022
2021
2020
2018
Year-end
11,780
11,598
11,511
11,677
11,696
Average
11,667
11,569
11,581
11,631
11,484
SHARE INFORMATION
2023
2022
2021
2020
2019
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
10.14
11.69
9.92
9.27
7.73
Gross dividend per share in €
6.60
5.63
5.00
4.25
3.20
Closing price on LJSE at the end of the period in €
110.00
92.00
118.00
91.40
73.20
Price/Earnings ratio (P/E)
10.85
7.87
11.90
9.86
9.47
Book value in €
6
66.53
65.21
58.52
53.42
50.85
Price/Book value (P/B)
1.65
1.41
2.02
1.71
1.44
Market capitalisation in € thousand (year-end)
3,607,279
3,016,997
3,869,627
2,997,321
2,400,480
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 Krka Group/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
2023 Annual Report – Introduction
12
Krka’s sustainable development indicators
Unit of
measure
2023
2022
2021
2020
2019
ENVIRONMENTAL DATA
Water consumption (total)
m
3
1,300,876
1,461,617
1,461,024
1,623,046
1,399,303
Drinking water
m
3
656,773
676,482
643,965
684,950
613,919
River water
m
3
644,103
785,135
817,059
938,096
785,384
Energy (total)
a,
3
GJ
952,265
1,010,667
953,366
969,833
956,577
Electric power
GJ
339,501
361,190
330,453
344,957
356,610
Natural gas
GJ
612,739
584,480
601,041
604,287
580,048
Liquid petroleum gas
GJ
0
0
17,750
20,564
19,409
Fuel oil (extra light)
GJ
26
64,997
4,122
26
510
Generated electric power –
alternative sources (total)
GJ
43,137
29,315
53,337
48,294
39,482
Solar power plant
GJ
246
275
266
280
252
Cogeneration
2
GJ
42,891
29,040
53,071
48,014
39,230
Energy intensity
Specific use of energy
b
MJ/€
1.21
1.52
1.62
1.62
1.66
Specific use of energy
b
TJ/billion units
73.2
77.4
78.1
78.1
82.6
Wastewater (total)
4
m
3
1,150,199
1,305,619
1,266,494
1,388,829
1,225,003
Cooling water
m
3
348,682
424,261
407,807
517,090
392,490
Industrial wastewater
m
3
801,517
881,358
858,687
871,739
832,513
– Suspended solids load
t
7.3
7.0
11.8
10.3
23.9
– Biochemical oxygen demand
t
3.1
3.6
3.1
7.0
6.9
– Chemical oxygen demand
t
38.3
48.0
41.4
42.1
57.5
– Nitrogen
t
5.2
6.2
5.1
2.9
4.9
– Phosphorus
t
0.5
0.7
0.7
0.6
0.7
Environmental load units
c
(ELU)
ELU
1,239
1,584
1,371
1,241
1,737
Waste (total)
t
11,519
11,932
11,369
12,512
11,091
Hazardous waste (total)
t
6,245
6,786
6,480
7,329
6,047
Solid waste
t
855
871
808
889
789
Liquid waste
t
5,390
5,915
5,672
6,440
5,258
Non-hazardous waste (total)
t
5,274
5,146
4,889
5,183
5,044
Disposal at landfills (total)
t
601
665
763
791
802
Composites (energy use)
t
97
/
/
/
/
Composites (processing)
t
567
502
495
427
489
Biomass (composting)
t
1,223
1,447
1,231
1,618
1,308
Recycling waste (total)
t
2,786
2,532
2,381
2,327
2,422
– Paper
t
1,237
1,303
1,243
1,273
1,221
– Plastics
t
564
513
421
380
401
– Glass
t
128
113
110
135
136
– Metal
t
229
188
186
150
239
– Wood
t
212
398
421
389
425
– Wood (reuse, pallets)
t
386
/
/
/
/
– Electric and electronic equipment
t
30
17
19
20
23
3
GRI 302-1
4
GRI 306-3
2023 Annual Report – Introduction
13
Unit of
measure
2023
2022
2021
2020
2019
ENVIRONMENTAL DATA
Air emissions
5
Energy related CO
2
– direct
t CO
2
-eq
30,742
33,475
35,046
34,709
33,332
Energy related CO
2
– indirect
d
t CO
2
-eq
0
0
0
45,707
47,251
Energy related SO
2
t
0.4
3.7
1
1
1
Energy related NO
x
t
21.5
35.9
28.0
27.9
26.8
Ozone-depleting substances and fluorinated
greenhouse gases
t CO
2
-eq
1,029
1,174
1,277
2,501
1,744
Compliance
Extraordinary events related to environment
0
0
0
0
0
Environmental protection (total)
€ thousand
10,894
11,968
11,599
10,056
7,672
Environmental protection costs
€ thousand
8,095
7,701
6,258
6,357
5,517
Investments in environmental programmes
€ thousand
2,799
4,267
5,301
3,699
2,155
SOCIETY
Number of employees
6,509
6,320
6,228
6,191
5,907
Slovenia
5,910
5,763
5,690
5,679
5,386
Representative offices abroad
599
557
538
512
521
Health and safety
Number of accidents
19
32
22
21
27
Lost time injury frequency rate (LTIFR)
2.0
3.3
2.4
2.3
2.8
Proportion of disabled employees
%
5.2
5.0
5.0
4.9
5.3
Education and training
Number of education and training hours
hour/employee
38
44
27
32
41
Education and training costs
€/employee
864
754
603
667
897
a
The calculation of GJ was based on net calorific values published on the website of the Slovenian Environment Agency.
b
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.
c
Environmental load units (ELU) indicate the annual load on the environment due to wastewater discharge 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 (Rules on Initial Measurements and Operational Monitoring of Wastewater; Official Gazette of
the Republic of Slovenia No. 94/14, as amended, No. 98/15).
d
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
2023 Annual Report – Introduction
14
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 33 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 in 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 2023, we established a wholly-owned subsidiary in the Netherlands, Krka Netherlands B.V.
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
2023 Annual Report – Introduction
15
Krka Group business model
Resources
Employees
Research
and
technological
capacities
Intellectual
capital
Financial
resources
Incoming
materials
Environment
and natural
resources
Prescription pharmaceuticals
• Cardiovascular system
• Central nervous system
• Gastrointestinal tract
• Pain relief
• Diabetes
• Blood and blood-forming organs
• Antiinfectives for systemic use
• Oncology
• Other
Non-prescription products
Health resort and tourist services
Flexibility, independence and competitiveness
Animal health products
Value
creation for
stakeholders
Quality, safe,
and effective
medicines
based on
innovative
solutions
Affordable
treatment
Investment in
research and
development
Stable
dividend
policy
Safe and
healthy work
environment
Employment
opportunities
and
development
of knowledge,
skills, and
talents
Natural
resource
efficiency
Improvement
of quality of
life in the
community
Purchase of
materials and
services
Key risks and opportunities
• Consistent quality and uninterrupted supply of
APIs and products
• Patient safety
• Technological and scientific progress and
development of innovative generic medicines
• Expansion of product portfolio and broader use
of combination medicines
• Talent management
• Employee inclusion and diversity
• Supply chain and business continuity
• Resilient and flexible vertically integrated
business model
• Ageing population and changing purchasing
power
• Measures for increasing accessibility of
medicines
• Raising awareness of healthy lifestyles and
treatment of modern-day common diseases
• Availability of resources for
healthcare expenditure
• Engagement of key stakeholders and
factoring in their interests and
expectations
• Legislative and regulatory compliance
• Digitalisation and information
security
• Climate change and
environmental impact
management
• Energy security and efficiency
• Growing competition
• International political and trade
challenges
• Other business, economic, social
and governance risks and
opportunities
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Marketing and
sales
Patient and
customer
satisfaction
surveys
Recording
patient and
customer needs
and requirements
Development,
production and
evaluation of
APIs
Development,
production and
evaluation of
finished
products
Rolling out new
products and
managing
existing ones
Integrated quality management and control
2023 Annual Report – Introduction
16
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.
Czechia
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 à capital variable
Belgium
KRKA Belgium, SA
Kazakhstan
LLС ‘KRKA Kazakhstan’
The chart includes companies operating as at 31 December 2023.
Other subsidiaries outside Slovenia
Production and distribution companies
Health resort and tourist services
China
Ningbo Krka Menovo Pharmaceutical Co. Ltd.
Bulgaria
KRKA Bulgaria EOOD
Region Overseas Markets
United Kingdom
KRKA UK LTD
Finland
KRKA Finland Oy
US
KRKA USA LLC
Joint venture for development, production, and distribution
Greece
KRKA HELLAS E.P.E.
Germany
123 Acurae Pharma GmbH
UAE
Krka GCC L.L.C
Slovenia
Netherlands
KRKA Netherlands B.V.
2023 Annual Report – Introduction
17
Krka in global markets
7
7
GRI 2-1
2023 Annual Report – Introduction
18
2023 highlights
Business operations
• The Krka Group generated product sales of €1,806.4 million, up 5% year on year, and net profit of €313.7 million.
• The proposed dividend per share of €6.60 gross, up 17% on the previous year, was approved at the 29th Annual
General Meeting.
• We participated in ten investment conferences and held three webcasts to present our business operations to
investors and analysts. We hosted the Krka Investor Day at the company’s headquarters for the tenth time. We
routinely provided updates to both the financial and general public regarding our performance, ensuring compliance
with applicable regulations and stock exchange reporting rules.
• The Krka Group set new records: we sold 17.5 billion tablets and capsules and surpassed €100 million in animal
health product sales and €90 million in sales of rosuvastatin-containing medicines.
• We established a new subsidiary in the Netherlands, KRKA Netherlands B.V.
• We revised the 2024–2028 Krka Group Development Strategy to factor in sustainability aspects and align with our
business objectives, thereby upholding our economic, social, and environmental responsibilities in the communities
where we operate.
• We upgraded our sustainability governance by adopting the Krka Group ESG Policy and strategic ESG goals, which
were fully incorporated into the Krka Group Development Strategy in 2023. They outline our strategic orientations,
objectives and key performance indicators for specific key ESG aspects.
• On 24 November 2023, Krka scored 50 (out of 100) in the 2023 S&P Global Corporate Sustainability Assessment,
ranking it among the top 10% in the pharmaceutical industry.
Visibility
• Krka once again scored highly in key parameters of the 2023 Slovenian Business Excellence survey, conducted
by an independent Slovenian agency, and retained the top spot among 54 surveyed companies. The overall
excellence score factored in corporate visibility, performance, reputation and sustainable operations.
• Krka won its fourth Best Investor Relations Award at the investment conference held by the Ljubljana and Zagreb
Stock Exchanges.
• Krka was recognised as one of the leading employers in the reputation poll conducted by the Slovenian company
Mojedelo.com in partnership with Universum Global. We have received the award for being the most reputable
employer in Slovenia seven times since the poll began.
• Krka was awarded the 2023 WIPO IP Enterprise Trophy by the World Intellectual Property Organization (WIPO),
the United Nations specialised agency for intellectual property that contributes to developing a balanced and
effective global intellectual property ecosystem.
• Our performance in the Slovenian pharmaceutical market earned us the 2022 Excellence Award by IQVIA, the
leading global provider of healthcare and IT solutions, market research and clinical trial services.
• At the Slovenian Conference of Energy Experts (Dnevi energetikov), Krka was recognised as Slovenia’s most
energy-efficient company because of its integrated, efficient, and sustainable energy management.
2023 Annual Report – Introduction
19
• Our long-standing, close, and fruitful partnership with the Slovenian National Institute of Chemistry earned us
special recognition from the Institute for research collaboration.
• Krka received the silver TOP Education Management certificate, distinguishing it as one of the Slovenian
companies that prioritise investment in employee education and development.
• Krka innovations received four gold and three silver awards at the innovation ceremony of the Chamber of
Commerce of Dolenjska and Bela krajina.
• At the Slovenian Chamber of Commerce and Industry Innovation Day, Krka researchers received one gold and one
silver award for innovation, winning the gold award for sitagliptin medications for managing type 2 diabetes and the
silver award for an integrated reference substance management system. The awards are a testament to our
commitment to continuously supplement our portfolio with new products that build on innovative approaches and
improved technological solutions.
• On its 85th anniversary, the Slovenian Academy of Sciences and Arts honoured Krka with a special recognition for
our enduring collaboration and support in the fields of science and art.
• The high quality of our products and services is widely recognised and confirmed by various certificates. The
Slovenian Institute of Quality and Metrology (SIQ) presented Krka with an award, recognising our common efforts
to deliver on the highest quality and safety standards.
• Krka was named the top large company in the 2022 Best Company Campaign for the Dolenjska and Posavska
regions, organised by the local weekly Dolenjski list in collaboration with the Chamber of Commerce of Dolenjska
and Bela krajina, Posavje Chamber of Commerce and Industry, and the Slovenian company Prva bonitetna
agencija.
Sustainability
• Krka hosted an international symposium on innovative approaches for managing type 2 diabetes, with over
140 attendees from 14 countries, as well as an international cardiology symposium in Amsterdam, which attracted
over 200 participants from 19 countries. Through these events, we contribute to the United Nation’s goal of reducing
deaths caused by noncommunicable diseases by one-third by 2030.
• The 2022 Talent-of-the-Year Awards were announced at the 17th traditional meeting with Krka’s sponsorship
recipients. Three outstanding young individuals were recognised for their achievements in sports and culture.
• Through our social responsibility initiative, Krka’s Week of Charity and Volunteering, employees from 19 countries
promoted the principles of volunteerism and mutual assistance, fostering intergenerational connection.
• Head of Environmental Protection at Krka Slavko Zupančič received the 2023 environmental sustainability manager
of the year award, presented by the Chamber of Commerce and Industry of Slovenia for the first time.
• Our Krka Car-Free Day united our employees from 13 countries in reaffirming our shared commitment to
sustainable mobility, a healthy environment, and improved quality of life for the eighth consecutive year.
• We delivered on our sustainability commitments by purchasing a new heavy-duty electric truck. We added it to our
fleet in 2023 as the first user in Slovenia. This addition marks a significant upgrade to our electric vehicle fleet and
establishes a new benchmark, reaffirming our commitment to advancing our long-term sustainable mobility policy.
• We continued our unique and long-standing tradition of Krka Prizes by conferring secondary school, undergraduate
and graduate level prizes for the 53rd consecutive time. Recipients had the opportunity to present their research
papers at a scientific symposium.
2023 Annual Report – Introduction
20
• For 70 years, we have remained dedicated to our mission of promoting healthy and fulfilling lives. To mark our
anniversary, we continued our support for various healthcare institutions. We provided donations of devices and
equipment to the Division of Paediatrics at the University Medical Centre Maribor, the Division of Paediatrics at the
University Medical Centre Ljubljana, as well as paediatrics departments in ten other general Slovenian hospitals,
underscoring our commitment to the well-being of the youngest members of our community.
• For the 12th consecutive year, we presented the Volunteer of the Year Award and expressed gratitude to Krka
employees who regularly donate blood.
• Krka’s Culture and Arts Society continued its work as an inseparable part of our company and its culture for over
50 years.
Employees
• At the 20th International Regulatory and Pharmacovigilance Conference, attendees discussed prevailing regulatory
hurdles, with the best regulatory affairs employees receiving awards, recognitions, and commendations.
• More than 170 colleagues from 38 countries attended the 25th Marketing and Sales Conference. The event focused
on Krka’s strategy through 2026 and its marketing and sales objectives.
• The 3rd Technological Conference brought together 180 pharmaceutical technology employees from six different
countries. Over two days, the event offered the attendees the chance to share knowledge and experiences,
enabling them to excel further in the competitive generic pharmaceutical market.
• The International Corporate Performance Management Conference was held for the fourth time. 154 attendees
were from Krka headquarters and 40 from Krka’s units abroad and Terme Krka.
• The 14th HR Conference focused on challenges facing global labour markets.
• The newly-elected Works Council convened 18 worker assemblies. The President and members of the
Management Board briefed 3,370 employees on performance results, plans for the current year, strategy, and other
current issues.
• All employees contribute to Krka’s progress. We acknowledged their commitment and professional achievements
by presenting the 2023 Krka Awards.
• The best employees in marketing and sales were presented with Marketing Awards for the 25th consecutive year.
Recipients hailed from 29 countries.
• Numerous training and educational programmes are a testament to the value that Krka places on knowledge.
24 employees completed the 19th Krka International Leadership School, while 20 employees completed the
Leadership School at the operational level and 20 at the basic level. The international programme for expert and
project teams included 46 employees.
• We thanked our colleagues and organisational units that submitted the best useful proposals and improvements
for their innovation efforts, contributing to the company’s progress.
• We are the only company in Slovenia to offer six national vocational qualification programmes for the
pharmaceutical industry. We introduced them in 2000. In 2023, 127 Krka employees completed different
programmes and acquired knowledge that will help them manage highly automated working processes and use
computer-controlled technological systems more easily.
• We continued with our tradition of organising an annual event for our recently retired colleagues, acknowledging
the contributions made by multiple generations of employees to our company’s success.
2023 Annual Report – Introduction
21
Subsequent events
The events after the end of the period had no impact on the 2023 financial statements.
Establishment of joint venture in India
On 25 January 2024, Krka notified investors that it had reached an agreement with Indian company Laurus Labs Ltd. to
establish a joint venture, Krka Pharma Pvt. Ltd., in Hyderabad, India. Under the agreement, Krka holds a 51% stake and
Laurus a 49% stake in the new company.
Krka and Laurus have been contractual partners for years, with their respective businesses complementing one another.
After discussing opportunities to strengthen their cooperation and leveraging synergies by combining know-how and
resources, the two partners agreed to establish and develop the new company gradually. The joint venture will devise a
strategy to penetrate the Indian market and other markets beyond the European Union, where neither party currently offers
its finished products.
The newly established company's registered capital amounts to €50 million in Indian rupees. Depending on financing
needs, Krka and Laurus agreed to subscribe to the registered capital in stages. The joint venture will develop its business
activities step by step.
Repurchase of treasury shares
Krka repurchased 44,992 treasury shares between 1 January 2024 and 18 March 2024, and thus held 1,960,958 treasury
shares at the end of this period, accounting for 5.98% of total shares.
2023 Annual Report – Business report
22
BUSINESS REPORT
Corporate governance statement
8
Krka employs a two-tier corporate governance system. The Management Board runs the Company and is overseen 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 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 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 starting from the notice date.
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 2023 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 29th AGM of 6 July 2023, shareholders:
• Received the Management Board annual report for 2022, including the auditor’s report, the Supervisory Board
report verifying and endorsing the 2022 annual report, and the 2022 Management and Supervisory Board
remuneration report;
• Adopted the resolution on the appropriation of accumulated profit for 2022;
• Discharged the Management and Supervisory Boards of liability for 2022;
• Discussed the remuneration policy for management and supervisory bodies in compliance with the Companies
Act, and approved it at consultative voting;
• Elected Luka Cerar to the Supervisory Board as a shareholder representative for a five-year term commencing on
7 July 2023;
• Adopted the resolution on the remuneration for the Supervisory Board members;
• Authorised the Management Board to acquire treasury shares, provided that total treasury shares, including
shares already held by the Company when the authorisation was issued, do not exceed 10% of the Company’s
share capital.
According to the 2024 financial calendar, the regular AGM is set for 11 July. The Company must give 30 days clear 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
8
GRI 2-9, 2-10
2023 Annual Report – Business report
23
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’.
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 Internal
Audit report. The President of the Supervisory Board concludes contracts with the external auditor. The Management
Board can only invite shareholders in the AGM notice to attend and vote at the AGM even if they are not physically present
at the meeting if permission is granted by the Supervisory Board (Item 6.21 of the Articles of Association).
The 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.
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 at their 26th regular meeting
held on 9 July 2020. Another two shareholder representatives sit on the Supervisory Board: Luka Cerar elected by the
AGM on 6 July 2023, 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, a shareholder representative,
and Franc Šašek, an 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 Krka’s 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 29th regular AGM in 2023.
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 financial report’s ‘Related party transactions’ section.
In addition to the Companies Act, the Rules of Procedure of the Supervisory Board govern any potential conflict of interest
of the 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 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.
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The work of the Supervisory Board and related committees is detailed in ‘2023 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
together with the 2023 Annual Report.
Shareholder representatives
Jože Mermal
President of the Supervisory Board
Jože Mermal (born 1954) comes 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. The highest managerial lifetime achievement award followed it, the Best
Manager of South-Eastern 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
2023 Annual Report – Business report
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Slovenia’s OECD membership talks. He is a member of the Strategic Council for Macroeconomic Issues of the Government
of the Republic of Slovenia.
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
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.
Luka Cerar
Luka Cerar (born 1976) holds a master’s degree in international finance. He is the CFO for the European region at Albaugh
TKI, d. o. o. He is accountable for finance, treasury, controlling, strategic planning, reporting, IT, and taxation in Europe,
the Near East, and Africa, where seventeen Albaugh’s legal entities and two manufacturing plants operate. Albaugh is one
of the global leaders in the production and sale of post-patent crop protection products and plants.
Before joining Albaugh, Cerar worked as the finance director at Atlantic Grupa in Slovenia. He gained ample experience
in pharmaceutical industry. Between 2001 and 2019, he completed many demanding strategic and financial assignments
at Novartis and Sandoz, also having worked abroad for 12 years in Austria, Germany, Denmark, and Croatia. His most
recent posts in Novartis’ subsidiary in Slovenia were that of the finance director and director. He received the 2018 Team
of the Year award from Novartis Slovenia and an award from Novartis for improving performance analyses in 2016. Sandoz
awarded him in 2013 for the best practice in finance.
Cerar graduated in economics from the Faculty of Economics in Ljubljana in 2000. He continued studies in the UK and
France, at Westminster Business School and SKEMA Business School, respectively, where he earned his master’s degree
in international finance in 2004. In 2007, Cerar earned the Novartis Business Diploma from Harvard Business School.
He holds a certificate of professional competence for supervisory board membership of the Slovenian Directors’
Association.
Mojca Osolnik Videmšek
Mojca Osolnik Videmšek (born 1966) holds a university degree in economics. She sits on the management board of
Gorenjska banka, d. d., 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. from 2019
until 2022. She has been on the management board of the bank again since 2022.
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
2023 Annual Report – Business report
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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 additionally acquired expertise through executive roles 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 through programmes at the University of Geneva and the University of Lyon, as well as within
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. Since the beginning of his career, he has been involved in engineering and technical services, holding positions
such as technologist, Head of the Technical and Technological Preparations Department, and subsequently, 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
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, he was also Business Continuity Officer. He
2023 Annual Report – Business report
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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 earned a master’s 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 d. o. o. 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 Audit 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 the 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 2023.
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 set out the operational functions and allocation of responsibilities within
the Management Board. The body’s operating approach is to coordinate opinions and make decisions by consensus. In
line with the Rules of Organisation and the Rules of Procedure of the Management Board, Management Board members
also have executive management duties. Every member is responsible for a certain number of organisational units, which
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 Committee.
The committees bring together Management Board members, managerial staff, and experts from individual sectors in
Krka. They prepare business policies and strategic guidelines for individual areas and also have some decision-making
responsibilities for implementing annual plans. Certain committees also have a risk management remit.
Remuneration, reimbursements, and other benefits for Management Board members are established in accordance with
the remuneration policy for management and supervisory bodies (Article 294a of the Companies Act) and detailed in
individual work contracts between the Supervisory Board and each Management Board member, aligning with the
aforementioned remuneration policy. In compliance with the Companies Act, a consultative resolution at the AGM decides
the remuneration policy for management and supervisory bodies. This provision has been applied to AGMs since
24 August 2021.
In 2023, 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 6 July 2023.
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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.
The obligations of Management Board members concerning potential conflicts of interest are regulated by the
Companies Act, guided by the Rules of Procedure of the Management Board, which adhere to best practices, notably
outlined in the Corporate Governance Code for Listed Companies. In accordance with the Rules of Procedure of the
Management Board, members are required to demonstrate unwavering loyalty 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.
Throughout their tenure, they are obliged to adhere to regulations prohibiting anticompetitive practices. 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 2023, 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 29th AGM of 6 July 2023,
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 (Slovenia),
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,
he 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. The Supervisory Board unanimously approved the unchanged
Management Board put forward by Jože Colarič and the Worker Director proposed by the Works Council for the 2022–
2027 term of office.
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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, he was appointed 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
from 31 July 2007 to 31 December 2009. Rotar has been Director of Research and Development since 2002. At their
meeting of 29 July 2009, the Supervisory Board reappointed him to the Management Board for a further six-year term of
office starting on 1 January 2010. Rotar has notably contributed to know-how and establishment of business functions for
in-house research and development at Krka. 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 Ljubljana 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 in Product Supply. 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 in 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. He successfully managed raw material development, production, and the
supply chain during that term. 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, Slovenija) 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 many awards for him and Krka - Polska.
Bratož has extensive knowledge across 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 successfully managed until April 2018. From January 2016 until July 2021, Kastelic
also headed Semi-Solid, Liquid and Other Products. In July 2021, she took up the position of Deputy Director of
Pharmaceutical Production in charge of the corresponding segment. She also delivers employee training.
As Krka’s internal auditor of 15 years, she has contributed to enhancing business processes in the Company. This role
enabled her to gain insights into the operations of various organisational units, the significance of close collaboration
among them, and the outcomes of their collective efforts.
In 2015, the Works Council proposed her as the Worker Director. The Supervisory Board appointed her to the
Management Board as Worker Director 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 as 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/.
2023 Annual Report – Business report
32
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.
2023 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 https://www.krka.biz/investors/investor-information/documents/corporate-governance-documents/.
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 2023,
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 applies it rationally to
all other management levels.
Krka ensures equal opportunities for its employees, irrespective of gender, race, colour, age, health status or disability,
religious or political beliefs, any other belief, trade union affiliation, national or social origin, family status, financial standing,
sexual orientation, or any 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 AGM 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 on 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 continuously strive to
heighten employee awareness regarding potential fraud, non-compliance, and other violations, as well as methods for
managing them, fostering accountability in their identification and reporting.
9
GRI 2-23, SDG 16
2023 Annual Report – Business report
33
Krka’s Code of Conduct (hereinafter also the Code), containing principles and rules of ethical conduct, good business
practices, 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 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 fundamental principle that employees must adhere to is making decisions in the best
interest of Krka. Under the Code, employees must refrain from decision-making when a conflict-of-interest risk exists.
Education and training on corporate compliance and corporate integrity
10
At the Krka Group level, we provide for 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, the last time in autumn 2023. New employees are briefed about this
before starting their work at Krka.
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 breach of Krka’s Code of Conduct, potential fraudulent, corrupt, or other non-compliant actions resulting in harm to
Krka are addressed in line with Directive (EU) 2019/1937 or relevant national legislation, as well as internally, following
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 have followed our example and set up their own channels where required by their respective national
legislation. The list of these subsidiaries is available further on (see the ‘Chief Compliance Officer’ section). 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 compliance.officer@krka.biz
has received 79 reports for consideration: 7 in 2023; 8 in 2022; 15 in 2021; 25 in 2020; 10 in 2019; and 14 in 2018. We
adopted relevant corrective measures to strengthen our internal controls on the back of these reports.
Chief Compliance Officer
12
At the Krka Group level, a Chief Compliance Officer is appointed to autonomously and independently oversee corporate
integrity. He liaises with Legal Affairs, employees from individual organisational units who advise on managing compliance
in their respective areas, and a secretary. 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 employ their own compliance officers where required by national legislation or good practice. In 2022,
subsidiaries in the Russian Federation, Poland, Ukraine, Croatia, Germany, and Terme Krka (Slovenia) had their own
10
GRI 205-2
11
GRI 2-26, 3-3, 205-3
12
GRI 2-16, 2-24
2023 Annual Report – Business report
34
compliance officers. In 2023, subsidiaries in Romania, Hungary, Czechia, Lithuania, Slovakia, Spain, Italy, Bulgaria, and
Portugal appointed their own compliance officers. They are also responsible for addressing the reports on any purported
irregularities in subsidiaries. They report to Krka’s Chief Compliance Officer every quarter.
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 2023–2024 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 non-compliance related to health and safety at work;
• Systemic risk related to integrity and compliance.
The probabilities and consequences of adverse events are evaluated as low, moderate, or high. Individual risk is evaluated
vis-à-vis of potential harm and the likelihood of it occurring. With respect to the risk level and established internal controls,
further corrective actions are taken if necessary.
Our 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. They are updated annually.
In 2023, 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 cycle meetings, and
training courses for marketing employees. They learn about the rules mentioned above and commit to work in line with
them.
13
GRI 2-23, 2-24
14
GRI 205-1
2023 Annual Report – Business report
35
Management approach to non-discrimination
15
Two umbrella documents set down non-discrimination principles: Krka’s Code of Conduct and the Integrity Plan, which
serves as an implementation document.
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 2023 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 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. Initiatives 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 support sports, culture, healthcare, science, education, and
humanitarian initiatives.
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
for Foreign Affairs of the Republic of Slovenia. Twenty-four major Slovenian companies signed the document. At the state
level, the issue is governed by the 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.
The Integrity Plan, updated yearly, refers to human resources; the latest update was made in July 2023.
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 2023 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 monitoring of risk management and
internal control systems. 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: Pharmaceutical Development; Production Plants Abroad and Contract Manufacture;
Utilities; Quality Control; Sales; Marketing Applications and Analytics; and Warehousing and Transport Service. Regular
internal audits were also conducted in several subsidiaries and representative offices in Slovenia and abroad. Moreover,
15
GRI 3-3, 406-1
16
GRI 3-3, 415-1
17
GRI 2-28
18
GRI 2-23, 2-24, 3-3, 412-3
2023 Annual Report – Business report
36
internal auditors provided consulting services in line with the aforementioned standards. In 2023, 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, opportunities for improvement were
indentified, leading to recommendations categorised by individual risk levels, coupled with regular verification of their
implementation.
Internal auditors work with the Krka Supervisory Board, its Audit Committee, and external auditors. In line with the Standards,
Internal Audit has been subject to three independent external quality assessments since its establishment. On each occasion,
we received an overall opinion that Internal Audit activities generally conform with the Standards and the Code of Ethics.
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 Tax Strategy is available at www.krka.biz.
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 the tax
perspective when changes occur or when introducing new business models or transactions; 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 control 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 shareholders appointed the audit firm as the auditor for
financial years 2022, 2023, and 2024 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
2023 Annual Report – Business report
37
Composition of Supervisory Board of Krka as at 31 December 2023
20
Name and surname
Jože
Mermal
Luka
Cerar
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
2023
2020
2010
2016
2019
2009
2005
2005
Duration of current term of
office
2025
2028
2025
2025
2025
2024
2024
2024
2024
Representing
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
Employees
Employees
Employees
Meeting attendance record
6/7
3/3
since member
6/7
7/7
7/7
6/7
7/7
7/7
7/7
Gender
Male
Male
Male
Female
Male
Female
Male
Female
Male
Citizenship
Slovenian
Slovenian
Slovenian
Slovenian
Slovenian
Slovenian
Slovenian
Slovenian
Slovenian
Year of birth
1954
1976
1971
1953
1948
1966
1967
1966
1967
Education and qualifications
University degree in
economics
University degree in
economics and
master’s degree in
international finance
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 2023, 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
No
Member of the
Audit Committee
Member of the Human
Resource Committee
President of the
Human Resource Committee
and since 19 July 2023,
member of the Audit
Committee
President of the
Audit Committee
since 19 July 2023
Member of the Audit
Committee
Member of the Human
Resource Committee
Member of the Human
Resource Committee
Attendance record at
regular committee
meetings
No
No
5/6
3/3
3/3 at Human Resource
Committee meetings and
2/2 at Audit Committee
meetings since member
5/6
6/6
3/3
3/3
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 expertise
Received several
awards for his visionary
work in the economy
and activities in culture,
sports, education, and
the humanitarian field
Contributed significantly
to the development of
expertise and practice
in the financial field as
an expert in
international finance,
analyses, and strategic
planning
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 accessible
healthcare
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, 2-15, 2-17, 405-1
2023 Annual Report – Business report
38
External members of committees as at 31 December 2023
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
5/6
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 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
ESG expertise
Transparency in terms of reporting and business operations; is a certified auditor
2023 Annual Report – Business report
39
Composition of Management Board of Krka as at 31 December 2023
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,
sustainable operations,
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
SG expertise
Extensive leadership
experience; numerous awards
for running a large corporation;
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
Responsible for sustainability
improvements with regard to
Krka’s operations; 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 health and
safety at work
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.
The composition and amount of the Management Board members’ remuneration are disclosed under the Note entitled ‘Related party transactions’. Further details are available in the Management and Supervisory Board
remuneration report presented to the AGM. Since 2022, it is available as part of AGM materials.
21
GRI 2-9, 2-10, 2-11, 2-12, 2-15, 2-17, 405-1
2023 Annual Report – Business report
40
Corporate governance code compliance statement
In 2023, 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 2023,
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 carry out 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 2023, 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 2023, an external assessment 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 2023, 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 Krka’s 2023 Annual Report. The Management Board members do not engage in
corporate governance and supervisory functions outside the Krka Group, while the information about the 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 adjustments to the remuneration policy in 2022 and submitted
them for AGM approval for the first time. In line with the shareholders’ comments at this AGM, the Supervisory Board
updated the remuneration policy again in 2023. It was approved with 97.45% of votes during consultative voting at the
29th AGM in 2023.
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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.
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 the Rules of Procedure of the Supervisory Board public. In the 2023 ‘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 bodies’
performance in 2023 (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, 25 March 2024
Jože Colarič
President of the Management Board and CEO
Jože Mermal
President of the Supervisory Board
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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
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43
Non-financial statement
22
The Management Board of Krka, tovarna zdravil, d. d., Novo mesto (hereafter the Company) hereby declares that all Krka
Group subsidiaries adhere to Krka Group policies concerning the social sphere and human resources, uphold principles
of 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 uphold the highest moral standards, encompassing honesty, loyalty, and professionalism, while
consistently complying with regulations and guidelines set forth by international organisations in the pharmaceutical
industry and bye-laws. The Code is published on the Company website. The Code is accessible to all business partners,
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 ‘Employees’ and ‘Corporate social responsibility’ sections.
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 we do
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 their nationality, race or
ethnicity, national or social origin, gender, colour, medical condition, disability, religion or belief, age, sexual orientation,
family status, trade union membership, financial standing, or any other personal circumstance.
Any form of harassment and ill-treatment in the workplace is prohibited. We provide adequate working conditions and an
open and creative working environment. Our working environment is free from any psychological pressure, sexual or other
harassment, or ill-treatment by other employees, superiors, or third parties. All employees are required to refrain from any
inappropriate action that would 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 supervisory and management bodies. In 2021, the Management and Supervisory Boards
adopted the Diversity Policy in line with the recommendations of the Slovenian Directors’ Association and made the
document available to the public. Please see also the ‘Corporate governance statement’ section, subsection ‘2023 diversity
policy for Management and Supervisory Boards’.
22
GRI 2-14
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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 allow no unethical, unprofessional, or unlawful conduct on the part of
employees and business partners regarding fraud and corruption prevention, and corporate compliance. 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 and do not give gifts to influence the decisions of national authorities, public officials, business
partners, or other entities, nor do we accept gifts or any other benefits that may influence our decisions 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 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 Company’s Code of
Conduct and the ‘Corporate governance statement’ section, subsection ‘Corporate compliance and integrity’. In 2023, 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.
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 and the ensuing policy
results can be found in the ‘Sustainable development’ section and in the ‘Krka’s sustainable development indicators’ chart
in the introductory part of the Annual Report.
In 2023, we made an important step forward in integrating a sustainability perspective in our strategic planning and
business operations as part of the 2024–2028 Krka Group Development Strategy revision. For the first time, we fully
integrated sustainable operations, the ESG strategy, and ESG goals into our business strategy. The sustainable operations
of the Krka Group are distinctly outlined and hold equal importance within the business strategy alongside other operational
areas. This underscores the significance of sustainability within the overall business operations of the Krka Group. In 2022,
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 ESG Policy was updated in 2023. It specifies management approaches to material
sustainability areas. It sets down the fundamental sustainability-related principles and efforts that the Krka Group follows
in its operations throughout the value chain and in relations with various stakeholder groups, from suppliers to customers
and subsidiaries within the Group. The fundamental objective of integrating the Krka Group sustainability principles and
sustainable management approaches into management processes and business decisions is to heighten the awareness
of sustainability-related impacts, risks, and opportunities that can affect the success of our business operations and
improve their management going forward. The Sustainability Committee was briefed about sustainable operations and
activities at the first meeting. During the year, the Management Board member in charge of sustainability, ESG coordinator,
and ESG managers were involved in various activities. The Management and Supervisory Boards were also regularly
briefed about sustainable operations.
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.
EU Taxonomy
Regulation (EU) 2020/852 of 18 June 2020 (hereinafter: Taxonomy Regulation) sets out 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 through increased investment in the projects and activities that are necessary to
achieve the objectives of the European Green Deal. The EU Taxonomy helps investors identify environmentally
2023 Annual Report – Business report
45
sustainable economic activities, promotes a transition to a zero-carbon future and guides funding towards solutions to
tackle the climate crisis and prevent further environmental degradation.
An economic activity qualifies as environmentally sustainable where that economic activity contributes substantially to one
or more of the environmental objectives set out in Article 9 of the Taxonomy Regulation in accordance with Articles 10
to 16 of the said Regulation; does not significantly harm any of the environmental objectives set out in Article 9 of the
Taxonomy Regulation in accordance with Article 17 of the said Regulation; is carried out in compliance with the minimum
safeguards laid down in Article 18 of the Taxonomy Regulation; and complies with technical screening criteria under
Article 19 that have been established by the Commission in accordance with Article 10(3), 11(3), 12(2), 13(2), 14(2), or
15(2) of the Taxonomy Regulation.
Taxonomy-eligible economic activity means an economic activity that is described in the delegated acts adopted pursuant
to Articles 10(3), 11(3), 12(2), 13(2), 14(2), and 15(2) of the Taxonomy Regulation, irrespective of whether that economic
activity meets any or all of the technical screening criteria laid down in those delegated acts. An economic activity is
taxonomy-aligned if it meets the criteria for a substantial contribution to environmental objectives, complies with technical
screening criteria set out in the Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021, Commission
Delegated Regulation (EU) 2022/1214 of 9 March 2022, Commission Delegated Regulation (EU) 2023/2485, and
Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023, and the Annexes to the Taxonomy Regulation and
to delegated regulations, if it meets the DNSH (do no significant harm) criteria, and is carried out in compliance with the
minimum safeguards for human and consumer rights, anti-corruption and bribery, tax provisions, and fair competition.
Taxonomy-non-eligible economic activity means any economic activity that is not described in the delegated acts adopted
pursuant to Articles 10(3), 11(3), 12(2), 13(2), 14(2), and 15(2) of the Taxonomy Regulation.
To monitor taxonomy-eligible and taxonomy-aligned economic activities of Krka and the Krka Group, we established a
Krka Group interdisciplinary project team composed of experts in environmental protection, engineering, technical
services, energy supply, transport, corporate performance management, and finance. We examined economic activities
that contribute to one of the six environmental objectives: climate change mitigation; climate change adaptation;
sustainable use and protection of water and marine resources; transition to a circular economy; pollution prevention and
control; and protection and restoration of biodiversity and ecosystems. We compared them against Krka’s and the Krka
Group’s economic activities, while considering criteria for environmentally sustainable economic activities under Article 3
and Articles 10 to 18 of the Taxonomy Regulation and technical criteria.
When determining whether an economic activity is taxonomy-aligned, the activity must, first and foremost, comply with the
first requirement of the Taxonomy Regulation, meaning that the activity must contribute substantially to one or more of the
environmental objectives. At this point, all our identified environmentally sustainable economic activities are taxonomy
eligible because we do not fully comply with all DNSH criteria and technical criteria. The Krka Group has not yet conducted
a detailed climate risk and vulnerability assessment for the identified physical climate risks and assessed their impact on
the performance of the economic activity in accordance with Appendix A to technical criteria. The screening revealed the
following Krka’s taxonomy-eligible activities falling under different environmental objectives.
Environmental objective: Climate change mitigation (1)
• Electricity generation using solar photovoltaic technology (taxonomy activity 4.1)
• District heating/cooling distribution (taxonomy activity 4.15)
• Installation and operation of electric heat pumps (taxonomy activity 4.16)
• Production of heat/cool using waste heat (taxonomy activity 4.25)
• Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system (taxonomy
activity 4.31)
• Transmission and distribution of electricity (taxonomy activity 4.9)
• Construction, extension and operation of water collection, treatment and supply systems (taxonomy activity 5.1)
• Construction, extension and operation of waste water collection and treatment (taxonomy activity 5.3)
• Renewal of waste water collection and treatment (taxonomy activity 5.4)
• Collection and transport of non-hazardous waste in source-segregated fractions (taxonomy activity 5.5)
• Freight transport services by road (taxonomy activity 6.6)
• Infrastructure for personal mobility, cycle logistics (taxonomy activity 6.13)
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• Construction of new buildings (taxonomy activity 7.1)
• Renovation of existing buildings (taxonomy activity 7.2)
• Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces
attached to buildings) (taxonomy activity 7.4)
• Data processing, hosting and related activities (taxonomy activity 8.1)
Under this environmental objective, we generated turnover from electricity generation using solar photovoltaic technology
(taxonomy activity 4.1) and collection and transport of non-hazardous waste in source-segregated fractions (taxonomy
activity 5.5). Turnover from electricity generation using solar photovoltaic technology came from direct payments by the
Energy Agency, which provides incentives for installing photovoltaic power stations. The annual support scheme for our
current system expires in the first quarter of 2026. Source-segregated fractions of non-hazardous waste provide raw
material for other activities and reduce the consumption of primary sources, while the photovoltaic power station
contributes to greenhouse gas emission savings. The two activities are Krka’s secondary business activities. No turnover
increase is expected from these activities.
Construction of new buildings and energy renovation of existing ones accounted for the largest proportion of capital
expenditure in 2023. These projects complied with the latest standards and requirements for energy efficiency in
construction. We started rolling out our project for waste heat recovery from wastewater using a heat pump, renovated the
collecting system for wastewater discharge, modernised the lighting of buildings by installing energy-efficient lamps,
installed an advanced energy-efficient air conditioning system, upgraded and modernised the energy management control
system by implementing an AI-driven module for targeted monitoring of energy use, upgraded the data processing system,
modernised the wastewater treatment plant, set up a waste air treatment system in the pharmaceutical production,
upgraded our fleet by adding an electric truck and several electric cars, modernised our internal network of charging
stations, and set up new bicycle parking lots to promote sustainable mobility and commuting by bike.
Investments in building maintenance, collection and transport of non-hazardous and hazardous waste, and highly efficient
wastewater treatment accounted for the largest proportion of our operating expenditure, followed by other supporting
activities funded from regular system maintenance. No significant operating expenditure increase is expected because
most system upgrades are posted under capital expenditure.
Environmental objective: Climate change adaptation (2)
• Residential care activities (taxonomy activity 12.1)
We provide medical rehabilitation services through outpatient clinics specialised in cardiology, physiatry, orthopaedics,
neurology, rheumatology and internal medicine and outpatient clinics for physical therapy without using natural healing
agents. We generated turnover from activities related to treating musculo-skeletal disorders and injuries, cardiovascular
diseases and conditions after cardiovascular surgery, diseases of the respiratory system, and rheumatic disorders.
Environmental objective: Transition to a circular economy (4)
• Collection and transport of non-hazardous and hazardous waste (taxonomy activity 2.3)
Our efficient separate waste collection system that integrates collecting and handing over usable waste to waste collection
and processing contractors for reuse, processing or energy recovery embodies our commitment to circular economy
principles. Source-segregated fractions of non-hazardous waste provide raw material for other activities and reduce the
consumption of primary sources.
Environmental objective: Pollution prevention and control (5)
• Manufacture of pharmaceutical products (taxonomy activity 1.2)
Our core business is the manufacture of high-quality innovative generic prescription pharmaceuticals, non-prescription
products, and animal health products, generating the bulk of our sales revenue. Investments in new product development,
building maintenance, production capacity upgrades, and highly efficient air purification constituted the major proportion
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of operating expenditure in pollution prevention and control. Capital expenditure covered in particular projects in upgrading
production capacities, which were also aimed at pollution prevention and control.
Environmental objective: Protection and restoration of biodiversity and ecosystems (6)
• Hotels, holiday, camping grounds and similar accommodation (taxonomy activity 2.1)
Our three health resorts generated turnover from hotel and catering services.
The European Commission adopted the Commission Delegated Regulation (EU) 2021/2178 (hereinafter: the Disclosures
Delegated Act) on 6 July 2021 and supplemented it with the Commission Delegated Regulation (EU) 2022/1214 of
9 March 2022. In line with Article 8 of the Taxonomy Regulation, the Krka Group discloses key performance indicators and
information on how and to what extent Krka’s and Krka Group’s activities are associated with economic activities that
qualify as environmentally sustainable. The disclosures comply with the Disclosures Delegated Act, its supplementing
acts, and technical screening criteria for determining the conditions under which an economic activity qualifies as
contributing substantially to one of the six environmental objectives and for determining whether that economic activity
causes no significant harm to any of the other environmental objectives.
We prepared the disclosures after thoroughly reviewing relevant taxonomy-related documents and based on our
understanding and available data. We constantly strive to improve our reporting system to ensure disclosure integrity as
per the Dislosure Delegated Act and its supplementing acts. The calculation of key performance indicators related to
turnover, capital expenditure (CapEx) and operating expenditure (OpEx) factors in the definitions from Annex 1 to the
Commission Delegated Regulation (EU) 2021/2178 and its supplementing acts.
In 2023, we only identified taxonomy-eligible activities, meaning that we classified the entire relevant turnover, all
investments, and expenditures under taxonomy-eligible activities (A2). We allocated each activity under a single
environmental objective in line with the technical criteria. To avoid double counting in calculating turnover, CapEx and
OpEx key performance indicators, we calculated the numerators of each indicator by dividing the basis (denominator)
between taxonomy-eligible and taxonomy-non-eligible activities. To avoid double counting again, fixed assets recognised
in the financial position statement were included in the basis for capital expenditure, while costs recognised in the
statement of profit or loss were included in the basis for operating expenditure. The calculations are detailed below. If a
certain capital or operating expenditure is related to various taxonomy-eligible activities, the relevant expenditure is divided
into proportions based on an expert assessment by certain sectors involved in the taxonomy activities. The sum of all
proportions always equalled 100%, avoiding the possibility of double counting.
Our investments in taxonomy-eligible activities return energy savings in space heating, improve energy efficiency, reduce
emissions from transport, channel waste into reuse, processing and energy recovery, contribute to highly efficient
wastewater treatment, ensure good status of watercourses, and reduce greenhouse gas emissions, climate risks, and the
impact of production on all environmental segments. Taxonomy activities indirectly or directly enhance biodiversity in the
area affected by our operations.
The Krka Group’s business strategy is sustainability-oriented. Sustainable operations are one of our key strategic
guidelines and are detailed in the 2024–2028 Krka Group Development Strategy and its ESG Policy. In November 2023,
Krka’s Management and Supervisory Boards adopted the revised strategy and policy. Our interpretation of sustainable
operations entails the responsible management of governance, social, and environmental impacts. We strive to incorporate
sustainability principles into our business operations, products and services to the greatest extent 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 our sustainability-related impacts, risks, and
opportunities. We adopt Krka Group strategic and operational decisions by factoring in sustainability principles,
safeguarding the environment and complying with environmental regulations, while working in tandem with the local
community and beyond. We outlined our commitment to the natural environment in our environmental and energy policies,
which obligate us to safeguard the environment in accordance with the ISO 14001:2015 standard. The Environmental
Management System (EMS) certificate obligated us to continuously reduce all environmental impacts, while the revised
edition of the ISO 14001:2015 standard obligated us to integrate environmental care into the earliest development stages
and projects. Successful audits validate our improvements across all environmental impact areas. Our efficient work in
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this domain earns us the privilege to use the responsible care logo annually. Moving forward, we aim to enhance our three
key performance indicators concerning taxonomy-eligibility and taxonomy-alignment in the coming years. We meticulously
plan all our activities, especially our investment projects, and assess their environmental impacts from the outset. We
utilise state-of-the-art technologies and equipment to minimise our impact on the natural environment. We calculated our
Scope 1 and Scope 2 carbon footprint and prepared the Krka Group’s action plan for reducing GHG emissions by 2025,
2030, and 2050. This initiative aims to reduce CO
2
emissions and align with the EU’s goal of becoming climate-neutral
by 2050. Our objective is to reduce the Krka Group’s Scope 1 and Scope 2 carbon footprint by 48% by 2030 compared to
the reference year 2019 through our activities. The 2030 decarbonisation target relies on intensifying fleet electrification,
optimising business processes, and improving energy efficiency. We will monitor trends and the best available techniques
in supplying carbon-neutral energy sources and incorporate them in our processes whenever feasible. Carbon footprint
reduction remains our goal for the 2030–2050 period. We will follow the best available techniques in decarbonisation and
the supply of carbon-neutral energy sources (RES, hydrogen, etc.) and utilise them in our processes to the fullest extent
possible. Our action plan for reducing our carbon footprint by 2050 will build on science-based targets (SBTi) and the Paris
Agreement’s decarbonisation and climate neutrality goals. Integrating newly available techniques, carbon-free energy
sources, and emerging legislation will form the foundation of our efforts to implement the environmental dimension of the
adopted ESG policy. Maintaining growth, development, and competitiveness in the global market is paramount for Krka.
Please see the ‘Krka’s sustainable development indicators’ chart on pages 12 and 13 and the ‘Sustainable development’
section for details on sustainability of operations.
Proportion of turnover from products or services associated with taxonomy-eligible economic
activities
Krka Group operating income, the basis for calculating the turnover KPI, totalled €1,808,362 thousand in 2023 and
included sales revenue and gain on sale of property, plant and equipment recognised under other income. The items are
posted in the statement of profit or loss and disclosed in consolidated financial statements of the Krka Group, Note 4 –
‘Revenue from contracts with customers’ and Note 5 – ‘Other operating income’. Operating income associated with
taxonomy-eligible economic activities totalled €1,802,153 thousand, or 99.66% of total operating income. Operating
income from taxonomy non-eligible economic activities of €6,209 thousand accounted for 0.34% of total operating income.
The manufacture of pharmaceutical products (NACE C21.20) accounted for the majority of our turnover from taxonomy-
eligible economic activities, totalling €1,754,177 thousand or 97.00% of Krka Group operating income. Hotels, holiday,
camping grounds and similar accommodation (NACE I55.10) followed at €29,451 thousand or 1.63% of Krka Group
operating income and residential care activities (NACE Q87.10) at €18,245 thousand or 1.01% of Krka Group operating
income.
Krka operating income, the basis for calculating the turnover KPI, totalled €1,675,351 thousand in 2023 and included sales
revenue and gain on sale of property, plant and equipment recognised under other income. The items are posted in the
statement of profit or loss and disclosed in financial statements of Krka, d. d., Novo mesto , Note 3 – ‘Revenue from
contracts with customers’ and Note 4 – ‘Other operating income’. Operating income associated with taxonomy-eligible
economic activities totalled €1,675,351 thousand, or 98.18% of total operating income. Operating income from taxonomy
non-eligible economic activities of €30,459 thousand accounted for 1.82% of total operating income. The manufacture of
pharmaceutical products (NACE C21.20) accounted for the majority of our turnover from taxonomy-eligible economic
activities, totalling €1,644,612 thousand or 98.17% of Krka operating income. Collection and transport of non-hazardous
waste in source-segregated fractions (NACE E38.11) followed at €267 thousand or 0.02% of Krka operating income and
electricity generation using solar photovoltaic technology (NACE D35.11, D42.22) at €13 thousand or 0.001% of Krka
operating income.
Proportion of capital expenditure (CapEx) from products or services associated with taxonomy-
eligible economic activities
Krka Group investments, the basis for calculating the CapEx key performance indicator, amounted to €136,433 thousand
in 2023. The total included acquisition of property, plant and equipment, right-of-use assets, and acquisition of intangible
assets. They are disclosed in consolidated financial statements of the Krka Group, Note 11 – ‘Property, plant and
equipment’ and Note 12 – ‘Intangible assets’. Taxonomy-eligible capital expenditure amounted to €88,399 thousand or
64.79% of Krka Group total CapEx in 2023. Taxonomy-non-eligible capital expenditure totalled €48,034 thousand or
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35.21% of Krka Group total CapEx. The manufacture of pharmaceutical products (NACE C21.20) accounted for the
majority of our taxonomy-eligible capital expenditure, totalling €51,884 thousand or 38.03% of Krka Group CapEx.
Investments in construction of new buildings (NACE F41.10, F41.20) totalled €18,965 thousand or 13.90% of CapEx, while
data processing, hosting and related activities (NACE J61.10) amounted to €9,742 thousand or 7.14% of Krka Group
CapEx.
Krka investments, the basis for calculating the CapEx key performance indicator, amounted to €112,517 thousand in 2023.
The total included acquisition of property, plant and equipment, right-of-use assets, and acquisition of intangible assets.
They are disclosed in financial statements of Krka, d. d., Novo mesto, Note 10 – ‘Property, plant and equipment’ and
Note 11 – ‘Intangible assets’. Taxonomy-eligible capital expenditure amounted to €81,291 thousand or 72.25% of Krka
total CapEx in 2023. Taxonomy-non-eligible capital expenditure totalled €31,226 thousand or 27.25% of Krka total CapEx.
The manufacture of pharmaceutical products (NACE C21.20) accounted for the majority of our taxonomy-eligible capital
expenditure, totalling €49,411 thousand or 43.91% of Krka CapEx. Investments in construction of new buildings
(NACE F41.10, F41.20) totalled €16,495 thousand or 14.66% of CapEx, while data processing, hosting and related
activities (NACE J61.10) amounted to €9,742 thousand or 8.66% of Krka CapEx.
Proportion of operating expenditure (OpEx) from products or services associated with taxonomy-
eligible economic activities
Krka Group operating expenditure, which comprised research and development expenses decreased by depreciation and
amortisation and maintenance expenses and lease expenses of other corporate functions, amounted to
€200,860 thousand in 2023. Operating expenses are posted in the statement of profit or loss of consolidated financial
statements of the Krka Group, Note 6 – ‘Costs by nature’. Taxonomy-eligible operating expenditure totalled
€31,334 thousand or 15.60% of Krka Group total OpEx. Taxonomy-non-eligible operating expenditure totalled
€169,526 thousand or 84.40% of Krka Group total OpEx in 2023. The manufacture of pharmaceutical products
(NACE C21.20) accounted for the majority of our taxonomy-eligible operating expenditure, totalling €20,266 thousand or
10.09% of Krka Group OpEx. Renovation of existing buildings (NACE F41.00, F43.00) followed at €4,590 thousand or
2.28% of OpEx and collection and transport of non-hazardous and hazardous waste (NACE E38.11, E38.12, F42.90) at
€3,690 thousand or 1.84% of Krka Group OpEx.
Krka operating expenditure comprised of research and development expenses decreased by depreciation and
amortisation and of maintenance expense and lease expense of other corporate functions amounted to €186,862 thousand
in 2023. Operating expenses are posted in the statement of profit or loss of financial statements of Krka, d. d., Novo mesto,
Note 5 – ‘Costs by nature’. Taxonomy-eligible operating expenditure totalled €27,804 thousand or 14.88% of Krka total
OpEx. Taxonomy-non-eligible operating expenditure totalled €159,057 thousand or 85.12% of Krka total OpEx. The
manufacture of pharmaceutical products (NACE C21.20) accounted for the majority of our taxonomy-eligible operating
expenditure, totalling €16,736 thousand or 8.96% of Krka OpEx. Renovation of existing buildings (NACE F41.00, F43.00)
followed at €4,590 thousand or 2.46% of OpEx and collection and transport of non-hazardous and hazardous waste
(NACE E38.11, E38.12, F42.90) at €3,690 thousand or 1.97% of Krka OpEx.
Amended classification of environmentally sustainable economic activities for 2022
While identifying the environmentally sustainable economic activities of Krka and the Krka Group for 2023, we re-assessed
the findings of the identification for 2022. Improved understanding of the criteria for determining taxonomy-aligned
economic activities saw us re-assess our classification of activities for 2022. None of the activities identified as taxonomy
aligned was found to meet all necessary technical criteria. Hence, we re-classified all identified activities for 2022 under
taxonomy-eligible activities as shown in column 18 of 2023 reporting tables.
In 2023, the number of identified taxonomy-eligible economic activities in the Krka Group and Krka increased compared
to 2022 because the Taxonomy Climate Delegated Act included new sectors and activities. The key performance
indicators for taxonomy-eligible activities improved mainly on the back of manufacturing pharmaceutical products
(NACE C21.20), which was included in the Taxonomy Climate Delegated Act and qualified as contributing substantially to
pollution prevention and control. We also identified several other activities as taxonomy-eligible due to a better
understanding of the legislation and our continuous effort to improve the reporting system. Year on year, the proportion of
taxonomy-eligible activities in revenue increased by 99.63 percentage points for the Krka Group and 98.15 percentage
points for Krka. The proportion of taxonomy-eligible activities in capital expenditure increased by 63.61 percentage points
2023 Annual Report – Business report
50
for the Krka Group and 71.24 percentage points for Krka year on year. The proportion of taxonomy-eligible activities in
operating expenditure increased by 14.92 percentage points for the Krka Group and 14.16 percentage points for Krka year
on year.
2023 Annual Report – Business report
51
Proportion of turnover from products or services associated with taxonomy-aligned economic activities for the Krka Group
Substantial contribution criteria
DNSH criteria
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Economic activities
Codes
Turnover
Proportion of turnover
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Minimum safeguards
Proportion of taxonomy-
aligned (A.1.) or -eligible (A.2.)
turnover, year 2022
Category enabling activity
Category transitional activity
€
%
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (taxonomy-aligned)
Turnover of environmentally
sustainable activities (taxonomy-
aligned) (A.1)
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
– Of which enabling
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
– Of which transitional
0.00
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
Electricity generation using solar
photovoltaic technology
D35.11,
D42.22
13,330
0.001%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Construction, extension and operation
of waste water collection and
treatment
E37.00
F42.99
0
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.01%
Collection and transport of non-
hazardous waste in source-
segregated fractions
E38.11
267,000
0.01%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.02%
Residential care activities
Q87.10
18,245,386
1.01%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Manufacture of pharmaceutical
products
C21.20
1,754,177,000
97.00%
N/EL
N/EL
N/EL
EL
N/EL
N/EL
0.00%
Hotels, holiday, camping grounds and
similar accommodation
I55.10
29,450,614
1.63%
N/EL
N/EL
N/EL
N/EL
N/EL
EL
0.00%
Turnover of taxonomy-eligible but not
environmentally sustainable activities (not
taxonomy-aligned activities)
1,802,153,330
99.66%
1.02%
0.00%
0.00%
97.00%
0.00%
1.63%
0.03%
-
-
A. Turnover of taxonomy-eligible activities
(A.1 + A.2)
1,802,153,330
99.66%
1.02%
0.00%
0.00%
97.00%
0.00%
1.63%
0.03%
-
-
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of taxonomy-non-eligible activities
6,208,670
0.34%
Total
1,808,362,000
100.00%
2023 Annual Report – Business report
52
Proportion of capital expenditure (CapEx) from products or services associated with taxonomy-aligned economic activities for the Krka Group
Substantial contribution criteria
DNSH criteria
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Economic activities
Codes
Turnover
Proportion of turnover
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Minimum safeguards
Proportion of taxonomy-
aligned (A.1.) or -eligible (A.2.)
turnover, year 2022
Category enabling activity
Category transitional activity
€
%
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (taxonomy-aligned)
CapEx of environmentally sustainable activities
(taxonomy-aligned) (A.1)
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
– Of which enabling
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
– Of which transitional
0.00
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
Electricity generation using solar
photovoltaic technology
D35.11,
D42.22
1,500
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Transmission and distribution of
electricity
D35.12,
D35.13
3,000
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.32%
District heating/cooling distribution
D.35.30
273,000
0.20%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Installation and operation of electric
heat pumps
D35.30,
F43.22
265,000
0.19%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Production of heat/cool from fossil
gaseous fuels in an efficient district
heating and cooling system
D35.30
250,000
0.18%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Construction, extension and operation
of water collection, treatment and
supply systems
E36.00
F42.99
17,000
0.01%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Construction, extension and operation
of waste water collection and
treatment
E37.00
F42.99
772,000
0.57%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.50%
Renewal of waste water collection and
treatment
E37.00
1,239,000
0.91%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Freight transport services by road
H49.4.1.
H53.10
H53.20
N77.12
247,000
0.18%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Infrastructure for personal mobility,
cycle logistics
F42.11
F42.12
F42.13
F43.21
M71.12
M71.20
120,000
0.09%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Construction of new buildings
F41.1
F41.2
F43
18,965,000
13.90%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Renovation of existing buildings
F41
F43
4,600,000
3.37%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.35%
2023 Annual Report – Business report
53
Installation, maintenance and repair of
charging stations for electric vehicles
in buildings (and parking spaces
attached to buildings)
F42
F43
M71
C16
C17
C22
C23
C25
C27
C28
20,000
0.01%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Data processing, hosting and related
activities
J63.11
9,742,000
7.14%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Manufacture of pharmaceutical
products
C21.20
51,884,000
38.03%
N/EL
N/EL
N/EL
EL
N/EL
N/EL
0.00%
CapEx of taxonomy-eligible but not
environmentally sustainable activities (not
taxonomy-aligned activities)
88,398,500
64.79%
26.76%
0.00%
0.00%
38.03%
0.00%
0.00%
1.18%
-
-
A. CapEx of taxonomy-eligible activities
(A.1 + A.2)
88,398,500
64.79%
26.76%
0.00%
0.00%
38.03%
0.00%
0.00%
1.18%
-
-
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of taxonomy-non-eligible activities
48,034,500
35.21%
Total
136,433,000
100.00%
2023 Annual Report – Business report
54
Proportion of operating expenditure (OpEx) from products or services associated with taxonomy-aligned economic activities for the Krka Group
Substantial contribution criteria
DNSH criteria
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Economic activities
Codes
Turnover
Proportion of turnover
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Minimum safeguards
Proportion of taxonomy-
aligned (A.1.) or -eligible
(A.2.) turnover, year 2022
Category enabling activity
Category transitional
activity
€
%
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (taxonomy-aligned)
OpEx of environmentally sustainable activities
(taxonomy-aligned) (A.1)
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
– Of which enabling
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
– Of which transitional
0.00
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
Electricity generation using solar
photovoltaic technology
D35.11,
D42.22
5,000
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Transmission and distribution of
electricity
D35.12,
D35.13
198,000
0.10%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.16%
District heating/cooling distribution
D35.30
104,000
0.05%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.15%
Production of heat/cool using waste
heat
D35.30
52,100
0.03%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.05%
Production of heat/cool from fossil
gaseous fuels in an efficient district
heating and cooling system
D35.30
384,000
0.19%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Construction, extension and operation
of waste water collection and
treatment
E37.00
F42.99
2,045,000
1.02%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.19%
Transport by motorbikes, passenger
cars and light commercial vehicles
H49.32
H49.39
N77.11
0
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Renovation of existing buildings
F41
F43
4,589,656
2.28%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Collection and transport of non-
hazardous and hazardous waste
E38.11
E38.12
F42.9
3,690,000
1.84%
N/EL
N/EL
N/EL
N/EL
EL
N/EL
0.14%
Manufacture of pharmaceutical
products
C21.20
20,266,442
10.09%
N/EL
N/EL
N/EL
EL
N/EL
N/EL
0.00%
OpEx of taxonomy-eligible but not
environmentally sustainable activities (not
taxonomy-aligned activities)
31,334,198
15.60%
3.67%
0.00%
0.00%
10.09%
1.84%
0.00%
0.68%
-
-
A. OpEx of taxonomy-eligible activities
(A.1 + A.2)
31,334,198
15.60%
3.67%
0.00%
0.00%
10.09%
1.84%
0.00%
0.68%
-
-
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of taxonomy-non-eligible activities
169,526,495
84.40%
Total
200,860,693
100.00%
2023 Annual Report – Business report
55
Proportion of turnover from products or services associated with taxonomy-aligned economic activities for Krka (2023)
Substantial contribution criteria
DNSH criteria
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Economic activities
Codes
Turnover
Proportion of turnover
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Minimum safeguards
Proportion of taxonomy-
aligned (A.1.) or -eligible (A.2.)
turnover, year 2022
Category enabling activity
Category transitional activity
€
%
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (taxonomy-aligned)
Turnover of environmentally
sustainable activities (taxonomy-
aligned) (A.1)
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
– Of which enabling
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
– Of which transitional
0.00
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
Electricity generation using solar
photovoltaic technology
D35.11,
D42.22
13,330
0.001%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Construction, extension and operation
of waste water collection and
treatment
E37.00
F42.99
0
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.01%
Collection and transport of non-
hazardous waste in source-
segregated fractions
E38.11
267,000
0.02%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.02%
Manufacture of pharmaceutical
products
C21.20
1,644,611,510
98.17%
N/EL
N/EL
N/EL
EL
N/EL
N/EL
0.00%
Turnover of taxonomy-eligible but not
environmentally sustainable activities (not
taxonomy-aligned activities)
1,644,891,840
98.18%
0.02%
0.00%
0.00%
98.1%
0.00%
0.00%
0.03%
-
-
A. Turnover of taxonomy-eligible activities
(A.1 + A.2)
1,644,891,840.00
98.18%
0.02%
0.00%
0.00%
98.17%
0.00%
0.00%
0.03%
-
-
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of taxonomy-non-eligible activities
30,459,223
1.82%
Total
1,675,351,063
100.00%
2023 Annual Report – Business report
56
Proportion of capital expenditure (CapEx) from products or services associated with taxonomy-aligned economic activities for Krka
Substantial contribution criteria
DNSH criteria
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Economic activities
Codes
Turnover
Proportion of turnover
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Minimum safeguards
Proportion of taxonomy-
aligned (A.1.) or -eligible (A.2.)
turnover, year 2022
Category enabling activity
Category transitional activity
€
%
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (taxonomy-aligned)
CapEx of environmentally sustainable activities
(taxonomy-aligned) (A.1)
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
– Of which enabling
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
– Of which transitional
0.00
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
Electricity generation using solar
photovoltaic technology
D35.11,
D42.22
1,500
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Transmission and distribution of
electricity
D35.12,
D35.13
3,000
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.43%
District heating/cooling distribution
D.35.30
273,000
0.24%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Installation and operation of electric
heat pumps
D35.30,
F43.22
265,000
0.24%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Production of heat/cool from fossil
gaseous fuels in an efficient district
heating and cooling system
D35.30
250,000
0.22%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Construction, extension and operation
of water collection, treatment and
supply systems
E36.00
F42.99
17,000
0.02%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Construction, extension and operation
of waste water collection and
treatment
E37.00
F42.99
772,000
0.69%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.11%
Renewal of waste water collection and
treatment
E37.00
1,239,000
1.10%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Freight transport services by road
H49.4.1.
H53.10
H53.20
N77.12
247,000
0.22%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Infrastructure for personal mobility,
cycle logistics
F42.11
F42.12
F42.13
F43.21
M71.12
M71.20
120,000
0.11%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Construction of new buildings
F41.1
F41.2
F43
16,495,000
14.66%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Renovation of existing buildings
F41
F43
2,435,000
2.16%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.48%
2023 Annual Report – Business report
57
Installation, maintenance and repair of
charging stations for electric vehicles
in buildings (and parking spaces
attached to buildings)
F42
F43
M71
C16
C17
C22
C23
C25
C27
C28
20,000
0.02%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Data processing, hosting and related
activities
J63.11
9,742,000
8.66%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Manufacture of pharmaceutical
products
C21.20
49,411,000
43.91%
N/EL
N/EL
N/EL
EL
N/EL
N/EL
0.00%
CapEx of taxonomy-eligible but not
environmentally sustainable activities (not
taxonomy-aligned activities)
81,290,500
72.25%
28.33%
0.00%
0.00%
43.91%
0.00%
0.00%
1.01%
-
-
A. CapEx of taxonomy-eligible activities
(A.1 + A.2)
81,290,500
72.25%
28.33%
0.00%
0.00%
43.91%
0.00%
0.00%
1.01%
-
-
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of taxonomy-non-eligible activities
31,226,418
27.75%
Total
112,516,918
100.00%
2023 Annual Report – Business report
58
Proportion of operating expenditure (OpEx) from products or services associated with taxonomy-aligned economic activities for Krka
Substantial contribution criteria
DNSH criteria
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Economic activities
Codes
Turnover
Proportion of turnover
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular economy
Biodiversity
Minimum safeguards
Proportion of taxonomy-
aligned (A.1.) or -eligible
(A.2.) turnover, year 2022
Category enabling activity
Category transitional
activity
€
%
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y; N; N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (taxonomy-aligned)
OpEx of environmentally sustainable activities
(taxonomy-aligned) (A.1)
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
– Of which enabling
0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
– Of which transitional
0.00
0.00%
0.00%
-
-
-
-
-
-
-
0.00%
-
A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
EL; N/EL
Electricity generation using solar
photovoltaic technology
D35.11,
D42.22
5,000
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Transmission and distribution of
electricity
D35.12,
D35.13
198,000
0.11%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.17%
District heating/cooling distribution
D35.30
104,000
0.06%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.16%
Production of heat/cool using waste
heat
D35.30
52,100
0.03%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.05%
Production of heat/cool from fossil
gaseous fuels in an efficient district
heating and cooling system
D35.30
384,000
0.21%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Construction, extension and operation
of waste water collection and
treatment
E37.00
F42.99
2,045,000
1.09%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.20%
Transport by motorbikes, passenger
cars and light commercial vehicles
H49.32
H49.39
N77.11
0
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Renovation of existing buildings
F41
F43
4,589,656
2.46%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Collection and transport of non-
hazardous and hazardous waste
E38.11
E38.12
F42.9
3,690,000
1.97%
N/EL
N/EL
N/EL
N/EL
EL
N/EL
0.12%
Manufacture of pharmaceutical
products
C21.20
16,736,361
8.96%
N/EL
N/EL
N/EL
EL
N/EL
N/EL
0.00%
OpEx of taxonomy-eligible but not
environmentally sustainable activities (not
taxonomy-aligned activities)
27,804,117.00
14.88%
3.95%
0.00%
0.00%
8.96%
1.97%
0.00%
0.72%
-
-
A. OpEx of taxonomy-eligible activities
(A.1 + A.2)
27,804,117.00
14.88%
3.95%
0.00%
0.00%
8.96%
1.97%
0.00%
0.72%
-
-
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of taxonomy-non-eligible activities
159,057,956
85.12%
Total
186,862,073
100.00%
2023 Annual Report – Business report
59
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
2023 Annual Report – Business report
60
Krka Group development strategy
23
The current Krka Group development strategy covering the five years from 2024 to 2028 was prepared by the Management
Board and approved by the Supervisory Board of Krka in November 2023. 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 corporation, since it
operates through subsidiaries and representative offices abroad, along with collaborative ventures with partners in all
locations where it operates. It regards all business processes within the Krka Group, from development and production to
marketing and sales, including all support processes. The Krka Group revises its development strategy every two years.
The next update is planned for autumn 2025.
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 taken into account
when identifying potential avenues and opportunities for further development and sustained independence going forward.
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 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.
The strategy also considers risk management, which is an essential component of 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 may hinder 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.
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; Corporate Identity Committee; and
Sustainability 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.
To maintain and improve the Krka Group’s standing on the global stage, 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
2023 Annual Report – Business report
61
Key strategic objectives of the Krka Group up to 2028
To attain at least a 5% annual sales growth average 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 classes.
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 and vertically integrated products account for the largest possible proportion in total sales in addition to the
existing range of products, including core products from key therapeutic areas.
To introduce innovative products in key therapeutic areas, namely combinations, innovative delivery systems, and dosage forms,
as an innovative generic pharmaceutical company. To continue developing complex products, including peptides, and enter new
therapeutic areas.
To increase outsourcing pertaining to the development and production of selected APIs and finished products, while assuring an
appropriate standard of quality.
To ensure growth through long-term partnerships, targeted acquisitions, and 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.
To pursue a stable dividend policy and consider the Krka Group’s financial requirements for investments and acquisitions when
determining the net profit share for dividend payment 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 exploit digitalisation potentials in all business phases.
To maintain independence.
Key strategic guidelines of the Krka Group up to 2028
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, Czechia, 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 increasing our sales and market shares, especially in therapeutic classes with a traditionally strong Krka’s presence
(cardiovascular system, central nervous system, gastrointestinal tract, and pain relief), and in classes with a high growth potential
(diabetes and blood and blood-forming organs).
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 subsidiaries. To continue product registration and sales activities and win tenders in China through direct presence in
the market.
Products
To evaluate individual projects relating to biosimilars in the European markets together with strategic partners, particularly
regarding Krka’s role in marketing authorisations, marketing, and sales. To prioritise therapeutic areas close to Krka products, such
as the treatment of diabetes.
To study new therapeutic approaches and research promising areas, especially in oligonucleotides and small interfering ribonucleic
acid (siRNA).
To rationally extend the non-prescription product range with products that complement key therapeutic areas as regards
prescription pharmaceuticals. To focus on Slovenia and markets of Regions East Europe 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 supplement the range of antiparasitics and pain relief medicines with dermatologicals and cardiovascular agents.
To maintain the range of products for farm animals. To focus on our key markets and all markets in Region West Europe.
Development and manufacture of products and quality
To strengthen cost-effective vertical integration, from product development, through production and to sales.
2023 Annual Report – Business report
62
To develop generic medicines, 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 the 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.
To strengthen all types of connections with external institutions and companies in the field of development and elsewhere.
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, particularly in
joint ventures, where we strive to hold more than 50% stake.
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 the financial community, as well as 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. To develop business analytics
(SAP BW/SAP Hana) in data strategy, also by using modern cloud solutions and artificial intelligence, and to monitor the
effectiveness of data source implementation and use throughout the entire supply chain (key performance indicators, overall
equipment effectiveness, showrooms).
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 suitable talent attraction and retention strategies.
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 compliance.
Objectives by markets
To strengthen our position as one of the five leading generic pharmaceutical companies in our traditional markets (Regions Slovenia ,
South-East Europe, Central Europe, and East Europe). This involves increasing our sales and market shares, in particular in
therapeutic classes and molecules with already strong Krka’s presence (cardiovascular system, central nervous system,
gastrointestinal tract, pain relief, cough and cold, and companion animals), and in classes with a high growth potential (diabetes,
blood and blood-forming organs). To continue a proactive sales policy and maintain strong, high-quality marketing and sales teams
in all markets. To consolidate Krka’s reputation, high direct customer satisfaction scores, and the recognition of products marketed
under Krka’s brands among doctors, veterinarians, pharmacists, in pharmacies and wholesalers. To continue to optimise our product
range and take advantage of business opportunities in the markets.
To enhance the visibility of Krka (Krka and TAD brands) and our market position in markets of the Region West Europe, primarily
through our subsidiaries and unrelated partners, and to improve our position as one of the ten leading generic pharmaceutical
companies in all western European markets. To achieve sales growth in volume and/or value exceeding the Krka Group sales growth
average. To maximise the current product range potential and extend the product range in the existing therapeutic areas while
entering new ones, primarily with medicines for treating diabetes and cancer. To strengthen our position and reputation with
pharmacists and selected target groups of doctors. To strengthen the recognition of Krka’s companion animal product range.
To market our products under our brand names in the Region Overseas Markets and through partnerships with unrelated parties. To
enter new markets by acquisitions and establishing specialised local joint ventures in which Krka has the majority share (marketing
authorisations, marketing, etc.). To identify a selected overseas market as a key market. To continue marketing authorisation and
sales activities and win tenders in China through direct presence in the market.
2023 Annual Report – Business report
63
Product and service portfolio
Prescription pharmaceuticals
To retain the cardiovascular system, the central nervous system, the gastrointestinal tract, and pain relief as the key therapeutic
areas. To add diabetes to our key therapeutic areas. To add blood and blood-forming organs to our key therapeutic areas.
To introduce innovative products, in addition to generic products, in the market of leading medicines (innovative combination
medicines, new strengths, dosage forms) in the key therapeutic areas.
To supplement the portfolio of antidiabetics, antithrombotics, and oncology medicines with new products.
To supplement the range of (double or triple) combinations for the treatment of hypertension, hyperlipidemia, heart failure, diabetes,
and pain relief.
To evaluate the possibility of entering other therapeutic areas with our own products or products of unrelated partners.
To monitor and evaluate the possibility of entering the therapeutic area of complex peptides.
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
before and/or during the launching phase.
To launch products with higher sales potential among the first generics—right after patent expiry.
To adapt marketing authorisations for 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 try to launch at least one new medicine every year in most markets.
Non-prescription products
To retain pain relief, cough and cold, and gastrointestinal tract and metabolism as our key therapeutic areas.
To supplement the umbrella brands in key therapeutic areas 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, which are promising and have appropriate economic value.
To focus on Slovenia and markets of Regions East Europe, Central Europe, 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 evaluate the possibility of entering the therapeutic
area of cardiovascular diseases.
To expand the product range for companion animals with new combinations, dosage forms (soft chewable tablets), and technologies.
To maintain the existing range of products for farm animals.
To focus on selected traditional markets and selected markets in Region West Europe, where we already have our own marketing
and sales network for human health products.
Health resort and tourist services
To deliver at least 3% average annual revenue growth and increased profitability.
To ensure that foreign visitors account for one-third of total visitors.
Delivering on Krka Group objectives in 2023
In 2023, the Krka Group sales revenue amounted to €1,806.4 million, up 5% on 2022 and 3% more than planned. Of that, revenue
from contracts with customers on sales of products and services amounted to €1,799.0 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 €313.7 million was higher than planned.
The number of the Krka Group employees was 1.6% higher than at the end of 2022.
2023 Annual Report – Business report
64
Krka Group business objectives for 2024
Product and service sales are expected to reach €1.850 billion.
The proportion of sales in markets outside Slovenia is estimated at 94%.
Prescription pharmaceuticals will remain the most important product class, accounting for 81% of total sales.
Profit is planned at just over €310 million.
The total number of employees in Slovenia and abroad is expected to increase by 3%.
We plan to allocate just over €150 million to investments, primarily for expanding and modernising production facilities and
infrastructure.
Krka Group sustainability management
25
Incorporating sustainability criteria into the management of the Krka Group aims to enhance its improved business
performance throughout the 2024–2028 strategic period. Our objective is to advance and enhance the value of the Krka
Group as a whole by implementing a comprehensive ESG governance process.
In early 2022, David Bratož, a Member of the Management Board, was appointed as Krka Group sustainability officer. He
facilitates the implementation of the ESG policy, while Finance is dedicated to integrating ESG topics into the strategy. An
interdisciplinary sustainability project team has also started on its work. In 2023, the Sustainability Committee, which
operates under the umbrella ESG policy, commenced its work. Management teams of all organisational units discussed
the sustainable management model at strategic meetings.
We identified upgrading sustainability aspects of governance 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 undertook a comprehensive process to update the list of our key
stakeholders and revise material ESG topics of the Krka Group. Subsequently, the Management Board approved the
revised topics after a resolution was passed. Their boundaries were verified through structured discussions with
representatives of key stakeholder groups, where we examined their understanding, assessment, and expected
disclosures. These findings will guide us in enhancing 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 took into
account the interests and expactations of key stakeholders regarding the industry and the Krka Group, along with
regulatory requirements, professional guidelines and standards, media analyses, future risks, and opportunities concerning
the environment, society, and governance.
25
GRI 2-13
26
GRI 3-1
2023 Annual Report – Business report
65
We utilised the collected information as the foundation 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
ESG goals
The Company’s Supervisory Board and Management Board adopted revised strategic goals in key sustainability areas.
For the first time, sustainability management and ESG goals were fully incorporated into the 2024–2028 Krka Group
Development Strategy. The adopted goals complement the Krka Group’s ESG Policy and contribute to our long-term
business success. They outline specific strategic directions, goals, and key performance indicators (KPI) in key
sustainability areas. The summary of strategic ESG goals is published on Krka’s corporate website.
Environmental (E)
Indicator
Objective by 2028
2023 result
Notes
Specific use of energy (TJ/billion units)
<80
73.2
Attained
Scope 1 and 2 emission reduction compared to
2019
-48%*
-4.1%
compared to 2022
According to plans
Specific waste volume reduction per year
-3%
-5.4%
Attained
* Objective by 2030
Social (S)
1. Product quality and patient safety
Indicator
Objective by 2028
2023 result
Notes
Critical non-compliances identified in inspections by
authorised bodies or partner audits
0
0
Attained
Complaints to released batches ratio
<1%
0.68%
Attained
Objectives of reducing the Krka Group’s carbon footprint by 2050
The Krka Group intends to further reduce its carbon footprint. We will monitor trends and leverage the best available
decarbonisation technologies in transport and the supply of carbon-neutral energy sources (renewables, hydrogen,
etc.) and utilise them in our processes wherever feasible. We will monitor the content and requirements of the CS3D
Directive regarding the preparation of decarbonisation plans aligned with the Paris Agreement and climate neutrality
by 2050. Emerging technologies, carbon-free energy sources, and new legislation will have a considerable impact on
the effective implementation of sustainable environmental policies in the near future. Maintaining growth, development,
and competitiveness in the global market is paramount for Krka.
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66
2. Recruitment, development and talent management; employee diversity, inclusion and participation; employee
safety, health and well-being
Indicator
Objective by 2028
2023 result
Notes
Employees trained in sustainability, corporate
compliance and human rights
All employees every
two years
11,659 employees or
98.9%
Attained
(excluding long-term
absences)
Key and promising employees in the Krka Group
≥10%
14.5%
Attained
Revenue allocated to education
0.35–0.50%
0.48%
Attained
Training hours per employee
40
42
Attained
LTIFR
<5
2.46
Attained
Number of fire drills
>45
73
Attained
Hours of training in health and safety at work
>10,000
23,122
Attained
3. Patient-tailored product portfolio; expert support for health professionals; initiatives to raise awareness of
healthy lifestyles and identification of widespread diseases; uninterrupted supply of medicines; affordable
medicines
Indicator
Objective by 2028
2023 result
Notes
Average sales volume growth per year
5%
5%
Attained
Average increase in patients treated with Krka’s
cardiovascular agents – direct contribution to the
relevant sustainable development goal from the
2030 Agenda for Sustainable Development
3%
3%
Attained
Position in key therapeutic areas, for example
cardiovascular diseases (hypertension,
hyperlipidemia), in traditional markets
Remain one of the
leading
manufacturers
The leading
manufacturer of
RAAS agents in
terms of sales value,
the leading
manufacturer of
sartans, the leading
generic manufacturer
of ACE inhibitors,
and the leading
manufacturer of
hypolipemics in
traditional markets
Attained
Proportion of sales generated by Region Overseas
Markets in total Krka Group sales
Increase the
proportion in total
Krka Group sales
4.2%
Attained;
3.9% in 2022
Ready availability of medicines and direct customer
satisfaction measured by customer satisfaction
index (CSI)
The Krka Group’s
average CSI
>80%
91.9%
Attained
4. R&D and culture of innovation
Indicator
Objective by 2028
2023 result
Notes
R&D intensity
10%
9.9%
An increase compared
to 2022 (9.5%); revenue
outpaced R&D expenses,
resulting in the proportion
being slightly under 10%
2023 Annual Report – Business report
67
Governance (G)
1. Resilient and flexible vertically integrated business model
Indicator
Objective by 2028
2023 result
Notes
Investments – average annual CapEx
€140 million
€131.9 million
Growth compared to 2022
(€106.0 million)
2. Prosperous business operations and financial strength
Indicator
Objective by 2028
2023 result
Notes
EBITDA margin
>25%
27.9%
Attained
Net profit of majority shareholders for dividend pay-
outs
≥50%
56.3%
Attained
3. Ethics in clinical trials and R&D
Indicator
Objective by 2028
2023 result
Notes
Corrective actions to meet ethics in clinical trials
0
0
Attained
4. Anti-corruption, human rights
Indicator
Objective by 2028
2023 result
Notes
Documented cases of fraud, corruption, non-
compliance, unethical, unprofessional, or unlawful
conduct by employees
0
0
Attained
Cases of human rights violations in the Krka Group
0
0
Attained
5. Fair marketing and sales practices
Indicator
Objective by 2028
2023 result
Notes
Unethical or legally inappropriate marketing activity
claims
0
0
Attained
Off-label promotion claims
0
0
Attained
6. Tax policy and transparency
Indicator
Objective by 2028
2023 result
Notes
Zero tax adjustment and sanction rate in tax control
or inspection procedures in compliance with Krka’s
tax management principles
0
0
Attained
2023 Annual Report – Business report
68
2024 macroeconomic forecast
Dispersed international operations and the vertically integrated business model ensure the Krka Group’s stable
performance despite shifting states of play in key markets.
Following a robust expansion in 2022, the European economy lost momentum in 2023. Real GDP experienced minimal
growth in the first three quarters of 2023 and contracted slightly in the fourth quarter of the year. A high cost of living took
a heavier toll than expected. Global trade and exports provided little support. Meanwhile, the response of restrictive
monetary policy to high inflation worked its way through the economy. Fiscal support for economic activity was partly
phased out. Going forward, growth is expected to rebound slightly as consumption recovers, driven by rising real wages
and strengthening external demand due to moderate growth of the Chinese economy and despite an expected recession
in the US. In the labour market, there are some signs of cooling. A reduction in fiscal stimulus will hinder more robust
economic growth.
Inflation in the EU is forecast to fall in 2024, driven by lower wage growth and higher unemployment. Inflation is set to drop
below the target level of 2% in 2025. The European Central Bank raised its interest rates several times in 2023 and is
likely to wait with rate cuts until a return to the target level is absolutely certain. Inflation rates listed for each country reflect
the average annual growth of retail prices.
2024 macroeconomic forecast
Country
Pharmaceutical
market growth
(%)
Projected value of
pharmaceutical
market at
wholesale prices
(€ million)
FX rate
(currency/€)
Annual change in
GDP
(%)
Annual inflation
rate
(%)
Slovenia
8
1,015
Euro area
1.9
2.9
Croatia
10
1,800
Euro area
2.6
2.5
Romania
14
6,000
5.0
2.9
5.8
Russian Federation
6–7
RUB2,220 billion
103
1.5
6.4
Ukraine
1–2
3,200
42
3.9
7.5
Poland
11
10,200
4.5
2.7
5.2
Hungary
5
2,700
380
2.4
4.5
Czechia
9
4,700
24.5
1.1
2.9
Slovakia
7
1,970
Euro area
2.3
3.5
Western Europe
3
288,218
Primarily Euro area
0.2
2.3
Pharmaceutical market forecasts are based on estimates by market data providers (e.g. IQVIA), the Evaluate
®
European Market Outlook database,
and internal estimates. Other forecasts are based on bank reports and European Commission reports.
Slovenia
Following a downward revision of the 2022 growth rate to 2.5%, growth further decelerated to 1.3% in 2023, reflecting
weaker consumption and exports. The direct economic impact of flooding appeared to have been limited. With inflation
easing, growth is set to accelerate to 1.9% in 2024 thanks to strong investment activity and expected gains in real
purchasing power. Limited availability of workers is expected to remain the predominant factor in the labour market. The
unemployment rate is projected to decline slowly but steadily, while wage growth is expected to outpace inflation. In 2023,
inflation stood at 7.2%. and is anticipated to drop to 2.9% in 2024. The general government deficit peaked at 3.7% of GDP
in 2023 due to weaker growth, one-off expenditure on post-flood reconstruction, and measures to mitigate the impact of
high energy prices. The deficit is projected to narrow to 3.3% of GDP in 2024 on the back of subsidy reductions and
discontinuation of measures taken to alleviate the impact of high energy prices. The public debt-to-GDP ratio is expected
to decline further, dropping from 69.3% in 2023 to 68.4% in 2024. This decline can be attributed to headline deficit changes
and the nominal GDP increase. Fiscal projections largely depend on post-flood reconstruction expenditure and additional
sources of tax revenue. The anticipated public sector wage system reform could also significantly affect public finances.
We project the sales value of pharmaceuticals in 2024 to be €1,015 million, marking an 8% increase year on year.
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69
Croatia
In 2023, a 2.6% growth in GDP was attributed to the adoption of the euro and accession to the Schengen area. In 2024,
growth is expected to remain the same. Domestic demand growth is set to accelerate as inflation abates. Net export
contribution to GDP growth is expected to decrease significantly. The primary threat to the economic outlook is inflation,
which has been more persistent in Croatia than in most of the euro area. Employment growth is projected to be solid,
bringing the unemployment rate to new record lows. The easing of inflation can be attributed to declining energy and food
prices, whereas the growth in service prices remains more persistent. Inflation averaged 8.4% in 2023 and is projected to
drop to 2.5% in 2024. High one-off fiscal revenue, the continuation of GDP growth, and high inflation turned the government
deficit into a small surplus of 0.1% of GDP in 2023. Looking ahead, the public surplus is expected to be adversely impacted
by significant rises in public sector wages and social benefits, leading to an increase in fiscal expenditure. In 2024, general
government deficit is expected to stand at 1.8% of GDP. Public debt is set to further decrease from 60.8% of GDP in 2023
to 58.8% of GDP in 2024.
We expect the value of the Croatian pharmaceutical market to grow by 10% in 2024 compared to the previous year, to
approximately €1.8 billion.
Romania
Real GDP growth slowed to 1.8% in 2023 due to high inflation constraining real disposable incomes, tight financial
conditions, and lower external demand. Real GDP growth is projected to gradually accelerate to 2.9% in 2024, supported
by solid increases in real disposable income, credit activity, and investment. The labour market is expected to remain tight
despite weaker GDP growth, keeping wage increases high. The unemployment rate declined in 2023 and is expected to
remain low going forward. Inflation is protracted. The slow easing of inflation to just under 10% in 2023 can be attributed
to lower energy prices and restrictive financial conditions. Inflation is projected to slow sharply in the coming years. In 2023,
the general government deficit was 6.3% of GDP, and is forecast to fall to 5.3% of GDP in 2024 due to the implementation
of new fiscal consolidation measures. The general government debt increased to 47.9% of GDP in 2023 and is projected
to reach 48.9% of GDP in 2024.
We expect the value of the Romanian pharmaceutical market to grow by 14% year on year, reaching €6 billion in 2024.
Russian Federation
Russian economy rebounded in 2023 on the back of stronger domestic demand underpinned by fiscal stimulus. In 2023,
GDP grew by 3.6%. Going forward, GDP growth is projected to slow again due to weakening household spending,
production bottlenecks, and especially labour shortages. Moderation of economic growth at 1.5% in 2024 is also expected
on the back of tight monetary policy. The unemployment rate dropped to a record low of 3%. Labour market conditions are
expected to persist in driving up wage growth. Inflationary pressure was modest at the start of 2023 but intensified in the
subsequent months. In 2023, inflation was 6.3%. Given the ongoing inflationary pressures and weakening rouble on the
back of a shrinking current account surplus, the Central Bank of Russia gradually hiked its reference interest rate to 16%
in the second half of 2023. In 2024, inflation is expected to reach 6.4%. The government deficit saw a slight drop to 2% of
GDP in 2023 and is forecast to stabilise at 1.4% of GDP in 2024. The government partly covered its financing needs from
the National Wealth Fund in 2023. With the government’s intention to reintroduce the temporarily suspended fiscal rule,
which requires saving a part of oil revenue in the National Wealth Fund, public debt is projected to rise, surpassing 15%
of GDP in 2024.
We expect the value of the Russian pharmaceutical market to reach RUB2,220 billion in 2024 and grow by 6 to 7% in
national currency year on year.
Ukraine
Economic activity in 2023 surpassed initial expectations thanks to continued grain exports, assistance from international
partners, and the government’s commitment to ensure macroeconomic stability. Growth reached 5.4% in 2023. The
economic outlook largely depends on the scale of international assistance. Economic growth is projected to remain
moderate in 2024, at around 4%. Inflation fell to 13.1% in 2023. This was driven mainly by falling food prices following a
2023 Annual Report – Business report
70
record harvest and increased supply. In 2024, inflation is expected to decline to 7.5%. A noticeable trade deficit in 2023
was attributed to increased imports and restrictions on domestic production activity limiting exports. Inflow of international
assistance is key to funding government spending. Fiscal deficit should see some narrowing in 2024. Public debt
decreased in 2023 and is forecast to fall further to 60% of GDP in 2024.
We expect the value of the Ukrainian pharmaceutical market to increase by 1 to 2% and total €3.2 billion in 2024.
Poland
Following a deceleration to 0.2% in 2023, economic growth is set to rebound in the upcoming years, supported by a
rebound in private consumption, additional government social support, public consumption, and diminishing inflationary
pressures. GDP is set to grow by 2.7% in 2024. Employment increased in 2023 despite economic growth decelerating.
The unemployment rate was close to 3%, a historical low. Growth in real wages is set to accelerate. Inflation peaked in
the first half of 2023 and fell to 10.9% by the end of the year. In 2024, inflation is expected to decline to 5.2%. The general
government deficit increased to 5.8% of GDP in 2023. Public expenditure is forecast to remain high due to planned
investments in defence and social spending, slowing down the rebalancing of the general government budget. In 2024,
the general government deficit is forecast to decrease to 4.6% of GDP, helped by accelerated economic growth. The
general government debt increased to 50.9% of GDP in 2023. The substantial deficits and adjustments linked to military
investments are expected to elevate the public debt ratio, projected to reach 54.4% of GDP in 2024.
With expected growth of 11% in 2024, the value of the Polish pharmaceutical market is estimated at approximately
€10.2 billion.
Hungary
Hungary’s economy remained in recession in 2023 causing a significant slippage in the 2023 budget. Hungary’s economy
contracted by 0.8%. Lower commodity prices and easing financing conditions are set to support a gradual recovery in 2024,
with GDP growth recovering to 2.4%. In spite of the recession, the unemployment rate remained low at 4.1%, as companies
were hesitant to shed workers in an environment of persistent labour shortages. The tight labour market and nominal wage
growth are expected to persist. Inflation is retreating from its high levels, bound to ease from 17% in 2023 to 4.5% in 2024.
The budget deficit was substantial in 2023, reaching 5.8% of GDP, and is expected to remain elevated, reflecting the
impact of lasting tax cuts adopted in recent years. The government deficit is projected at 4.3% of GDP in 2024. Debt-to-
GDP ratio fell to 70% of GDP in 2023. Debt consolidation is projected to decelerate due to persistently high deficits and
slower nominal GDP growth. The debt ratio is set to reach 71.7% of GDP in 2024.
We expect the Hungarian pharmaceutical market to record 5% growth, reaching €2.7 billion in 2024.
Czechia
After experiencing stagnation in 2023, economic activity in Czechia is expected to accelerate gradually, reaching 1.1%
in 2024. This growth is supported by the anticipated easing of inflation, continued relaxation of financing conditions, and
increasing real wages. The unemployment rate remains at a record low, but a slight increase is expected as the economy
stagnates. Shortages of skilled workers are set to persist. Inflation has declined significantly since early 2023 and
amounted to 12% for the year. In 2024, inflation is set to decline further and is forecast at 2.9%. In 2023, the budget deficit
rose to 3.8% of GDP, primarily driven by expenditures rising faster than GDP due to the indexation to inflation. The budget
deficit is forecast to drop to 2.4% of GDP in 2024 as measures to mitigate the impact of high energy prices expire and the
government implements a consolidation package. Public debt is still low despite its high pace of growth in recent years.
The public debt-to-GDP ratio was 44.7% of GDP in 2023 and is forecast to rise to 45.5% of GDP in 2024.
The Czech pharmaceutical market is expected to grow by 9% in 2024, and its value to reach approximately €4.7 billion.
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71
Slovakia
Slovakia’s GDP expanded by 1.1% in 2023, supported by investment growth propelled by EU structural funds, the
Recovery and Resilience Facility (RRF), and government investments. Economic growth is projected at 2.3% overall
in 2024 due to an expected pick-up in private consumption after the energy price shock. The unemployment rate is
expected to continue decreasing to 5.4% in 2024, reflecting a tight labour market and a continuing trend of shrinking
working-age population. High energy prices pushed inflation to 11% in 2023. The inflation rate is set to drop to 3.5%
in 2024. The general government deficit increased to 5.7% of GDP in 2023 due to new measures to cushion the impact of
high energy prices and new social expenditure. In 2024, the general government deficit is forecast to increase further to
6.5% of GDP despite easing inflationary pressures and the withdrawal of energy-related measures. The government debt-
to-GDP ratio decreased slightly to 56.7% in 2023 before increasing to 59.9% in 2024. The increases are due to high deficits
in previous years.
We expect the value of the Slovakian pharmaceutical market to grow by 7% to €1.97 billion in 2024.
Western Europe
Real GDP growth in 2023 stood at a modest 0.5%. Challenges in export-oriented sectors intensified. Economic activity is
expected to continue to decline in 2024, mainly due to expected weak investment resulting from rising insolvencies, a
contraction in credit activity, and fall in building permits. Export contributions are projected to be limited due to modest
growth in China and the recession in the US. Annual GDP growth in 2024 is estimated at 0.2%, picking up in the second
half of 2024 and continuing in 2025. The unemployment rate is expected to increase from 6.4% in 2023 to 6.5% in 2024.
Inflation stood at 5.4% in 2023 and is expected to rapidly decline in the coming years. Weaker-than-expected domestic
demand and weaker wage growth are likely to see inflation further shrink to 2.3% in 2024. The European Central Bank will
probably hold off on rate cuts until a return to the 2% inflation target is absolutely certain. Budgetary plans for 2024 show
that fiscal adjustment has mostly stalled. However, a sharp rise in borrowing costs and the prospect of EU Excessive
Deficit Procedures could intensify the pressure to rein in spending. General government debt is projected to rise to 90.2%
of GDP in 2024.
We expect the value of the western European pharmaceutical market to grow by 3% to €288.2 billion in 2024.
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72
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. In every
evaluation of business performance, the Audit Committee and the Supervisory Board are briefed about both operational
and financial risk management. The ‘2023 Supervisory Board Report’ outlines their risk management work. The Krka
Group monitors its exposure to diverse risks daily and implements 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 Committee;
• Business Continuity Officer;
• Information Security Officer;
• Chief Compliance Officer;
• Sustainability Coordinator.
Risk management is integrated into all business processes across the Group. The controlling company manages financial
risks centrally at the Group level, while subsidiaries independently manage business risks in accordance with controlling
company guidelines. We apply numerous standard operating procedures relating to quality systems, other bye-laws, and
instructions that set down the activities and responsibilities crucial for enabling uninterrupted operations and mitigating
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 (ISO/IEC 27001);
• Principles of good manufacturing practice (GMP);
• Requirements of the ISO 14001 standard;
• Guidelines relating to the integration of quality management in all business processes; and
• ESG Policy.
Environment, social, and governance (ESG) risks are identified through the double materiality assessment process,
managed as part of various risks, and included in the risk management processes. Governance approaches for specific
material ESG topics are defined in the Krka Group ESG Policy, adopted by Krka Management Board and Supervisory
Board. The Sustainability Committee and the Supervisory Board, Management Board, the ESG coordinator, and
ESG managers responsible for specific sustainability-relevant organisational areas share the responsibility for
ESG issues.
Below we outline Krka’s significant operating risks and our corresponding management of these risks. Every risk
assessment is based on assessing the extent of the damage and the likelihood of occurrence. The final assessment of an
individual risk is made by simultaneous consideration of the potential severity of its impact and the probability of its
occurrence, with due regard to the effectiveness of control measures already in place. 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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73
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 international
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, monitoring of regulatory
requirements, 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
movements 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 causing prolonged interruptions in production and sales 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 a 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 revised at intervals of no more than five years or whenever
significant technological and/or organisational changes occur, new threats emerge, or existing ones intensify.
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 aimed at restoring normal operations as swiftly as possible. Based on the Business Continuity
Management Strategy, we prepare business continuity plans for each critical process or service. 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 annually, ensuring alignment with the business continuity policy and strategy. Exercises
and training play a pivotal role in evaluating the implementation of specific business continuity measures. The Quality
Committee discuss 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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76
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 audits and routine 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 the optimal utilisation of production capacities and measure production efficiency. In this respect, we
introduce measures for continuous process improvement. To fulfil sales demands, we procure new equipment and make
new investements, expanding our production capacities and contract manufacturing cooperations.
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.
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.
We identified drinking and river 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, thanks to public infrastructure upgrades in 2021. In the event of a loss of water supply
from the primary source due to force majeure, there is an option to connect to an alternative water source from the public
infrastructure. River water is stored behind a dam, which ensures a sufficient water level for offdrawing even during
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extended dry periods. The Krka River flow rate is significantly higher than the minimum discharge rate required for offtaking
water from a watercourse in line with the water offtake permit, even in extended dry periods. Therefore, the risk with regard
to water supply is acceptable or low.
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 receive periodic training, and their skills and qualifications are
routinely assessed.
We provide servicing and scheduled maintenance for our systems to uphold the necessary HVAC standards within our
buildings. Our maintenance team is efficiently organised and trained to address operational and maintenance concerns.
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. 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.
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
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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. Internal audits of information
security 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.
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.
We invest 2% of revenue to manage IT risks, including cyber security.
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 upon changes. 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. Consent, including a risk assessment, 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 the exposure of employees who carry out a specific technological procedure. We continually verify the suitability
and appropriateness of technical and organisational measures and personal protective equipment by conducting relevant
measurements during technological operations.
We promote health among our employees and constantly raise awareness of health and safety at work.
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 that no work processes are
disrupted.
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
largescale absences or increased workload.
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.
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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, API Production, 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, adjustments to regulatory requirements, and 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: 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;
• 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. 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.
Sales and marketing risk
The Krka Group has a broad marketing and sales network, selling its products in 73 countries worldwide. It operates in
various 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),
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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.
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, the risks related to entering new markets and new therapeutic areas, and risks
associated with changing practices regarding prescribing and/or dispensing, and/or reimbursing 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 insolvency or bankruptcy, risks related to payment
terms, and other risks related to compliance with contractual provisions.
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 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 Management Board
in the context of performance indicators. At their regular meetings, supervisory bodies of subsidiaries and representative
offices discuss more specific indicators at the level of individual markets.
We consistently comply with the Krka Group ESG Strategy in our business operations. As one of the leading generic
manufacturers and an important partner of local healthcare systems, we enable access to affordable, safe, and efficacious
advanced medicines. The Sustainability Committee discusses indicators such as achieving sales volume growth,
increasing the number of people treated with our products from key therapeutic areas, and monitoring direct customer
satisfaction with our product supply.
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. If we believe that the results of our research work are new and innovative, we
apply for patent protection.
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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.
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 purchasing
various incoming materials, other purchases, and manufacturing processes to manufacturing finished products, quality
control, warehousing, and distribution, all while ensuring the compliance of pharmaceutical products 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 prioritise maintaining data integrity in quality management, thus reducing the risk of misusing test results when
assessing the suitability of raw materials, packaging, processes, and finished products.
Regular monitoring of new legislative developments and prompt implementation of updated requirements mitigate the risk
of inadequacies in the quality system, thereby reducing risks associated with maintaining manufacturing and marketing
authorisations as well as GMP certificates.
We regularly raise awareness and deliver 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.
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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.
As a component of quality risk management, we proactively mitigate the risks associated with the potential loss of
manufacturing authorisations, GMP certificates, and other management systems utilised across Krka’s manufacturing and
distribution units.
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 associated with 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 the Committee for Monitoring
Environmental Aspects meetings 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 reduce the risk of deviations from statutory requirements and loss of reputation due to excessive environmental
pollution by continuously following new developments in legislation, implementing new requirements on time, and carrying
out regular monitoring. We reduced the risks of heavy rainfall events caused by climate change by renovating the sewerage
system for rainwater drainage. We manage waste removal risk by adding waste solvent warehousing facilities, dividing
our waste streams, and engaging several contractual waste collection and removal partners. We manage 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.
We identified the following relevant risks arising from climate change: the risks of water supply, floods, storms, and heavy
downpours, as well as the risks of high temperatures and prolonged drought. Water supply-related risks are defined in the
‘Technical service risks’ segment. All Krka production sites are located in areas that are not at risk of flooding. We took
into consideration prolonged, heavy downpours when renovating the rainwater drainage system. In order to reduce the
impact of storms on our operations, we carry out regular maintenance of buildings and the surroundings. With powerful air
conditioning systems, we ensure suitable conditions for uninterrupted production, even at extremely high temperatures.
We assess that the risks arising from climate change are low or moderate.
In 2023, we recorded no extraordinary events or incidents that had adverse effects 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 devote particular focus to key personnel essential for achieving the objectives of the Krka Group, who are also coveted
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 associated with the shortage of experts in the labour market by actively engaging with the labour market,
bolstering Krka’s image as a reputable employer, working with faculties and schools, and 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 risks centrally in the Finance division of the controlling company in Slovenia.
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 2023, 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
45%
20%
10%
5%
4%
4%
3%
9%
EUR
RUB
PLN
USD
RON
CZK
HUF
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, subsidiary funding by the controlling company, and recorded
purchase orders.
Currency position structure of the Krka Group
The Russian rouble accounted for the major, 45%, share in the currency position of the Krka Group at the end of 2023.
The rouble’s currency position strengthened compared to the beginning of the year. The primary reason for this was a
limited possibility for hedging the rouble with derivative financial instruments. The position in the rouble 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 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 in 2023.
Unlike with other currencies, exposure to the US dollar arises from a surplus of liabilities over assets from regular business
operations, or in other words, the currency position is short. Exposure to the US dollar arises primarily from purchasing
raw and other materials. Considering liquid financial assets in US dollars and dollar forward contracts that together offset
the short financial position from operations, the 2023 year-end exposure to US dollars accounted for 7% of total Krka
Group currency exposure.
The exposure to the Romanian leu, accounting for 15% of the currency position at the end of 2023, arises from trade
receivables accrued due to extended payment terms in Romania. Exposure to the Polish zloty resulted from trade
receivables and manufacturing facilities held by the Group in Poland and accounted for 14% 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 19% of the Krka Group currency position.
2023 currency markets
The different dynamics of consumer price index in certain important Krka’s markets and various measures that monetary
authorities took against the rise in prices enhanced the volatility of important currency pairs in 2023.
The European Central Bank (ECB) aggressively hiked the key interest rate in the first half of 2023, then gradually slowed
the hike in the middle of the year, concluding its rate-hiking cycle at the end of the year. The US Federal Reserve adopted
a similar approach. The central banks of Poland, Hungary, Czechia, and Romania, which raised their interest rates already
in 2022 due to high inflation, did not implement any major changes during the year. However, except for the Romanian
central bank, they gradually lowered the key interest rates towards the end of 2023.
The decline in the rouble’s value started in the last quarter of 2022 already and continued until the end of the first half
of 2023. The downward trend was primarily driven by a reduced trade surplus, which resulted in rising inflation on the back
of relatively stable economic activity. Monetary authorities moderated the inflation and depreciation of the rouble in the
second half of the year with several key interest rate hikes and other measures to protect the value of domestic currency.
The value of the Russian rouble denominated in the euro dropped by 21.5% from the beginning to the end of the year and
was, on average, 20.6% lower than in 2022.
The value of the US dollar denominated in the euro declined by 3.5% over the course of 2023 and was, on average,
2.6% lower than the previous year. The euro/US dollar currency pair fluctuated between 1.05 and 1.13 in 2023. The impact
of the US dollar fluctuations on the Krka Group result was offset using financial instruments.
In 2023, the value of the Ukrainian hryvnia continued to be affected by the Russian invasion and uncertainty regarding the
future economic situation in the country.
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85
For the majority of the year, the value of the Polish zloty experienced a gradual strengthening, with further increases
occurring after the parliamentary elections at the end of September. Over the course of 2023, the value of the zloty
increased by 7.9% and the average value was 3.2% higher than in 2022.
Throughout 2023, the Romanian leu remained highly stable. By mid-2023, the long-term trend of the Czech koruna’s
gradual appreciation against the euro shifted to a slow depreciation. Additionally, the Hungarian forint exhibited less
volatility in 2023 compared to 2022.
2022 and 2023 movements 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 2023, we continued to hedge the US dollar with financial instruments. We used natural hedging to mitigate the risk
exposure to the Russian rouble as there were no suitable financial instruments on the banking market. Due to the declining
value of the Russian rouble denominated in the euro, we generated net foreign exchange losses, primarily in the first half
of 2023.
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 hedging the exposure in the US dollar with financial
instruments in 2023.
We generated net foreign exchange gains from other currencies, primarily owing to the strengthening of the Polish zloty
in the last quarter of 2023. 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.
In 2023, currency risk resulted in a loss of €38.8 million. The Krka Group recorded net financial loss of €32.5 million, which
includes currency risk result, interest income and expenses, and other financial income and expenses.
50
60
70
80
90
100
110
120
130
140
150
160
31 Dec 2021 31 Mar 2022 30 Jun 2022 30 Sep 2022 31 Dec 2022 31 Mar 2023 30 Jun 2023 30 Sep 2023 31 Dec 2023
RON PLN USD CZK HUF RUB
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86
2024 objectives
We intend to remain focused on activities to offset currency exposure using natural hedging methods. We intend to utilise
financial instruments as a partial hedging strategy to mitigate risks associated with volatile currencies, which account for
a substantial portion of Krka’s currency exposure.
2023 foreign exchange rates
31 Dec 2023
31 Dec 2022
Low
High
Average
Standard
deviation
Coefficient of
variation*
RUB
99.97
78.43
73.00
111.02
92.44
10.01
10.8%
RON
4.98
4.95
4.88
4.98
4.95
0.02
0.4%
PLN
4.34
4.68
4.31
4.79
4.54
0.13
2.8%
CZK
24.72
24.12
23.27
24.72
24.00
0.39
1.6%
HUF
382.80
400.87
368.15
403.33
381.85
7.66
2.0%
UAH
41.99
39.49
38.21
41.99
39.74
0.77
1.9%
RSD
117.08
117.22
116.60
117.70
117.12
0.12
0.1%
USD
1.11
1.07
1.05
1.13
1.08
0.02
1.5%
GBP
0.87
0.89
0.85
0.89
0.87
0.01
1.2%
* 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 2023.
2024 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 for 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 700 at the end of 2023, 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.
2023 Annual Report – Business report
87
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 stage of the credit-control process entails ongoing dynamic monitoring of a customer’s payment history. All
Krka Group companies engaged in sales employ information systems to manage available limits and track overdue
receivables each time a product is shipped. 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 complex credit risk situation in 2023 derived from the tense situation in Ukraine, the Russian Federation, and Belarus.
These markets were at our focal point. We continued with our trade receivable management activities. The credit risk
management balance was favourable in 2023. At the end of 2023, the value of trade receivables increased by 26%
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 was lower than the amount of the reversed
allowance. Therefore, net impairments and write-offs of receivables had a positive impact on the Krka Group’s bottom line
in 2023.
30%
20%
35%
15%
Customers’s profitability and
payment habits
Customers’s financial
stability
Internal quality assessment
Country-related risk
2023 Annual Report – Business report
88
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 2023, more than 95% of trade
receivables were insured. After deductibles, more than 80% 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 remained low at the end
of 2023 compared to total trade receivables.
124
6
8
17
34
311
377
460
385
475
0
50
100
150
200
250
300
350
400
450
500
31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022 31 Dec 2023
€ million
Uninsured receivables Receivables insured with insurance company or bank
13
9
12
12
13
72
76
80
79
97
186
168
241
144
212
74
62
58
73
86
86
64
72
91
95
4
3
5
6
6
0
50
100
150
200
250
2019 2020 2021 2022 2023
€ million
Region Slovenia Region South-East Europe Region East Europe
Region Central Europe Region West Europe Region Overseas Markets
2023 Annual Report – Business report
89
Receivables by maturity
2024 objectives
We intend to continue standard credit risk management activities in 2024. The insurance contract for our trade receivables
expires in the second half of 2024. 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. If we determine that individual customer exposure exceeds acceptable levels, we will implement tailored
measures to gradually decrease this exposure.
Our goal is to maintain a low total for receivable impairments and write-offs at the Krka Group level.
Liquidity risk
Business partners value Krka for its excellent financial discipline and stable cash flows. In 2023, 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 2023.
At the end of 2023, the Krka Group recorded cash and cash equivalents primarily as cash at bank or short-term deposits
with first-class commercial banks. Other current liquid assets were held in short-term treasury bills of western European
countries with first-class credit ratings.
The world’s most important central banks raised the key interest rates in 2023. The Krka Group recorded favourable returns
on cash, cash equivalents, and low-risk liquid investments, leading to higher interest income and income from other
financial instruments.
The Krka Group oversees liquid assets in line with internal investment diversification rules, taking into account factors such
as 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 excess cash is deposited with the controlling company. Excess cash
from all Group companies is transferred to the controlling company’s master account either automatically daily (cash
pooling) or manually through individual bank transfers. This allows for cash management optimisation, currency risk
mitigation, an overview of liquidity of all Group companies, and enhanced security of money transactions.
420
375
457
394
481
11
4
7
7
21
1
2 2
0
4
1
1
0
1
1
2
1
1
1
1
0
50
100
150
200
250
300
350
400
450
500
2019 2020 2021 2022 2023
€ 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
2023 Annual Report – Business report
90
The Krka Group also reported favourable and stable liquidity ratios at the end of 2023.
Krka Group liquidity ratios
2023
2022
2021
2020
2019
5-year
average
Current ratio
3.93
3.75
3.21
4.00
3.21
3.62
Quick ratio
2.54
2.42
2.21
2.54
2.02
2.35
Acid test ratio
1.11
1.37
0.69
1.04
0.62
0.97
Receivables turnover ratio
3.65
3.70
3.45
3.50
3.21
3.50
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
2024 objectives
We plan to carefully manage cash flows and excess liquidity within the Krka Group in 2024 to ensure proper liquidity of all
Group companies.
Property, liability, and business interruption insurance
The Krka Group holds insurance policies with insurance companies to insure property, liabilities, and financial losses in
the event of a business interruption. Insurance is only 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 requiring 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.
3.21
4.00
3.21
3.75 3.93
2.02
2.54
2.21
2.42
2.54
0.62
1.04
0.69
1.37
1.11
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2019 2020 2021 2022 2023
Current ratio Quck ratio Acid test ratio
2023 Annual Report – Business report
91
Key insurance policies taken out by the Krka Group to manage risks include insurance for property, general civil liability,
manufacturer’s liability, clinical trials, product recalls, freight-in-transit, and business interruption. Insurance policies also
indicate the main risks, including property protection, especially against disasters (fire, earthquake, flood, storm,
explosion), business interruption at manufacturing plants, and 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 2023 to improve our insurance programme. Krka makes
gradual improvements every year and simultaneously assumes part of the risk through insurance deductibles or by
cancelling low-risk insurance policies. Five insurance audits were conducted in the Krka Group last year, with no critical
recommendations made.
Krka has been investing systematically in damage prevention. Our buildings are designed to minimise their hazard
exposure is as low as possible. They are equipped with active fire protection systems, such as fire and smoke alarms,
sprinkler systems, fire flaps, and emergency lighting. Preventive inspections and fire drills are arranged regularly.
Employees receive theoretical and practical emergency response training.
Planned preventive measures and appropriate insurance policies have effectively minimised property damage in recent
years, and it remains low.
Extent of property damage
The graph does not include car or personal insurance.
29
4
0
25
2
0
5
10
15
20
25
30
2019 2020 2021 2022 2023
€ thousand
Krka Group property damage
2023 Annual Report – Business report
92
Investor and share information
Shareholder return
Krka share price on the Ljubljana Stock Exchange
€
2023
2022
2021
2020
2019
Year high
118.50
120.00
120.00
92.60
74.60
Year low
91.60
80.80
91.20
54.00
56.80
31 December
110.00
92.00
118.00
91.40
73.20
Annual change (%)
19.6
-22.0
29.1
24.9
26.6
In 2023, the Krka share price increased by almost 20%.
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 Annual General Meeting (AGM) decides on the proposed dividend amount. In 2023, we allocated 56.3% of the
consolidated net profit attributable to equity holders of the controlling company generated in 2022 for the dividend payout.
Gross dividend per share increased by 17.2%. 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 majority 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
2023 Annual Report – Business report
93
Dividends and dividend yield
2023
2022
2021
2020
2019
Earnings per share
1
(€)
10.14
11.69
9.92
9.27
7.73
Gross dividend per share
2
(€)
6.60
5.63
5.00
4.25
3.20
Dividend payout ratio
3
(%)
56.3
56.6
53.6
54.3
58.2
Dividend yield
4
(%)
6.0
6.1
4.2
4.6
4.4
1
Net profit for the year attributable to majority 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/Consolidated net profit attributable to majority equity holders of the controlling company
4
Gross dividend per share/Share price as at 31 December
Share trading and shareholding
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 houses 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 2023, the average daily trading volume of
Krka shares on the Ljubljana Stock Exchange reached €0.52 million or 4,800 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 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022 31 Dec 2023
Closing price (€)
Trading volume
(€ thousand)
Trading volume on LJSE Trading volume on WSE Closing price on LJSE
2023 Annual Report – Business report
94
Ten largest shareholders as at 31 December 2023
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
1,555,561
4.74
Erste Group Bank AG - PBZ Croatia Osiguranje
1
1,331,938
4.06
Clearstream Banking SA
1
1,028,314
3.14
Luka Koper, d. d.
433,970
1.32
State Street Bank and Trust
1
350,672
1.07
KDPW
1
346,318
1.06
Privredna banka Zagreb d. d.
1
318,434
0.97
Total
14,174,234
43.22
1
The shares are held in custody accounts with the above-listed banks and are owned by their clients.
At the end of 2023, Krka had 47,172 shareholders.
Shareholder structure (%)
Reference: KDD
In 2023, the Company acquired 130,117 treasury shares valued at €13,899 thousand on the regulated market and held
1,915,966 treasury shares as at 31 December 2023.
Communication with investors
28
We adhere to the highest standards in conducting our business, which also extends 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 carefully examined and presented to our Management Board.
28
GRI 2-29
38.5
38.2
38.8
40.4
41.4
27.1
27.1
27.1
27.1
27.1
7.6
6.8
6.8
6.1
5.5
3.8
4.7
5.1
5.5
5.8
23.0
23.2
22.2
20.9
20.5
31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022 31 Dec 2023
Domestic retail investors State ownership
Domestic legal entities and institutional investors Treasury shares
Foreign investors
2023 Annual Report – Business report
95
In 2023, we participated in 13 investment conferences with investors from more than 15 countries. We organised three
webcasts to present our quarterly business reports. We also hosted Krka Investor Day, where we presented our nine-
month business results and the revised business strategy and highlighted our professional expertise in strategic marketing
and sales at Krka. The event also provided an excellent opportunity for participants to tour Krka’s development and
production facilities. We also held conference calls with more than 100 investors. The Ljubljana Stock Exchange presented
Krka with the Best Investor Relations Award for 2023.
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.
Performance analysis
Operating income
Revenue
In 2023, the Krka Group generated revenue of €1,806.4 million, an €88.9 million or 5% increase on 2022, of which revenue
from contracts with customers on sales of products and services reached €1,799.0 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 4.2% in volume and 6.3% in value.
In 2023, Krka (in this section referred to as ‘the Company’ for clarity reasons) generated revenue of €1,674.6 million, of
which revenue from contracts with customers on sales of products and services amounted to €1,449.7 million, revenue
from contracts with customers on sales of materials totalled €214.9 million, and other revenue from sales reached
€10.0 million), a €121.1 million or 8% increase on 2022.
Operating expenses
The Krka Group posted operating expenses of €1,412.9 million, up €67.5 million or 5% on 2022. The Company accrued
operating expenses totalling €1,353.9 million, up 13% on 2022.
Krka Group operating expenses comprised: cost of goods sold of €779.7 million; selling and distribution expenses of
€347.9 million; R&D expenses of €178.6 million; and general and administrative expenses of €106.8 million. Operating
expenses accounted for 78% of total revenue and, over the past five years, ranged between 75% in 2020 and 83% in 2019.
1,390
1,447
1,381
1,554
1,675
1,493
1,535
1,566
1,717
1,806
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2019 2020 2021 2022 2023
€ million
Company Krka Group
2023 Annual Report – Business report
96
Costs of goods sold, up 5% on 2022, accounted for the largest Krka Group operating expense item. They accounted
for 43.2% of total revenue in 2023, and 43.3% in 2022. Selling and distribution expenses remained at the 2022 level and
accounted for 19.3% of total revenue, down 1.0 percentage point on 2022. R&D expenses constituted 9.9% of total
revenue (up 0.4 percentage points on 2022) and increased by 10%. General and administrative expenses amounted
to 5.9% of total revenue, up 18%, while their proportion in revenue increased by 0.6 percentage points.
Company operating expenses comprised: costs of goods sold of €786.1 million; selling and distribution expenses of
€300.9 million; R&D expenses of €173.8 million; and general and administrative expenses of €93.1 million. Costs of goods
sold, up 19%, accounted for the largest Company operating expense item. They accounted for 46.9% of total revenue, up
4.2 percentage points on 2022. Selling and distribution expenses remained at the 2022 level and accounted for 18.0% of
total revenue, down 1.4 percentage points on 2022. R&D expenses constituted 10.4% of total revenue (up 0.2 percentage
points on 2022) and increased by 10%. General and administrative expenses accounted for 5.6% of total revenue, a
20% increase, while their proportion in total revenue increased by 0.6 percentage points on 2022.
Financial income and expenses
€ thousand
Krka Group
Company
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
Financial income
23,567
57,668
19,711
23,259
24,987
60,964
57,744
24,714
31,786
34,410
Financial
expenses
-56,062
-5,806
-12,082
-75,011
-14,814
-54,223
-3,356
-12,083
-72,837
-14,751
Net financial
result
-32,495
51,862
7,629
-51,752
10,173
6,741
54,388
12,631
-41,051
19,659
In 2023, the Krka Group recorded a net financial loss of €32.5 million, while the Company recorded a net financial gain of
€6.7 million.
Operating in diverse international environments, the Krka Group is subject to foreign exchange risks in specific sales and
procurement markets. The Krka Group currency risk generated a loss of €38.8 million in 2023. Please see pages 83-86
for details about foreign exchange risks.
Krka Group financial income comprised: interest income of €11.2 million; derivative income of €4.3 million; income from
other financial instruments of €7.2 million; and dividend income of €0.8 million. Financial expenses comprised: net foreign
exchange differences of €38.3 million; derivative expenses of €4.8 million; interest expense of €0.5 million; and other
financial expenses of €12.5 million.
Company financial income comprised: interest income of €9.1 million; derivative income of €4.3 million; income from other
financial instruments of €7.2 million; income from dividends and other profit shares of €40.4 million. Financial expenses
comprised: net foreign exchange differences of €42.1 million; derivative expenses of €4.8 million; interest expense of
€3.8 million; and other financial expenses of €3.6 million.
2023 Annual Report – Business report
97
Operating results
Operating profit (EBIT) and net profit for the year
The Krka Group recorded EBIT totalling €399.6 million, up €18.4 million or 5% on 2022. The Krka Group posted EBITDA
totalling €504.2 million, up €15.3 million or 3%.
The Company generated EBIT of €322.3 million, while its EBITDA reached €402.5 million.
In 2023, Krka Group profit before tax decreased by €65.9 million or 15% to €367.1 million. Its effective tax rate was 14.5%.
Company profit before tax amounted to €329.0 million.
29
The Krka Group recorded net profit of €313.7 million, down €49.9 million or 14% on 2022. Profit before tax and net profit
decreased year on year primarily owing to the depreciation of the rouble against the euro in 2023 and strong rouble
appreciation in the year before. Company net profit totalled €294.5 million.
Assets
€ thousand
Krka Group
Company
2023
%
2022
%
Index
2023/22
2023
%
2022
%
Index
2023/22
Non-current
assets
1,059,267
38.3
1,125,025
41.9
94
1,076,235
41.2
1,123,594
44.6
96
Property, plant
and equipment
790,345
28.6
779,336
29.0
101
595,525
22.8
566,780
22.5
105
Intangible assets
102,348
3.7
102,550
3.8
100
26,043
1.0
24,960
1.0
104
Investments and
loans
117,772
4.2
188,309
7.0
63
446,181
17.1
522,545
20.7
85
Other
48,802
1.8
54,830
2.1
89
8,486
0.3
9,309
0.4
91
Current assets
1,705,024
61.7
1,562,475
58.1
109
1,537,636
58.8
1,392,950
55.4
110
Inventories
604,621
21.9
553,332
20.6
109
513,892
19.7
492,978
19.6
104
Trade receivables
509,070
18.4
402,730
15.0
126
463,126
17.7
357,889
14.2
129
Other
591,333
21.4
606,413
22.5
98
560,618
21.4
542,083
21.6
103
Total assets
2,764,291
100.0
2,687,500
100.0
103
2,613,871
100.0
2,516,544
100.0
104
29
GRI 207-4
264
339
273
358
322
249
258
245
348
294
274
391
355
381
400
244
289
308
364
314
0
50
100
150
200
250
300
350
400
2019 2020 2021 2022 2023
€ million
Company EBIT Company net profit Krka Group EBIT Krka Group net profit
2023 Annual Report – Business report
98
At the end of 2023, Krka Group assets were valued at €2,764.3 million, a €76.8 million or 3% increase on year-end 2022.
The ratio of non-current to current assets in the overall asset structure differed from that recorded at year-end 2022, as
non-current assets decreased by 3.6 percentage points and totalled 38.3%.
At the end of 2023, Company assets were valued at €2,613.9 million, an €97.3 million or 4% increase on year-end 2022.
The ratio of non-current to current assets in the overall asset structure differed from that recorded at year-end 2022, as
non-current assets decreased by 3.4 percentage points and totalled 41.2%.
Krka Group non-current assets were valued at €1,059.3 million, a €65.8 million or 6% decrease on year-end 2022. The
most significant item in the Krka Group asset structure was property, plant and equipment (PP&E). It was valued at
€790.3 million and accounted for 28.6% of total Krka Group assets (of which Company PP&E accounted for €595.5 million
or 75% of total Krka Group PP&E). Intangible assets totalled €102.3 million and accounted for 3.7% of total assets (of
which Company assets accounted for €26.0 million or 25% of total Krka Group intangible assets). The Krka Group non-
current loans totalled €70.1 million or 2.5% of total Krka Group assets and included a €30.0 million deposit with maturity
over one year at a Slovenian bank with a high credit rating.
Krka Group current assets were valued at €1,705.0 million and increased by €142.5 million or 9% on year-end 2022.
Inventories amounted to €604.6 million or 21.9% of total Krka Group assets. Trade receivables totalled €509.1 million,
accounting for 18.4% of total Krka Group assets. Inventories increased by €51.3 million or 9% and trade receivables
increased by €106.3 million or 26%, primarily due to foreign exchange losses accrued from the translation of Russian
rouble-denominated receivables into euro. Krka Group current loans amounted to €58.7 million or 2.1% of its total assets,
and included a €50.0 million deposit of the controlling company with maturity of more than 90 days and less than one year
at a foreign bank with high credit ratings. Investments at fair value through profit or loss of €236.8 million represented
investments in treasury bills of western EU states with high credit ratings. Cash and cash equivalents were valued at
€174.0 million, down €344.9 million on year-end 2022, accounting for 6.3% of total Krka Group assets. A decrease in cash
and cash equivalents from the beginning to year-end 2023 resulted primarily from transfers of invested surplus cash. A
portion of cash and cash equivalents was transferred to current loans, while the majority was transferred to investments
at fair value through profit or loss. We transferred the investments in order to disperse credit risk and maturity of individual
investments.
Company non-current assets were valued at €1,076.2 million, a €47.4 million or 4% decrease on year-end 2022. The most
significant item worth €595.5 million or 22.8% of total Company assets was PP&E. Investments in subsidiaries totalled
€357.3 million or 13.7% of total Company assets. Intangible assets of €26.0 million accounted for 1% of total assets.
Company non-current loans totalled €41.2 million or 1.6% of its total assets and included a €30.0 million deposit with
maturity over one year at a Slovenian bank with a high credit rating.
Company current assets were valued at €1,537.6 million and increased by €144.7 million or 10% on year-end 2022.
Inventories totalled €513.9 million, accounting for 19.7% of total Company assets, and trade receivables amounted to
€463.1 million or 17.7% of total Company assets (of which trade receivables due by customers outside the Krka Group
reached €194.7 million). Inventories increased by 4% and trade receivables by 29%. Company current loans totalled
€65.7 million or 2.5% of its total assets and included a €50.0 million deposit with a maturity of more than 90 days and less
than one year at a foreign bank with a high credit rating. Investments at fair value through profit or loss totalled
€236.8 million and represented investments into treasury bills of western European EU countries with a high credit rating.
Cash and cash equivalents were valued at €141.0 million, down €329.3 million on year-end 2022, accounting for 5.4% of
total Company assets. A decrease in cash and cash equivalents from the beginning to year-end 2023 resulted primarily
from transfers of invested surplus cash. A portion of cash and cash equivalents was transferred to current loans, while the
majority was transferred to investments at fair value through profit or loss. We transferred the investments in order to
disperse credit risk and the maturity of individual investments.
2023 Annual Report – Business report
99
Equity and liabilities
€ thousand
Krka Group
Company
2023
%
2022
%
Index
2023/22
2023
%
2022
%
Index
2023/22
Equity
2,181,766
78.9
2,138,509
79.6
102
2,133,258
81.6
2,060,792
81.9
104
Non-current
liabilities
149,218
5.4
132,130
4.9
113
118,930
4.6
102,333
4.1
116
Current liabilities
433,307
15.7
416,861
15.5
104
361,683
13.8
353,419
14.0
102
Total equity and
liabilities
2,764,291
100.0
2,687,500
100.0
103
2,613,871
100.0
2,516,544
100.0
104
As at 31 December 2023, the Krka Group posted €43.3 million or 2% higher equity than at year-end 2022. The rise was
attributable to Krka Group net profit of €313.7 million and acquisition of non-controlling interests of €1.3 million. Equity was
reduced by other comprehensive income net of tax of €53.5 million, dividends paid of €204.4 million, and repurchase of
treasury shares in total of €13.9 million.
The Krka Group recorded provisions of €124.4 million (of which post-employment and other non-current employee benefits
accounted for €113.3 million; provisions for lawsuits €10.6 million; and other provisions €0.5 million), a €17.2 million
or 16% increase on year-end 2022. Provisions for post-employment and other non-current employee benefits increased
by €17.3 million, other provisions declined by €0.1 million, while provisions for lawsuits remained unchanged.
Of Krka Group current liability items, trade payables increased by €12.9 million (of which payables to domestic suppliers
increased by €1.7 million and payables to suppliers abroad by €11.3 million). Current liabilities from contracts with
customers increased by €4.5 million (of which bonuses and volume rebates increased by €6.4 million and right of return
by €0.8 million, while contract liabilities decreased by €2.7 million). Other current liabilities increased by €18.6 million, (of
which payables to employees increased by €19.0 million; derivative liabilities by €2.7 million; while other liabilities
decreased by €3.1 million).
As at 31 December 2023, Company equity increased by €72.5 million or 4% on year-end 2022. The increase was
attributable to Company net profit in total of €294.5 million. Equity was reduced by dividends paid in total of €204.4 million,
a repurchase of treasury shares in total of €13.9 million, and other comprehensive income net of tax in total of €3.7 million.
Company provisions amounted to €114.0 million (of which post-employment and other non-current employee benefits
totalled €103.5 million and provisions for lawsuits €10.5 million). In comparison to the end of 2022, they increased by
€17.4 million or 18%, primarily due to an increase in provisions for post-employment and other non-current employee
benefits. Provisions for lawsuits were brought forward unchanged.
Of Company current liability items, trade payables decreased by €18.3 million. Current liabilities from contracts with
customers decreased by €2.7 million, while other current liabilities increased by €20.4 million. At the end of 2023, the
Company recorded current borrowings from subsidiaries totalling €87.7 million.
Cash flow statement
€ thousand
Krka Group
Company
2023
2022
2023
2022
Net cash from operating activities
227,254
467,651
155,399
407,733
Net cash from investing activities
-343,235
76,414
-296,529
105,073
Net cash from financing activities
-229,822
-187,022
-188,159
-189,807
Net change in cash and cash equivalents
-345,803
357,043
–329,289
322,999
Net change in Krka Group cash and cash equivalents (exclusive of exchange rate fluctuations) yielded a loss of
€345.8 million in 2023, because the positive cash flow from operating activities was lower than the negative cash flow from
investing and financing activities.
2023 Annual Report – Business report
100
The Krka Group generated profit from operating activities before changes in net current assets totalling €446.5 million.
Changes in current assets that had a positive impact on cash flow consisted of changes in trade payables, provisions, and
other current liabilities, while changes in trade receivables, inventories, and deferred income had a negative impact. The
decrease in net cash flow from operating activities was further accrued by income tax paid.
Negative cash flows from investing activities in total of €343.2 million primarily resulted from net investment expenses for
current investments in total of €209.5 million and purchase of property, plant and equipment in total of €130.0 million.
Payments of dividends and other profit shares totalling €204.4 million and treasury share repurchases of €13.9 million
contributed the most to negative cash flows from financing activities in total of €229.8 million.
Performance ratios
Krka Group and Company operating figures for the past five years
€ thousand
Krka Group
Company
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
Revenue
1,806,391
1,717,453
1,565,802
1,534,941
1,493,409
1,674,572
1,553,514
1,381,367
1,447,112
1,390,248
EBITDA
1
504,215
488,895
463,625
502,432
385,437
402,547
440,086
358,188
424,028
345,929
– EBITDA
margin
27.9%
28.5%
29.6%
32.7%
25.8%
24.0%
28.3%
25.9%
29.3%
24.9%
EBIT
2
399,621
381,211
354,788
390,744
274,195
322,308
357,870
273,325
338,882
263,852
– EBIT margin
22.1%
22.2%
22.7%
25.5%
18.4%
19.2%
23.0%
19.8%
23.4%
19.0%
Net profit
313,732
363,662
308,150
288,949
244,272
294,481
348,215
245,216
258,474
249,411
– Net profit
margin
17.4%
21.2%
19.7%
18.8%
16.4%
17.6%
22.4%
17.8%
17.9%
17.9%
Assets
2,764,291
2,687,500
2,536,988
2,235,542
2,184,618
2,613,871
2,516,544
2,427,245
2,208,379
2,129,960
ROA
3
11.5%
13.9%
12.9%
13.1%
11.7%
11.5%
14.1%
10.6%
11.9%
12.3%
Equity
2,181,766
2,138,509
1,919,085
1,751,812
1,667,516
2,133,258
2,060,792
1,876,142
1,791,850
1,664,178
ROE
4
14.5%
17.9%
16.8%
16.9%
15.2%
14.0%
17.7%
13.4%
15.0%
15.5%
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
28.3
23.0
22.4
17.7
14.1
24.0
19.2
17.6
14.0
11.5
28.5
22.2
21.2
17.9
13.9
27.9
22.1
17.4
14.5
11.5
0
5
10
15
20
25
30
EBITDA margin EBIT margin Net profit margin ROE ROA
%
Company 2022 Company 2023 Krka Group 2022 Krka Group 2023
2023 Annual Report – Business report
101
Marketing and sales
In 2023, the Krka Group generated €1,806.4 million from sales of products and services, a 5% year-on-year rise. Of that,
revenue from contracts with customers for sales of products and services amounted to €1,799.0 million, while other
revenue from contracts with customers for sales of material and other sales revenue constituted the difference. Sales in
markets outside Slovenia were €1,685.2 million, accounting for 94% of overall Krka Group sales. Product sales volume
increased by 5%.
Sales by region
30
Region East Europe recorded the highest sales, €594 million or 33% of total Krka Group sales. Region Central Europe
achieved the second highest sales, €397.1 million, or 22.1% of total Krka Group sales. Region West Europe ranked third
in sales with €369.6 million, or 20.5% of total Krka Group sales. Sales generated by Region South-East Europe totalled
€249.3 million or 13.9% of total sales, and by Region Overseas Markets €75.2 million or 4.2% of total sales. Region
Slovenia generated sales of €113.8 million, accounting for 6.3% of total Krka Group sales.
2023 Krka Group sales by region
Krka Group and Krka sales by region
€ thousand
Krka Group
Company
2023
2022
Index
2023/22
2023
2022
Index
2023/22
Region Slovenia
113,777
103,047
110
66,087
60,503
109
Region South-East Europe
249,330
224,523
111
246,512
220,624
112
Region East Europe
593,951
623,377
95
376,988
387,489
97
Region Central Europe
397,079
364,154
109
380,775
351,191
108
Region West Europe
369,624
327,343
113
319,539
284,593
112
Region Overseas Markets
75,208
66,098
114
59,838
51,675
116
Total
1,798,969
1,708,542
105
1,449,739
1,356,075
107
30
GRI 2-6
6.3%
13.9%
33.0%
22.1%
20.5%
4.2%
Region Slovenia
Region South-East Europe
Region East Europe
Region Central Europe
Region West Europe
Region Overseas Markets
2023 Annual Report – Business report
102
Krka Group quarterly sales by region
€ thousand
2023
2022
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Region Slovenia
28,077
28,558
30,043
27,099
23,432
25,988
27,780
25,847
Region South-East Europe
63,526
63,923
59,747
62,134
60,310
58,951
53,575
51,687
Region East Europe
143,493
156,984
133,606
159,868
146,700
140,983
126,464
209,230
Region Central Europe
110,262
102,646
92,105
92,066
99,620
96,443
84,824
83,267
Region West Europe
91,744
89,616
85,039
103,225
84,595
83,941
73,837
84,970
Region Overseas Markets
19,151
18,491
17,870
19,696
15,991
16,486
16,611
17,010
Total
456,253
460,218
418,410
464,088
430,648
422,792
383,091
472,011
Krka Group sales by region over the past five years
Region Slovenia
Sales of products and services in Slovenia, one of Krka’s key markets, amounted to €113.8 million in 2023. Product sales
reached €66.1 million, accounting for 9% growth in value. Prescription pharmaceuticals accounted for the majority or 73%.
Non-prescription products accounted for 23%, and sales of animal health products accounted for the remaining 4%.
Holding a 7.3% market share, we maintained the leading position among providers of generic medicines in Slovenia in
terms of sales value. Health resort and tourist services generated €47.7 million, up 12% on the year before,
contributing 10% to sales growth in the domestic market.
Prescription pharmaceutical sales were predominantly driven by medicines for cardiovascular diseases, the central
nervous system, gastrointestinal tract issues, and pain relief. Market shares of all key therapeutic classes of prescription
medicines increased.
Cardiovascular agents recorded the strongest sales, most notably Prenewel (perindopril/indapamide), Amlessa
(perindopril/amlodipine), Prenessa (perindopril), and Amlewel (perindopril/amlodipine/indapamide). Of our cholesterol-
lowering agents, Sorvasta (rosuvastatin) recorded the most significant sales figures. We bolstered the recognition of two
agents, Sovitimb rosuvastatin/ezetimibe single-pill combinations, and Roxiper perindopril/indapamide/rosuvastatin single-
pill combinations.
Our leading pain relievers included Nalgesin Forte (naproxen) and Doreta (tramadol/paracetamol), including prolonged-
release tablets Doreta SR (tramadol/paracetamol). We also increased the visibility of our non-opioid analgesic Algominal
(metamizole). Nolpaza (pantoprazole) and Emozul (esomeprazole) were our best-selling medicines for gastrointestinal
diseases. From our range of medicines for the central nervous system, our leading products included Asentra (sertraline),
92
85
93
103
114
191
199
209
225
249
481
517
548
623
594
340
341
352
364
397
336
341
305
327
370
49
46
54
66
75
0
100
200
300
400
500
600
700
2019 2020 2021 2022 2023
€ million
Region Slovenia Region South-East Europe Region East Europe
Region Central Europe Region West Europe Region Overseas Markets
2023 Annual Report – Business report
103
Mirzaten (mirtazapine), Dulsevia (duloxetine), Kventiax (quetiapine), Parnido (paliperidone), and Memaxa (memantine).
We extended our antihyperglycemic product range of the dipeptidyl-peptidase 4 (DPP-4) inhibitors with a mono-component
agent Maysiglu (metformin) and a single-pill combination Maymetsi (sitagliptin/metformin). We extended our range of
cardiovascular agents with Tezulix (ranolazine), indicated for the symptomatic treatment of patients with stable angina
pectoris. We added Vitamin D3 Krka 7000 IU (cholecalciferol) to our product portfolio, which is taken once per week.
Sales of non-prescription products were driven by Magnezij Krka, followed by Nalgesin S (naproxen), and Septabene
(benzydamine/cetylpyridinium chloride). We broadened our antihistamine product portfolio with Daselta Control
(desloratadine).
Sales of animal health products were driven by vitamins and minerals Grovit, followed by a fixed-dose combination
Fypryst Combo (fipronil/S-methoprene) used for protection against fleas and ticks. We added a non-steroid anti-
inflammatory and anti-rheumatic chewable tablets Robexera (robenacoxib) to our animal health range.
Krka Group market position in Slovenia
With a 7.3% market share, we ranked first among all generic medicine providers.
Krka produced one in five of all medicines sold in Slovenia.
We were the leading provider of:
• Proton pump inhibitors, accounting for more than a 65% market share;
• Mono-component non-steroidal anti-inflammatory and antirheumatic medicines, accounting for more than a 60% market
share;
• Statins, accounting for approximately a 60% market share;
• Products with effect on the pharynx, accounting for approximately a 45% 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; 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, including rosuvastatin in combination with ezetimibe; sertraline; simvastatin;
tramadol in combination with paracetamol; telmisartan, including telmisartan in combination with hydrochlorothiazide; valsartan,
including valsartan in combination with hydrochlorothiazide; and venlafaxine.
We were the leading provider of generic varieties of aripiprazole; dexamethasone; duloxetine; etoricoxib; olanzapine; and
tamsulosin.
We were the leading provider of non-prescription products as follows: products with effect on the 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),
Doreta (paracetamol/tramadol), and Amlessa (perindopril/amlodipine) were among medicines that generated strongest sales.
Region South-East Europe
Region South-East Europe generated product sales of €249.3 million, up 11% on 2022. We recorded growth in all regional
markets. Absolute growth, however, was the highest in Romania, where our sales increased by €9.2 million year on year.
Serbia saw sales grow by €5.3 million, and Croatia, where sales grew by €5 million, followed in terms of absolute year-on-
year sales growth.
Prescription pharmaceuticals accounted for just under 87%, and non-prescription products accounted for over 10% of
regional sales. Animal health products constituted slightly more than 3% of total regional sales. Our prescription
pharmaceuticals recorded 13% year-on-year growth. Non-prescription product sales levelled with 2022 sales figure, while
animal health products increased by almost 6% on 2022.
In Romania, one of our key markets and the largest regional one, year-on-year sales increased by 15% to €72.4 million.
Our market share reached 1.7% and market share volume 5.1%, respectively, ranking us the country’s fourth largest
foreign provider of generic prescription pharmaceuticals. The leading medicines in terms of sales were Atoris (atorvastatin),
Co-Prenessa (perindopril/indapamide), Nolpaza (pantoprazole), Roswera (rosuvastatin), and Doreta
(tramadol/paracetamol). Our best-selling non-prescription products were Bilobil (ginkgo leaf extract) and Nalgesin brand
2023 Annual Report – Business report
104
products. Companion animal products accounted for the majority of animal health product sales, most notably the Fypryst
brand products, Milprazon (milbemycin/praziquantel), and Selehold (selamectin).
Krka Group market position in Romania
With a 1.7% market share, we ranked fourth among foreign providers of generic medicines.
In 2023, we outperformed the entire market in terms of sales growth.
We were among the leading providers of:
• SNRI antidepressants, accounting for more than a 60% market share;
• Statins, accounting for more than a 25% market share;
• Antimicrobials (fluoroquinolones), accounting for approximately a 20% market share;
• Prescription analgesics and antipyretics, accounting for approximately a 20% market share;
• Angiotensin II receptor blockers, also in combination with diuretics, accounting for more than a 15% market share;
• ACE inhibitors and ACE-based combinations, accounting for more than a 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 varieties of aripiprazole; dasatinib; ivabradine; ginkgo leaf extract; pantoprazole; single-
pill combinations of perindopril and indapamide; and single-pill combinations of perindopril, indapamide, and amlodipine; and
single-pill combinations of rosuvastatin and ezetimibe.
Croatia, another key market, ranked second in the region for sales. Croatian sales totalled €46 million, up 12% on 2022.
We ranked fourth among all generic medicine providers and second among animal health product manufacturers. We
recorded double-digit growth in year-on-year sales of prescription pharmaceuticals and non-prescription products, while
sales of animal health products increased by almost 5%.
Per 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), Helex (alprazolam), Valsacombi (valsartan/hydrochlorothiazide), Dalneva (perindopril/amlodipine), and
Doreta (tramadol/paracetamol). Of non-prescription products, Nalgesin (naproxen) and Septolete Duo
(benzydamine/cetylpyridinium chloride) recorded the strongest sales. Fypryst brand products and Enroxil (enrofloxacin)
generated the highest sales of our animal health products.
2023 Annual Report – Business report
105
Krka Group market position in Croatia
With a market share of 3.5%, we ranked second among foreign providers of generic medicines.
In 2023, we outperformed the entire market in terms of sales growth.
We were the leading provider of:
• Angiotensin II receptor blockers, also in combination with diuretics, accounting for more than a 65% market share;
• Antimicrobials (fluoroquinolones), accounting for approximately a 60% market share;
• Antitussives, accounting for approximately a 55% market share;
• ACE inhibitor combinations with diuretics, accounting for approximately a 35% market share;
• Statins, including ezetimibe, accounting for approximately a 30% market share.
We were among the leading providers of:
• Mono-component corticosteroids for systemic treatment, accounting for more than a 30% market share;
• Typical antipsychotics, accounting for more than a 30% market share;
• Sulphonamide antidiabetics, accounting for approximately a 30% 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 approximately a 25% market
share;
• Angiotensin II receptor blockers, also in combination with calcium channel blockers, accounting for approximately a 20%
market share;
• Anxiolytics, accounting for approximately a 20% market share;
• Antidepressants, accounting for more than a 15% market share;
• Mono-component non-steroidal anti-inflammatory and antirheumatic medicines, accounting for more than a 15% market
share.
We were the leading provider of abiraterone; alprazolam; atorvastatin; butamirate; ciprofloxacin; dexamethasone; diosmin;
escitalopram; esomeprazole; gentamicin; clarithromycin; lansoprazole; levofloxacine; losartan; norfloxacin; perindopril, including
perindopril in combination with indapamide; rosuvastatin, including rosuvastatin in combination with ezetimibe; telmisartan in
combination with hydrochlorothiazide; tramadol in combination with paracetamol; and valsartan, including valsartan in
combination with hydrochlorothiazide.
We were the leading provider of generic varieties of desloratadine; duloxetine; gliclazide; perindopril in combination with
amlodipine; perindopril in combination with amlodipine and indapamide; sitagliptin, including sitagliptin in combination with
metformin; valsartan in combination with amlodipine; valsartan in combination with amlodipine and hydrochlorothiazide; and
simvastatin.
Serbia generated €37.5 million in sales and recorded 16% growth, ranking it third among regional markets. Rapid market
share growth continued due to strong prescription pharmaceutical sales in pharmacies. Prescription pharmaceuticals
accounted for 87% of overall country sales. Sales were driven by Nolpaza (pantoprazole), Co-Amlessa
(perindopril/amlodipine/indapamide), Roxera (rosuvastatin), Co-Prenessa (perindopril/indapamide), Atoris (atorvastatin),
and Valsacor (valsartan). Non-prescription product sales amounted to €3.3 million, up 2% on 2022. Nalgesin (naproxen),
Septolete Total (benzydamine/cetylpyridinium chloride), and Bilobil (ginkgo leaf extract) were the leading products. Sales
value of animal health products increased by 8% on 2022. Fypryst and Dehinel brand products and Enroxil (enrofloxacin)
were at the forefront.
Sales in Bulgaria totalled €26.8 million in 2023, a 5% year-on-year increase. Prescription pharmaceuticals accounted for
94% of total country sales, and Co-Valsacor (valsartan/hydrochlorothiazide), Roswera (rosuvastatin), Valsacor (valsartan),
Flosteron (betamethasone), Co-Amlessa (perindopril/amlodipine/indapamide), Nolpaza (pantoprazole), Co-Roswera
(rosuvastatin/ezetimibe), and Co-Prenessa (perindopril/indapamide) recorded strongest sales. Non-prescription products
saw a 15% year-on-year drop. Solvolan (ambroxol), Septolete Total (benzydamine/cetylpyridinium chloride), and Flebaven
generated the strongest sales. Sales of animal health products generated €1.2 million, 6% down on 2022. Key animal
health products in terms of sales were Fypryst brand products, Milprazon (milbemycin/praziquantel), and Floron
(florfenicol).
We have recorded sales growth in North Macedonia for nineteen successive years. Sales totalled €26.9 million, up 5%
on 2022. Krka remained the leading foreign provider of generic medicines in the country. Sales of prescription
pharmaceuticals were pivotal, in particular of Roswera (rosuvastatin), Nolpaza (pantoprazole), Co-Prenessa
(perindopril/indapamide), Enap (enalapril), Tanyz (tamsulosin), Atoris (atorvastatin), and Lorista (losartan). Our non-
prescription product sales recorded a 4% year-on-year increase, with leading products including Septanazal
(xylometazoline/dexpanthenol), Daleron (paracetamol), Bilobil (ginkgo leaf extract), Septolete Total
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(benzydamine/cetylpyridinium chloride), Flebaven (diosmin), and Herbion brand products. Sales of animal health products
increased by almost 7%, owing primarily to strong sales of Fypryst brand products and Ecocid.
We recorded sales totalling €21.5 million, up 4%, and remained the leading foreign provider of generic medicines in Bosnia
and Herzegovina. Prescription pharmaceuticals accounted for the majority of total sales. Roswera (rosuvastatin), Lexaurin
(bromazepam), Amlewel (perindopril/amlodipine/indapamide), Enap-H and Enap-HL (enalapril/hydrochlorothiazide), and
Nolpaza (pantoprazole) generated the strongest sales. Nalgesin (naproxen), Panatus (butamirate), Septolete Total
(benzydamine/cetylpyridinium chloride), Bilobil (ginkgo leaf extract), and B-Complex were the leading non-prescription
products. Fypryst brand products and Rycarfa (carprofen) remained key animal health products. Most notable of our new
product launches in 2023 were Roswera Combi (rosuvastatin/ezetimibe) and Dulsevia (duloxetine). While restrictions for
foreign manufacturers persisted on specific reimbursement lists, they did not undermine our stable position in the market.
In Kosovo, we recorded sales growth of just over 6%, placing us among the country’s leading medicine providers. Sales
value reached €9.1 million. Prescription pharmaceuticals accounted for the majority of sales, with Lorista H
(losartan/hydrochlorothiazide), Atoris (atorvastatin), and Roswera (rosuvastatin) the leading products. Year-on-year sales
in Albania increased slightly and totalled €3.8 million. As expected, prescription pharmaceuticals accounted for the
majority of total sales. Ultop (omeprazole), Atoris (atorvastatin), Nolpaza (pantoprazole), and Lorista (losartan) generated
the strongest sales. We recorded sales totalling €2.5 million in Montenegro, up slightly more than 10%. Sales were driven
in particular by prescription pharmaceuticals, most notably Nolpaza (pantoprazole), Atoris (atorvastatin), Roswera
(rosuvastatin), and Lorista H and Lorista HD (losartan/hydrochlorothiazide). This marked our third year of independently
marketing products in Greece, with our total product sales reaching €2.8 million. Sales were driven by prescription
pharmaceuticals, most notably Pitavador (pitavastatin), Parnido (paliperidone), Zalasta (olanzapine), Marixino
(memantine), Rosuvador (rosuvastatin), and Esolib (esomeprazole).
Region East Europe
Region East Europe generated sales totalling €594 million, a 5% year-on-year drop, and remained the leading area by
sales. Sales increased in all markets except the Russian Federation, Ukraine, and Turkmenistan. Uzbekistan recorded the
highest absolute sales growth, increasing product sales by €9.3 million on 2022. We recorded the highest relative sales
growth in Tajikistan.
The Russian Federation remained our largest individual market. Product sales generated €346.8 million, 90% of 2022
sales. We make sales in the Russian Federation in the national currency. Sales denominated in Russian roubles reached
31.1 billion, marking a 15% increase, with a 7% rise in year-on-year sales volume. The difference between the euro and
the rouble sales indices resulted from the depreciation of the rouble.
Prescription pharmaceuticals were the leading product group, generating €270.8 million or 78% of overall sales. Medicines
that recorded strongest sales were Lorista H and Lorista HD (losartan/hydrochlorothiazide), Co-Perineva
(perindopril/indapamide), Lorista (losartan), Valsacor (valsartan), Nolpaza (pantoprazole), Co-Dalneva
(perindopril/amlodipine/indapamide), Vamloset (valsartan/amlodipine), Roxera (rosuvastatin), Valsacor H and
Valsacor HD (valsartan/hydrochlorothiazide), and Co-Vamloset (valsartan/amlodipine/hydrochlorothiazide). Dabexom
(dabigatran), Roxera Plus (rosuvastatin/ezetimibe), two antidiabetic agents Asiglia (sitagliptin), Asiglia Met
(sitagliptin/metformin), and Flosteron (betamethasone) recorded the highest absolute growth.
Sales of non-prescription products generated €44.4 million in 2023. Septolete Total (benzydamine/cetylpyridinium
chloride), products sold under the Herbion brand, and Nalgesin (naproxen) were at the forefront. We successfully marketed
Flebaven (diosmin/hesperidin) as well.
Sales of animal health products recorded high growth, generating €31.5 million. Selafort (selamectin), Milprazon
(milbemycin/praziquantel), and Enroxil (enrofloxacin) generated the strongest sales. Tuloxxin (tulathromycin) and Fyprist
(fipronil) recorded the most impressive absolute growth.
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Krka Group market position in the Russian Federation
With a 2% market share, we ranked second among foreign providers of generic medicines.
Krka’s sales dynamics essentially surpassed the average in the Russian pharmaceutical market.
We were the leading provider of prescription pharmaceuticals for the treatment of cardiovascular diseases.
We were the leading provider of generic prescription pharmaceuticals in the pharmacy segment.
We were the leading provider of:
• Angiotensin II receptor blockers, also in combinations, accounting for approximately 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 more than a 20% market share;
• Proton pump inhibitors, accounting for more than a 15% market share;
• SSRI and SNRI antidepressants, accounting for a 15% market share;
• Parenteral corticosteroids, accounting for approximately a 15% market share;
• Atypical antipsychotics, accounting for approximately a 15% market share.
We were the leading provider of medicines containing aripiprazole; atorvastatin; duloxetine; enalapril, including enalapril in
combination with hydrochlorothiazide; losartan, including the losartan-based single-pill combinations with amlodipine and
hydrochlorothiazide; naproxen; norfloxacin; olanzapine; pantoprazole; ramipril; telmisartan in combination with
hydrochlorothiazide; and valsartan, including all valsartan-based single-pill combinations with amlodipine and hydrochlorothiazide.
We were the leading provider of generic varieties of escitalopram; esomeprazole; ivabradine; clopidogrel; perindopril, including all
perindopril-based single-pill combinations with amlodipine and indapamide; rosuvastatin; and telmisartan.
In Ukraine, another of our key markets, pharmaceutical sales have stagnated over the past few years and decreased
in 2023 due to the state of emergency in the country. Sales amounted to €83.4, or 88% of the 2022 sales total. We
maintained our market position and ranked second among foreign providers of generic pharmaceuticals, holding a 2.9%
market share. Prescription pharmaceuticals, the leading product group, accounted for 80% of total 2022 sales, with
Co-Prenessa (perindopril/indapamide), Co-Amlessa (perindopril/amlodipine/indapamide), Nolpaza (pantoprazole), and
Roxera (rosuvastatin) at the forefront. Sales of non-prescription products increased by 2%. Herbion brand products,
Nalgesin (naproxen), and Septolete Total (benzydamine/cetylpyridinium chloride) generated the highest sales. Sales of
animal health products increased by 25% on 2022. The leading animal health products were Milprazon
(milbemycin/praziquantel), Selafort (selamectin), and Prinocate (imidacloprid/moxidectin).
Krka Group market position in Ukraine
With a market share of 2.9%, we ranked second among foreign providers of generic medicines.
We were the leading provider of:
• Parenteral corticosteroids, accounting for approximately a 45% market share;
• Angiotensin II receptor blockers, also in combinations, accounting for approximately a 35% market share;
• Statins, accounting for more than a 35% market share;
• Antitussives, accounting for more than a 30% 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 approximately a 15% market share;
• Macrolide and pyranoside antibiotics, accounting for approximately a 10% market share.
We were the leading provider of atorvastatin; betamethasone; dexamethasone; enalapril in combination with hydrochlorothiazide;
ginkgo leaf extract; carvedilol; clarithromycin; losartan in combination with hydrochlorothiazide; naproxen; pantoprazole;
perindopril, including perindopril in combination with indapamide; rosuvastatin; simvastatin; and valsartan.
We were the leading provider of generic varieties of enalapril; 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 totalled
€57.2 million, up 17%. We recorded double-digit sales growth in Belarus, Azerbaijan, and Armenia.
Sales in Belarus totalled €24.4 million, up 16% on 2022. We increased our market share by above-average growth
dynamics in terms of value and volume, and retained our second place ranking among foreign providers of generic
medicines. Co-Amlessa (perindopril/amlodipine/indapamide), Nolpaza (pantoprazole), and Co-Prenessa
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(perindopril/indapamide) accounted for the mass of prescription pharmaceuticals, our key product group. Septolete Total
(benzydamine/cetylpyridinium chloride) and products marketed under the Herbion brand recorded the strongest sales
among non-prescription products. Sales of our animal health products generated €1.2 million, with Trisulfon
(sulfamonomethoxine/trimethoprim) recording the strongest sales.
In Mongolia, product sales totalled €15.9 million, up 8%, maintaining our position as the country’s leading foreign provider
of medicines. A sharp rise in sales of cardiovascular agents and antibiotics significantly drove the growth of prescription
pharmaceuticals. Nolpaza (pantoprazole), Zyllt (clopidogrel), Amlessa (perindopril/amlodipine), Fromilid (clarithromycin),
and Betaklav (amoxicillin/clavulanic acid) each recorded sales of over €1 million. Sales of non-prescription products were
driven above all by Septolete Total (benzydamine/cetylpyridinium chloride), products sold under the Herbion brand, Bilobil
(ginkgo leaf extract), and Nalgesin (naproxen).
In Azerbaijan, product sales totalled €9.6 million or a 27% increase on 2022. Holding slightly more than a 3-percent market
share, we ranked first among providers of generic pharmaceuticals in the country. The leading product group of prescription
pharmaceuticals recorded a 26% increase, while non-prescription products grew by 3%. Animal health product sales
significantly increased due to companion animal product launches. Animal health products generated €0.5 million,
accounting for 5% of overall country sales.
Product sales in Armenia totalled €7.3 million, a 25% year-on-year increase. Holding a 3.5% market share, we ranked
third among providers of generic medicines in the country. Prescription pharmaceuticals accounted for 90% of sales, with
Co-Amlessa (perindopril/amlodipine/indapamide), Nolpaza (pantoprazole), and Atoris (atorvastatin) at the forefront. We
recorded a 22% drop in sales of non-prescription products. Herbion brand products and Septonazal
(xylometazoline/dexpanthenol) generated the strongest sales.
Subregion East Europe K
Product sales in Kazakhstan, Moldova, and Kyrgyzstan were valued at €42 million, up 8% on 2022. All markets in this
subregion recorded growth.
Product sales in Kazakhstan totalled €21.9 million, up 9% year on year. Sales of prescription pharmaceuticals accounted
for 66% of sales, up 10%. Nolpaza (pantoprazole), Valodip (valsartan/amlodipine), Ulcavis (bismuth), and Valsacor
(valsartan) generated the majority of overall prescription product sales. Non-prescription product sales amounted to
€6.3 million. Products sold under the Herbion and Duovit brands and Septolete Total (benzydamine/cetylpyridinium
chloride) recorded the strongest sales. Sales of animal health products totalled €1.1 million. Trisulfon
(sulfamonomethoxine/trimethoprim) and Ecocid were bestsellers.
Product sales in Moldova generated €13.7 million, up 3% on 2022. We maintained a high market share and remained the
leading provider of prescription pharmaceuticals, accounting for 78% of overall country sales, up 11%. Valsacor
(valsartan), Roswera (rosuvastatin), and Lorista (losartan) generated the majority of prescription pharmaceutical sales.
We started marketing Doreta (tramadol/paracetamol) and Tolura (telmisartan). Non-prescription product sales amounted
to €2.8 million. The leading non-prescription products were Septanazal (xylometazoline/dexpanthenol), Septolete Total
(benzydamine/cetylpyridinium chloride), and Nalgesin (naproxen). Sales of our animal health products generated
€0.3 million.
We generated €6.4 million in product sales, reflecting a 21% increase, securing a 4% market share in Kyrgyzstan,
positioning us third among providers of generic pharmaceuticals in the country. Prescription pharmaceuticals accounted
for 75% of total country 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 Duovit brands.
Subregion East Europe U
Our Subregion East Europe U, composed of Uzbekistan, Georgia, Tajikistan, and Turkmenistan, generated €64.6 million
in product sales, up 21%. Turkmenistan was the only market where we did not record a year-on-year sales increase.
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Product sales in Uzbekistan totalled €48.8 million, up 24% on 2022. We ranked first among all providers of prescription
pharmaceuticals in the country and were the leading provider of cardiovascular agents. Of our prescription
pharmaceuticals, Amlessa (perindopril/amlodipine), Lorista (losartan), Valodip (valsartan/amlodipine), and Nolpaza
(pantoprazole) generated the strongest sales. Of our non-prescription products, Septolete Total
(benzydamine/cetylpyridinium chloride) and products marketed under the Pikovit brand were bestsellers.
Our product sales totalled €9.5 million in Georgia, a 19% year-on-year increase. Our 4.8% market share ranked us fourth
among all medicine providers in the country. Our most important medicines in terms of sales were Lorista H and Lorista HD
(losartan/hydrochlorothiazide), Amlessa (perindopril/amlodipine), and Atoris (atorvastatin). The best-selling non-
prescription product was Nalgesin (naproxen).
In Tajikistan, sales reached €3.7 million, a 28% year-on-year increase. Pikovit, a non-prescription product, remained one
of our best-selling product brands in the country. Nolpaza (pantoprazole) and Co-Amlessa
(perindopril/amlodipine/indapamide) were our new products that drove sales growth the most.
Product sales in Turkmenistan totalled €2.5 million, down 15% on 2022. Amlessa (perindopril/amlodipine) and Nolpaza
(pantoprazole) from our leading product group of prescription pharmaceuticals, while non-prescription products sold under
the Pikovit and Herbion brands generated the strongest sales.
Region Central Europe
Region Central Europe product sales totalled €397.1 million, up 9%. We recorded growth in all subregional markets.
Poland saw the highest sales value increase of €12.7 million, while Lithuania experienced the highest relative sales growth
of 20%.
In Poland, the largest regional market and our key market, product sales reached €180.8 million, up 8% on 2022. We
secured a 1.9% 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 introduced to the market in recent years also significantly contributed to our sales.
We focused on medicines for the treatment of cardiovascular diseases, managed to retain sales at the same level as
in 2022 despite great market pressures, and remained the leading provider. Coroswera (rosuvastatin/ezetimibe) was most
notable of our new medicines launched in recent years and accounted for a 28% market share. Sales increased by 69%
on 2022. Our other notable products were antidiabetic agents Maymetsi (sitagliptin/metformin), accounting for a 14%
market share, Maysiglu (sitagliptin) with a 10% market share, and Vimetso (vildagliptin/metformin), sales of which more
than quadrupled year on year. We also successfully launched Vitamin D3 Krka. We were the provider with the most
pharmaceuticals for patients aged 65 years and older on the new reimbursement list.
Sales of non-prescription medicines rose by 10% on 2022. Septolete brand products were our leading non-prescription
products. Septanazal (xylometazoline/dexpanthenol) followed, whose sales increased by 57% year on year.
Animal health products generated €7.5 million in sales, up 23%. Milprazon (milbemycin/praziquantel), up 4%, and Floron
(florfenicol), up 28%, remained best-selling animal health products.
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Krka Group market position in Poland
With a 1.9% market share, we ranked third among foreign providers of generic medicines.
We were the leading provider of:
• Angiotensin II receptor blockers, also in combination with diuretics, accounting for more than a 40% market share;
• Statins, including ezetimibe, accounting for more than a 35% market share;
• SSRI and SNRI antidepressants, accounting for approximately a 15% market share.
We were among the leading providers of:
• Sulphonamide antidiabetics, accounting for more than a 20% market share;
• Oral corticosteroids, accounting for more than a 15% market share;
• Aminosalicylates for bowel disease, accounting for approximately a 15% market share;
• Antimicrobials (fluoroquinolones), accounting for approximately a 15% market share;
• Proton pump inhibitors, accounting for approximately a 15% market share;
• ACE inhibitors and all ACE-based combinations, accounting for more than a 10% market share;
• Antiparkinsonians, accounting for approximately a 10% market share.
We were the leading provider of atorvastatin; celecoxib; duloxetine; 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 varieties of gentamicin; gliclazide; ivabradine; and perindopril, including all perindopril-
based combinations with amlodipine and indapamide.
In Czechia, another of our key markets, year-on-year sales increased by 9% to €60.9 million. We ranked fourth among
foreign providers of generic medicines, holding a 1.4% market share. Prescription pharmaceuticals maintained the leading
position, above all Atoris (atorvastatin), Sorvasta (rosuvastatin), Lexaurin (bromazepam), Pragiola (pregabalin), Doreta
(tramadol/paracetamol), Asentra (sertraline), Nolpaza (pantoprazole), Elicea (escitalopram), Kventiax (quetiapine),
Tonarssa (perindopril/amlodipine), and Tonanda (perindopril/amlodipine/indapamide).
Sales of non-prescription products increased by 28%. Septolete brand products, Nalgesin S (naproxen), and Bisacodyl
(bisacodyl) generated the strongest sales. Animal health product sales increased by 7%, and Dehinel and Fypryst brand
products remained our key products.
Krka Group market position in Czechia
With a 1.4% market share, we ranked fourth among foreign providers of generic medicines.
We were among the leading providers of:
• Sulphonamide antidiabetics, accounting for approximately a 35% market share;
• Fluoroquinolones, accounting for approximately a 30% market share;
• Anxiolytics, accounting for more than a 25% market share;
• Angiotensin II receptor blockers, also in combination with diuretics, accounting for more than a 20% market share;
• SSRI and SNRI antidepressants, accounting for more than a 20% market share;
• Statins, accounting for more than a 20% market share;
• Proton pump inhibitors, accounting for approximately a 20% market share;
• ACE inhibitors, also in combinations with diuretics, accounting for approximately a 15% market share.
We were the leading provider of medicines containing esomeprazole; gliclazide; carvedilol; lansoprazole; losartan in combination
with hydrochlorothiazide; valsartan, including valsartan in combination with hydrochlorothiazide; and ziprasidone.
We were the leading provider of generic varieties of aripiprazole; atorvastatin; escitalopram; levocetirizine; olanzapine,
pantoprazole; perindopril, including all perindopril-based combinations with amlodipine and indapamide.
Hungary, another key market, generated sales of €52.3 million, up 11% 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 1.7%
market share. Prescription pharmaceuticals generated the highest sales, in particular Co-Prenessa
(perindopril/indapamide), Roxera (rosuvastatin), Emozul (esomeprazole), Valsacor (valsartan), Zyllt (clopidogrel), and Co-
Dalnessa (perindopril/amlodipine/indapamide).
Sales of non-prescription products generated €4.2 million, up 16% on 2022. Septolete Extra (benzydamine/cetylpyridinium
chloride), Bilobil (ginkgo leaf extract), and Septanazal (xylometazoline/dexpanthenol) were key non-prescription products.
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Sales of our animal health products jumped by 59%. Milprazon (milbemycin/praziquantel) and Fypryst brand products
were bestsellers.
Krka Group market position in Hungary
With a 1.7% market share, we ranked second among primarily foreign providers of generic medicines.
We were the leading provider of:
• SNRI antidepressants, accounting for approximately a 40% market share;
• Angiotensin II receptor blockers, also in combination with diuretics, accounting for approximately a 35% market share;
• Platelet aggregation inhibitors (ADP receptor antagonists), accounting for approximately a 35% market share;
• Antimicrobials (oral fluoroquinolones), accounting for more than a 25% market share;
• Mono-component thiazide diuretics and analogues, accounting for more than a 25% market share;
• Antiparkinsonians, accounting for more than a 15% market share.
We were among the leading providers of:
• Statins, accounting for more than a 15% market share;
• ACE inhibitors and ACE-based combinations with diuretics, with a market share of more than 15%;
• Macrolide and pyranoside antibiotics, accounting for approximately a 15% market share;
• Proton pump inhibitors, accounting for more than a 15% market share;
• Sulphonamide antidiabetics, accounting for more than a 10% market share;
• Cerebral and peripheral vasotherapeutics, accounting for more than a 10% market share.
We were the leading provider of amlodipine in combination with telmisartan; indapamide; ginkgo leaf extract; clarithromycin;
clopidogrel; mirtazapine; pramipexole; rasagiline; tramadol in combination with paracetamol; and valsartan, including valsartan in
combination with hydrochlorothiazide.
We were the leading provider of generic varieties of aripiprazole, gliclazide, and zolpidem.
Product sales in Slovakia, another key market, and the fourth regional market in size, generated €42.8 million, up 6%
on 2022. Prescription pharmaceuticals were the leading product group in terms of sales, most notably Nolpaza
(pantoprazole), Atoris (atorvastatin), Co-Prenessa (perindopril/indapamide), Co-Amlessa
(perindopril/amlodipine/indapamide), Amlessa (perindopril/amlodipine), and Prenessa (perindopril). Non-prescription
product sales saw a 1% rise. Best-selling products were Nalgesin S (naproxen) and Septolete brand products. Animal
health products saw 10% growth, and Enroxil (enrofloxacin) and Dehinel recorded the strongest sales.
Krka Group market position in Slovakia
With a 2.3% market share, we ranked fourth among all providers of generic pharmaceuticals in the country.
We were the leading provider of:
• Proton pump inhibitors, accounting for approximately a 45% market share;
• Angiotensin II receptor blockers, also in combination with diuretics, accounting for approximately a 40% market share;
• Antimicrobials (fluoroquinolones), accounting for more than a 35% market share;
• Statins, accounting for more than a 30% market share;
• Antidementives, accounting for approximately a 30% market share.
We were among the leading providers of:
• ACE inhibitors and ACE-based combinations, accounting for approximately a 25% market share;
• Sulphonamide antidiabetics, accounting for more than a 20% market share;
• Anxiolytics, accounting for approximately a 20% market share;
• Antidepressants and mood stabilizers, accounting for approximately a 20% market share.
We were the leading provider of atorvastatin; duloxetine; escitalopram; esomeprazole; ezetimibe in combination with rosuvastatin;
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 varieties of dexamethasone; gliclazide; and perindopril, including all perindopril-based
combinations with amlodipine and indapamide.
Sales in Lithuania totalled €29.8 million, up 20% on 2022. Prescription pharmaceuticals accounted for the majority of
overall sales, primarily Nolpaza (pantoprazole), Atoris (atorvastatin), Ravalsyo (rosuvastatin/valsartan), Escadra
(esomeprazole), Roswera (rosuvastatin), and Captopril Krka (captopril). Sales of non-prescription products grew by 17%.
Septabene (benzydamine/cetylpyridinium chloride) and Nalgesin S (naproxen) were key products. We grew sales of
animal health products by 5%, with products sold under the Fypryst brand and Milprazon (milbemycin/praziquantel) at the
forefront.
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In Latvia, sales totalled €18.3 million in 2023, a 7% year-on-year increase. This solidified our position as the leading
provider of generic medicines in the country. As expected, prescription pharmaceuticals accounted for the majority of
sales, primarily Nolpaza (pantoprazole), Co-Amlessa (perindopril/amlodipine/indapamide), Sorvasta (rosuvastatin), Atoris
(atorvastatin), and Prenewel (perindopril/indapamide). Sales of non-prescription products generated €2.8 million, up 3%
on 2022. Septanazal (xylometazoline/dexpanthenol) and Septabene (benzydamine/cetylpyridinium chloride) were the
leading products in this segment. Animal health product sales dropped by 3%.
In Estonia, sales totalled €12.2 million, up 16% on 2022. Prescription pharmaceuticals again accounted for the majority
of overall sales, above all Roswera (rosuvastatin), Co-Prenessa (perindopril/indapamide), Atoris (atorvastatin), Prenessa
(perindopril), and Nolpaza (pantoprazole). Year-on-year sales of non-prescription products increased by 30%.
Septolete Omni (benzydamine/cetylpyridinium chloride) and products sold under the Herbion brand remained the leading
medicines in this product group. Animal health product sales grew by 9%.
Region West Europe
The markets of Region West Europe are collectively regarded as one of our key markets. Regional sales totalled
€369.6 million in 2023, a 13% year-on-year increase. Germany, Scandinavia, Portugal, Italy, and France recorded the
highest sales. Sales through subsidiaries totalled €300 million, a 16% year-on-year increase. We generated 19% of
regional sales through unrelated parties.
Prescription pharmaceuticals were the leading product group, recording sales of €318.9 million, up 14% on 2022, and 86%
of overall regional sales. Medicines containing esomeprazole, candesartan, sitagliptin, pantoprazole, and venlafaxine were
at the forefront. We remained one of the leading sartan and gliptin providers in the markets of Region West Europe.
Animal health products recorded a 6% increase, accounting for 11% of overall regional sales. Sales through related parties
grew by 3% in 2023, accounting for 57% of total sales of animal health products in Region West Europe. Antiparasitic
products for companion animals drove sales, most notably a single-pill combination of milbemycin and praziquantel in
flavoured tablets, and fipronil. Medicines containing flubendazole and toltrazuril were our bestselling farm animal products.
Sales of non-prescription products grew by 11%, accounting for 3% of regional sales. The Septolete brand, paracetamol-
based, and diosmin-based products recorded the strongest sales.
We pursue sales and activities in the region via 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 in any of our categories through unrelated parties. Our sales in these markets totalled €12.6 million.
Germany remained our most important regional and key individual market. Country sales reached €105.9 million, up 20%
on 2022. Our most important products in terms of sales were cardiovascular agents and medicines for the treatment of the
gastrointestinal tract and metabolism, followed by central nervous system agents. We remained one of the leading sartan
providers in Germany also in 2023. We recorded strong sales of the gliptin product family used in diabetes therapy and
emerged as the leading provider in the country by volume. Candesartan, sitagliptin, valsartan, ramipril, and pantoprazole
generated the highest sales.
2023 Annual Report – Business report
113
Krka Group market position in Germany (pharmacy segment)
With a 1.6% generic market share, we ranked eighth among all foreign providers of generic medicines in the country.
We outperformed the entire market in terms of sales growth in Krka’s respective therapeutic categories.
We were among the leading providers of:
• Calcium channel blockers in combinations with adrenergic receptor beta blockers, accounting for approximately a 35%
market share;
• Angiotensin II receptor blockers, also in combination with calcium channel blockers, accounting for approximately a 20%
market share;
• platelet aggregation inhibitors (ADP receptor antagonists), accounting for approximately a 15% market share;
• Angiotensin II receptor blockers, also in combination with diuretics, accounting for approximately a 15% market share;
• ACE inhibitors and ACE-based combinations with calcium channel blockers, accounting for more than a 10% market share;
• Coronary therapy, excluding calcium channel blockers and nitrites, accounting for more than a 5% market share.
We were the leading provider of gliptin products, accounting for more than a 25% market share in terms of volume.
We were the leading provider of products containing cyproterone; ivabradine; candesartan in combination with
hydrochlorothiazide; losartan in combination with hydrochlorothiazide; prasugrel; valsartan in combination with amlodipine and
hydrochlorothiazide; tramadol in combination with paracetamol; and ziprasidone.
We were one of the leading providers of products containing bisoprolol in combination with amlodipine; esomeprazole;
candesartan in combination with amlodipine; carvedilol; olmesartan in combination with amlodipine and hydrochlorothiazide;
pramipexole; ramipril in combination with amlodipine; sitagliptin, including sitagliptin in combination with metformin; and valsartan
in combination with hydrochlorothiazide.
Subregion Europe – South
Subregion Europe – South comprises Italy, Portugal, and Spain. Subregional product sales amounted to €88.7 million,
up 11% on 2022. Products marketed under our own brand names accounted for 74% of overall subregional sales.
In Portugal, sales totalled €33.8 million, a 22% year-on-year increase. All product groups contributed to the growth.
Prescription pharmaceuticals recorded the highest absolute growth, increasing our share to 7.7% of the generic market.
The single-pill combination of rosuvastatin and ezetimibe, tapentadol, esomeprazole, and olanzapine were among our
leading prescription pharmaceuticals. We added a single-pill combination of sitagliptin and metformin to successfully
launch products from the gliptin family, immediately placing them among the five leading prescription pharmaceuticals in
our portfolio.
In Italy, year-on-year sales increased by 4% to €32.3 million. We primarily increased sales of non-prescription and animal-
health products. Medicines containing pantoprazole, clopidogrel, atorvastatin, quetiapine, and gliclazide were among our
leading prescription pharmaceuticals.
In Spain, year-on-year sales increased by 8% to €22.7 million. All product groups recorded growth, with non-prescription
products recording the highest. Medicines containing donepezil, pramipexole, galantamine, naproxen, and memantine
generated the strongest sales.
Subregion Scandinavia
In Scandinavia, sales climbed to €62.9 million. Sweden remained the leading subregional market, followed by Finland,
Norway, Denmark, and Iceland. Sales were driven by medicines containing esomeprazole, sertraline, atorvastatin,
venlafaxine, and candesartan. In Norway, we remained the leading provider of many medicines, primarily those containing
esomeprazole, pantoprazole, and losartan. We were one of the leading generic manufacturers of medicines containing
venlafaxine, duloxetine, and valsartan in Finland, paracetamol and mirtazapine in Sweden, and atorvastatin and sertraline
in Denmark. Our product sales in Iceland generated €2.1 million, where esomeprazole and pregabalin recorded the
strongest sales.
Subregion Europe – Continental West
France and the Benelux constitute our Subregion Europe – Continental West. The subregion recorded €53.1 million in
sales, a 4% drop year on year. Sales through our subsidiaries reached 52%, up 2%.
2023 Annual Report – Business report
114
Sales in France totalled €31.5 million, a 9% decline on 2022. 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 14% on 2022, primarily because of a medical representative shortage that dampened marketing and sales
activities. Most sales were generated by prescription pharmaceuticals, above all those containing tadalafil, abiraterone,
and amoxicillin. Of our non-prescription products, medicines containing paracetamol stood out. They were the third best-
selling product of the subsidiary in 2023. Antiparasitics for companion animals generated the strongest sales of our animal
health product range, notably fipronil-based products and the combination of milbemycin and praziquantel.
In the Benelux, sales increased by 3% to €21.6 million. Prescription pharmaceuticals generated the strongest sales,
primarily emtricitabine in combination with tenofovir, valsartan, esomeprazole, and abiraterone. The
milbemycin/praziquantel combination was the best-selling product in 2023.
Subregion Europe – West
The United Kingdom, Ireland, and Austria constitute our Subregion Europe – West. The subregion recorded €46.4 million
in sales, a 21% year-on-year increase. Sub-sales through our subsidiaries increased by 19%, reaching 93%.
Sales in the United Kingdom grew by 31% year on year, totalling €19.4 million. Milbemycin/praziquantel and fipronil/S-
methoprene combinations and ranolazine were among our best-selling products.
In Ireland, we generated €15.1 million in product sales, outperforming 2022 sales by 19%. We were the leading provider
of medicines containing esomeprazolet, ezetimibe, donepezil, venlafaxine, candesartan, valsartan, indapamide, and
duloxetine in the country.
In Austria, our sales grew by 11% to €12 million. Sales were driven by pharmaceuticals containing pregabalin, valsartan,
and duloxetine.
Region Overseas Markets
Region Overseas Markets generated €75.2 million in sales, a 14% year-on-year rise. All four sales offices recorded sales
growth. Prescription pharmaceuticals contributed to the growth the most. We primarily marketed them under our own
brands, accounting for over 90% of overall regional sales.
Product sales in the markets of the Middle East totalled €29.2 million, an 8% year-on-year increase. Iran remained our
largest regional market. We recorded the highest relative growth in Saudi Arabia, where we expect high sales growth
rates in the future as well. In the Middle East, our best-selling products were Asentra (sertraline), Nolpaza (pantoprazole),
Letizen (cetirizine), Emanera (esomeprazole), and Yasnal (donepezil).
Product sales in the Far East and Africa reached €30.6 million, up 24% on 2022. We recorded the highest absolute growth
in Vietnam, our largest individual market in the area, and our second-largest regional market. Product sales increased
by 55%. We recorded high relative sales growth in the Philippines and Australia, where we started marketing our
products at the end of 2022. Medicines containing esomeprazole, gliclazide, tramadol in combination with paracetamol,
lansoprazole, and etoricoxib were our best-selling products.
Our sales office in China generated €13.6 million, or 6% more than in 2022. Strong sales of Palprostes (saw palmetto
extract), the medicine made by our subsidiary TAD Pharma, continued. We also increased sales through our joint venture,
Ningbo Krka Menovo, which successfully marketed products containing pregabalin, losartan, atorvastatin, and
rosuvastatin.
Our Americas sales office remained focused on the countries of Central America, where overall product sales reached
€1.8 million, up 11% on 2022. Valsacor (valsartan), Valsaden (valsartan/hydrochlorothiazide), Nolpaza (pantoprazole),
and Vasilip (simvastatin) were our best-selling products.
2023 Annual Report – Business report
115
Product and service groups
31
In 2023, sales of prescription pharmaceuticals accounted for 81.7% of total sales, followed by non-prescription products
at 9.9%, animal health products at 5.8%, and health resort and tourist services at 2.6%.
Krka Group sales revenue increased by 5% in 2023. Sales of prescription pharmaceuticals increased by 6%, non-
prescription products saw a 3% decrease in sales, animal health products sales grew by 12%, and health resort and tourist
services by 12%.
2023 Krka Group sales by product group
Krka Group and Krka sales by product and service group
v tisoč EUR
Krka Group
Company
2023
2022
Index
2023/22
2023
2022
Index
2023/22
Human health products
1,646,633
1,572,949
105
1,350,438
1,267,805
107
– Prescription pharmaceuticals
1,469,381
1,390,972
106
1,181,580
1,104,323
107
– Non-prescription products
177,252
181,977
97
168,858
163,482
103
Animal health products
104,640
93,041
112
99,301
88,270
112
Health resort and tourist services
47,696
42,552
112
Total
1,798,969
1,708,542
105
1,449,739
1,356,075
107
31
GRI 2-6
81.7%
9.9%
5.8%
2.6%
Prescription pharmaceuticals
Non-prescription products
Animal health products
Health resort and tourist
services
2023 Annual Report – Business report
* 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.
116
Krka Group quarterly sales by product and service group
v tisoč EUR
2023
2022
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Human health products
417,457
418,146
379,484
431,546
400,342
386,472
348,348
437,787
– Prescription pharmaceuticals
370,309
383,380
340,650
375,042
353,099
356,073
303,471
378,329
– Non-prescription products
47,148
34,766
38,834
56,504
47,243
30,399
44,877
59,458
Animal health products
28,402
29,621
24,850
21,767
21,930
25,278
22,174
23,659
Health resort and tourist
services
10,394
12,451
14,076
10,775
8,376
11,042
12,569
10,565
Total
456,253
460,218
418,410
464,088
430,648
422,792
383,091
472,011
2023 sales of leading products**
** Sales of leading products are presented by main active ingredient. Combination medicines that incorporate this active ingredient are also included.
New products
In 2023, sales of new products, i.e. products launched in individual markets in the past five years, accounted for 22% of
Krka Group overall sales, or 1 percentage point down on the year before.
In 2023, the following new products were most important in terms of absolute sales growth: Maymetsi*
(sitagliptin/metformin) and Maysiglu (sitagliptin), first marketed in 2022; Co-Roswera* (rosuvastatin/ezetimibe), first
marketed in 2019; Dabixom (dabigatran); and Tezulix* (ranolazine), first marketed in 2023.
In 2023, we launched several new products containing new generic active ingredients, also in combinations, and added
new pharmaceutical forms or pack sizes to the existing range and placed them on new markets.
25
26
27
30
33
35
35
47
57
76
86
87
94
158
182
0 20 40 60 80 100 120 140 160 180 200
sitagliptin ± metmorfin (MAYSIGLU*)
enalapril ± hydrochlorothiazide ± lercanidipine (ENAP*)
milbemycin ± praziquantel (MILPRAZON)
telmisartan ± hydrochlorothiazide ± amlodipine (TOLURA*)
naproxen (NALGESIN*)
candesartan ± hydrochlorothiazide ± amlodipine (KARBIS*)
tramadol ± paracetamol (DORETA*)
SEPTOLETE*
esomeprazole (EMANERA*)
atorvastatin ± amlodipine (ATORIS)
pantoprazole (NOLPAZA*)
losartan ± hydrochlorothiazide ± amlodipine (LORISTA*)
rosuvastatin ± ezetimib (ROSWERA*)
valsartan ± hydrochlorothiazide ± amlodipine ± rosuvastatin (VALSACOR)
perindopril ± indapamide ± amlodipine ± rosuvastatin (PRENESSA*)
€ million
2023 Annual Report – Business report
* 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.
117
Percentage of sales generated by new products*** within the Krka Group
***Includes products launched on individual markets within the past five years.
New products in 2023
Prescription pharmaceuticals
Cardiovascular agents
Prenessa Neo* (perindopril arginine)
Co-Prenessa Neo* (perindopril arginine/indapamide)
Amlessa Neo* (perindopril arginine/amlodipine)
Tezulix* (ranolazine)
Pain relief
Tapendolor* (tapentadol)
Blood and blood-forming organs
Dabixom (dabigatran)
Animal health products
Analgesics for companion animals
Robexera (robenacoxib)
Antimicrobials for farm animals
FlorFlu* (florfenicol/flunixin)
Prescription pharmaceuticals
In 2023, Krka Group sales of prescription pharmaceuticals amounted to €1,469.4 million, up 5.6% year on year. Germany,
Poland, and Romania contributed most to sales growth.
Top-ranking 2023 therapeutic classes of prescription pharmaceuticals included cardiovascular agents, central nervous
system agents, gastrointestinal tract medicines, and pain relievers.
We market our prescription pharmaceuticals under our brands in most European countries through our marketing and
sales network. We boast one of the most robust marketing and sales networks of all pharmaceutical companies in countries
where we maintain a long-standing presence. We have been managing sales in most markets of western Europe through
our network. We use it to engage with the expert community, especially physicians and pharmacists.
33
26
25
23
22
0
5
10
15
20
25
30
35
2019 2020 2021 2022 2023
%
2023 Annual Report – Business report
* 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.
118
Prescription pharmaceutical sales by ten major markets
Prescription pharmaceutical sales by therapeutic classes
Cardiovascular agents
Sartans (angiotensin II receptor blockers)
Highlights
• We are the leading generic manufacturer of sartans in Europe.
• The majority of patients undergoing sartan therapy in Europe are prescribed our sartans.
• We are the leading manufacturer of generic varieties of valsartan, telmisartan, and candesartan, as well as the leading
manufacturer of all losartan products in Europe.
0
25
50
75
100
125
150
0
50
100
150
200
250
300
Russian Federation
Poland
Germany
Ukraine
Romania
Scandinavia
Czechia
Slovenia
Hungary
Croatia
Index
€ million
2019 2020 2021 2022 2023 Index 2023/22
52.9%
13.1%
11.8%
6.2%
3.6%
3.3%
9.1%
Cardiovascular agents
Central nervous system
Gastrointestinal tract
Pain relief
Antiinfectives for systemic
use
Antidiabetics
Other
2023 Annual Report – Business report
* 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.
119
Sartans and sartan-based combinations
• We market 20 sartan-based products. The range comprises six sartan varieties.
• Our product portfolio includes single-pill sartan-based combinations with a diuretic, a calcium channel blocker, and a statin.
• We are the only pharmaceutical provider in Europe that markets a single-pill combination of a sartan and a statin.
Sartans
Combinations
containing a diuretic
Combinations
containing a calcium
channel blocker
Combinations
containing a calcium
channel blocker and a
diuretic
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 primary sartan. Valsartan-based products placed second among all our products in 2023 sales. We sold
more than 1.3 billion valsartan-based tablets. This product group comprised five medicinal products. Valarox* is indicated
for the treatment of lipitension and remained the sole single-pill combination of a sartan and a statin in Europe in 2023.
Valtricom* was the only single-pill combination of this type in Czechia, Belarus, and certain other markets of Region East
Europe. In 2023, we were the leading producer of generic valsartan varieties in Europe, providing for a patient base of four
million. Capturing a market share of over 45%, we were the leading producer of valsartan-based medicines in the Russian
Federation, Poland, Ukraine, and other countries. We extended the marketing reach of our valsartan products. We started
marketing Valtricom* in Poland, Wamlox* in Vietnam, and both medicines in Greece, the Netherlands, and as the first
generic manufacturer in Montenegro.
Losartan is our second most important sartan. Losartan products placed third of all our products in terms of 2023 sales.
We sold more than 1.4 billion tablets containing losartan. Lorista* and losartan single-pill combinations were the leading
sartan-based medicines in Georgia, Kyrgyzstan, Moldova, and Uzbekistan. Our losartan/amlodipine single-pill combination
Tenloris* was the only medicine of this type in Germany and several other markets. We were Europe’s leading
manufacturer of losartan products last year, capturing a market share of over 20%. We started marketing Lorista* and
Lorista H* in Iceland.
Another two sartans, candesartan and telmisartan, were also among the top fifteen Krka products in terms of sales in 2023.
We were the leading manufacturer of generic telmisartan varieties in Europe, capturing a market share of almost 10%. We
outperformed all telmisartan producers in Croatia, Slovenia, Latvia, and Ukraine, capturing a market share of over 45%.
We started marketing Tolura* in Moldova and Teldipin* in the United Arab Emirates. We were the leading manufacturer
of generic candesartan varieties in Europe, capturing a market share of over 10%.
2023 Annual Report – Business report
* 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.
120
Angiotensin-converting enzyme (ACE) inhibitors
Highlights
• We are the leading generic manufacturer of angiotensin-converting enzyme inhibitors in Europe.
• We are the leading generic manufacturer of perindopril-based products in Europe.
• We sold more than 1.7 billion perindopril tablets in 2023.
Angiotensin-converting enzyme inhibitors and ACE combinations
• We market 14 medicines from the ACE-inhibitor class based on five different angiotensin-converting enzyme inhibitors.
• We started marketing three new products containing a new perindopril salt in 2023.
• We are a generic pharmaceutical company with the most comprehensive perindopril-based product range in Europe.
ACE Inhibitors
Combinations
containing a diuretic
Combinations
containing a calcium
channel blocker
Combinations
containing a calcium
channel blocker and a
diuretic
Combinations
containing a statin
perindopril (Prenessa*,
Prenessa Neo*)
perindopril/
indapamide
(Co-Prenessa*,
Co-Prenessa Neo*)
perindopril/
amlodipine
(Amlessa*,
Amlessa Neo*)
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*)
Perindopril-based products were our best-selling pharmaceuticals in 2023. We sold more than 1.7 billion tablets, or over
100 million more than a year ago. We are a generic pharmaceutical company with the most comprehensive perindopril-
based product range in Europe. We started marketing three new products that contain a new perindopril salt, perindopril
arginine: Prenessa Neo* (perindopril arginine), Co-Prenessa Neo* (perindopril arginine/indapamide), and Amlessa Neo*
(perindopril arginine/amlodipine). We launched all three medicines as the first generic manufacturer in Czechia and
Slovakia, and at the same time as other generic producers in France, Belgium and other markets. We also market Roxiper*
and Roxampex* for treating lipitension, i.e. coexisting hypertension and hyperlipidemia. The two triple combinations
contain three active ingredients in a single pill, two antihypertensives and a statin. In 2023, we placed Roxampex* on the
market in Belarus, Hungary, and Portugal. We remained the only manufacturer of the two single-pill combinations in
Europe. We consolidated our position as the leading generic manufacturer of perindopril and perindopril-based
combinations in Europe. Sales of our products saw the steepest increase of all generic varieties in 2023, and we increased
our market share to almost 14%.
Even though promotion focused primarily on our new angiotensin-converting enzyme inhibitors, Enap* and single-pill
combinations of enalapril, hydrochlorothiazide, and lercanidipine remained among our top fifteen products in terms of
2023 sales. We ranked among the leading generic manufacturers of enalapril-based products in Europe, capturing a
market share of almost 10%.
Other antihypertensives
Angiotensin-converting enzyme inhibitors and sartans are our two most important classes of antihypertensives. Our
product portfolio also includes a calcium channel blocker Tenox* (amlodipine), a diuretic Rawel SR (indapamide),
adrenergic receptor blockers Coryol (carvedilol), Bloxazoc* (metoprolol), Niperten* (bisoprolol), and a single-pill
combination Sobycombi* (bisoprolol/amlodipine). Altogether, we market more than 40 antihypertensives in more than
150 strengths.
2023 Annual Report – Business report
* 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.
121
Statins and other hypolipemics
Highlights
• We remain the leading producer of hypolipemics in Regions Slovenia, Central, East, and South-East Europe.
• We recorded the highest sales increase of all competitors in those regions.
• The leading statins in the regions were Atoris* and Roswera*.
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.
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*)
Rosuvastatin, which ranked among our top five products in terms of sales, was our primary statin in 2023, leading in
absolute sales growth as well. We increased its sales by more than 20% in 2023. In Regions Slovenia, Central, East, and
South-East Europe, Roswera* captured a market share of over 25% and remained the leading rosuvastatin product. Of
all statins, only our Atoris* placed higher. Roswera* recorded the highest absolute sales growth in the regions. The single-
pill combination Co-Roswera* supplements our statin product range. We started marketing it in nine new markets,
including Spain, Ukraine, and Uzbekistan. It remained the leading single-pill combination of this type in Croatia, Slovakia,
Slovenia, Bulgaria, and Estonia. In 2023, we started marketing new strengths. As the only generic manufacturer, we started
marketing the single-pill combination containing 15 mg of rosuvastatin in Poland, Hungary, Czechia, and several other
markets, and the single-pill combination containing 40 mg of rosuvastatin in the Russian Federation and Georgia. We
ranked among the leading manufacturers of generic rosuvastatin varieties in Europe.
Our second most important statin-based product is Atoris*, available in six strengths. We are the only provider of 30 mg
and 60 mg atorvastatin tablets in many markets. Atoris* was one of Krka’s ten leading products in terms of sales and
among top five Krka products that surpassed the milestone of 1 billion tablets sold in 2023. The agent remained the leading
statin in Regions Slovenia, Central, East, and South-East Europe for the tenth consecutive year. In 2023, its sales
increased to more than 30% of the market, placing us among Europe’s leading providers of generic atorvastatin varieties.
Ezoleta* supplements our range of hypolipemics with a different mechanism of action. It was the leading ezetimibe-based
product in Slovenia and the Baltic states in 2023.
Statins are also incorporated in our single-pill combinations. In addition to the single-pill hypolipemics Co-Roswera* and
Ezesimin*, we also market several combinations for lipitension. They combine antihyperlipidemic and antihypertensive
agents. Our portfolio comprises three such agents, Valarox* is a single-pill combination of a statin and a sartan, while two
single-pill combinations, Roxiper* and Roxampex*, contain combinations of statins with an angiotensin-converting
enzyme inhibitor.
2023 Annual Report – Business report
* 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.
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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 a diuretic Apleria* (eplerenone), which is also indicated for the treatment of
chronic heart failure. Bravadin* captured a market share of over 20% last year and was the leading generic variety of
ivabradine in Regions Slovenia, Central, East, and South-East Europe. It outperformed all ivabradine products in Germany.
Apleria* was the leading eplerenone-based product in Hungary, Lithuania, and Estonia.
In 2023, we added a new product to our portfolio for the treatment of stable angina pectoris and started marketing Tezulix*
(ranolazine) prolonged-release tablets. Ranolazine is used with other medicines for treating stable angina pectoris in
patients whose condition is not adequately managed or in those who are unable to tolerate the first-choice therapy. We
made Tezulix* available as one of the first generic providers in seven markets of Regions West and Central Europe,
Germany and Spain among them.
Central nervous system
Antidepressants
Highlights
• We are the leading generic manufacturer of antidepressants in Regions Slovenia, Central, East, and South-East Europe.
• Our antidepressants are the most frequently prescribed by physicians compared to competing products in the specified area.
Antidepressants
• We market six state-of-the-art antidepressants from different classes.
• We are the only provider of 90 mg duloxetine tablets in several markets.
duloxetine (Dulsevia*)
agomelatine (Lamegom)
escitalopram (Elicea*)
venlafaxine (Alventa*)
sertraline (Asentra*)
mirtazapine (Mirzaten*)
We were the leading generic manufacturer of antidepressants in Czechia, Slovakia, and Croatia, outperforming all
competitors in Slovenia and Estonia.
Dulsevia* is our primary antidepressant. This leading duloxetine product captured a market share of over 40% in Regions
Slovenia, Central, East, and South-East Europe. Last year, it ranked first in numerous markets within the regions and
surpassed all competitors in both the Russian Federation and Hungary. It remained one of the leading generic varieties in
Germany. We remained the only provider of 90 mg duloxetine tablets in Hungary, Czechia, and Slovenia. We started
marketing Dulsevia* in Bosnia and Herzegovina last year.
Elicea*, Asentra*, and Lamegom remained the leading generic varieties in Regions Slovenia, Central, East, and South-
East Europe in 2023. The market share of Elicea and Asentra exceeded 15%. Elicea remained the leading generic variety
in Slovenia, the Russian Federation, Czechia, and Lithuania, and exceeded all escitalopram products in Serbia, Slovakia,
and Croatia. Also last year, Asentra was the leading sertraline product in Slovenia and Estonia, and one of the leading
sertraline products in Germany.
Alventa* and Mirzaten* supplement our antidepressant range. Once again, Mirzaten was the leading mirtazapine-based
antidepressant in Regions Slovenia, Central, East, and South-East Europe, capturing a market share of over 25%. Alventa
ranked first in Romania, Ireland, and several other countries.
Antipsychotics
Highlights
• We are the leading generic manufacturer of antipsychotics in Regions Slovenia, Central, East, and South-East Europe.
• We are the leading generic manufacturer of paliperidone and ziprasidone in Europe.
2023 Annual Report – Business report
* 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.
123
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*, our flagship antipsychotic, is available in tablets and prolonged-release tablets. Its market share increased to
more than 15% and remained the leading quetiapine product in Regions Slovenia, Central, East, and South-East Europe
in 2023. It captured a market share of over 35% in Slovenia, Latvia, Estonia, and Slovakia. Aryzalera* was the leading
generic variety of aripiprazole, while Zalasta* ranked among the leading olanzapine products in that area. Zalasta* and
Aryzalera* captured a market share of over 35% in the Russian Federation and were the leading of all olanzapine and
aripiprazole products, while Kventiax* in prolonged-release tablets was the leading quetiapine product. Zalasta* was the
leading olanzapine product in Portugal last year.
One of our new antipsychotics, Parnido*, was the only generic variety of paliperidone in tablets in Region West Europe
and several other markets. We remained the leading generic manufacturer of paliperidone in that pharmaceutical form,
while our antipsychotic Zypsilan* was the leading generic variety of ziprasidone in Europe.
Anti-Parkinson agents
We market three medicines for the treatment of Parkinson’s disease: Oprymea (pramipexole), Rolpryna SR* (ropinirole),
and Ralago* (rasagiline). For years, we have been one of the leading generic producers of those pharmaceuticals in
Regions Slovenia, Central, East, and South-East Europe, further improving our position in 2023. We remained the leading
generic manufacturer in Poland, and in Hungary, we achieved a market share of over 15%, making us the leading producer
of anti-Parkinson agents.
We were the leading generic manufacturer of pramipexole in Europe. Our flagship anti-Parkinson agent is Oprymea*,
outperforming all competing products in Poland, Czechia, Portugal, and several other countries, capturing a market share
of over 40% in 2023.
Rolpryna SR*, one of the leading generic ropinirole varieties in Europe, outperformed all competing products in Romania,
Slovenia, and several other markets.
Anti-Alzheimer agents
Four oral agents are used to treat Alzheimer’s disease, and all four are part of our product portfolio. We market Yasnal*
(donepezil), Marixino* (memantine), Galsya* (galantamine), and Nimvastid (rivastigmine). They are available in tablets
and capsules. Yasnal* and Nimvastid* are also available in orodispersible tablets. We are the only producer of rivastigmine
in that pharmaceutical form in Europe.
We rank among the leading generic producers of anti-Alzheimer agents in Europe. We are the leading generic producer
in Slovenia and the foremost producer of anti-Alzheimer agents in Italy, Lithuania, and Slovakia.
Other central nervous system agents
We market Lacosabil* (lacosamide) indicated for various types of epilepsy in Region West Europe. We were among the
leading generic manufacturers of lacosamide in Germany and the only generic producer in Ireland in 2023. Pragiola*
(pregabalin), also from the group of antiepileptics, is indicated primarily for neuropathic pain therapy.
Gastrointestinal tract
Proton pump inhibitors
Highlights
• We are one of the leading producers of proton pump inhibitors in Europe.
• We have been the leading proton pump inhibitor producer for over a decade in Regions Slovenia, Central, East, and South-
East Europe.
• We recorded the sharpest sales increase among all competitors, with our market share now exceeding 18%.
2023 Annual Report – Business report
* 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.
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• We are one of the leading generic producers of pantoprazole and 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* is our flagship medicine of this class, ranking among the five best-selling Krka products. In 2023, we sold more
than 1.2 billion tablets of Nolpaza*, 60 million more than the year before. Nolpaza remained among our five medicines
exceeding 1 billion tablets sold. It was the leading proton pump inhibitor in Regions Slovenia, Central, East, and South-
East Europe, capturing a market share of over 13%. Nolpaza* was the leading pantoprazole product in 15 countries, while
in the Russian Federation, Lithuania, Slovakia, and several other countries, it captured a market share of over 60%.
Nolpaza* placed us among the leading manufacturers of generic pantoprazole varieties in Europe. We also market it as a
non-prescription product.
Emanera* (esomeprazole) is our second most important proton pump inhibitor and one of our top ten products in terms of
sales. In 2023, it again ranked fifth among proton pump inhibitors in Regions Slovenia, Central, East, and South-East
Europe. We were the leading generic manufacturer of esomeprazole in the aforementioned regions, capturing a market
share of over 25%. Emanera* saw the sharpest increase of all esomeprazole products in year-on-year sales. Emanera*
generated strong sales in Region West Europe. It was one of the leading generic esomeprazole varieties in Germany and
Portugal, outperforming all competing products in Ireland. Last year, we ranked among the leading generic manufacturers
of esomeprazole in Europe. We also market it as a non-prescription product in certain markets.
Other medicines for acid-related disorders
We market Ulcavis* (bismuth), which is indicated for the treatment of gastritis. Combined with antibiotics and proton pump
inhibitors, it is also indicated for removing Helicobacter pylori bacteria. It is the leading generic variety in Europe and the
only bismuth-based medicine in many markets of Regions Central and South-East Europe. We also market it as a non-
prescription product.
Pain relief
Highlights
• We are the leading generic manufacturer of the tramadol/paracetamol combination in Europe.
• Nalgesin* is the leading naproxen-based medicine in Europe.
Pain relief
• We have a broad range of medications for relieving various types and intensities of pain.
• We started marketing opioid analgesic Tapendolor* (tapentadol) in 2023.
• Our non-prescription products complement the range of prescription analgesics.
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*)
tapentadol (Tapendolor*)
etoricoxib (Roticox*)
celecoxib (Aclexa*)
Doreta* (tramadol/paracetamol) is our flagship prescription analgesic. It ranked among the top ten Krka products in terms
of sales in 2023. We market tablets in two strengths. As the only producer in Europe, we made available prolonged-release
tablets in 2021 and dispersible tablets in 2022. We further strengthened Doreta’s* position as the leading
2023 Annual Report – Business report
* 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.
125
tramadol/paracetamol single-pill combination in 2023 and increased its market share to over 50% in Regions Slovenia,
Central, East, and South-East Europe. We started marketing Doreta* in Moldova. We were the leading generic producer
of the tramadol/paracetamol combination in Europe.
Nalgesin* (naproxen) is a non-steroidal anti-inflammatory and antirheumatic medicine (NSAID). It is the leading naproxen
product in Europe, capturing a market share of over 20%. Nalgesin* recorded the strongest sales growth of all competing
products in 2023, and its market share further increased. It remained the only naproxen-based analgesic in Slovenia,
Czechia, and other countries. Nalgesin* was the leading NSAID in Slovenia and ranked among the leading medicines of
this type in Croatia, Slovakia, and certain other countries. We also market it as a non-prescription product.
Naklofen Duo* and two analgesics from the coxib sub-class, Roticox* and Aclexa*, are also our NSAIDs. Roticox* and
Aclexa* were once again the leading generic varieties of etoricoxib and celecoxib in Regions Slovenia, Central, East, and
South-East Europe. Roticox* outperformed all competing products in Hungary, Lithuania, and certain other markets last
year. We remained the leading celecoxib provider in Poland, Czechia, and Slovakia. We started marketing Roticox* in
Kyrgyzstan in 2023 as well.
We also started marketing our new opioid analgesic. We launched Tapendolor* in Germany, Spain, Czechia, and
Portugal, and as the first generic manufacturer in Ireland and Slovakia.
Our two agents, an antidepressant Dulsevia* and an antiepileptic Pragiola*, are often used in neuropathic pain therapy.
Pragiola* was the main generic variety of pregabalin in Slovenia, Austria, and Slovakia. It outperformed all pregabalin
products in Estonia. Algominal supplements our analgesic range.
Blood and blood-forming organs
We market antiaggregant and anticoagulant medicines. Zyllt* (clopidogrel), an antiaggregant, is our primary medicine from
this product group. We market it in more than 40 countries. Zyllt* was the leading generic variety of clopidogrel in the
Russian Federation, Uzbekistan, and several other countries, and one of the leading clopidogrel products in Portugal and
Hungary. Surpassing a 35% market share, it outstripped all competing products in Georgia. It is the leading generic variety
of clopidogrel in Regions Slovenia, Central, East, and South-East Europe.
Our two new antiaggregant medicines are Eliskardia* (prasugrel) and the even newer Atixarso (ticagrelor), first launched
in 2021. Eliskardia* was the leading generic variety of prasugrel in Czechia, Slovakia, and Slovenia, and outperformed all
competing products in Germany.
Xerdoxo*(rivaroxaban) is one of the most advanced anticoagulants, which we launched in 2020 as one of the first generic
manufacturers in Europe. We launched it in Azerbaijan in 2023. Last year, we also started marketing our new anticoagulant
Dabixom (dabigatran), which we launched in the Russian Federation as the first generic manufacturer. Dabigatran in hard
capsules is indicated for the treatment and prevention of venous thromboembolic events.
Antidiabetics
Our primary antidiabetic agent is sitagliptin, a dipeptidyl peptidase-4 inhibitor. This state-of-the-art agent has a very good
safety profile and can be used already at the earliest stages of diabetes, either independently or in combination with other
agents. We market Maysiglu* (sitagliptin) and the single-pill combination Maymetsi* (sitagliptin/metformin). We first
launched them in 2022, and rolled them out in new markets in 2023. We started marketing Maysiglu* in Austria and France,
and Maymetsi* in Italy, Spain, Czechia, and nine other markets. In 2023, we gained the leading position among
manufacturers of generic varieties in the Russian Federation, Romania, Germany, Croatia, and several other markets, and
in turn, ranked as the leading generic manufacturer of sitagliptin in Europe. Our agent was the most frequently prescribed
sitagliptin-based product in Germany last year.
Vildagliptin is another agent in this class. We market two vildagliptin-based medicines, Glypvilo* (vildagliptin) and,
since 2022, also the single-pill combination Vimetso* (vildagliptin/metformin). In 2023, we put this single-pill combination
on the market in Italy and as the first generic manufacturer in Czechia. We were one of the leading generic manufacturers
in Germany, Czechia, and Portugal, and the leading manufacturer in Poland, capturing an almost 30% market share. Our
2023 Annual Report – Business report
* 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.
126
sitagliptin and vildagliptin placed us among the leading generic manufacturers of dipeptidyl peptidase-4 inhibitors in
Germany, Romania, Poland, and several other markets.
The antidiabetic agent Gliclada* (gliclazide) is a sulphonylurea. It is the only gliclazide in prolonged-release tablets in
Europe, and is available in three strengths. We were among the leading generic manufacturers of gliclazide in Europe
in 2023. We were the leading generic manufacturer in Poland, Slovakia, and certain other markets, while Gliclada*
outperformed all competing products in Czechia, Slovenia and Latvia. We also started marketing gliclazide through our
subsidiary in China in 2023.
Antiinfectives for systemic use
Our portfolio of antibiotics comprises medicines from various classes: macrolides, β-lactam antibiotics, fluoroquinolones,
and other antibiotics. In 2023, as in previous years, we remained the leading manufacturer of fluoroquinolone products
and ranked first among generic manufacturers of macrolide antibiotics in Regions Slovenia, Central, East, and South-East
Europe.
Fromilid* (clarithromycin), our flagship macrolide, has been the leading generic variety of clarithromycin in the
aforementioned regions for years. Fluoroquinolone antibiotics Moloxin* (moxifloxacin), Ciprinol* (ciprofloxacin), and
Nolicin (norfloxacin) outperformed all competing products in the area. We also market a fluoroquinolone Levalox*
(levofloxacine) and Azibiot (azithromycin) from the macrolide class. Our primary β-lactam antibiotic is Betaklav*
(amoxicillin/clavulanic acid).
We market medicines for the treatment of HIV infection, with Emtenovo* (emtricitabine/tenofovir) and Efavemten*
(efavirenz/emtricitabine/tenofovir) as our flagship products. In 2023, we placed among Germany’s leading generic
producers of the two single-pill combinations.
Oncology
We market fourteen oncology agents. Abiratel* (abiraterone), indicated for treating metastatic prostate cancer, is the most
important of them. Last year, we launched Abiratel* in Austria, Hungary, Portugal, Poland, and Croatia. In Croatia and
Sweden, we ranked among the leading generic providers of abiraterone.
Lenabdor* (lenalidomide) is indicated for multiple myeloma and is our second most important oncology agent. It was one
of the leading generic varieties of lenalidomide in 2023 in Germany, Austria, Finland, and several other countries. We also
launched it in Romania and Hungary.
Meaxin* (imatinib) was the leading generic variety of imatinib in Slovenia last year and among the leading imatinib products
in Poland, Ireland and certain other countries. Dasatinib Krka* (dasatinib) was the leading generic dasatinib variety in
Romania, the leading of all dasatinib products in Slovenia, and among the leading products in Slovakia. Ecansya*
(capecitabine) was one of the leading generic varieties of capecitabine in Ireland, Poland, Finland, and other countries,
while we are the only provider of capecitabine in Bosnia and Herzegovina. We started marketing Bortezomib Krka
(bortezomib) in Croatia in 2023 and emerged as the leading bortezomib producer in the market.
Everofin* (everolimus), Lortanda* (letrozole), and other medicines supplement our range of oncology agents.
In addition to oncology agents acting directly on cancer cells, we also market certain complementary medicines. Orlixon*
(dexamethasone) is used in oncology, haematology, and other therapeutic areas. It is available as a solution for injection
and tablets of several strengths. We were the only manufacturer of 40 mg tablets in Germany, Spain, and throughout
Regions Slovenia, Central, East, and South-East Europe last year. We were the only provider of 4 mg, 8 mg, and 20 mg
tablets in many countries, and started marketing 8 mg dexamethasone tablets in Kosovo. We also became the leading
manufacturer of dexamethasone for oral use in Europe.
2023 Annual Report – Business report
* 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.
127
Non-prescription products
In 2023, the Krka Group sales of non-prescription products totalled €177.3 million, a 2.6% year-on-year drop. Changing
rates of the Russian rouble caused the drop in value. However, sales volume of non-prescription products in the Russian
Federation saw a 5% increase. We recorded the highest absolute sales increases in Uzbekistan, Slovenia, and Czechia.
We market non-prescription products through our marketing and sales network in most countries of Regions Central, East,
and South-East Europe.
Septolete*, Nalgesin*, Herbion*, and Septanazal* were our primary non-prescription product brands in terms of sales.
Non-prescription product sales by ten major markets
2023 non-prescription product sales by therapeutic class
0
25
50
75
100
125
150
175
0
10
20
30
40
50
60
70
Russian Federation
Slovenia
Uzbekistan
Ukraine
Romania
Kazakhstan
Poland
Belarus
Croatia
Czechia
Index
€ million
2019 2020 2021 2022 2023 Index 2023/22
51.1%
17.3%
11.5%
6.5%
6.2%
3.6%
3.8%
Cough and cold
Analgesics
Vitamins and minerals
Gastro-intestinal tract and
metabolism
Cerebral and peripheral
circulation
Vasoprotectives
Other
2023 Annual Report – Business report
* 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.
128
Septolete remained our leading non-prescription product brand in 2023 and one of the ten leading products in terms of
sales. Septolete Total* (benzydamine/cetylpyridinium chloride) is available in spray and lozenges. We market three
lozenge flavours: eucalyptus, elder-and-lemon, and honey-and-lemon. We started marketing Septolete Total* honey-and-
lemon flavoured lozenges in Montenegro, Kosovo, and Tajikistan, and Septolete Total* elder-and-lemon flavoured
lozenges in Turkmenistan. Septolete Total* ranked first among products targeting the oral cavity and pharynx in Lithuania,
Slovenia, Belarus, and certain other markets of Region East Europe. At the Smartpharma awards ceremony, it won second
place in the category of sore throat products recommended by pharmacists in the Russian Federation.
Herbion, our third most important non-prescription product brand, also belongs to the cough-and-cold product group. It
comprises herbal 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, hoarseness, and dry, irritating cough. Herbion Ivy Lozenges act much like the syrup and help 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, remaining the leading syrup in 2023. We
started marketing Herbion* Iceland Moss syrup in the Russian Federation and Herbion Ivy lozenges in Tajikistan and
Mongolia.
Nalgesin* (naproxen), an analgesic, is our second most important non-prescription product. It was the leading naproxen-
based medicine in Europe in 2023. It was one of the leading analgesics of the NSAID product group in Regions Slovenia,
Central, East, and South-East Europe in terms of absolute sales growth. Nalgesin* remained the leading analgesic of this
product group in Slovenia last year and was one of the leading varieties in Lithuania, Croatia, Slovakia, and several other
markets. It is also marketed as a prescription pharmaceutical.
Septanazal* (xylometazoline/dexpanthenol) is a nasal decongestant available in spray for adults and spray for children.
Its 2023 sales significantly increased, ranking it fourth among our non-prescription products. It was one of the leading
sprays in its category by sales in Slovenia and Lithuania, and first in Latvia and Moldova, where its market share increased
to over 20%.
Bilobil*, which contains the ginkgo leaf extract, belongs to the peripheral vasodilator product group and is indicated for
slowing the progression of cognitive decline. We market it in 26 markets in Europe and the Middle East. Bilobil* was among
the leading ginkgo-based products, capturing a market share of almost 20% in Regions Slovenia, Central, East and South-
East Europe. In Slovenia, Belarus, Bosnia and Herzegovina, and Ukraine, it ranked first among products in its class.
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, especially in Region East Europe, where it was one of the leading
brands of vitamins and minerals for children. Pikovit again ranked first of all competing products in several markets of
Region East Europe, capturing a market share of over 60% in Uzbekistan and Kazakhstan. We started marketing it in
Slovakia.
Flebaven* (diosmin) belongs to the group of vasoprotectives. It is used to treat chronic venous insufficiency and acute
haemorrhoidal syndrome. Flebaven was among the leading diosmin varieties in Slovakia, Croatia, Slovenia, and Estonia.
In certain countries, it is available on prescription as well.
Our food supplement Magnezij Krka (magnesium) is available in water-soluble granules. Last year, we added a new
400 mg strength to the existing 300 mg strength. The new strength was the primary driver of the product brand sales.
Capturing a 50% market share, Magnezij Krka solidified its position as the leading magnesium product in Slovenian
pharmacies.
Vitamin D3 Krka (cholecalciferol) is indicated for the treatment and prevention of vitamin D deficiency and as adjunctive
therapy in the specific treatment of osteoporosis. In Slovenia, it remained the leading cholecalciferol-based product in
pharmacies, capturing a market share of over 30%. We started marketing a new strength, cholecalciferol 7000 IU tablets
as a prescription pharmaceutical in Slovenia, Latvia, and Poland.
Nolpaza Control* (pantoprazole) and Emozul Control* (esomeprazole) are two proton pump inhibitors from the product
group for the gastrointestinal tract and metabolism. We also market the two products as prescription pharmaceuticals.
2023 Annual Report – Business report
* 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.
129
Nolpaza Control* remained one of the leading non-prescription products for the gastrointestinal tract, capturing a 30%
market share and ranking first in that category in Slovakia and Lithuania. We also started marketing it in Finland and
Armenia. Emozul Control remained one of the leading products of this category in Hungary.
Animal health products
In 2023, the Krka Group sales of animal health products amounted to €104.6 million, a 12.5% year-on-year climb. Sales
generated in the Russian Federation, Poland, and Germany were the primary drivers of growth.
In Regions Slovenia, Central, East, and South-East Europe and most markets of Region West Europe, we use our own
marketing and sales network for selling our animal health products. On other markets of Region West Europe and
Overseas Markets, we market them through our partners.
In 2023, the combination of milbemycin and praziquantel (Milprazon*) emerged as the best-selling animal health product.
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 product sales by ten major markets
0
25
50
75
100
125
150
175
200
0
5
10
15
20
25
30
35
40
Russian Federation
United Kingdom
France
Poland
Germany
Ukraine
Benelux
Czechia
Portugal
Spain
Index
€ million
2019 2020 2021 2022 2023 Index 2023/22
2023 Annual Report – Business report
* 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.
130
2023 animal health product sales by therapeutic class
We produce animal health products for farm animals and companion animals. Products for companion animals, which
accounted for over 70% of animal health sales last year, were the primary drivers of sales growth.
Our primary companion animal product is the antiparasitic Milprazon* (milbemycin/praziquantel), which is also our leading
animal health product in terms of sales. It is available in tablets and Milprazon Chewable* flavoured tablets for dogs and
cats, first launched in 2022. We started marketing it in new markets, including the Russian Federation, Serbia, Spain,
Belarus, and Sweden. Flavoured tablets contributed most to the growth of the Milprazon* product brand, which ranked
among our leading animal health products in terms of absolute sales growth.
Spot-on solutions accounted for the majority of our companion animal product range. Fypryst* is the primary spot-on and
our second most important animal health product brand. Fypryst* is also available as a cutaneous spray. Fypryst* Combo
(fipronil/S-methoprene) complements the range. Region West Europe recorded the strongest fipronil sales, particularly the
United Kingdom, where absolute sales growth was the highest. Fypryst* contributed most to our animal health product
growth in 2023.
Another spot-on solution from the antiparasitic class for the treatment of ectoparasite infestations in dogs is Ataxxa*
(imidacloprid/permethrin). We recorded the strongest sales in the Russian Federation, Poland, France, and Finland.
Another antiparasitic for companion animals, the endectocide Selehold* (selamectin), is available as a spot-on solution.
It is used for treating and preventing infestations with endo- and ectoparasites. Last year, it was our third most important
animal health product in terms of sales and also ranked among our leading products in terms of absolute sales growth.
Prinocate* (imidacloprid/moxidectin) spot-on solution is also our endectocide for companion animals. This is our latest
spot-on, which we launched in 2020. This double fixed-dose combination is indicated for treating endo- and ecto-parasites
parasites in dogs and cats. It generated the strongest sales in the United Kingdom, Ukraine, and Poland.
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 for large dogs. Our range also includes flavoured tablets Dehinel Plus* Flavour
(febantel/pyrantel/praziquantel) for dogs and Dehinel* (pyrantel/praziquantel) for cats.
Our animal health product range also comprises two antimicrobial agents, Otoxolan
(marbofloxacin/clotrimazole/dexamethasone) ear drops and Marfloxin* (marbofloxacin). Tablets are used for treating
companion animals and a solution for injection for farm animals.
58.6%
9.0%
3.1%
20.2%
4.4%
4.7%
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
2023 Annual Report – Business report
* 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.
131
The most recent addition to our range of antimicrobial agents for companion animals is a fixed-dose combination Cladaxxa
(amoxicillin/clavulanic acid) from our antibiotic range. Chewable tablets, available in three strengths, are indicated for the
treatment of bacterial infections of the skin, gums, respiratory tract, urinary tract, and intestines in cats and dogs. We
started marketing Cladaxxa in 2022, and last year made it available in ten new markets, including Romania, Italy, and the
Baltic states. It is one of our animal health products that contributed the most to absolute sales growth.
Rycarfa* (carprofen), available in tablets and as a solution for injection, is an analgesic from our companion animal product
range. We launched our new and contemporary analgesic Robexera (robenacoxib) chewable tablets for dogs in 2023. It
is available in four strengths. This nonsteroidal anti-inflammatory agent from the coxcib class is indicated for relieving pain
and treating inflammation associated with chronic osteoarthritis and soft tissue surgeries. We started marketing it as the
first generic manufacturer in Germany, the United Kingdom, Poland, and other countries, eleven all together.
The leading farm animal product is an antibiotic, Enroxil* (enrofloxacin), which is also one of our leading animal health
products. The antibiotic Floron* (florfenicol) also ranked among the leading animal health products in terms of sales. We
added a fixed-dose combination FlorFlu* (florfenicol/flunixin) solution for injection to the range. Administered by a single
injection, it has an antimicrobial, analgesic, and anti-inflammatory effect. Our new medicine is indicated for treating
respiratory tract infections in cattle. We started marketing FlorFlu* in the United Kingdom and Spain.
Our range of antimicrobials also included Doxatib (doxycycline), Amatib*(amoxicillin), Trisulfon
(sulfamonomethoxine/trimethoprim), and Tuloxxin (tulathromycin) – one of our leading animal health products in terms of
absolute sales growth in 2023.
Our primary antiparasitic products for farm animals were Toltarox* (toltrazuril) and Flimabend (flubendazole).
Ecocid* S ranks among our top ten animal health products. In 2023, we continued to market it successfully as a
preventative against African swine fever. This disinfectant is also gaining popularity among owners of companion animals.
Health resort and tourist services
Terme Krka sales revenue totalled €47.7 million at the end of 2023, up 12% year on year. We recorded 336,174 overnight
stays, a 4% year-on-year increase. Overnight stays of foreign guests increased by 8%. The majority of foreign guests were
from Italy, Austria, and Germany. While individual guests favoured wellness programmes, our group guests primarily
participated in medical wellness programmes and business events. Referral-based medical care accounted for 35% of
total revenue.
Products marketed under different brand names in individual markets
Prescription pharmaceuticals
API
Brands
amlodipine
Alneta, Amlobe, Amlober, Amlodinova, Hipres, Tenox
amlodipine/atorvastatin
Amaloris, Atordapin
amlodipine/valsartan
Valodip, Vamloset, Wamlox
amoxicillin/clavulanic acid
Betaklav, Hiconcil Combi
aripiprazole
Arisppa, Aryzalera, Zylaxera
atorvastatin
Astator, Atoridor, Atoris
bismuth
Ulcamed, Ulcavis
bisoprolol
Niperten, Sobyc, Sobycor, Zonsiloc
bisoprolol/amlodipine
Bisodipin, Niperten Combi, Sobycombi, Sobycor Combi
candesartan
Candecor, Canocord, Karbis
candesartan/amlodipine
Camdero, Camlocor, Candecam, Kandoset
candesartan/hydrochlorothiazide
Cancombino, Candecor Comp, Canocombi, Karbicombi
celecoxib
Aclexa, Dilaxa
dexketoprofen
Dekendol, Dekenor, Dexfenia
diclofenac
Naklofen, Naklofen Duo
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132
donepezil
Yasnal, Yasnal Q-Tab, Yasnoro
duloxetine
Duloxalta, Duloxenta, Dulsevia, Dulvas, Loxentia
dutasteride
Dortilla, Dutascar, Dutrys
dutasteride/tamsulosin
Dutamyz, Dutastam, Tadusta, Tadustix
enalapril
Corvo, Enap
enalapril/hydrochlorothiazide
Corvo HCT, Enap-H, Enap-HL
enalapril/lercanidipine
Elernap, Elyrno, EnaCanpin
eplerenone
Apleria, Enplerasa, Riolma
escitalopram
Ecytara, Elicea, Elicea Q-Tab, Escitalex
esomeprazole
Emanera, Emozul, Escadra, Esolib, Esozoll
etoricoxib
Bericox, Etoriax, Etoxib, Roticox
ezetimibe
Ezetad, Ezoleta
ezetimibe/simvastatin
Ezesimin, Vasitimb
finasteride
Finascar, Finpros
galantamine
Galnora, Galsya, Galsya SR
gliclazide
Diacronal MR, Gliclada, Gliclada SR, Glyclada
imatinib
Imanivec, Itivas, Meaxin, Neopax
indapamide
Icorvida SR, Rawel SR
irbesartan
Ifirmasta, Irabel
irbesartan/hydrochlorothiazide
Co-Irabel, Ifirmacombi, Irbecor Comp
ivabradine
Bixebra, Bravadin, Brivecor, Ivabalan
lacosamide
Lacosabil, Lydraso
lansoprazole
Lansoptol, Lanzul, Zoletad
letrozole
Likarda, Lortanda
levofloxacin
Levalox, Levaxela, Levnibiot
losartan
Lavestra, Lorista
losartan/amlodipine
Alortia, Lortenza, Tenloris
losartan/hydrochlorothiazide
Lavestra H, Lavestra HCT, Lorista H, Lorista HD, Lorista HL
memantine
Marixino, Maruxa, Maryzola, Memando, Memaxa, Mentixa
metoprolol
Bloxan, Bloxazoc, Metazero, Metazero XR
mirtazapine
Mirtin, Mirzasna, Mirzaten, Mirzaten Q-Tab, Mirzaten Oro-Tab
moxifloxacin
Moflaxa, Moflaxya, Moloxin, Moxibiot
naproxen
Analgesin, Analgesin Forte, Ilgesin, Naldorex, Nalgesin, Nalgesin F,
Nalgesin Forte, Naprosyn
olanzapine
Zalasta, Zalasta Q-Tab, Zolrix
olmesartan
Olimestra, Olmecor
olmesartan/amlodipine
Olmeamlo, Olssa, Polaplom
olmesartan/amlodipine/hydrochlorothiazide
OlmeAmlo HCT, Olsitri, Polaplom HCT
olmesartan/hydrochlorothiazide
Co-Olimestra, Olmecor HCT
oxycodone/naloxone
Adolax, Oxycaloxon, Oxynador
pantoprazole
Nolpaza, Sedipanto
perindopril
Perineva, Prenessa, Prenessaneo, Prenessa Neo
perindopril/amlodipine
Amlessa, Amlessa Neo, Amlessini, Dalnessa, Dalneva, Predalneva,
Tonarssa, Tonarssa Neo
perindopril/amlodipine/indapamide
Amlewel, Co-Amlessa, Co-Dalnessa, Co-Dalneva, Tonanda
perindopril/amlodipine/rosuvastatin
Rosamera, Roxampex, Roxatenz-Amlo
perindopril/indapamide
Comaranil, Co-Perineva, Coprenessa, Co-Prenessa, Co-Prenessa Neo, Co-
Prenessaneo, Prenewel, Prenewel Neo
perindopril/indapamide/rosuvastatin
Roxatenz-Inda, Roxiper, Triemma
prasugrel
Eliskardia, Prasillt, Sigrada
pregabalin
Apregia, Pragiola, Pregabador, Pregabio, Rewisca
quetiapine
Kventiax, Kventiax Prolong, Kventiax SR, Quentiax, Quentiax SR
rabeprazole
Gelbra, Zulbex
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133
ramipril
Ampril, Amprilan
ramipril/amlodipine
Rameam, Ramidipin, Ramladio
ramipril/hydrochlorothiazide
Ampril HL, Ampril HD, Amprilan H, Amprilan HD, Amprilan HL, Marilamed
rasagiline
Raglysa, Ralago
risperidone
Rorendo, Rorendo Oro-Tab, Torendo, Torendo Q-Tab
rivaroxaban
Rivarolto, Rivaroxia, Xerdoxo
ropinirole
Ralnea, Rolpryna, Rolpryna SR
rosuvastatin
Rosuvador, Roswera, Roxera, Sorvasta
rosuvastatin/ezetimibe
Coroswera, Co-Roswera, Co-Roxera, Rosazimib, Roswera Combi,
Roxera Plus, Sorvasta Plus, Sorvitimb
sertraline
Asentra, Sertrone
sildenafil
Sildegra, Vizarsin
silodosin
Sidarso, Silbesan
simvastatin
Sivales, Vasilip
sitagliptin
Asiglia, Maysiglu, Sitagavia
sitagliptin/metformin
Asigefort, Asiglia Met, Maymetsi, Sitagavia Met
solifenacin
Asolfena, Solifemin
tadalafil
Tadagis, Tadilas, Tadilecto
tamsulosin
Tadin, Tamzeltos, Tanyz, Tanyz ERAS
tapentadol
Apeneta, Tapendolor
telmisartan
Telmista, Tolura
telmisartan/amlodipine
Tamloset, Telassmo, Teldipin, Telmista AM
telmisartan/hydrochlorothiazide
Tolucombi, Telmista H, Telmista HD
tramadol/paracetamol
Doreta, Doreta Prolong, Doreta SR, Ramlepsa, Tramabian
valsartan
Valsacor, Valsareta
valsartan/amlodipine/indapamide
Co-Valodip, Co-Vamloset, Valsamtrio, Valtricom
valsartan/hydrochlorothiazide
Co-Valsacor, Co-Valsareta, Valsacombi, Valsacor H, Valsacor HD,
Valsaden
valsartan/rosuvastatin
Ravalsyo, Valarox
vardenafil
Vardegin, Viavardis
venlafaxine
Alventa, Olwexya, Venlafex XL
vildagliptin
Glypvilo, Vildabetes
vildagliptin/metformin
Vildakombi, Vimetso
ziprasidone
Ypsila, Zipsilan, Zypsila, Zypsilan
Non-prescription products
API
Brands
benzydamine/cetylpyridinium chloride
Septabene, Septolete Total, Septolete Duo, Septolete Extra,
Septolete Omni, Septolete Ultra, Septafar
diosmin; diosmin/hesperidin
Flebaven, Flebazol, Flabien
esomeprazole
Emozul Control, Esozoll
ginkgo leaf extract
Bilobil, Gingonin
Iceland moss extract
Herbion Iceland Moss, Herbisland
ivy leaf extract
Herbion Ivy Syrup, Herbihelix
magnesium citrate
Magnezij Krka 300, Magnezij Krka 400, Magnesol B2
naproxen
Nalgesin S, Analgesin, Nalgedol, Ilgesin, Nalgesin Dolo, Nalgesin Mini,
Nalgesin Relief
pantoprazole
Nolpaza Control, Sedipanto, Panto TAD
vitamins for children
Pikovit, Divakid
xylometazoline/dexpanthenol
Septanazal, Septanasal
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Animal healt products
API
Brands
amoxicillin
Amatib, Awazom
carprofen
Karprovet, Rycarfa
enrofloxacin
Enrox, Enroxal, Enroxil
febantel/pyrantel/praziquantel
Anthelmin Plus, Dehinel Plus, Wormscreen Plus
fipronil
Amflee, Fyperix, Fypryst
fipronil/S-methoprene
Amflee Combo, Fleascreen Combo, Fyperix Combo, Fypryst Combo
florfenicol
Fenflor, Floron
florfenicol/flunixin
FlorFlu, Flovuxin
imidacloprid/moxidectin
Imoxicate, Prinocate
imidacloprid/permethrin
Ataxa, Ataxxa
marbofloxacin
Marfloxin, Quiflor, Quiflox
milbemycin/praziquantel
Milprazin, Milprazon, Milprazon Chewable, Milprazon Plus, Milquantel
pyrantel/praziquantel
Anthelmin, Dehinel, Wormscreen
selamectin
Selafort, Selehold
toltrazuril
Toltracol, Toltarox, Tolzesya
biocide
Ecocid, Oxicid
Research and development
32
Krka’s competitive product range arises from our development strategy, which capitalises on the benefits of vertical
integration and synergies between our development and production expertise. Because we manage the entire process,
we can timely introduce high-quality, safe, and effective medicines into over 70 markets.
By the end of 2023, our portfolio comprised approximately 500 authorised products in various pharmaceutical forms. There
are about 170 projects at different development stages aiming to extend our range of medicines in key therapeutic
categories, such as medicines for the treatment of high blood pressure, diabetes, blood and blood-forming organs, and
cancer. This enables us to contribute to making quality medicines widely available, aligning with one of the primary United
Nations Sustainable Development Goals (SDG).
33
We have adopted a development strategy and project management approach for products in all life-cycle phases and for
all our markets. Research-and-development productivity and hands-on understanding of regional and national legislative
requirements enable us to draft and manage complex registration documentation and regulatory procedures efficiently and
thus obtain timely product marketing authorisations. We consider the market-specific target properties of a product and
tailor our development efforts and studies from its earliest stages accordingly. Through this approach, we prioritise our
social responsibility, guaranteeing a modernised portfolio of medicines across all our markets, even in financially
disadvantaged regions or countries (low- or medium-income), within the shortest timeframe achievable. We currently
market over 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 and patients’ needs. We
introduce new and improved development approaches, where we also cooperate with external partners. Our emphasis
lies in collaborating with educational and R&D institutions, fostering a continuous exchange of expertise between academia
and industry. Through this partnership, we facilitate the professional development of our employees and drive innovation
forward. This leads to development and quality improvement in both segments. As a responsible pharmaceutical company,
our products and technologies are the culmination of top-notch expertise and scientific endeavours. We actively collaborate
with EDQM (European Directorate for Quality of Medicines and Healthcare), especially by establishing quality standards
of active pharmaceutical ingredients (APIs) in Europe and globally. Some Krka’s APIs are certified according to European
reference standards, and analytical methods for several crucial APIs are outlined in monographs.
32
SDG 3, SDG 12
33
GRI 2-6
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135
Research-and-development processes that involve comprehensive and complex technological, analytical, preclinical, and
clinical studies enable us to develop complex products in innovative pharmaceutical forms with added value for patients.
We focus on medicines containing two or more active substances that provide double or triple therapy to our patients in a
single pill. We use less excipients, packaging material, and energy to produce these single-pill combinations, reducing our
environmental footprint. In addition to generic combinations, we also develop novel innovative single-pill combinations of
established active substances. The development of these products is complex, as they require state-of-the-art
technological solutions at the production scale and complex analytical evaluations, including clinical studies.
New products are supported with safety and efficacy studies. We conduct clinical trials in line with the applicable legal
requirements, good practice guidelines, the Helsinki Declaration, and Regulation (EU) 2016/679 (General Data Protection
Regulation). Routine inspections carried out by regulatory authorities validate the assurance of participant safety,
transparency, ethical standards, and high-quality research.
Quality is paramount for our products, starting from the early development stages and remaining integral throughout each
product’s lifecycle. We ensure all development activities adhere to established quality systems, which we consistently
update and enhance.
Bearing in mind the environment, we strive for simple and energy-efficient technological solutions that also make our
products affordable. We develop our products in compliance with our environmental policy and the ISO 14001 standard.
We ensure that our technological procedures have a minimal environmental impact by implementing measures to reduce
our carbon footprint, water consumption, and organic solvent volumes. In doing so, we align with circular economy
objectives.
We allocate approximately 10% of our annual revenue to research and development, support innovations, and respond
quickly to patients’ needs.
We also invest a substantial amount in data science and technology. In 2023, we continued with the digitisation of R&D
data. The start of implementation of the uniform Laboratory information management system (LIMS) was of paramount
importance. For the first time, we conducted a computer simulation project of technological processes that further
increased the efficiency of processes and the top quality of our products. We continued with the robotisation of analytical
processes in labs. By implementing analytical procedures supported by automated sample preparation, we expedited
analyses and minimised the likelihood of errors.
Also, in 2023, we invested in physico-chemical analytics, cell test know-how, and laboratory equipment to develop in-
house analytical methods and other complex product projects, including peptides. Through collaboration with diverse
partners, we enhanced our expertise and capabilities in transferring production procedures of complex products to an
industrial scale.
We utilised our comprehensive development studies on established products, adjusted development activities accordingly,
integrated our development and manufacturing operations, and gathered information about regulatory and marketing
requirements to successfully enter the new strategic market of China. In 2023, approvals were granted for our three new
products in this region.
Again, in 2023, the wider community recognised our researchers’ achievements. At the state level, we received two awards
for best innovations from the Slovenian Chamber of Commerce and Industry. The gold award was awarded for a group of
medicines used to manage type 2 diabetes, and a silver award for an integrated reference substance management system.
Protecting our know-how and industrial property
In 2023, we filed eleven patent applications for new technological solutions we evaluated as innovations at the global
ranking level. Based on priority applications from 2022, we filed seven international and one regional patent application.
We were granted six patents in various countries. Overall, more than 200 valid patents protect Krka’s technological
solutions.
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136
We filed 72 applications for Krka trademarks in Slovenia. We also filed 48 international and 17 national trademark
applications. In total, we have registered more than 1,100 trademarks in various countries.
In 2023, Krka earned the WIPO IP Enterprise Trophy. The World Intellectual Property Organization (WIPO) grants awards
to companies to stimulate innovation within their business environment and beyond, foster collaboration with public
research institutions and underscore the significance of intellectual property rights.
Latest Krka Group products and marketing authorisations
In 2023, we expanded our product range with fourteen new products, including ten new prescription pharmaceuticals, two
veterinary medicines, and two additions to our portfolio of non-prescription products.
We finalised 698 marketing authorisation procedures, including 497 prescription pharmaceuticals and nine non-
prescription products, thereby making medications more accessible to patients across various markets. In the animal
health segment, we finalised 192 procedures, primarily expanding our product portfolio for companion animals.
We manage a wide range of medicinal products from several therapeutic categories. We optimise our processes and
products in line with new regulatory guidelines and scientific findings. Furthermore, in 2023, our meticulously planned
variation strategies facilitated the rapid implementation of significant enhancements to several products. In total, over
23,000 regulatory variations were granted in the past year.
Prescription pharmaceuticals
We concluded marketing authorisations for ten new products and secured additional authorisations for our established
products in additional markets.
Last year, we again focused on developing and registering single-pill products that combine two or several active
substances in a single dosage form.
Single-pill combinations of angiotensin II receptor blockers and a diuretic are the drugs of choice in the treatment of patients
with high blood pressure. In 2023, we concluded marketing authorisation procedures for three new single-pill combinations:
Valsacor-inda (valsartan/indapamide) modified-release tablets, Telmista-amlo H
(telmisartan/amlodipine/hydrochlorothiazide) tablets – also approved as Tolutris, Tolvecamo, and Tolvecom, and
Telinstar (telmisartan/indapamide) modified-release tablets. The three medicinal products are innovative single-pill
combinations based on Krka’s know-how that will bring patients with high blood pressure an optimised way of treatment.
In European markets, we added two new medicinal products for the treatment of diabetes to our portfolio. Marketing
authorisations were granted for Dagrafors (dapagliflozin) film-coated tablets and Empagliflozin Krka (empagliflozin) film-
coated tablets. Both are from the cutting-edge group of medicinal products, effectively reducing glycated haemoglobin
levels while also exhibiting positive effects on the cardiovascular system and kidney function.
Marketing authorisations were granted for our new antithrombotic agent Daxanlo (dabigatran), on certain markets also
approved under the brand name Danengo, used for the prevention of atherothrombotic and thromboembolic events in
adults with various cardiovascular diseases. Dabigatran is the drug of choice for preventing venous thromboembolism
after hip or knee replacement and is available in hard capsules in three different strengths.
We obtained marketing authorisations for new medicines in China. Approval was obtained for rivaroxaban film-coated
tablets. The medicine has a broad range of therapeutic uses in preventing atherothrombotic events in adults with
cardiovascular diseases. It is an advanced anticoagulant, providing an effective and safe therapy for cardiovascular
patients and improving their quality of life. In the group of agents for the treatment cardiovascular diseases, an approval
was granted for a medicine containing perindopril tert-butylamine. Perindopril is one of the most widely researched ACE
inhibitors in terms of clinical trials and is the drug of choice for the treatment of hypertension, heart failure and coronary
heart disease.
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We also obtained our first approval for an antidiabetic agent in the Chinese market. The medicine containing gliclazide in
the form of modified-release tablets was approved. It effectively reduces blood glucose levels in diabetes 2 patients.
In the countries of the European Union, additional marketing authorisations were obtained for products from established
and new therapeutic categories.
Marketing authorisations were granted for sitagliptin film-coated tablets and the single-pill combination of
sitagliptin/metformin film-coated tablets used to treat diabetes. In the group of pain relief products, marketing
authorisations were granted for tapentadol prolonged-release tablets and tramadol/paracetamol prolonged-release
tablets. Oncology medication abirateron film-coated tablets used to treat prostate cancer was granted an additional
marketing authorisation. The accessibility of cardiovascular treatments was enhanced with marketing authorisations for
amlodipine tablets, losartan and losartan/hydrochlorothiazide film-coated tablets. Additional marketing authorisations
were also granted for the single-pill combination of rosuvastatin/ezetimib film-coated tablets. In the group of medicines
for the treatment of central nervous system disorders, we obtained marketing authorisations for lacosamide film-coated
tablets, an epilepsy treatment. Marketing authorisations were granted via the decentralised procedure for Vitamin D3 Krka
(cholecalciferol) 7000 IU tablets, and additional authorisations were obtained for the advanced anticoagulants rivaroxaban
film-coated tablets and apixaban film-coated tablets.
We obtained marketing authorisations in the UK for amlodipine tablets and ranolazine prolonged-release tablets.
Marketing authorisation was also granted for teriflunomide film-coated tablets, a medicine to treat patients with multiple
sclerosis.
In Eastern Europe, we obtained marketing authorisations for important products from our key therapeutic categories. We
obtained approvals in additional markets of the Region East Europe according to the Mutual Recognition Procedure (MRP)
in the Eurasian Economic Union (EAEU) for the analgesic Etoriax (etoricoxib) film-coated tablets. We obtained a marketing
authorisation for Tigalant (ticagrelor) film-coated tablets and marketing authorisations in additional markets for Rivaroxia
(rivaroxaban) film-coated tablets, also approved as Rozarya in certain countries. Both are antithrombotics, i. e. medicines
that prevent blood clotting. In the group of cardiovascular agents, approvals were granted for the single-pill combination
Roxatenz-Inda (perindopril/indapamide/rosuvastatin) film-coated tablets, and for Co-Prenessa Neo
(perindopril/indapamide) tablets. We supplemented our range of antidiabetics with the modern agent Glypvilo (Glipvilo)
(vildagliptin), a single-pill combination Glypvilo Met (Glipvilo Met) (vildagliptin/metformin) film-coated tablets, and Asiglia
(sitagliptin) film-coated tablets.
In the markets of Region South-East Europe, we obtained additional marketing authorisations for our cardiovascular
agents. The single-pill combination Co-Roswera (rosuvastatin/ezetimibe) film-coated tablets were also granted a
marketing authorisation. It is used to treat resistant hyperlipidemias. Approvals were granted to Krka for the marketing of
a new peridopril salt, incorporated into our products Arprenessa (perindopril) tablets, Aramlessa (perindopril/amlodipine)
tablets, and CoArprenessa (perindopril/indapamide) tablets. Marketing authorisation was also granted for our advanced
reversible platelet aggregation inhibitor Atixarso (ticagrelor) film-coated tablets. The group of antidiabetic agents
expanded after we obtained marketing authorisation for Maysiglu (sitagliptin) and Maymetsi (sitagliptin/metformin) film-
coated tablets. Also, our oncological medicine Everolimus Krka (everolimus) tablets were granted a marketing
authorisation.
In the Overseas Markets, we supplemented our portfolio of cardiovascular agents with Sobycor (bisoprolol), Elernap
(enalapril/lercanidipine), Wamlox (amlodipine/valsartan), Telorssa (losartan/amlodipine), Olmira
(olmesartan/amlodipine), and Amaloris (amlodipine/atorvastatin), all film-coated tablets; Rameam (ramipril/amlodipine)
capsules, and Tolura (telmisartan), Telassmo (telmisartan/amlodipine), Amlessa (perindopril/amlodipine), Enap H
(enalapril/hydrochlorothiazide) and Vasitimb (ezetimibe/simvastatin) tablets. Approvals were granted for Bravacor
(ivabradin), Lorista (losartan), and Roswera (rosuvastatin) film-coated tablets, and Nolpaza (pantoprazole) gastro-
resistant tablets. In these markets, we obtained approvals for the pain relief medicine Aclexa (celecoxib) hard capsules,
medicines to treat psychoses Parnido (paliperidone) and Quentiax SR (quetiapine) prolonged-release tablets, Tadilas
(tadalafil) film-coated tablets to treat erectile dysfunction, and Monkasta (montelukast) film-coated tablets for the
prevention and treatment of chronic bronchial asthma and seasonal allergic rhinitis symptoms.
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We obtained a Certificate of Suitability to the monograph of the European Pharmacopoeia (CEP) issued by the European
Directorate for the Quality of Medicines & Health Care (EDQM) for a new synthesis route for norfloxacin, the active
substance incorporated in Krka Nolicin film-coated tablets.
Non-prescription products
In 2023, we added two new products to our portfolio of non-prescription medicinal products and food supplements.
Magnezij Krka DIREKT powder, intended for direct use, is a food supplement containing 250 mg of magnesium and group
B vitamins that contribute to reducing tiredness and exhaustion and normal nervous system functioning. Our product does
not contain preservatives, artificial colouring agents, flavours, sweeteners, gluten, or lactose. The novel formulation allows
easy intake without water.
Harntee TAD is a food supplement containing dry extracts of birch leaf, golden rod, and Java tea. The product does not
contain preservatives, artificial colouring agents, flavours, sweeteners, gluten, or lactose and supports normal urinary tract
function. It is available as a powder for solution, allowing for quick beverage preparation.
We obtained additional marketing authorisations for established products, among them
Septanazal (xylometazoline/dexpanthenol) nasal spray and Septolete Total (benzidamine/cetylpiridinium chloride)
lozenges and spray. Approval was also granted for Herbion Iceland Moss syrup.
Animal health products
In 2023, two new animal health products were granted marketing authorisations.
Our portfolio of companion animal health products was expanded by Arocenia (maropitant) solution for injection for cats
and dogs. The agent acts on the central nervous system, reducing nausea and preventing vomiting after surgery and
chemotherapy, thus improving post-operative recovery.
We concluded the first generic decentralised procedure (DCP) for Robexera (robenacoxib) chewable tablets for dogs,
available in four strengths, and approved as Rogiola in certain countries. The product contains robenacoxib, a nonsteroidal
anti-inflammatory active substance from the coxib class. It is used in veterinary medicine to relieve pain and treat chronic
osteoarthritis inflammation and to control inflammation and pain after soft tissue surgical procedures.
We obtained marketing authorisations for several established products in additional markets. We obtained marketing
authorisations for antibiotic Cladaxxa (amoxicillin/clavulanic acid) chewable tablets available in three strengths, a single
pill combination product used to treat bacterial infections in cats and dogs, and for two products for treating and preventing
worm infestations: Milprazon Chewable (milbemycin/praziquantel) flavoured film-coated tablets for dogs, and
Milprazon Chewable (milbemycin/praziquantel) film-coated tablets for cats. Additional marketing authorisations were
granted for Prinocate (Prinocat) (imidacloprid/moxidectin) spot-on solution and Dehinel Plus Flavour
(febantel/pyrantel/praziquantel) flavoured tablets. Both medicinal products are used to treat and prevent infections with
internal parasites in companion animals.
Health resort and tourist services
In 2023, we continued to implement systematic improvements across our comprehensive portfolio. Our guests welcomed
the renovated upper floor of Villa Park at Talaso Strunjan Health Resort, as well as the outdoor swimming pool. In addition,
we started work on an extensive reconstruction project for the third-floor rooms at the Svoboda hotel, including renovations
for the hotel restaurant, kitchen, reception hall, and lobby. We expect to complete the reconstruction by mid-2024.
2023 Annual Report – Business report
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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 promptly address shifting market demands,
continuously enhance processes to minimise lead times throughout the supply chain, and integrate supply processes
across 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.
Controlling all product life cycle stages allows us to adapt to market challenges more readily and effectively.
We effectively integrate research and development with API and pharmaceutical production, enabling us to swiftly and
smoothly transfer new products from development to regular production. In 2023, we accelerated technological problem-
solving, optimised technological processes, and introduced many alternative sources of materials to ensure uninterrupted
production and long-term volume growth.
Planning
Through implementation of continuous process enhancements, we significantly cut the average lead time from order to
delivery. This, in turn, boosted our responsiveness and process flexibility across the entire supply chain. We continued to
optimise inventories of raw materials and finished products.
By optimising available resources in the controlling company and subsidiaries and through cooperation with contractors,
we manufactured and packed 16.9 billion tablets and other pharmaceutical forms in 2023. By achieving 1% annual growth
compared to 2022, we sustained our long-term trend and advanced toward 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; shifting
market requirements; requirements for package labelling in national languages; and other demands. Careful planning and
efficient production allowed us to meet diverse customer demands.
We continuously improved post-registration procedures for preparing packaging materials and technological documents
for production in Slovenia, at our subsidiaries abroad and at contract manufacturers to ensure the timely provision of
products and prompt response to sales demands.
15.2
16.5
16.2
16.8
16.9
0
2
4
6
8
10
12
14
16
18
2019 2020 2021 2022 2023
Billion pieces
2023 Annual Report – Business report
140
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 2023, 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 on the market. In 2023, the number of raw
material manufacturers continued to decline, mainly driven by factors related to environmental, financial, and good
manufacturing practices. Raw material shortages and transport route disruptions also affected our business. Despite the
ongoing unstable situation, 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. We improved the transparency of purchasing raw and packaging materials and upgraded the system for
managing purchase agreements and coordinating raw material specifications with suppliers.
We successfully managed prices in the market for purchasing raw materials. 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. The situation in the Russian Federation and Ukraine had no siginiticant impact on the Krka Group’s
supply chains and the smooth supply to production units of Krka and its subsidiaries.
Purchase and transport agreements concluded with our suppliers and contractors require them to comply with national
and international laws and regulations. In 2023, we worked with 123 suppliers with an ISO 45001 certification and
294 suppliers certified to ISO 14001 and regularly audited 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, Slovenia. In turn, we considerably expanded active ingredient 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, both in Slovenia. Production plans for 2023 were implemented.
Production of pharmaceutical products
We have been integrating additional equipment and advanced high-tech solutions into pharmaceutical production.
Upgrades and refurbishments result in adequate production process effectiveness, augmented digitalisation, and utilisation
of production documentation in e-format, adding to automation and paperless operation. Through optimisation, we
improved production effectiveness and, in turn, achieved strong growth in product segments that saw a considerable rise
in market demand.
Production at our production sites abroad continued, further consolidating our position as a local manufacturer and allowing
us to supply all necessary products to key markets to benefit local stakeholders.
To ensure continuous training and uphold work quality standards, we upgraded the Pharmaceutical Production training
centre, where our employees receive hands-on training on equipment used in all key production processes. Participants
34
GRI 2-6, 3-3, 308-1, 414-1, SDG 3
2023 Annual Report – Business report
141
learn through the experience and expertise of their mentors, selected from Krka’s top-performing employees, and modern
methods for knowledge transfer.
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 were the first end user in Slovenia to register and utilise a heavy-duty electric truck for product
transportation. We augmented temperature-controlled sea transport. Due to the challenging operating climate in 2023, 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.
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.
Employees must comply with the procedures defined in internal guidelines, international agreements, and local regulations
at all stages of the purchasing process. 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:
• Adherence to relevant standards and regulations;
• References in implementing similar projects with other clients;
• Development capabilities and technical facilities;
• Number of key employees and their respective qualifications;
• Financial stability and relation to sub-suppliers or sub-contractors; and
• Previous track record when doing business with Krka.
We conduct supplier audits in accordance with quality standards and Krka guidelines and take account of suppliers’ quality,
responsiveness, delivery terms, reliability, prices, regulatory compliance, compliance with our guidelines, and their social
responsibility. In 2023, we rolled out the process of assessing and evaluating some of our key suppliers against ESG
criteria. We are also conducting activities to set up an appropriate due diligence process, which we will upgrade in
compliance with international guidelines and European legislation.
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 2023, 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
2023 Annual Report – Business report
142
Investments
37
In 2023, the Krka Group allocated €131.9 million to investments, of that €111.8 million to the controlling company, and
€20.1 million to subsidiaries. We primarily invested in expanding and technological upgrades to our production and
development facilities, improving quality management, and our production and distribution centres worldwide.
We prioritise sustainable development values, carefully evaluating environmental standards and both direct and indirect
environmental impacts in all our investment projects. The selected equipment embodies the best available technology for
environmental protection and energy efficiency, ensuring safe and efficient operations.
2019–2023 Krka Group investments
In Slovenia and abroad, we made multiple investments in new production equipment and upgrades to systems and
instruments, further increasing our production capacities and product quality. In 2023, we invested primarily in the
production of finished products, information and documentation management systems, intangible assets, and
infrastructure. The investments play a crucial role in aligning our research and development, production, and control
processes, showcasing the advantages of our vertically integrated business model. Investments accounted for 7.3% of
sales revenue generated in 2023.
37
GRI 2-6, SDG 9
113
77
66
106
132
0
2
4
6
8
10
12
14
0
20
40
60
80
100
120
140
2019 2020 2021 2022 2023
%
€ million
Investments in € million
% of sales value
2023 Annual Report – Business report
143
Structure of 2023 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
Notol, our solid dosage forms production plant in Novo mesto, Slovenia. This year, we are finishing the replacement of
packaging lines. We also plan to increase tablet compression capacities at Notol and Notol 2 and upgrade and increase
granulation capacities.
The investment in additional capacities for compression mixture preparation and granulation in the tablet compression
process and in logistic capacities at the Solid Dosage Products plant (Slovene: OTO) in Novo mesto, Slovenia, is drawing
to a close.
We completed the investment in room refurbishment in our development-and-control laboratories in Novo mesto
(Slovenia). We acquired extra space for laboratories and for managing samples and packaging materials.
We increased production capacities for granulation and packaging at the Ljutomer plant in Slovenia.
We installed a new filling line for animal health products in the Powders and Solutions at the Bršljin Department in
Novo mesto, Slovenia.
At the Beta Šentjernej plant in Slovenia, we upgraded systems and equipment and increased the production capacity.
In Novo mesto, Slovenia, the construction of a new multi-purpose building called Paviljon 3 is drawing to a close. The
building design incorporates our microbiology laboratory extension and additional rooms for Supply Chain Management
and other organisational units.
Increasing API development and production capacities
We obtained the integral building permit for our plant in Krško, Slovenia, comprising the Sinteza 2 API production plant,
laboratories for chemical analyses (Slovene: Kemijsko-analitski center), the liquid raw materials warehouse, and the
wastewater treatment plant, based on project documentation and an environmental impact assessment. We are still in the
process of obtaining the environmental protection and chemical safety (SEVESO) permit. At the end of 2023, we started
constructing a technologically advanced wastewater treatment plant. However, we intend to postpone the construction of
other buildings for a few years.
37.3%
0.7%
19.5%
2.3%
40.2%
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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144
Infrastructure
We built a fire-water retention basin (ZD4) at the Ločna site in Novo mesto, Slovenia. As part of the same project, we
implemented controlled access to car parks located in front of the office building, at the northern gate, and behind the Notol
plant. We also arranged additional parking in the multi-storey car park and on the motorcyclists’ platform.
We intend to capture the excess effluent temperature and using it for heat generation, increasing energy use efficiency at
our wastewater treatment plant in Ločna, Novo mesto, Slovenia. This investment supports the responsible management
of natural resources in line with the strategic environmental goals of our ESG Policy.
We aim to expand the capacity for pharmaceutical water production through enhanced drinking water treatment in our
Vodarna 2 water plant. This upgrade is intended to ensure redundancy and reliability across all stages of the treatment
process and pharmaceutical water production from drinking water.
We purchased several properties in the Cikava industrial zone in Novo mesto, Slovenia, for our long-term development on
23 hectares.
Investments outside Slovenia
We refurbished and upgraded business offices at our Serbian subsidiary Krka-Farma Beograd.
In the production and distribution centre in Jastrebarsko, Croatia, we are set to increase production capacities for solid
forms of animal health products.
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.
New projects
Construction of an extension to the Sterile Products plant is to start in early 2024. We expect this new production line for
sterile solutions to increase animal health product production capacity and ensure long-term production of high-volume
sterile products.
We intend to ensure uninterrupted production of liquid animal health products.
We plan to build a new building for Powders and Solutions at the Bršljin Department in Novo mesto, Slovenia, to increase
production capacities for animal health product. With the installation of new packaging lines, production capacities for
animal health tablets and liquid products will enjoy a boost.
We plan to start construction on a multi-purpose building. This new construction design also features a canopied cargo
bay and cargo vehicle inspection point.
Terme Krka
We rearranged the rooms on the ground floor at Villa Park and completely renovated the indoor aquatic therapy pool, the
outdoor pool, and the terrace at Hotel Svoboda. We are also refurbishing the hotel restaurant and rooms on the third floor.
We plan a comprehensive reconstruction of Hotel Vital at the Dolenjske Toplice health resort and an investment in the new
Vitarium hotel and refurbishment of pools at the Šmarješke Toplice health resort.
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145
Quality
38
Our fundamental strategic orientation in terms of quality is to ensure quality of our products, processes and services. To
this end, we pursue effective quality system performance, which requires compliance with requirements in the
pharmaceutical industry, good practices, responsible management of safety, health and 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 requirements and standards 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.
Regulatory inspections, partner audits and regular certification of our systems by SIQ (Slovenian Institute of Quality and
Metrology) lend corporate credibility and strengthen and maintain customer trust. In 2023, 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.
The quality system is supported by a centralised information and document management system, which we regularly
upgrade through digitalisation and other measures to ensure that data in documents and electronic records are credible,
easily accessible and protected and to provide for transparency as regards our processes and products. We use this
approach to conduct analyses 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 builds on framework quality guidelines, operating procedures and controls
integrated into IT systems and organisational processes.
Quality management system
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
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
38
GRI 3-3, 416-2
GxP
ISO
9001
ISO
45001
ISO/IEC
27001
HACCP
MDR
ISO
22301
ISO
14001
2023 Annual Report – Business report
146
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.
Product and process quality management
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 regularly 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 with equipment and systems fit for purpose. Before a new
or a reconstructed building with its built-in equipment and systems is made operational, Quality Assurance checks its
compliance with all applicable good practice requirements. The vast number of projects demonstrates large-scale
investment in new plants and departments, new or reconstructed rooms, new production, laboratory and development
equipment, etc. Major projects in 2023 included setting up a system intended for use in potentially explosive atmospheres
at the Beta Šentjernej plant (Slovenia), replacing two coating pans, renovating the packaging room and refurbishing two
R&D laboratories at the Notol plant (Slovenia), installing a new filling line at the Bršljin production site (Slovenia), and
increasing granulation and packaging capacities at our production site in Ljutomer (Slovenia). Construction of new
buildings for our microbiological laboratory started in 2023 and is planned to end in the first quarter of 2024.
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,
contemporaneity, consistency, security and descriptiveness, and ensure regulatory compliance. Considerable attention is
given to the development and implementation of information systems and introduction and management of laboratory and
production equipment. We ensure source data integrity through validations and qualifications of equipment, change control
and deviation management.
Quality is integrated at the early 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 research, we use new approaches and apply expertise to ensure
the level of patient and volunteer safety required by law.
R&D
supply and resources
Production and processes
Marketing, product availability
and customer satisfaction
Continuous assesment of risks and opportunities
Product, service and process quality management
2023 Annual Report – Business report
147
We set up a system for ensuring the quality of clinical research and the safety of patients and volunteers participating in
research. We ensure quality through: highly qualified personnel, use of adequate equipment and computer systems, risk
management, careful screening of partners involved in the entire product manufacturing process, clinical research
performance monitoring, reporting on patient safety and safety of all other participants in clinical research, 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 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 incorporate new findings important for the
safe administration of medicines in product information leaflets or take other risk mitigation steps. We present data and
findings to regulatory authorities. We also have a medical device monitoring system in place, which helps us to
systematically gather and analyse data on the quality, performance and safety of medical devices throughout their life
cycles.
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.
Pharmaceutical quality system oversight
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. 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.
Product and process quality control
39
GRI 2-27, SDG 16
Product compliance verification
Product compliance
Product Quality
Reviews
Continuous process
validation
Quality control,
laboratory testing,
deviations,
complaints,
etc.
Legislation
Inspections
and audits
Internal audits
QA approvals
Quality system verification
Quality
indicators and
strategic criteria
Quality
Committee
and other
committees
Management review
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148
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 carcinogenic potential. They also issue guidelines and gradually 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 2023, we introduced a safety feature system for finished products to be sold in China and Kyrgyzstan and active
pharmaceutical ingredients intended for the market of India. Kazakhstan, the Russian Federation (for animal health
products) and Kuwait have also announced requirements to introduce the system in the year ahead. In 2023, there were
no reports from the markets about falsification or safety feature non-compliance.
Before an incoming material or finished product batch can be certified and/or released to production or the market, a batch
sample undergoes laboratory quality control. Our qualified personnel conducts the control using validated and verified
analytical methods and calibrated or qualified laboratory equipment. We confirm the quality and compliance of the
processes through internal verification procedures, ensuring the integrity and completeness of analytical results. The
number of samples analysed depends on production plans. We continuously plan and coordinate activities that ensure the
timely implementation of production and sales plans and regularly improve the process. Due diligence, continuous
progress, improvement and optimisation underpin our work processes. Quality culture guides our work and paves the way
for success and achievement of the set goals.
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 the competent
medicines agency 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
as soon as possible. The ratio of batches with complaints lodged over the last five years to the total number of released
finished product batches is marginal, showing no significant upward trend despite rising production volumes. There has
been no upward trend in recalls over the past five years. In 2023, 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 deliver
high-quality medicinal products to our users consistently. Recalls are made in collaboration with marketing authorisation
holders (MAHs) and the competent authorities responsible 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 system audits.
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
2023 Annual Report – Business report
149
Institute of the Republic of Slovenia (MIRS) conducts inspections of measuring devices in use and available on the market
and prepacked products.
In 2023, 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 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 2023, we
passed a pharmacovigilance inspection by the regulatory body of Kazakhstan. We were not required to undergo an
inspection by regulatory bodies of the Russian Federation when applying for state authorisation of new medicinal products
for human and veterinary uses. We were granted renewed GMP certificates after submitting applications for authorisation
of new products in the Russian Federation. The certificates extend to the entire Eurasian Economic Union (EAEU). The
certificates issued by the EAEU apply to the 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 the preparation for European, EAEU, and Chinese inspections conducted at our subsidiaries and
main contractual partners. The control over operations and quality management in product manufacture and distribution,
clinical research 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 annually to verify good practice compliance, pharmacovigilance
system suitability, and contract compliance.
Inspections
In 2023, the Krka Group passed all inspections and audits and obtained all relevant authorisations and certificates.
Competent authorities for medicinal products also conduct quality control of marketed products. Every year, several
products undergo their control procedures to verify product quality. The results of all controls in 2023 were compliant and
confirmed the efficiency of internal controls within the quality system.
35
23
35
21
28
0
5
10
15
20
25
30
35
40
2019 2020 2021 2022 2023
Number of inspections
2023 Annual Report – Business report
150
Information security and personal data protection
Our Information Security Management System (ISMS) holds ISO/IEC 27001 certification and undergoes regular review
through self-inspections, audits, and inspections. In 2023, we passed a regular system audit. We regularly assess risks
related to information sources and employ state-of-the-art technologies to safeguard 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 implemented or launched personal data protection activities to comply with the revised Slovenian Personal Data
Protection Act (ZVOP-2). We established and rolled out an internal General Data Protection Regulation (GDPR)
compliance system. We regularly monitor specific personal data processing procedures and align them with the latest
practices of supervisory bodies in Slovenia, other 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 specific employee
groups, and using cookies on websites. We aim to minimise the risk of violations and ensure compliance with applicable
legislation and practice.
Key elements for successfully implementing the ISMS include regular and continuous employee training and awareness
campaigns. In 2023, we focused on raising awareness among all Krka Group employees about phishing attacks through
simulated attack demonstrations mimicking real-life scenarios. We ensure high uptime for critical systems, including the
business, production, documentation, e-mail, and control systems. The expected minimum availability of critical
(production, documentation, business, and e-mail) systems is 99.5%. Krka has duplicated its data centre and implemented
various measures to bolster system availability and data safety. Together with the main data centre, they guarantee a high
level of redundancy, meeting the requirements for high-level availability and data safety. Real-time backups are performed
for all computer systems, applications, and databases at a remote location outside Novo mesto.
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.
Key features of the BCMS include procedures for optimising our resilience to incidents, incident management procedures,
and business continuity plans for crisis management. The BCMS is integral to the Krka Group’s comprehensive risk
management. We regularly control it through internal audits and inspections.
In 2023, we evaluated the implementation of the BCMS strategy, focusing on the reliable supply of heating, cooling and
power sources and other key sources. We arranged regular drills and intensive training courses to verify the feasibility and
efficiency of planned business continuity measures across all nine critical processes identified in the Business Impact
Analysis. This initiative fostered awareness and refined the skills of employees tasked with managing emergencies,
directing damage limitation activities, and rapidly getting processes back online. Following training analysis, we made the
requisite improvements to business continuity plans or validated the adequacy of planned measures.
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SUSTAINABLE DEVELOPMENT
Environmental, social, and corporate governance (ESG) is a crucial component of Krka’s capacity for long-term value
creation and efficient delivery of the business strategy. Sustainability risk management, the attainment of sustainability
goals, and transparent reporting are growing in importance for Krka Group stakeholders. Therefore, they are being
thoroughly integrated into our strategy and business operations.
We carefully plan the development of our products and all processes that impact lives and the environment in which we
operate. We establish trust with our patients and partners through our expertise, professional and ethical conduct, and
adherence to high-quality standards across all aspects of our operations. Guided by sustainable development principles,
we aim to enhance our performance regarding nature conservation, health and safety, and to co-design our social
environment.
We actively engage in activities to implement the EU Corporate Sustainability Reporting Directive (CSRD) and the
European Sustainability Reporting Standards (ESRS) to ensure compliance with the current and forthcoming legislation
on sustainable operations and reporting. This includes drawing up new business policies, updating existing ones and
undertaking various activities to ensure effective management of sustainability risks and opportunities and minimise the
adverse impacts of our operations on the natural and social environment. We are also preparing for the adoption of the
Corporate Sustainability Due Diligence Directive (CS3D) and regulations associated with the European Green Deal.
Materiality assessment process
We foster trust among stakeholders by engaging with them, understanding their viewpoints, addressing their expectations,
and acting on their feedback and initiatives. We incorporate these considerations into our strategic directions and day-to-
day business operations, geared towards creating enduring value for our stakeholders and the community while minimising
the impacts of our operations on the natural environment.
Management approach
We assess materiality by employing an integrated approach to risk management and strategic planning within the Krka
Group. 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 comprehensive materiality assessment for the first time to identify topics particularly relevant for
Krka, its stakeholders, and the wider community. In 2022, the assessment was updated through a process led by an
interdisciplinary sustainability project team. We updated the list of our key stakeholders and revised material ESG topics
relevant to the Krka Group. Their boundaries and stakeholders’ expectations were confirmed through in-depth discussions
with 17 experts representing our stakeholder groups. This brought a new dimension to the systematic consideration of
their interests, enabling us to anticipate future trends and topics from the perspective of external stakeholders. We
conducted analyses and identified six groups comprising 33 material ESG topics. The Management Board of Krka
considered and approved all the above-mentioned aspects. The results are presented in the Krka Group materiality matrix
below.
We intend to revise the process of identifying the impacts, risks and opportunities and assessing double materiality as per
the European Sustainability Reporting Standards and requirements set out by the European Financial Reporting Advisory
Group (EFRAG).
Policy, strategic objective and indicator compliance
In 2022, we took a significant step forward in integrating ESG perspectives into our strategic planning and business
operations, aligning with Krka Group key strategic objectives up to 2026. We used the materiality assessment findings to
revise policies in key areas and adopt strategic objectives in sustainability-relevant domains. The fundamental objective
2023 Annual Report – Sustainable development
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of integrating the Krka Group sustainability principles and ESG governance approaches into management processes and
business decisions is to raise awareness of sustainability-related risks and opportunities. This, in turn, can enhance their
management and contribute to the success of our business operations in the future. We integrated the entire sustainability
management topic into the revised 2024–2028 Krka Group Development Strategy and updated the set strategic ESG
objectives.
The adopted ESG Policy of the Krka Group applies to the controlling company and all our subsidiaries, outlining our priority
areas and management approaches. It demonstrates our commitment to applying sustainability principles and encouraging
their integration into business processes across Krka’s value chain. In 2023, the revised 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.
Materiality assessment
40
In the latter half of 2022, changes in our environment and our commitment to fostering a culture of sustainability prompted
us to revise the assessment of key environmental, social, and governance impacts that Krka has on its stakeholders, as
well as the evaluation of external impacts on Krka’s 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 took into account the results of regular satisfaction surveys among end users and interactions with key
stakeholders. Our sustainability project team collaborated with 20 experts in our key business areas to assess external
impacts internally. On the initiative of the Management Board member overseeing sustainability matters, the Management
Board deliberated and endorsed the process and the updated materiality assessment concerning external impacts on our
business operations and our impacts on key stakeholders, following approval from the interdisciplinary sustainability
project team.
We identified two new material topics and repositioned certain ESG perspectives in response 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 when aligning the scope and content of disclosures.
Disclosures in the Annual Report fully incorporate indicators from the GRI (Global Reporting Initiative) Standards and
select indicators from the 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 pinpointed the significant sustainable development goals of the United Nations that our operations contribute to
achieving. 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
40
GRI 3-1, 3-2
2023 Annual Report – Sustainable development
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ESG score
On 24 November 2023, Krka scored 50 (out of 100) in the 2023 S&P Global Corporate Sustainability Assessment, with a
score of 60 (out of 100) in the governance dimension, 42 (out of 100) in the environmental dimension, and 41 (out of 100)
in the social dimension. Krka also received a modelled S&P Global ESG Score of 52 (out of 100). As of 24 November 2023,
Krka’s S&P Global CSA Score ranked among the top 10% in the pharmaceutical industry.
The received ESG score validates the outlined direction of the Krka Group’s sustainable
management practices and ESG governance, prioritising corporate social responsibility and care
for the health and well-being of patients. We provide them with access to high-quality, safe, and
effective medicines produced to the highest standards of good manufacturing practice.
Throughout this process, we place considerable emphasis on environmental protection and
minimising our environmental impact. Furthermore, we uphold the highest standards of business
ethics, integrity, and transparent operations in the governance of the Krka Group.
The score encourages and commits us to improve the sustainability practices of the Krka Group going forward.
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. The business report covers the operations of
the Krka Group as a whole, indicating any significant distinctions between Krka, d. d., Novo mesto and its subsidiaries.
Generally, no reference is made to the value chain’s sales and purchasing segments beyond the Krka Group.
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 questions regarding the Annual Report can be sent to letno.porocilo@krka.biz.
42
41
GRI 2-2, 2-3, 2-4, 3-2
42
GRI 2-3
2023 Annual Report – Sustainable development
154
Key stakeholder groups and approach to stakeholder engagement
43
Stakeholder groups
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 opinions 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
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155
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
2023 Annual Report – 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 deemed as having a major impact on Krka Group operations are presented on the right.
2023 Annual Report – Sustainable development
157
Employees
A responsible approach to employees involves maintaining robust and professional employee management practices
throughout their employment at the Krka Group. We cultivate an engaging work environment where the goals and
aspirations of individuals are aligned with the objectives of the Group, fostering the development of our employees’ skills,
competencies and careers. There is special emphasis on attracting and retaining talent to ensure the company remains
successful.
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 for the second consecutive year.
New hires continued, as we recruited over 1,800 new employees.
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 governing ethical behaviour, good business practices 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. Standard guidelines, management approach and policies,
and good practices are integrated into the work processes at Krka Group subsidiaries. This expansion enhances the
breadth of compiled data and is poised for further growth 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 latest organisational climate survey reaffirmed that our employees have a sense of loyalty to
the Company and are motivated to accomplish set objectives. Furthermore, it confirmed the Krka Group’s commitment to
corporate social responsibility and adherence to high ethical standards. Employees recognised the company as a reliable
employer and a successful player in a creative and dynamic market. We use regular surveys and active employer branding
to identify our strengths, improve our weaknesses and design sustainable strategies for attracting and retaining high-
performing employees.
Key data about employees
46
31 Dec 2023
Number of regular employees
11,780 of which 55.5% in Slovenia
Number of agency workers
973 (7.6% of total personnel)
Employees covered by collective bargaining agreements
64.6%
Average age
39.4 years
Female employees
60.6%
Female employees in management positions
50.0%
Permanent employees
87.3% (women 86.3% and men 88.8%)
45
GRI 3-3
46
GRI 2-7, 2-8, 2-30, 405-1, SDG 5
2023 Annual Report – Sustainable development
158
2023 employment index
Index 2023/22
Krka in Slovenia
103
Krka’s representative offices abroad
108
Company
103
Subsidiaries abroad
99
Terme Krka
106
Krka Group
102
Agency workers
98
We hired 1,827 new employees, accounting for 14% of the total Krka Group headcount. Employee turnover of the Krka
Group was 11.6%.
2023 new employee hires by age group, gender and region
47
Rate of new employee
hires
Age groups
Under 30 years old
47.4%
30–50 years old
48.9%
Over 50 years old
3.7%
Gender
Male
35%
Female
65%
Region
Region Slovenia (including Terme Krka)
29.0%
Region South-East Europe
9.4%
Region East Europe
38.6%
Region Central Europe
16.0%
Region West Europe
6.5%
Region Overseas Markets
0.5%
Employee structure by region (including agency workers) as at 31 December 2023
48
47
GRI 401-1
48
GRI 2-7
58.6%
5.6%
21.9%
9.4%
4.1%
0.4%
Region Slovenia (including
Terme Krka)
Region South-East Europe
Region East Europe
Region Central Europe
Region West Europe
Region Overseas Markets
2023 Annual Report – Sustainable development
159
Educational structure
The Krka Group employs 204 persons holding a doctoral degree and 400 persons holding a master’s degree or
specialisation. In total, 5,978 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 the educational structure. We are aware that
only our experts’ high level of qualification 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 2023
31 Dec 2023
Higher professional, university degree or higher (level VII or higher)
67.0%
Vocational college degree (level VI)
2.6%
Secondary school education (level V)
22.4%
Other (less than level V)
8.1%
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,
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 advocate for lifelong learning, recognising its role in fostering successful work, advancing
careers, nurturing professional growth, and facilitating personal development. We plan our educational and training
programmes and deliver them systematically.
We prioritise creating training programmes focused on people management, conflict resolution, and fostering effective and
respectful communication. Given Krka’s widely dispersed international organisation, combining traditional training, e-
learning, and e-testing has played a crucial role.
Quality comprised a significant proportion of our educational activities in 2023. We recorded 100,491 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 271 Krka employees were part-time
students, of whom 27 were pursuing postgraduate studies to obtain a specialisation, master’s, or doctoral degree.
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 2023, as many as 69 Krka employees completed the training programme (level IV). In total, 1,954 certificates have been
awarded since 2004: 1,812 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 one-on-one in the field.
49
GRI 3-3, SDG 8
50
GRI 404-2
51
GRI 404-3
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160
2023 key data on employee education in the Krka Group
52
2023
Average training hours per employee
42
Share of revenue allocated for education
0.48%
Average cost of training per employee (€)
731
Hours of human rights training
7,655
Share of employees trained in human rights
98%
We offer scholarships to students who demonstrate interest, talent, and high competence in working in the Krka Group.
We systematically collaborate with them, offering opportunities to gain experience. During their internship, they can learn
about Krka and its working processes and demonstrate and develop their skills and competencies. 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 2023, Krka had 70 scholarship students, 14 of whom graduated in 2023 and started
working at Krka. We collaborate with secondary schools and faculties to facilitate mandatory work placements. Through
partnerships with faculties and schools and the provision of scholarships, we can identify potential new hires and talents,
making it easier to mitigate risks associated with the shortage of experts in the labour market.
Key and promising employees
We systematically train key and promising employees, aiming to identify them early in their careers. We prepare them for
the most demanding and pivotal roles through a combination of training, mentoring and coaching.
Highly promising employees with less than one year of service at Krka are invited to a workshop, where we test their
abilities through a series of individual and group tasks. We also use this method when selecting candidates for challenging
roles and for internal transfers of employees to other roles to ascertain 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.
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
52
GRI 404-1
Selection process
Key and promising employees – 14% of all Krka Group employees
Annual review of key and promising
employees by organisational units
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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161
backgrounds, and employees’ personal development. New employees and employees who take on roles carrying greater
responsibility learn about their tasks through mentoring. We employ a unique form of international mentorship to develop
promising employees systematically.
Rewarding and motivation
All employees of the Krka Group are enrolled in reward and recognition systems, enabling us to acknowledge exemplary
work and strong performance systematically. They encourage dedication and motivation and praise excellence and loyalty.
We host the Krka Awards Day, a long-standing tradition where we honour our best employees with awards and
recognitions. Additionally, we present long-service awards and special recognition awards to our most loyal employees.
In 2023, the ceremony encompassed the entire Krka Group, during which we recognised the outstanding achievements
of both employees and managers within organisational units and the Krka Group as a whole. Additionally, we honoured
the best employees in the sales and marketing network, regulatory affairs, and other fields.
Encouraging innovation
In 2023, a total of 362 useful proposals and improvements were submitted, resulting in the recognition of 353 proposals
contributed by 351 employees.
Useful proposals and improvements lead to continuous improvement of the quality system and, hence the integrated
management system, generating savings and improving efficiency. We endeavour to motivate our employees to address
a wide range of issues encompassing economy, production, logistics, technology, engineering, administration,
environment, business, information science, quality, and health and safety at work. Both easily implementable useful
proposals and intricate improvements yielding significant effects are valued.
We encourage inventive work through campaigns, meetings, recognitions, and awards. Additionally, the most useful
proposals and improvements are recognised at the Krka Awards Day.
Digitalisation in human resources
We upgrade our human resource information system by introducing new solutions. In 2023, we continued to optimise and
digitalise processes that are standardised across the entire Krka Group.
We rolled out digitalised time management at our subsidiaries in Ukraine and Bulgaria. We have also continued to digitalise
the Krka appraisal interview process and the employee education and development system. We introduced a new platform
for conducting organisational climate surveys. The platform simplified data collection, reporting, and action planning. The
key and promising employee screening and monitoring system is currently being upgraded. We aim to further advance
and digitalise employee development, training and monitoring systems to meet the needs of various organisational units
in implementing our common corporate strategy.
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.
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Internal corporate communication takes place simultaneously through various internal media and tools.
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 via communication campaigns. The Your
Effectiveness Counts campaign 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 details about
our operations’ societal impacts.
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-mail 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.
Health and safety at work
53
We ensure a safe and healthy work environment for all our employees and Krka Group contractors. Every new project and
technological solution incorporates the latest health and safety at work and fire prevention developments.
The Management Board adopted the health and safety at work policy in line with Krka’s strategic goals. The health and
safety at work system that has been implemented adheres to the ISO 45001 standard and is seamlessly integrated into
Krka’s quality 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 dedicated health and safety team tasked with formulating and
executing key goals and programmes approved by the Management Board, and ensuring regular reporting to the
Management Board. Safety and Health workgroups operate in organisational units and production sites, facilitated by an
authorised certified HSW officer from Safety and Health.
53
GRI 3-3, 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7
2023 Annual Report – Sustainable development
163
Workers covered by ISO 45001 system
54
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 health and safety training, which is mandatory for all employees. The training takes place during
working hours, and Krka fully compensates for it. 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 delivered in languages that employees easily understand.
The effectiveness of training is evaluated through regular safety audits conducted across all organisational units and
production sites. We also gather information by managing safety incidents, near misses and accidents, and we take
corrective and preventive actions if any deviations are identified.
Workplace accident and safety incident management complies with internal instructions for handling dangerous events
and workplace accidents. All employees, agency workers, and student workers are informed of the instructions.
Contractors at Krka receive a summary of key information from internal safety documents. External service providers also
receive the summary and necessary personal protective equipment before they enter Krka premises.
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 in a dynamic process, 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.
The Krka Group has implemented various activities to help reduce sick leave. We adopted many sanitary, health and
organisational measures to prevent the introduction and spread of viral infections and ensure uninterrupted work
processes. In 2023, the sick leave rate was 6.7%, down 1.1 percentage points on 2022. 4.9% of Krka employees were on
parental leave, which they can take in compliance with their national legislation.
55
54
GRI 403-8
55
GRI 401-3
5,407
5,702
5,715
5,789
5,934
1,114
973
952
1,017
1,012
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2019 2020 2021 2022 2023
Employees Agency workers, students
2023 Annual Report – Sustainable development
164
At the Company, 5.2% of employees have a registered work-related disability. We adjust their workplaces to facilitate their
jobs in compliance 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 enrolled in appropriate re-qualification programmes.
56
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 2023, there were no fatalities as a result of work-related injury or cases of work-related ill-health. The
LTIFR reached 2.46, down 39% on the previous year. Injuries were mainly minor and involved knocks, cuts and slips.
There were no injuries requiring an absence of more than six months. 56% of accidents involved men, and 44% involved
women, with no significant age group representation.
57
LTIFR by year for Krka employees and agency workers
58
We constantly raise employee awareness of the importance of process safety. We support processes and procedures in
key areas by adhering to good planning and engineering principles and good operational practices. In doing so, we assess
specific risks, train employees, and conduct safety controls and audits. This includes upgrading fire and explosion
protection systems, overseeing logistical procedures and handling hazardous substances, managing and maintaining
technological equipment, overseeing our contractors, and other activities. Our employees collaborate with external experts
in these processes.
In 2023, we recorded no major safety incidents that might cause a fire or a major spillage of hazardous chemicals or impact
manufacturing processes.
Our employees undergo regular fire protection training. We conducted 73 fire drills in total. At four full-scale fire drills, we
worked hand-in-hand with professional fire and rescue brigades, 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, medical, and Krka first aid teams.
The Fire Safety Unit and the Industrial Fire Brigade will mobilise in the event of any incident.
56
GRI 405-1
57
GRI 403-9, 403-10
58
GRI 403-9
3.91
3.27
3.41
4.06
2.46
0
1
2
3
4
5
2019 2020 2021 2022 2023
2023 Annual Report – Sustainable development
165
Number of drills and emergency exercises
Health and safety system in our subsidiaries abroad complies with relevant national laws and regulations. Nevertheless,
we have progressively implemented uniform guidelines that consider safety documents and health and safety policies.
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 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.
We recognise the major importance of clinically proven medicines and monitor their efficacy, safety, and quality during
registration procedures and subsequent to obtaining relevant marketing authorisations. We conduct bioequivalence
studies, research in pre-authorisation phases, and support many post-authorisation clinical research projects. 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
laws, guidelines by the International Council for Harmonisation (ICH) and other bodies, 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.
59
59
GRI 3-3
61
45
49
65
0
10
20
30
40
50
60
70
80
2019 2020 2021 2022 2023
2023 Annual Report – Sustainable development
* 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.
166
Patients
We align with the vision of the World Health Organization outlined in the United Nation’s 2030 Agenda for Sustainable
Development, especially the Agenda’s target to reduce deaths caused by noncommunicable diseases by one-third
by 2030, through our product portfolio. More than half of our portfolio consists of medicines for treating cardiovascular
diseases, the leading cause of death from noncommunicable diseases. We contribute to the target by providing agents for
treating high blood pressure, high cholesterol, and diabetes, and by organising educational programmes for health
professionals, giving them access to the latest medical developments and information for everyday practice. Through this
approach, we strive to achieve our goal of providing optimal treatment options for patients.
Our wide range of products for treating most common diseases of civilisation ensures affordable and the best possible
therapies for patients. Doctors can choose from many generic medicines that combine several active ingredients and
prescribe the most suitable therapy for each patient for the best treatment outcome. We plan to expand our portfolio of
medicines for treating common chronic noncommunicable diseases and supplement it, especially with medicines for
treating high blood pressure in innovative combinations and agents for treating blood-clotting disorders, diabetes and
cancer. This will further contribute to attaining the relevant target under the United Nations’ sustainable development goals
(SDG).
Detailed information about Krka products is regularly published on our product, corporate, and thematic websites, available
in over 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 instances of non-compliance
concerning product information were identified in 2023.
60
After redesigning and updating the Slovene corporate website in 2022, we published our global corporate website in
English and its Russian, Polish, Croatian, Romanian and Czech versions in 2023. They feature a new section ‘Health
Matters’ and additional information on our products, their development and production, and quality assurance. Our
standalone 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.
In 2023, we launched Flebi, our AI-powered mobile application that helps patients recognise symptoms of chronic venous
disease. The general public recognised its benefits and innovative approach, while the Chamber of Commerce of
Dolenjska and Bela Krajina awarded it for its innovative value. The application was also awarded the digital achievement
prize at WEBSI, Slovenia’s largest competition for digital projects.
Successfully conducted clinical research in our medicines translates into clinically proven use of the medicines to provide
daily therapies for the increased number of patients. Patients can only be included in clinical research after expressing
their willingness to participate 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 the free movement
of such data. We identified no personal data breaches in 2023.
61
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. 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 2023, documentation was prepared for three new
interventional clinical studies: the cardiovascular international clinical trial with single-pill combinations of telmisartan
(Tolura*), which will investigate 24-hour blood pressure and its variability in hypertension patients, the cardiovascular
international clinical trial with rosuvastatin (Roswera*) and its combination with ezetimibe (Co-Roswera*), and the pain-
related clinical trial with Nalgesin Forte. In 2023, an application to conduct a clinical trial with a Krka medicine was
submitted for the first time via the EU’s new Clinical Trials Information System.
60
GRI 417-1, 417-2, SDG 3
61
GRI 418-1
2023 Annual Report – Sustainable development
167
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 2023.
62
We foster transparent and traceable relationships with medical professionals.
Direct customers include distributors, pharmacy chains, hospitals, and pharmaceutical companies. We regularly conduct
online satisfaction surveys among our direct customers to determine their general satisfaction level, 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, take relevant steps, and monitor their performance in the subsequent
survey.
In 2023, the response rate was 93%, up 10 percentage points compared to the year before. The satisfaction index of 92%
was among the highest over the last five years. The respondents attached the highest importance to building strong
business relationships with Krka, sales team response, and order fulfilment. Average scores surpassed 9 in the above-
mentioned aspects and were high for the remaining aspects of customer satisfaction.
63
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’s products are available and
are organised as in-person, online, or hybrid events.
Physicians and pharmacists can access educational information on our thematic websites, which we constantly upgrade.
In 2023, we launched Croatian, Polish, Slovak and Lithuanian web portals for healthcare professionals to complement the
existing Slovenian version.
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 medicines from different therapeutic
classes and other Krka products. We prioritise their comprehension and adherence to ethical standards, standards of
work, legal requirements, and other regulations, alongside ensuring their proficiency in effective communication skills.
Feedback and opinions obtained through daily interaction 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 actively engage in evolving the professional, scientific and regulatory landscape by participating in various professional
and industry associations in Slovenia, the European Union, and other countries.
62
GRI 417-3
63
GRI 2-29
2023 Annual Report – Sustainable development
168
Corporate social responsibility
We are aware of the impact of our operations on 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 quality of life. We
maintain long-term partnerships through sports, culture, healthcare, science, education, and humanitarian initiatives.
64
We identify the community’s needs 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 screens
sponsorship and donation applications.
We allocated 0.29% of our sales revenue to sponsorships and donations and helped more than 550 institutions,
associations, and organisations achieve their goals.
65
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. At the 17th meeting with Krka’s sponsorship recipients, four
outstanding youths were honoured with the Talent-of-the-Year Award, while 13 were acknowledged for their
accomplishments. Notably, two individuals were awarded the Krka Supergirl and Superboy Award for the first time, in
recognition of their multitude of talents, diverse achievements, and exemplary virtues. We extended our gratitude to nine
representatives from various clubs, associations and institutions for their invaluable contributions.
Encouraging new scientific discoveries
66
We endorse 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, offer scholarships, facilitate above-standard
educational activities, promote research work, and enable participation in national and international competitions.
We attract young talent in research through Krka Prizes. Over the past 53 years, we have awarded 3,110 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 49 research papers. We
awarded 20 Krka Prizes and 29 recognitions for their research work. In the call for graduate and post-graduate research
papers, we received 107 research papers and awarded Krka Prizes to 33 young researchers. Five of them received Krka
Grand Prizes for their research work. We also presented the students with 29 special commendations and 46 recognitions.
Among the recipients, 35 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 2023, we partnered with more than 50 primary and secondary schools, supported major projects at three primary
schools and kindergartens, and donated to school funds for talented pupils. We also supported several end-of-year
celebrations at primary and secondary schools. For the sixth consecutive year, our support for the Janez Drnovšek
Scholarship Fund underscores our commitment to its endeavours.
The Slovene Science Foundation, our long-time sponsorship recipient, organised the 29th Slovene Science Festival
in 2023, attracting participants from around the world.
Charity and volunteering
Volunteering and charity have become inseparable parts of our organisational culture. In 2012, we consolidated all our
charitable and volunteering initiatives under Krka’s Week of Charity and Volunteering. This campaign is organised in all
countries where Krka has its subsidiaries and representative offices. In 2023, the number of Krka employees who
volunteered to participate in the campaign was close to 1,000.
64
GRI 3-3
65
GRI 201-1
66
GRI 203-1, 203-2, SDG 4, SDG 8
2023 Annual Report – Sustainable development
169
Our charity impact over the decade of Krka’s Week of Charity and Volunteering
The campaign united over 10,000 Krka volunteers in acts of kindness.
We collected 31.9 tonnes of clothes, food, books, toys, personal hygiene products and other necessities for the Red Cross and the
Slovenian Karitas charity.
We donated 1,095 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, and organised workshops and cultural events for them.
We helped prepare more than 8,295 food packages and sort clothes and other necessities at the Red Cross and the Karitas
charity.
We collected almost 4.2 tonnes of pet food and helped at pet shelters and the Ljubljana ZOO.
We hosted almost 21,000 visitors and Krka employees at Krka.
We encourage our employees to volunteer by participating on sponsorship boards of non-profit institutions and providing
supplies. In 2023, as we have done every year since its establishment, we supported the retirement home in Novo mesto
by donating three adaptive bicycles for their elderly daycare centre to celebrate the 43rd anniversary of the retirement
home. Furthermore, we reiterated our commitment to the Novo mesto Dragotin Kette Primary School for children with
special needs. Alongside our 46-year-long support through the Krka sponsorship board, we arranged a trip to Planica for
the pupils and their mentors in 2023.
In 2023, we presented the 12th consecutive Volunteer of the Year Award and thanked 166 Krka employees who donated
blood between 10 and 100 times.
Support for healthcare institutions
67
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 the evolving needs of patients and effectively address 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 acquiring state-of-the-art medical devices aid in improving the quality of health care services,
diagnostics, and patient treatment.
We have been pursuing our mission to help people live a healthy and satisfying life for 70 years. To mark our anniversary,
we once again supported several healthcare institutions. We donated to the Division of Paediatrics at the University
Medical Centre Maribor, the Division of Paediatrics at the University Medical Centre Ljubljana, and departments of
paediatrics at another ten general Slovenian hospitals because the youngest are at the heart of our patient care.
Support for patient associations and societies
68
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. Our focus lies in supporting local clubs and associations
that encourage youth involvement in recreational or professional sports. We donate funds to purchase sports equipment
for schools and other organisations that promote a healthy lifestyle.
67
SDG 3, SDG 5
68
SDG 4
2023 Annual Report – Sustainable development
170
Our long-term sports partners 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 exclusive sponsorship of the Ski Flying World Championship in Planica was an acknowledgement of a 38-year-long
collaboration. We arranged a trip to Planica for 383 children and their mentors from eight primary special education schools
to see the qualifications for the ski jumping 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.
We have hosted cultural evenings since 2008 to show our appreciation for artistic work, offering people the opportunity to
experience enriching and captivating cultural events. The inaugural cultural evening took place at the church housing the
Galerija Božidar Jakac gallery in Kostanjevica na Krki, featuring the members of the Russian chamber choir of the Smolni
Cathedral from St. Petersburg. In the years that followed, many distinguished Slovenian and foreign musicians and artists
gave impressive performances at what became a traditional cultural event in the Dolenjska region. We hosted two cultural
evenings in 2023. In July, the chamber ensemble Dissonance, comprising established Slovenian musicians, performed in
Kostanjevica na Krki. The December cultural evening at the Krka Hall in Novo mesto featured the Slovenian pianist Meta
Fajdiga and the Brazilian pianist Richard Octavian Kogima.
We celebrated the Slovenian National day of Culture by staging a music performance by male and female vocal
ensembles. Our long-lasting partnership with the Cankarjev dom cultural and congress centre in Ljubljana led to the 1st
international ballet festival at the centre. The five-day event hosted four remarkable ballet performances by Slovenian and
international ballet companies, alongside a talk and an exhibition dedicated to the renowned artist Rudolf Nureyev.
We supported the publication of ten books and many 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 55th 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 plays a prominent role in fostering culture. In 2023,
the Society arranged the 44th Dolenjska Book Fair, 18 art exhibitions, eight Theatre Club meetings, various art workshops,
and performances by Krka’s mixed choir and Krka Octet.
Support for non-governmental and humanitarian organisations
69
Every year, we support several non-profit, non-governmental, and non-political organisations and their initiatives,
particularly those of the Red Cross and the Slovenian Karitas charity.
In August 2023, extreme weather with heavy rain caused severe flooding in a large part of Slovenia. Many lost their homes
and belongings. We stepped in with our know-how and equipment to help some companies and communities that were hit
69
GRI 201-1, 203-1
2023 Annual Report – Sustainable development
171
hardest by the floods. Our technical team provided assistance to the Slovenian company KLS Ljubno in restarting their
production capacities, and members of Krka Fire Brigade helped in recovery efforts in the Slovenian town of Luče. Many
employees volunteered in various flood relief campaigns during their annual leave. We paid one-time solidarity aid to
employees most severely hit by the floods in line with the adopted emergency legislation to help them repair damage that
poses a threat to life and seriously affects housing conditions. We contributed €1 million to the government’s flood relief
fund.
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 three 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 young family renovate a part of their house to accommodate a mobility-impaired family member.
In collaboration with the local Association of Friends of Youth Mojca in Novo mesto, we distributed gifts to over
2,500 children residing in three municipalities within the Dolenjska region, including the 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 many years. The centre’s residents once again prepared New Year gifts for our
company.
We provided material and financial support to firefighting departments. We contributed towards the purchase of new fire
engines and equipment, as well as the refurbishment of fire stations for 14 fire departments and firefighting agencies
across Slovenia. We also helped 50 fire departments to raise funds by preparing promotional material.
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.
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 a healthy living environment for our employees and the wider community. In 2023, we
made significant progress in enhancing the environmental dimension of sustainability. We continued our efforts to operate
predominantly on zero-carbon electricity, rolled out energy efficiency improvement projects and campaigns, improved the
separate waste collection system, reduced deposited waste, and set up a returnable packaging system in partnership with
our major supplier. We adhere to environmentally sound management guidelines across the Krka Group.
2023 Annual Report – Sustainable development
172
2023 environmental milestones
We cut the specific energy use measured in TJ per billion product units by 5.4% compared to 2022.
We reduced the Krka Group’s carbon footprint by 48.4% on 2019 reference year (Scope 1 and Scope 2 under the GHG Protocol).
All our energy efficiency improvement projects returned emission savings of 160 t CO
2
-eq per year.
We purchased an all-electric truck, which will reduce our fuel consumption by over 15,000 litres annually.
We reduced total waste by 3.6% on 2022.
We reduced total water consumption by 11% on 2022.
We reduced the volume of sludge produced at the wastewater treatment plant in Ločna (Slovenia) by 17.4%.
We substituted 5.6% of river water used to supply cooling towers with rainwater.
We reduced disposable waste by 10%.
We reduced waste packaging by 43 tonnes through our returnable packaging system and solvent supply system employing
reusable intermediate bulk containers. This translated into emission savings of 115 t CO
2
-eq.
We handed over a total of 567 tonnes of waste composites for processing, from which the contractor recovered 187 tonnes of
aluminium and 332 tonnes of plastic.
We set strategic ESG goals, which commit us to reducing our carbon footprint, increasing renewable energy, cutting specific waste,
and ensuring efficient use of energy, water and other natural resources.
In 2023, total waste decreased by 3.6%, notwithstanding the increase in production. Recycling waste separation increased
by 10%, and disposable waste decreased by 10%. A total of 22.5 tonnes of reusable plastic packaging were returned to
suppliers through our returnable packaging system. Metal packaging waste decreased by 20.5 tonnes after introducing
the system for supplying dichloromethane in reusable intermediate bulk containers. This returned emission savings of
115 t CO
2
-eq. By processing waste composites, the contractor recovered 519 tonnes of reusable materials. By doing so,
we contributed to the circular economy.
We reduced total water consumption by 11% on 2022. Year on year, drinking water consumption decreased by 2.9% to
656,773 m
3
and river water consumption by 17.9% to 644,103 m
3
. Total environmental load units (ELUs) for wastewater
treatment saw a 22% drop on 2022.
Environmental management system and policies
70
The 2022–2028 Krka Group Development 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 aids us in meeting stringent 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 22 years ago. The Environmental Management System (EMS) certificate obligated us to minimise all
our environmental impacts, while the revised edition of the ISO 14001:2015 standard compelled us to incorporate
environmental considerations from the outset of development stages and projects. Successful audits validate our progress
in enhancing all areas affecting the environment.
All employees are included in the comprehensive environmental management system, which is specified in the internal
document Environmental Management System. Environmental Protection employees 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 corporate environmental objectives. We handle waste that
remains after certain processes and cannot be reused according to stringent requirements specific to the pharmaceutical
industry using the best available techniques (BAT). We adhere to the precautionary principle whenever a risk assessment,
hazard assessment for the water environment, or feasibility study indicates that a new technology, production process or
a product may result in a significant environmental burden. If such a risk is identified in the pre-development phase of a
product, the product is discontinued. For products in the development phase, we explore alternatives to replace substances
that pose major environmental hazards. We implement additional measures for products in the production phase to
mitigate their environmental impacts.
70
GRI 2-23, 2-24, 2-25, 3-3
2023 Annual Report – Sustainable development
173
We collect and analyse data about the environmental management system through a range of methodological tools. We
leverage all available resources, including monitoring outcomes for our processes or activities with significant
environmental impact, 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 environmental emissions monitoring
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 progressively harmonised with these 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 at www.krka.biz.
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 forms a substantial component of the European acquis. For our internal reference, we maintain a compendium
encompassing 20 legal areas, which undergoes biannual review. These lists are made available on our internal web pages.
The Committee for Monitoring Environmental Aspects periodically reviews compliance with legal and other requirements
applicable to Krka. It appoints responsible persons and sets deadlines to implement any additional measures necessitated
by legislative amendments. A management review assesses progress towards goals and the implementation of
programmes. The Committee is tasked with periodically identifying environmental aspects, encompassing the impacts of
our products and services across 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, noise emissions, and electromagnetic radiation, as well as 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 put
forward a suggestion relating to environmental protection. Publicly available information on environmental protection and
contact details are published on www.krka.biz, which was completely updated and extended with ESG topics in 2022.
Environmental compliance
71
All our activities comply with environmental laws, permits, ISO 14001, guidelines and EU directives. We control
environmental compliance by regularly monitoring all environmental impacts. All results of environmental impact monitoring
in 2023 complied with legal requirements.
Inspections by the Environment and Energy Inspectorate of the Republic of Slovenia reaffirmed our compliance with
environmental legislation. No irregularities were established in inspections in 2023. We received a decision to implement
wastewater treatment measures at our Krško plant (Slovenia).
In 2019, the Inspectorate of the Republic of Slovenia for the Environment and Spatial Planning issued a decision on the
construction of a wastewater treatment plant at the Krško production site. Construction was delayed due to a lengthy
environmental protection permit modification procedure. Therefore, the Environment and Energy Inspectorate of the
Republic of Slovenia issued an enforcement order fining us and extended the period for fulfilling the imposed obligation.
Construction on the wastewater treatment plant commenced in October 2023. The plant is to be operational in 2025.
71
GRI 2-27, 413-1
2023 Annual Report – Sustainable development
174
We filed an application with the Slovenian Ministry of the Environment, Climate and Energy to amend the environmental
protection permit for our Ločna (Slovenia) production site and for an environmental protection permit for a low
environmental risk facility at the same production site.
We received no complaints related to environmental protection from our stakeholders in 2023.
Environmental protection costs
Over the last five years, we have allocated more than €50 million to environmental protection, of that €10.9 million in 2023.
Direct costs amounted to €8.1 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 €2.8 million in environmental protection programmes to further minimise environmental impacts.
Water
72
Clean drinking water that meets rigorous chemical and microbiological quality requirements is indispensable for the
pharmaceutical industry. We devote considerable effort to safeguarding the quality of water bodies at our production sites.
Drinking water quality also depends on seasonal fluctuations and precipitation. We closely monitor gauge height to
guarantee optimal performance of pharmaceutical water preparation machines and to maintain drinking water quality within
threshold values. All Krka water systems are managed in compliance with Good Manufacturing Practice (GMP) and the
HACCP system. We minimise system failures through planned preventive maintenance in line with equipment
manufacturers’ recommendations, our experience, legislative requirements, and standards.
Wastewater resulting from rinsing the machines for preparation of pharmaceutical water is chemical-free and is reused to
prepare water for energy supply. Two separate supply systems deliver water to the central distribution system,
guaranteeing a continuous and uninterrupted flow of pharmaceutical water to the production facilities. In the event of a
water supply interruption, the system decreases the volume of water drawn from the public supply network. Any deficit is
then compensated for by utilising pharmaceutical water stored for this purpose in reservoirs.
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 that dispense water
from the public water supply network. We save on average 10% of drinking water by utilising tap jet regulators.
We comply with stringent requirements set down by pharmacopoeias regarding water preparation in the pharmaceutical
industry. Our practice entails utilising only drinking water of officially controlled quality from the water supply utility. Water
undergoes additional purification depending on its intended use, most commonly using sophisticated membrane
technologies. Preventive maintenance, machine operation monitoring, and technological improvements ensure consistent
water quality, prolong the useful life of the equipment, decrease water and chemical consumption, and reduce waste
generation.
At Krka, total water consumption in 2023 decreased by 11% year on year. River water use declined by 17.9% and drinking
water use by 2.9%.
Approximately 50% of river water is used for cooling through various heat exchangers, especially in API production, while
the rest is used for preparing technological waters to meet the demands of energy supply and production. We markedly
72
GRI 3-3, 303-1, 303-2
2023 Annual Report – Sustainable development
175
reduced river water use by withdrawing a major river water consumer and upgrading technological processes. We replaced
7,380 m
3
or 5.6% of river water for cooling systems with rainwater, a 1.3% year-on-year increase.
Drinking and river water use
73
Energy
Our main energy sources are:
• Natural gas;
• Electric power; and
• Fuel oil as back-up fuel.
The electric supply is sourced from the public utility electricity grid, in-house generators powered by renewable sources
like the solar power station, and the natural gas-fired cogeneration plant.
Energy management system
74
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 tasked with periodically identifying energy-related aspects in alignment with ISO 14001, bye-
laws and policies. Through this approach, we manage and enhance our processes with a focus on sustainable
development and circular economy principles, ensuring a high level of environmental protection is maintained.
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, committed to efficient and rational energy use in line with the environmental policy.
The energy management control system serves as the primary information tool to support the energy management system,
complementing the computer system for monitoring and control. In 2023, we upgraded it to the latest version, which
includes machine learning. Please see the ‘Energy efficiency projects’ section for more information.
73
GRI 303-3, 303-5
74
GRI 3-3
785
938
817
785
644
614
685
644
676
657
0
200
400
600
800
1,000
2019 2020 2021 2022 2023
m
3
thousand
River water Drinking water
2023 Annual Report – Sustainable development
176
Krka excelled in energy efficiency in 2023
During the 25th Slovenian Energy Experts Conference Dnevi energetikov held on 18 and 19 April 2023 in Portorož,
Slovenia, the Slovenian business daily Finance recognised outstanding energy projects and top energy-efficient
companies. Krka won the title of the most energy-efficient company in the expert jury and internet users’ opinion.
We received two awards for integrated, efficient and sustainable management of energy and natural resources, as seen
in the reduction of specific energy use and greenhouse gas emissions. We save more than 50 GWh of electricity and
natural gas per year. Our purchase of zero-carbon electricity returned annual CO
2
emission savings of 45,000 tonnes. This
corresponds to planting 170,000 trees. We generate more than 50% of the required thermal power by waste heat recovery.
Survey of implemented measures and their impact on energy management
75
In accounting for an average simple payback period, we consider only measures taken exclusively for economic viability.
Softening energy prices increased the simple payback period in 2023 compared to 2022.
Specific use of energy
76
Specific use of energy shows production costs, taking into account the physical volume of production.
Through various initiatives focused on efficient energy use, energy efficiency investment, and energy-efficient
maintenance, we achieved a 20% year-on-year reduction in specific energy use correlated with production costs. This
indicator showed that we decreased absolute energy consumption year on year despite higher production costs in 2023.
75
GRI 302-4
76
GRI 302-3
2,310
1,490
2,583
2,360
3,310
1,145
1,530
820
705
2,640
0
1
2
3
4
5
6
7
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2019 2020 2021 2022 2023
Simple paybak per
iod (years)
Savings (
MWh), investment
(€ thousand
)
Average annual savings Total investment Average simple payback period
2023 Annual Report – Sustainable development
177
Specific use of energy by production costs
Through various initiatives focused on efficient energy use, energy efficiency investment, and energy-efficient
maintenance, we achieved a 5% year-on-year reduction in specific energy use correlated with production volume.
Specific use of energy by production volume
Energy efficiency projects
We prioritise energy efficiency, as evidenced by our ongoing efforts to enhance 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 2023, all energy efficiency projects generated savings of 1,810 MWh and
cut our emissions by 160 t CO
2
-eq.
Upgrading the energy management information system – AI-driven industrial energy audit
We upgraded our energy management information system, which supports advanced analyses and accurate monitoring
of our environmental goal achievements. One of the key objectives was the introduction of machine learning into energy
processes, which uses artificial intelligence to monitor energy efficiency. This advanced technological solution allows easy
1.60
1.55 1.55
1.41
1.13
1.66
1.62 1.62
1.52
1.21
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2019 2020 2021 2022 2023
MJ/€ of production costs
Specific use of energy by production costs (LHV) Specific use of energy by production costs (HHV)
79
75.00 75
72
68
83
78 78
77
73
0
10
20
30
40
50
60
70
80
90
2019 2020 2021 2022 2023
TJ/billion units
Specific use of energy by production volume (LHV) Specific use of energy by production volume (HHV)
2023 Annual Report – Sustainable development
178
control over the efficiency of production, processes, energy and other media consumption in a large system, which includes
over 2,500 measurement points. It allows for energy efficiency screening of individual processes, speeding up our
response in case of unexpected changes.
Interconnection of two cooling stations for preparing water-glycol mixture in the temperature range of -1 to 3 °C
We ensure that all work processes in the pharmaceutical industry meet the necessary environmental conditions. Relative
air humidity is an important parameter, and we use two cooling stations to maintain it at required levels in certain seasons.
After monitoring the efficiency of two distinct water-glycol mixture production systems at our two largest production sites,
we identified an opportunity to reduce electricity consumption (200 MWh) during the preparation of the water-glycol mixture
within the temperature range of -1 to 3 °C. We optimised the process by interconnecting the two stations, enabling us to
produce the water-glycol mixture by running only one station. Before the reconstruction, the same quantity of the medium
that can now be produced by a single station could only be produced by operating both stations. The system’s specific
use of energy improved by another 25%.
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 consumption for heat generation decreases by 54% (24 GWh) annually.
Upgrading energy efficiency monitoring at the Bršljin plant
In 2023, we installed additional electricity meters to enable real-time monitoring of production efficiency for primary utilities
at the Bršljin plant (Slovenia). We integrated the measurements into our energy management information system and
deployed a machine learning module to monitor on-site energy use at specific locations.
Optimisation of air-conditioning system operation
The concept, planning, design, regulation, control and operation of air-conditioning (HVAC) systems are among the
deciding factors of an efficient end use of energy in production and non-production facilities. HVAC systems account for
approximately 60% of energy end use at Krka. We enhanced the control of operating parameters to improve increase
energy efficiency further. We conducted regular hydraulic balancing of distribution systems and heating and cooling
consumers. In 2023, we completed a project involving the implementation of dehumidification technology with glycol
chillers for dry air preparation, replacing the obsolete and energy-inefficient drying wheel system.
Replacement of FLUO lighting with LED lights
In line with the Krka Group’s internal strategy for transition to LED lamps, we rolled out the first replacement projects. This
upgrade improved the illumination of rooms and work surfaces at the Ločna site in Slovenia, with estimated annual
electricity savings of 800 MWh.
Biodiversity
77
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 percent of all known species and more than two percent of terrestrial
species.
All Krka production sites comply with and implement all guidelines and requirements of the European and national
legislation on biodiversity to preserve the natural world’s ecological, biotic and landscape features.
We raise employee awareness of the importance of biodiversity in internal training courses. We comply with the strictest
environmental requirements for existing buildings and planned ones. A systematic biodiversity evaluation of watercourses
as ecosystems in Slovenia has not been established yet. Therefore, we observe various publications and reports issued
77
GRI 3-3, 304-2, 304-4
2023 Annual Report – Sustainable development
179
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. The new
external lighting and appropriate lighting fixtures significantly reduced the impact of artificial lighting on animals and plants,
contributing to biodiversity conservation.
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 wastewater treatment plant in Krško (all Slovenia) in order to prevent any potential harm to
biodiversity from our emissions.
Transport
78
In 2023, we organised transport for over 11,000 shipments of finished products, raw materials and packaging materials.
Total mileage by our fleet surpassed 2.0 million km, and fuel consumption totalled 569,000 litres. We continued to
modernise our fleet and organised training for drivers.
We use state-of-the-art vehicles equipped with environmentally sound engines for road transport. We supply products to
distant markets primarily by sea or by air. Our in-house transport department organises transport. We use our fleet or
employ contractual carriers. Most of our products are delivered to European and Asian markets. Despite encountering
additional restrictions in transit countries and facing challenges in air and maritime transportation, transport proceeded
without any hindrances. To ensure uninterrupted supplies of medicines, we successfully completed the trial phase of
transporting goods by rail between China and Slovenia. Due to uncertainties in the Red Sea and consequent prolonged
transit times, we devised an alternative transport route between India and Slovenia.
We diligently and consistently adhere to the regulations governing the transport of pharmaceutical products, ensuring
thorough communication and compliance with all contractual carriers and their drivers regarding these requirements and
other pertinent specifics. 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.
Our fleet comprises 19 transport vehicles. We modernised it by adding three semi-trailers in 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. In December 2023, we upgraded our fleet with an all-electric truck for
transporting goods across Slovenia. The new vehicle marks a significant upgrade of our electric vehicle fleet and sets a
new standard going forward, reaffirming our commitment to the ongoing pursuit of our long-term sustainable mobility policy.
Notably, this is the first electric truck with gross vehicle weight of more than 12 tonnes, both at Krka and in Slovenia. Based
on workload estimates, the truck will cover more than 50,000 kilometres a year and generate fuel savings of more
than 15,000 litres. This is equivalent to the total fuel consumption of 10 typical Slovenian passenger car drivers. A fossil
fuel-powered truck of the same category generates more than 40 tonnes of CO
2
, meaning it would take 2,600 trees to
offset its carbon emissions. We also have 14 electric and two hybrid vehicles in our fleet. We intend to closely monitor
78
SDG 12
2023 Annual Report – Sustainable development
180
advancements in modern low-carbon vehicles and further expand our fleet. Following our vehicle acquisition strategy, we
plan to replace at least 20 used diesel and petrol vehicles with electric ones by 2025.
We intend to expand our charging station network, which currently includes eight standard stations, by adding the first fast
charging station. The new station at our site in Novo mesto will be capable of charging a vehicle six times faster than a
standard electric vehicle charger. Whenever feasible, we opt for teleconferencing or video conferencing as substitutes for
business travel to minimise fuel consumption and air pollution.
We joined the European Mobility Week for the eighth consecutive year with our Krka Car-Free Day campaign. In 2023,
the campaign united our employees from 12 countries. Sustainable commuting has become a habit of many Krka
employees. Many of our employees in Slovenia, 40% of them, live more than 40 km away from the company. The
increasing number of employees carsharing contributes to reducing the environmental impact, enhancing traffic safety,
and improving 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 areas at all our facilities in Slovenia. In 2023, we arranged a modern bicycle
parking station in Ločna (Novo mesto), increasing bicycle parking capacity by more than 40% and providing 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
79
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. Monitoring 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 discharged 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 information concerning the local water environment. We regularly control
and review the calculations, incorporating the latest research findings and other credible technical information into
wastewater and waste management. In collaboration with our external partners, we have developed complex analytical
methods for monitoring residue concentrations in wastewater for several active pharmaceutical ingredients that present
heightened environmental risk.
We reduce industrial wastewater quantities and pollution at all stages of the production process. We integrate
considerations from environmental protection permits and legislative requirements from the product development stage
onwards, opting for technologies that minimise water consumption whenever possible. Advanced water preparation
technologies, closed cooling systems, and other methods are employed to save production water. Whenever possible, we
use raw materials and excipients that are less harmful to water. We minimise the quantity of detergents used in production
washing procedures. 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 (Slovenia) 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
79
GRI 303-2, 303-4, SDG 12
2023 Annual Report – Sustainable development
181
discharge system. In recent years, we have upgraded and professionally managed the biological wastewater treatment
plant, ensuring that effluent quality remains high and compliant with all legal requirements. In 2023, we collected and
treated 710,121 m
3
of wastewater, or 80,427 m
3
(10%) less than in 2022. Organic pollution expressed by chemical oxygen
demand was cleaned in 91.5%, while removal of organic pollution expressed by biochemical oxygen demand within 5 days
reached 98.6%. Cooling wastewater volume totalled 347,182 m
3
, down 75,557 m
3
on 2022. By effectively managing the
wastewater treatment plant, we reduced the volume of sludge, which is subsequently handed over to a contractor for
further processing, by 17.4%. Total environmental load decreased by 274 ELU, or 19%, year on year.
Our Bršljin plant (Slovenia) 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 2023, we generated a total of 19,288 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 2023, we generated
a total of 17,364 m
3
of wastewater.
Our plant in Ljutomer (Slovenia) 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 2023, we
generated a total of 26,436 m
3
of wastewater.
Our plant in Krško (Slovenia) 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 2023, we generated a total
of 28,308 m
3
of wastewater. Construction of an in-house wastewater treatment plant is underway at the site. The plant is
planned to become operational in June 2025.
In 2023, total environmental load decreased by 345 ELU, or 22%, year on year. Our in-house wastewater treatment plan
at the Ločna site contributed most to the reduction.
Wastewater management
Environmental load units (ELU) denote the standardised 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.
1,737
1,241
1,371
1,584
1,239
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2019 2020 2021 2022 2023
Enviromental load units (ELU)
2023 Annual Report – Sustainable development
182
Waste
80
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 incorporate extended producer
responsibility into 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 prioritise reducing environmental impacts, as
set out in the ISO 14001:2015 environmental standard. Our priority is to prevent waste generation through:
• Downsizing packaging units;
• Using returnable packaging;
• Using tank vehicles and large returnable packaging units to supply liquid raw materials;
• Developing improved technological and production procedures;
• Using recovered solvents;
• Reusing pallets; and
• Many other measures.
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. This allowed us to reuse 22.5 tonnes of plastic
packaging material in 2023 in line with the circular economy principles. Solvents that we used to receive in single-use
metal containers are now supplied in large returnable packaging units. In this way, we reduced packaging volume by
20.5 tonnes. Both measures reduced packaging waste by 43 tonnes and emissions by 115 t CO
2
-eq.
Producing double or triple combination medicines yields higher packaging and excipient savings and leads to reduced
waste volume compared to producing mono-component medicines.
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. Recycling waste separation increased by 10% year over year.
In 2023, we collected 567 tonnes of waste composites, up 13% compared to 2022. An approved contractor recovered
187 tonnes of aluminium and 332 tonnes of plastic from them and handed them over for recycling. We handed over
116.8 tonnes of organic waste to obtain biogas via anaerobic digestion, reducing emissions by 10.5 t CO
2
-eq.
Year on year, we reduced total waste volume by 3.6%, notwithstanding the increase in production, and reduced waste
disposed at landfills by 64 tonnes, or 10%.
Risks related to the reception and removal of certain types of waste in Slovenia persisted in 2023. We diversified our waste
management channels and extended cooperation to several waste collection and removal companies in Slovenia and
abroad to manage the risks.
Achieving favourable outcomes necessitates responsible efforts from all employees. To accomplish this, we provided our
employees with regular waste management training.
80
GRI 3-3, 306-1, 306-2, SDG 12
2023 Annual Report – Sustainable development
183
Recyclable waste
81
Waste for biological processing
82
81
GRI 306-4
82
GRI 306-4
2,422
2,327
2,381
2,532
2,786
0
500
1,000
1,500
2,000
2,500
3,000
2019 2020 2021 2022 2023
Tonnes
1,308
1,618
1,231
1,447
1,223
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2019 2020 2021 2022 2023
Tonnes
2023 Annual Report – Sustainable development
184
Waste disposed at landfills
Waste for incineration
83
Noise
We reduce noise emissions using suitable equipment, installing the equipment in closed rooms, setting up noise barriers,
fitting cargo vehicles with electrical cooling units, and relocating cargo vehicle docks to the inner areas of production sites.
Adhering to regulations on environmental noise indicators, we conduct noise level measurements every three years and
whenever modifications are made that could potentially increase noise levels. Results of monitoring conducted by
authorised contractors over the last three years confirm that implemented measures were effective and noise levels
complied with legislative requirements.
Air emissions
84
Effective reduction of air emissions is one of our priorities in environmental protection and climate change mitigation. We
comply with the EU actions aimed at implementing the European Green Deal, as well as legal requirements and the
83
GRI 306-5
84
GRI 3-3, SDG 13
802
791
763
665
601
0
100
200
300
400
500
600
700
800
900
2019 2020 2021 2022 2023
Tonnes
6,047
7,329
6,480
6,786
6,245
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2019 2020 2021 2022 2023
Tonnes
2023 Annual Report – Sustainable development
185
pharmaceutical industry’s stringent requirements to prevent cross-contamination. We reduce air emissions using treatment
systems fitted on all outlets that could 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 the best available technology allows.
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.
We calculated the Krka Group’s carbon footprint from 1 January 2023 to 31 December 2023 inclusive pursuant to
Greenhouse Gas Protocol (GHG) Scope 1 and Scope 2.
In 2023, emissions from combustion of fuel in Krka Group-owned stationary equipment used mainly for heating and in
production processes and occasional emissions from combustion of fuel in diesel generators that supply power to key
equipment in the event of a power outage accounted for the largest proportion of greenhouse gases (58%). Emissions
from consumed electricity followed with 20%, and emissions from burning of fuels by Krka Group-owned transportation
devices such as trucks, vans and cars with 19%. Other emissions, for example fugitive emissions resulting from cooling
liquid leaks from cooling and heating stations, process emissions from oxidation of volatile organic agents in regenerative
thermal oxidisers, emissions from wastewater treatment, emissions from consumption of heat from the heat network and
heat from the cogeneration system, accounted for less than 3% of total greenhouse gas emissions.
Greenhouse gas emissions
85
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. We plan to include Scope 3 emissions in our subsequent emission calculations.
As our production site in Ločna (Novo mesto, Slovenia) is included in the EU emissions trading scheme, we report our
emissions to the Ministry of the Environment, Climate and Energy in accordance with the relevant legislation.
In 2023, the Krka Group recorded a 48.4% decrease in CO
2
emissions compared to the reference year 2019. We
reduced year-on-year Scope 1 emissions by 4.2% and Scope 2 emissions by 4.1% according to GHG.
86
2019–2023 Krka Group carbon footprint relative to revenue, employee total, and production volume
87
2023
2022
2021
2020
2019
Carbon footprint/Revenue (kg CO
2
-eq/€)
0.041
0.045
0.051
0.089
0.096
Carbon footprint/Employee total (t CO
2
-
eq/employee)
6.28
6.67
6.90
11.78
12.48
Carbon footprint/Physical production volume
(t Co
2
-eq/billion units)
4,379.8
4,596.3
4,930.9
8,304.1
9,428.4
In 2023, reports and the action plan for Krka Group total carbon footprint reduction were revised, adjusting the Scope 1
emission factor. In turn, total GHG emissions for 2022 changed.
85
GRI 305-1, 305-2
86
GRI 305-5
87
GRI 305-4
2023 Annual Report – Sustainable development
186
2019–2023 Krka Group total greenhouse emissions according to GHG (Scope 1 and Scope 2)
88
Objectives and action plan
We calculated our Scope 1 and Scope 2 carbon footprint and prepared the Krka Group’s action plan for reducing GHG
emissions by 2025, 2030, and 2050. This plan aligns with our commitment to reduce CO2 emissions and contribute to the
EU’s goal of becoming climate-neutral by 2050.
Our objective is to reduce the Krka Group’s Scope 1 and Scope 2 carbon footprint by 48% by 2030 compared to the
reference year 2019 through our activities. The 2030 decarbonisation target relies on intensifying fleet electrification,
optimising business processes, and improving energy efficiency. The goal to reduce the carbon footprint has not yet been
aligned with the Paris Agreement’s objectives and science-based targets. Activities set out in the action plan are integrated
into the strategic planning of investment projects, which Krka will highly likely deliver employing its own financial assets
and human resources. We will monitor trends and leverage the best available technologies in the supply of carbon-neutral
energy sources. If carbon-neutral energy sources are available on the market in accordance with the national energy and
climate plan, Krka will strive to achieve the Paris Agreement’s goals and reduce its carbon footprint by 50% by 2030.
Krka intends to maintain growth and increase its production volumes at all production sites. Therefore, it is deemed more
acceptable and realistic to set relative carbon footprint reduction goals in correlation to production volume.
Carbon footprint reduction remains the Krka Group’s goal also for the 2030–2050 period. We will leverage the best
available technologies in decarbonisation and the supply of carbon-neutral energy sources (RES, hydrogen, etc.) and
utilise them in our processes wherever feasible. Our action plan for reducing carbon footprint by 2050 will build on science-
based targets (SBTi) and the Paris Agreement’s decarbonisation and climate neutrality goals.
88
GRI 305-1, 305-2, SDG 12
66,245
63,672
64,192
61,592
59,029
77,067
73,345
15,688
15,625
14,989
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2019 2020 2021 2022 2023
GHG air emissions (CO
2
-eq)
Scope 1 Scope2
143,312
137,017
79,880
77,217
74,018
2023 Annual Report – Sustainable development
187
Chronology of performance and set goals by 2050
Electromagnetic radiation (EMR)
We constantly monitor relevant legislation and conduct necessary measurements. Electromagnetic radiation is universally
present in our living environment. However, extended electricity 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 initial measurements indicate that radiation levels from identified sources were below statutory thresholds. 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 lots, traffic routes (i.e. roads and pedestrian areas), as well as transport and warehousing facilities at our
production and business sites in Slovenia are illuminated with outdoor lighting. Our signage and billboards are also
illuminated. The astronomical clock regulates the automatic activation and deactivation of outdoor lighting, signage, and
billboards. We conduct separate measurements for electricity consumption for outdoor lighting at our major sites. In 2023,
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 effectively disseminate robust environmental protection guidelines and practices across all subsidiaries through
ongoing cooperation, information sharing, and investment. Compliance with national legislation is a key aspect of this
process. Additionally, we have implemented efficient separate waste collection systems and exclusively utilise authorised
waste collection and treatment companies for proper disposal.
Wastewater generated during the production of highly potent active ingredients at our plant in Jastrebarsko, Croatia,
undergoes treatment at our in-house wastewater treatment plant using advanced oxidation processes that yield a 99.9%
degradation of active substances. Wastewater at Krka-Rus in the Russian Federation is treated at the in-house wastewater
2023 Annual Report – Sustainable development
188
membrane biological wastewater treatment plant, which we upgraded in 2023 by setting up a secondary sedimentation
tank. Wastewater from other production plants and companies is discharged to modern municipal wastewater treatment
plants.
We install highly efficient absolute filtration devices on units emitting particulate matter to reduce emissions. We transfer
good practices in rational energy and water use to subsidiaries. In 2023, we reviewed the energy management system
internally at Krka-Rus in the Russian Federation. The review revealed several points for improvement. We intend to set
establish a comprehensive monitoring system for production efficiency for heating, cooling and power sources to ensure
permanent control of the relevant systems.
Environmental communication
We recognise every employee’s potential to significantly contribute to positive environmental protection outcomes.
Therefore, we actively encourage continual learning and heightened environmental consciousness among our staff. Our
internal communication campaign Your Care for the Environment Counts promotes energy conservation, paper reduction,
and the importance of separate waste collection.
Responsible environmental management forms a part of the induction seminar for newly recruited employees and 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, light pollution, and
environmental sustainability topics. In 2023, 1,199 employees from Krka in Slovenia attended environment-related training
courses.
We made all the related content available online during the COVID-19 pandemic. We included employees from abroad in
the education about environmental protection and sustainable development by preparing various language versions of the
content in e-format. In 2023, 48 employees took part in these trainings.
We brief the public about our environmental activities via public announcements in the media and at various seminars,
symposia, and round tables. Additionally, we play an active role in developing environmental legislation and are a co-
founder and engaged member 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.
Upholding responsible care for society and the environment necessitates fostering positive relationships with local
community stakeholders, particularly our immediate neighbours, as our activities directly influence their living environment
and quality of life. We sustain continuous and transparent communication with our neighbours, cultivating strong
relationships. In March 2023, held our customary meeting with them, during which we shared updates on our
environmental protection actions, accomplishments, and future plans. We plan to hold another meeting in 2025. We
prepared an informative booklet Utrip okolja to inform our immediate neighbours of our Krško plant (Slovenia) about the
company’s activities, investment plans, and environmental actions. We sent the booklet to more than 1,000 recipients. We
also met with the plant’s immediate neighbours in December 2023. We also presented the company’s activities, investment
plans and environmental impacts at the Municipal Council meeting of the Municipality of Krško.
We take into account the perspectives and feedback from all our stakeholders when enhancing the environmental
management system.
In 2023, during the Slovenian Chamber of Commerce and Industry’s annual Environmental Business Day, the
Environmental Sustainability Manager of the Year award was introduced for the first time. The inaugural recipient of this
award was the Head of Environmental Protection at Krka.
2023 Annual Report – Sustainable development
189
GRI content index
Statement of use
Krka Group has reported in accordance with the GRI (Global Reporting Initiative) Standards for the period from 1 January 2023 to 31 December 2023
GRI 1 used
GRI 1: Foundation 2021
Applicable GRI sector standard(s)
At the time of the preparation of the report there were no relevant sector standard(s).
GENERAL DISCLOSURES
GRI
standard
Disclosure
Page
Segment
Requirement(s) omitted and
explanation(s)
GRI 2: General disclosures 2021
The organisation and its reporting practices
2-1
Organisational details
14
17
93–94
At a glance
Krka in global markets
Share trading and shareholding
2-2
Entities included in the organisation’s sustainability reporting
153
Sustainable development, About the Report
2-3
Reporting period, frequency and contact point
153
Sustainable development, About the Report
2-4
Restatements of information
153
Sustainable development, About the Report
2-5
External assurance
Krka has not yet decided on an
external verification of GRI
reporting.
Activities and workers
2-6
Activities, value chain and other business
relationships
11
93–94
101–114
115–134
134
140
141
142
Krka Group financial highlights
Share trading and shareholding
Sales by region
Product and service groups
Research and development
Supply process
Suppliers
Investments
2-7
Employees
157–158
Employees
Krka does not report on 2-7-b-iii,
since it is not relevant for the Krka
Group.
2-8
Workers who are not employees
157
Employees
Governance
2-9
Governance structure and composition
22
37
39
Corporate governance statement
Composition of Supervisory Board of Krka
as at 31 December 2023
Composition of Management Board of Krka
as at 31 December 2023
2023 Annual Report – Sustainable development
190
2-10
Nomination and selection of the highest governance body
22
37
39
Corporate governance statement
Composition of Supervisory Board of Krka
as at 31 December 2023
Composition of Management Board of Krka
as at 31 December 2023
2-11
Chair of the highest governance body
37
39
Composition of Supervisory Board of Krka
as at 31 December 2023
Composition of Management Board of Krka
as at 31 December 2023
2-12
Role of the highest governance body in overseeing the management
of impacts
39
Composition of Management Board of Krka
as at 31 December 2023
2-13
Delegation of responsibility for managing impacts
64
Krka Group sustainability management
2-14
Role of the highest governance body in sustainability reporting
43
Non-financial statement
2-15
Conflicts of interest
37
39
Composition of Supervisory Board of Krka
as at 31 December 2023
Composition of Management Board of Krka
as at 31 December 2023
2-16
Communication of critical concerns
33
Chief Compliance Officer
2-17
Collective knowledge of the highest governance body
37
39
Composition of Supervisory Board of Krka
as at 31 December 2023
Composition of Management Board of Krka
as at 31 December 2023
2-18
Evaluation of the performance of the highest governance body
Supervisory Board report
Published on the website of the
Krka Group.
2-19
Remuneration policies
Supervisory Board report
Published on the website of the
Krka Group.
2-20
Process to determine remuneration
Supervisory Board report
Published on the website of the
Krka Group.
2023 Annual Report – Sustainable development
191
2-21
Annual total compensation ratio
In accordance with the
remuneration policy, fixed
remuneration of Management
Board members is determined as a
multiple of the average salary of all
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 scope of tasks and
areas of work that each member of
Management Board covers. For
the President of the Management
Board multiplier of 10 is used.
Strategy, policies and practices
2-22
Statement on sustainable development strategy
3–8
Statement by the President of the Management Board
2-23
Policy commitments
32
34
35
60
172–173
Corporate compliance and integrity
Integrity Plan
Human rights in business operations
Krka Group development strategy
Natural environment
2-24
Embedding policy commitments
33
34
35
172–173
Chief compliance officer
Integrity plan
Human rights in business operations
Natural environment
2-25
Processes to remediate negative impacts
172–173
Natural environment
2-26
Mechanisms for seeking advice and raising concerns
33
Addressing purported irregularities
2-27
Compliance with laws and regulations
147–149
173
Quality
Natural environment
2-28
Membership associations
35
Contributions and other financial commitments
Stakeholder engagement
2-29
Approach to stakeholder engagement
94–95
154
167
Communication with investors
Sustainable development
Health professionals, healthcare providers and direct
customers
2-30
Collective bargaining agreements
157
Employees
GRI 3: Material topics 2021
3-1
Process to determine material topics
64
152
Krka Group development strategy
Sustainable development, Materiality assessment
2023 Annual Report – Sustainable development
192
3-2
List of material topics
152
152
155
Sustainable development, materiality assessment
Sustainable development, About the Report
Sustainable development
ECONOMY
GRI 201: Economic performance 2016
3-3
Management of material topics
60–63
Krka Group development strategy
201-1
Direct economic value generated and distributed
11
168, 170
227
Krka Group financial highlights
Corporate social responsibility
7. Employee benefits
201-3
Defined benefit plan obligations and other retirement plans
227
7. Employee benefits
201-4
Financial assistance received from government
241
22. Deferred income
GRI 203: Indirect economic impacts 2016
3-3
Management of material topics
168
Corporate social responsibility
203-1
Infrastructure investments and services supported
168, 170
Corporate social responsibility
203-2
Significant indirect economic impacts
168
Corporate social responsibility
GRI 204: Procurement practices 2016
3-3
Management of material topics
141
Suppliers
204-1
Proportion of spending on local suppliers
141
Suppliers
GRI 205: Anti-corruption 2016
3-3
Management of material topics
33
Corporate compliance
205-1
Operations assessed for risks related to corruption
34
Integrity Plan
205-2
Communication and training about anti-corruption policies and
procedures
33
Corporate compliance
Data capturing does not include
the number of hours.
205-3
Confirmed incidents of corruption and actions taken
33
Corporate compliance
Data capturing includes reported
suspected incidents.
GRI 206: Anti-competitive behavior 2016
3-3
Management of material topics
33
Corporate compliance
206-1
Legal actions for anti-competitive behavior, anti-trust, and monopoly
practices
240
21. Provisions
GRI 207: Tax 2019
3-3
Management of material topics
36
Internal controls and risk management relating to
financial and tax reporting
207-1
Approach to tax
36
Internal controls and risk management relating to
financial and tax reporting
207-2
Tax governance, control, and risk management
36
Internal controls and risk management relating to
financial and tax reporting
207-3
Stakeholder engagement and management of
concerns related to tax
36
Internal controls and risk management relating to
financial and tax reporting
207-4
Country-by-country reporting
97
Business performance
Data capturing includes effective
tax rate.
2023 Annual Report – Sustainable development
193
ENVIRONMENT
GRI 302: Energy 2016
3-3
Management of material topics
175
Energy
302-1
Energy consumption within the organisation
12
Krka's sustainable development indicators
302-3
Energy intensity
176–177
Energy
302-4
Reduction of energy consumption
176
Energy
GRI 303: Water and effluents 2018
3-3
Management of material topics
174
Water
303-1
Interactions with water as a shared resource
174
Water
303-2
Management of water discharge-related impacts
174
180
Water
Emissions, wastewater
303-3
Water withdrawal
174–175
Drinking and river water use
303-4
Water discharge
180–181
Emissions, wastewater
303-5
Water consumption
174–175
Drinking and river water use
GRI 304: Biodiversity 2016
3-3
Management of material topics
178–179
Biodiversity
304-2
Significant impacts of activities, products, and services on
biodiversity
178–179
Biodiversity
304-4
IUCN Red List species and national conservation list species with
habitats in areas affected by operations
178–179
Biodiversity
GRI 305: Emissions 2016
3-3
Management of material topics
184–186
Air emissions
305-1
Direct (Scope 1) GHG emissions
185
Air emissions
305-2
Energy indirect (Scope 2) GHG emissions
185
Air emissions
305-4
GHG emissions intensity
185
Air emissions
305-5
Reduction of GHG emissions
185
Air emissions
305-6
Emissions of ozone-depleting substances (ODS)
13
Krka's sustainable development indicators
305-7
Nitrogen oxides (NOX), sulfur oxides (SOX), and
other significant air emissions
13
Krka's sustainable development indicators
GRI 306: Waste 2020
3-3
Management of material topics
182
Waste
306-1
Waste generation and significant waste-related
impacts
182
Waste
306-2
Management of significant waste-related impacts
182
Waste
306-3
Waste generated
12
Krka's sustainable development indicators
306-4
Waste diverted from disposal
183
Waste
306-5
Waste directed to disposal
18
Waste
2023 Annual Report – Sustainable development
194
GRI 308: Supplier environmental assessment 2016
3-3
Management of material topics
140
Supply process
308-1
New suppliers that were screened using environmental criteria
140
Supply process
Data capturing includes the
number of assessments by all
criteria.
SOCIAL
GRI 401: Employment 2016
3-3
Management of material topics
157
Employees
401-1
New employee hires and employee turnover
158
Employees
Data capturing includes employee
turnover at the Krka Group level.
401-3
Parental leave
163
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
162–164
Health and safety at work
403-1
Occupational health and safety management
system
162–164
Health and safety at work
403-2
Hazard identification, risk assessment, and incident investigation
162–164
Health and safety at work
403-3
Occupational health services
162–164
Health and safety at work
403-4
Worker participation, consultation, and communication on
occupational health and safety
162–164
Health and safety at work
403-5
Worker training on occupational health and safety
162–164
Health and safety at work
403-6
Promotion of worker health
162–164
Health and safety at work
403-7
Prevention and mitigation of occupational health and safety impacts
directly linked by business relationships
162–164
Health and safety at work
403-8
Workers covered by an occupational health and safety management
system
162–164
Health and safety at work
403-9
Work-related injuries
164
Health and safety at work
403-10
Work-related ill health
164
Health and safety at work
GRI 404: Training and education 2016
3-3
Management of material topics
159
Employee education and development
404-1
Average hours of training per year per employee
160
Employee education and development
Data capturing does not include
breakdown by gender and
employee category.
404-2
Programs for upgrading employee skills and transition assistance
programs
159
Employee education and development
404-3
Percentage of employees receiving regular
performance and career development reviews
159
Employee education and development
2023 Annual Report – Sustainable development
195
GRI 405: Diversity and equal opportunity 2016
3-3
Management of material topics
157
Employees
405-1
Diversity of governance bodies and employees
37
39
157
164
Composition of Supervisory Board of Krka
as at 31 December 2023
Composition of Management Board of Krka
as at 31 December 2023
Employees
Health and safety at work
GRI 406: Non-discrimination 2016
3-3
Management of material topics
35
Management approach to non-discrimination
406-1
Incidents of discrimination and corrective
actions taken
35
Management approach to non-discrimination
GRI 413: Local communities 2016
3-3
Management of material topics
172
Natural environment
413-1
Operations with local community engagement, impact assessments,
and development programs
173
Natural environment
Data capturing does not include
the percentage of the operations.
GRI 414: Supplier social assessment 2016
3-3
Management of material topics
140
Supply process
414-1
New suppliers that were screened using social criteria
140
Supply process
Data capturing includes the
number of assessments by all
criteria.
GRI 415: Public policy 2016
3-3
Management of material topics
35
Contributions and other financial commitments
415-1
Political contributions
35
Contributions and other financial commitments
GRI 416: Customer health and safety 2016
3-3
Management of material topics
145–149
Quality
416-2
Incidents of non-compliance concerning the health and safety
impacts of products and services
145–149
Quality
GRI 417: Marketing and labelling 2016
3-3
Management of material topics
165
Patients and other customers
417-1
Requirements for product and service information and labelling
166
Patients
417-2
Incidents of non-compliance concerning product and service
information and labelling
166
Patients
417-3
Incidents of non-compliance concerning marketing communications
167
Patients
GRI 418: Customer privacy 2016
3-3
Management of material topics
165
Patients and other customers
418-1
Substantiated complaints concerning breaches of customer privacy
and losses of customer data
166
Patients
2023 Annual Report – Sustainable development
EMPTY PAGE
2023 Annual Report – Financial report
FINANCIAL REPORT
2023 Annual Report – Financial report
198
Contents
Introduction to the financial statements ..................................................................................................... 199
Statement of compliance .............................................................................................................................. 200
Consolidated financial statements of the Krka Group ............................................................................... 201
Consolidated statement of financial position ............................................................................................................. 201
Consolidated income statement ................................................................................................................................ 202
Consolidated statement of other comprehensive income .......................................................................................... 202
Consolidated statement of changes in equity ............................................................................................................ 203
Consolidated statement of cash flows ....................................................................................................................... 205
Notes to the consolidated financial statements ......................................................................................................... 206
Independent auditor’s report ...................................................................................................................................... 261
Financial statement of Krka, d. d., Novo mesto .......................................................................................... 269
Statement of financial position ................................................................................................................................... 269
Income statement ...................................................................................................................................................... 270
Statement of other comprehensive income ............................................................................................................... 270
Statement of changes in equity ................................................................................................................................. 271
Statement of cash flows ............................................................................................................................................ 273
Notes to the financial statements .............................................................................................................................. 274
Independent auditor’s report ...................................................................................................................................... 332
2023 Annual Report – Financial report
199
Introduction to the 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 the accompanying Notes of Krka, d. d., Novo mesto (hereinafter: ’the
Company’). The financial statements have been prepared in compliance with the International Financial Reporting
Standards (hereinafter: ‘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 2023 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.
2023 Annual Report – Financial report
200
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 2023.
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 EU.
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, 25 March 2024
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
2023 Annual Report – Consolidated financial statements of the Krka Group
201
Consolidated financial statements of the Krka Group
Consolidated statement of financial position
€ thousand
Notes
31 Dec 2023
31 Dec 2022
Index
2023/22
Assets
Property, plant and equipment
11
101
Intangible assets
12
100
Loans
13
90
Investments
14
43
Deferred tax assets
15
89
Other non-current assets
101
Total non-current assets
94
Assets held for sale
100
Inventories
16
109
Contract assets
45
Trade receivables
17
126
Other receivables
17
185
Loans
13
928
Investments
14
585
Cash and cash equivalents
18
34
Total current assets
109
Total assets
103
Equity
Share capital
19
100
Treasury shares
19
-138,489
-124,566
111
Reserves
19
80
Retained earnings
19
105
Total equity holders of the controlling company
102
Non-controlling interests
19
99
Total equity
102
Liabilities
Provisions
21
116
Deferred income
22
92
Lease liabilities
27
106
Deferred tax liabilities
15
100
Total non-current liabilities
113
Trade payables
23
109
Lease liabilities
27
92
Income tax payables
32
Contract liabilities
24
103
Other current liabilities
25
122
Total current liabilities
104
Total liabilities
106
Total equity and liabilities
103
The accompanying Notes form an integral part of the consolidated financial statements and should be read in conjunction with them.
2023 Annual Report – Consolidated financial statements of the Krka Group
202
Consolidated income statement
€ thousand
Notes
2023
2022
Index
2023/22
Revenue
105
– Revenue from contracts with customers
4
105
– Other revenue
92
Cost of goods sold
-779,682
-743,060
105
Gross profit
105
Other operating income
5
67
Selling and distribution expenses
-347,898
-349,111
100
– Whereof net impairments and write-offs of receivables
-1,875
R&D expenses
-178,582
-162,580
110
General and administrative expenses
-106,755
-90,688
118
Operating profit
105
Financial income
9
41
Financial expenses
9
-56,062
-5,806
966
Net financial result
-32,495
Profit before tax
85
Income tax expense
10
-53,394
-69,411
77
Net profit
86
Attributable to:
– Equity holders of the controlling company
86
– Non-controlling interests
-214
Basic earnings per share (€)
20
87
Diluted earnings per share (€)
20
87
The accompanying Notes form an integral part of the consolidated financial statements and should be read in conjunction with them.
Consolidated statement of other comprehensive income
€ thousand
Notes
2023
2022
Index
2023/22
Net profit
86
Other comprehensive income for the year
Other comprehensive income reclassified to profit or loss
at a future date
Translation reserve
19
-49,705
Net other comprehensive income reclassified to profit or
loss at a future date
-49,705
Other comprehensive income that will not be reclassified
to profit or loss at a future date
Change in fair value of financial assets
14
8,525
Restatement of post-employment benefits
21
-12,007
Deferred tax effect
15
-2,695
-3,417
79
Net other comprehensive income that will not be
reclassified to profit or loss at a future date
-3,790
Total other comprehensive income for the year (net of tax)
-53,495
Total comprehensive income for the year (net of tax)
65
Attributable to:
– Equity holders of the controlling company
66
– Non-controlling interests
-1,503
-139
1,081
The accompanying Notes form an integral part of the consolidated financial statements and should be read in conjunction with them.
2023 Annual Report – Consolidated financial statements of the Krka Group
203
Consolidated statement of changes in equity
€ thousand
Share
capital
Treasury
shares
Reserves
Retained earnings
Equity
attributable
to the
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
from
previous
years
Profit for
the year
Balance at 1 Jan 2023
-124,566
-85,919
Net profit
-214
Total other comprehensive income
for the year (net of tax)
-3,181
-48,451
-574
-52,206
-1,289
-53,495
Total comprehensive income
for the year (net of tax)
-3,181
-48,451
-574
-1,503
Transactions with owners,
recognised in equity
Formation of other profit reserves
under the resolution of the AGM
-101,893
Transfer of previous periods' profit
to retained earnings
-353,271
Repurchase to treasury shares
-13,923
-13,923
-13,923
Formation of reserves for treasury
shares
-13,923
Dividends paid
-204,378
-204,378
-204,378
Acquisition of non-controlling interests
Total transactions with owners,
recognised in equity
-13,923
-367,194
-218,301
-216,980
Balance at 31 Dec 2023
-138,489
-511
-134,370
The accompanying Notes form an integral part of the consolidated financial statements and should be read in conjunction with them.
2023 Annual Report – Consolidated financial statements of the Krka Group
204
€ thousand
Share
capital
Treasury
shares
Reserves
Retained earnings
Equity
attributable
to the
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
from
previous
years
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 to 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 should be read in conjunction with them.
2023 Annual Report – Consolidated financial statements of the Krka Group
205
Consolidated statement of cash flows
€ thousand
Notes
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit
Adjustments for:
– Amortisation/Depreciation
11,12
– Net foreign exchange differences
-27,030
-224
– Net write-offs and allowances for inventories
– Net impairments and write-offs of receivables
-3,712
– Investment income
-25,534
-15,817
– Investment expenses
– Income on financing activities
-4
– Interest expenses and other financial expenses
– Income tax expense
10
Operating profit before changes in net current assets
Change in trade receivables
-104,133
Change in inventories
16
-62,709
-117,946
Change in trade payables
23
Change in provisions
21
-4,272
Change in deferred income
22
-501
-827
Change in other current liabilities
-1,410
Income tax paid
-94,097
-56,892
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
-130,024
-87,905
Purchase of intangible assets
12
-9,187
-6,827
Proceeds from non-current loans
Payments for non-current loans
-2,009
-42,690
Net payments/proceeds from current loans
-46,784
Proceeds from sale of non-current investments
Payments for acquiring non-current investments
-51
-32,970
Proceeds from sale of current investments
Payments for acquiring current investments
-568,607
-121,621
Proceeds from derivatives
Payments for derivatives
-389
Net cash flow from investing activities
-343,235
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid
-8,657
-4,179
Lease liabilities paid
27
-4,184
-3,926
Dividends and other profit shares paid
28
-204,379
-175,044
Repurchase of treasury shares
19
-13,923
-10,025
Proceeds from payment of non-controlling interests
Net cash flow from financing activities
-229,822
-187,022
Net decrease/increase in cash and cash equivalents
-345,803
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 should be read in conjunction with them.
2023 Annual Report – Consolidated financial statements of the Krka Group
206
Notes to the consolidated 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 No.
1/00097/00. Company registration No.: 5043611000.
The consolidated financial statements for the year ended 31 December 2023 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.
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 resort 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’) as adopted by the EU, interpretations issued by the International Financial Reporting Interpretations Committee
of the IASB (‘IFRIC’) adopted by the EU, and in compliance with additional provisions required by the Companies Act
(ZGD-1).
The consolidated financial statements were approved by the Krka Management Board on 25 March 2024.
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 Krka’s functional currency. All financial
information presented in the euro has been rounded to the nearest thousand.
Use of estimates and judgements
The preparation of financial statements requires the Management Board of the controlling company to make judgements,
estimates and assumptions that affect the carrying amounts of assets and liabilities of the Krka Group, as well as the
reported income and expenses for the period.
Management estimates include among others: determination of the useful life and residual value of property, plant and
equipment, as well as intangible assets; revenue from contracts with customers, allowances made for inventories and
receivables; assumptions material to the actuarial calculation of defined employee benefits; assumptions used in the
calculation of provisions for lawsuits, as well as assumptions and estimates relating to impairment of the TAD Pharma
goodwill, the assumptions and estimates for the impairment testing of the Russian Federation 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,
2023 Annual Report – Consolidated financial statements of the Krka Group
207
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. 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 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 recognises financial income and expenses on these sales using the appropriate discount rate.
• 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 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.
2023 Annual Report – Consolidated financial statements of the Krka Group
208
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 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 Group.
The accounting policies and the calculation methods used are the same as for the last annual reporting, except for the
new standards and interpretations. which are noted below and were applied if relevant events occurred in the Krka Group
in the reporting period.
In its statement of financial position, the Krka Group classifies liabilities and assets according to their maturity i.e. as non-
current and current.
The Group classifies an asset as current if:
• it expects to realise it or intends to sell or use it in the normal course of business (12 months);
• it is held primarily for trading purposes;
• it expects to realise it within 12 months after the reporting period; or
• the asset is cash or a cash equivalent (pursuant to IAS 7) unless it is prohibited from being exchanged or used
to settle a liability for a period of at least 12 months after the reporting period.
All other assets are classified by the Group as non-current.
2023 Annual Report – Consolidated financial statements of the Krka Group
209
The Group classifies a liability as current if:
• it expects to settle it within the normal course of business (12 months);
• it is held primarily for trading purposes;
• it is to be settled within 12 months after the reporting period; or
• at the end of the reporting period, it does not have the right to defer settlement of the liability for at least
12 months after the reporting period.
All other liabilities are classified by the Group as non-current.
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.
The Krka Group considers that the conditions for controlling both Russian subsidiaries by the controlling company has not
changed due to the situation in Ukraine and the Russian Federation. The controlling company retains influence over the
operations of the Russian companies and voting rights, including influence over variable returns. Activies with the Russian
subsidiaries are conducted in a similar manner as before February 2022, as pharmaceuticals are not subject to
EU sanctions and we do not expect this to change.
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.
2023 Annual Report – Consolidated financial statements of the Krka Group
210
Operating profit
Operating profit comprises profit before tax and financial items. Financial items include interest on bank balances, deposits,
investments held for sale, interest paid on borrowings, profit or loss from the sale of financial assets at fair value through
other comprehensive income, and foreign exchange gains or losses from the translation of all monetary assets and
liabilities to foreign currency.
Fair value
A number of the Krka Group's accounting policies and disclosures require the determination of fair value for both, financial
and non-financial assets and liabilities.
Fair value is the amount for which an asset could be sold or a liability exchanged in a regular transaction between market
participants. All assets and liabilities measured and disclosed at their fair value in financial statements are classified in the
fair value hierarchy on the basis of lowest level of input data significant for measurements of total fair value:
• Level 1 – market value (unadjusted) from the active market for similar assets and liabilities;
• Level 2 – valuation model 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 value of individual groups of assets 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 (FVOCI), 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
2023 Annual Report – Consolidated financial statements of the Krka Group
211
contain a significant financing component or for which the Group has applied the practical expedient, the Group initially
measures a financial asset at fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has
applied the practical expedient are measured at the transaction price determined within 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.
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 Krka 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 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 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 Group's financial assets at amortised cost also include trade receivables.
2023 Annual Report – Consolidated financial statements of the Krka Group
212
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.
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, non-derivative financial liabilities are classified 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 of assets’).
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.
Items of property, plant and equipment that have substantially different useful lives but whose value is significant are
accounted for as individual assets.
2023 Annual Report – Consolidated financial statements of the Krka Group
213
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.
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 as at the reporting date:
• 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 -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
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depend on an index or a rate are recognised in profit or loss as expenses in the period in which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate based on estimated
bond returns if it were to incur debt on the financial markets, while considering their maturity if the interest rate implicit in
the lease is not readily determinable.
Upon initial recognition, 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 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, whereas it
is reviewed for impairment given the changed circumstances in the business environment.
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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 as an expense in profit
or loss as incurred.
Other intangible assets
Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less
accumulated amortisation and accumulated impairment losses (refer to the accounting policy ‘Impairment of assets’).
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.
Emission coupons
The Group recognises emission coupons purchased or acquired free of charge in order to fulfil its obligation to the State
to surrender emission coupons under the Environmental Protection Act as intangible assets. Emission coupons acquired
free of charge are carried at €1 per emission coupon and those purchased are measured at cost on initial recognition. The
first-in-first-out (FIFO) method is used for the transfer of coupons. Intangible assets relating to
emission coupons are not amortised.
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 e. The Krka Group reviews the net realisable
value of inventories once a year at the date of the consolidated statement of financial position. If the carrying amount of
inventories exceeds their net realisable value, inventories are written-down through profit and loss.
As of the reporting date, the Group also reviews whether inventories need to be impaired. Thus, impaired are:
• all types of inventories that are known or expected to be unusable in the production of semi-finished and finished
goods or that cannot be sold for any reason,
• all types of inventories that have expired,
• inventories that will expire within 90 days in an amount to be determined by the person responsible for the
inventories,
• all other inventories that for any other reason require impairment.
Possible impairments are reviewed and recorded by inventory type group 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 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 cost of labour, depreciation, cost of services, energy, maintenance and quality. 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.
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Impairment of assets
Financial assets
The Group recognises an allowance for the expected credit losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements
that are integral to the contractual terms.
Expected credit losses are recognised in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are
possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant
increase in credit risk since the initial recognition, a loss allowance is required for credit losses expected over the remaining
life of the exposure, irrespective of the timing of the default (a lifetime ECL).
Impairments of receivables and assets from contracts
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Trade receivables
that do not 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 Group does not track changes in credit risk, but instead recognises a loss allowance based on a lifetime ECL at each
reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted
for forward-looking factors specific to the debtors and the economic environment. Allowances are recognised using uniform
methodology applicable to the Krka Group and in consideration of the probability or assessed probability of receivable
settlement by the debtors.
Impairment of investments
For investments that include government bonds measured at amortised cost, the Group measures expected credit losses
annually.
Except when a 12-month expected credit loss is recognised, the Group recognises an allowance for credit losses in an
amount equal to the expected credit loss over the entire 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 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", which equals to a rating of Baa2 or above by Moody's or BBB- or above by S&P Global
Ratings.
The Group monitors changes in credit risk by tracking published external credit ratings. The probabilities of default (PD),
both 12-month and over the period of the financial instrument’s life, are based on information submitted by the external
credit rating agency. The loss given default (LGD) ratio, which reflects the assumed recovery rate, is also reported by the
external credit rating agencies.
Non-financial assets
The carrying amounts of the Group’s non-financial assets are reassessed at each reporting date to determine whether
there is any indication of impairment. If such indications exist, the asset’s recoverable amount is assessed.
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 the present value using a pre-tax
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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 upon the changed estimates used to determine the recoverable amount of the asset. An
impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised in the previous
periods.
Share capital
Repurchase of treasury shares
When treasury shares recognised as a part of share equity are repurchased, the amount of the consideration paid,
including directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as
treasury shares and are presented as a deduction from total equity.
Dividends
Dividends are recognised in the Krka Group’s consolidated financial statements in the period in which they are declared
by the Annual General Meeting.
Current employee benefits
Current employee benefit obligations are measured on an undiscounted basis and are expensed as the related service
is provided.
Non-current employee benefits
Provisions for post-employment benefits and other non-current employee benefits
Pursuant to the local legislation of countries where the controlling company and subsidiaries are located, the Krka Group
is liable to pay to its employees’ anniversary bonuses and termination benefits upon retirement. Provisions are set aside
for these obligations.
Provisions are determined by discounting, at the reporting date, the estimated future benefits in respect of retirement
benefits and anniversary bonuses paid to employees in those countries where this legal obligation exists. The obligation
is calculated by estimating the costs of retirement benefits upon retirement and the costs of all expected anniversary
bonuses until retirement. The calculation is performed using the projected unit credit method. Employee benefit costs,
as well as cost of interest, are recognised in profit or loss, whereas restatement of post-employment benefits or unrealised
actuarial profit or loss is recognised in other comprehensive income.
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can
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be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions for disputes
The Group discloses provisions for lawsuits referring to alleged patent infringements. The eligibility of provisions formed
in terms of a favourable or unfavourable outcome of the lawsuit is assessed on an annual basis. The amounts of provisions
are defined on the basis of the noted amount of the indemnification claim, or on the basis of anticipated potential amount,
if the indemnification claim is not yet disclosed.
Revenue from contracts with customers
The Krka Group is engaged in the development, production, marketing and sale of human health products (prescription
pharmaceuticals, non-prescription products), animal health products, and health resort and tourist services. Revenue
from contracts with customers is recognised when control of the goods and services is transferred to the customer at an
amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services
while considering specific terms and conditions of an individual contract.
Transfer of control over those goods and services depends on terms and conditions of the contract. In general, control
is transferred when goods are accepted by the customer or services are rendered. The normal credit term ranges
from 30 to 120 days.
The Krka Group assesses the performance obligations contained in each sales contract. The Group also 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 effects of variable
consideration are considered 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 Group uses the expected
value method to estimate the goods that will not be returned because this method best predicts the amount of variable
consideration to which the Group will be entitled. The requirements of IFRS 15 on constraining estimates of variable
consideration are also applied in order to determine the amount of variable consideration that can be included in the
transaction price. Goods that, based on past experience and business practice in a given environment, are expected to
be returned instead of generating revenue, the Group recognises a refund liability. A right-of-return asset (and
corresponding adjustment to cost of products sold) is also recognised for the right to recover products from a customer.
Bonuses and volume rebates
The Group provides retrospective bonuses and volume rebates to certain customers once the quantity or value of products
or services purchased during the period exceeds a threshold specified in the contract. Rebates are offset against amounts
payable by the customer. To estimate the variable consideration for the expected future rebates, the Group considers the
terms and conditions of the contract, including criteria and elements that provide the basis for the recognition of bonuses
and volume rebates.
For valuation, Krka Group uses the most probable value method or the expected value method. The method chosen, which
best predicts the value of the rebates and volume discounts, is based on the number of thresholds in the contract.
In addition to discounts available to end customers, the Krka Group also grants discounts for public procurement to
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countries, ministries, or insurance companies in individual countries, based on the agreed tender conditions or contractual
provisions and the actual sales orders realised.
Disclosures about the use of estimates and judgements in estimating variable consideration are provided in the Basis of
preparation of the financial statements section.
Significant financing component
In some cases, the Group receives current advances from its customers. Using the practical expedient in IFRS 15.63,
the Group does not adjust the promised amount of consideration for the effects of a significant financing component if it
expects, at contract inception, that the period between the transfer of the promised goods or services to the customer and
when the customer pays for those goods or services will be one year or less.
Contract balances
Contract assets
A contract asset is the right to an amount of consideration in exchange for goods or services transferred to the customer.
If the Group transfers goods or services to a customer before the customer pays consideration or payment is due, a
contract asset is recognised for the earned consideration that is conditional. Once the transaction is completed and the
customer is confirmed, the contract assets are reclassified as trade receivables.
Trade receivables
A receivable represents the Group's right to an amount of consideration that is unconditional, i.e. only the passage of time
is required before payment of consideration is due (refer to the accounting policy ‘Recognition of financial instruments’).
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the goods
or services are transferred to the customer, a contract liability is recognised when the payment is made, or the payment
is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
Right-of-return assets
Right-of-return assets represent the Group's right to recover the goods expected to be returned by customers.
The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods,
including any potential decreases in the value of returned goods. The Group regularly updates the measurement of the
asset recorded for any revisions to its expected level of returns, as well as any additional decreases in the value of the
returned products.
Refund liabilities
A refund liability is the obligation to refund some or all of the consideration received (or receivable from the customer). It is
measured at the amount the Group ultimately expects it will have to return to the customer.
The Group updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end
of each reporting period. Refer to above accounting policy on variable consideration.
It is irrelevant to the Group's assessment of the role it plays in individual customer contracts, as it usually acts as a
principal.
The Group does not normally have long-term sales contracts with customers.
Government grants
Income from government grants is initially recognised when there is reasonable assurance that the grant will be received
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and that the Group will comply with the attached conditions. Income that compensates the realised expences 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.
The Group recognises emission coupons received free of charge from the State within government grants received. The
emission coupons received free of charge are recorded as intangible assets at a value of €1 per emission coupon. Upon
their transfer, the Group reduces intangible assets and recognises other operating income.
Financial income and expenses
Financial income comprises interest income on funds invested, dividend income, gains on the disposal of financial assets,
changes in the fair value of financial assets at fair value through profit or loss, foreign exchange gains and gains on hedging
instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the
effective interest method. Dividend income is recognised on the date that the shareholder's right to receive payment is
established, which in the case of quoted securities is the ex-dividend date.
Financial expenses comprise interest expense on borrowings, foreign exchange losses, changes in the fair value of
financial assets at fair value through profit or loss, impairment losses recognised on financial assets, and losses on hedging
instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective
interest method, except those that are attributable to property, plant and equipment under construction.
Income tax 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.
In 2023, Slovenia adopted the Minimum Tax Act, which introduces a minimum tax into the Slovenian tax-law system,
aimed at ensuring a global minimum taxation of the profits of large international and domestic groups at an effective tax
rate of 15% (the minimum tax rate). The Act was adopted on the basis of EU Directive 2022/2523 on the provision of a
global minimum tax rate for international and large domestic groups in the EU, which was drafted on the basis of the
GLOBE Model Rules prepared by the Organisation for Economic Co-operation and Development (OECD) in October 2021.
The minimum tax rules of the Act are applicable to the Group's financial years starting from 1 January 2024.
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Management has assessed the impact of the global minimum tax on the financial statements of the Krka Group and based
on the assumptions of current tax legislation and similar operating results, estimates that it will not have a material impact
on the financial statements. The Group has subsidiaries in different countries where different tax rates apply. While the
assessment has not yet been finalised, management considers that the most significant exposure to top-up tax would be
in Slovenia, where, under the assumptions set out above, the estimated effective tax rate would be 14%, resulting in a top-
up tax of 1% on the excess profit, which takes into account the reduction for the substantive exclusion of income.
Earnings per share
The Krka Group reports basic earnings per share, which is calculated by dividing the profit or loss attributable to majority
shareholders by the average number of ordinary shares issued during the financial year, whereby treasury shares are
excluded. Diluted earnings per share is equal to basic earnings per share because the Krka Group has not issued any
dilutive or contingently dilutive instruments.
Segment reporting
An operating segment is a distinguishable component of the Group that is engaged in providing products or services within
a particular geographically defined economic environment. Segments are different in terms of risks and returns. The Krka
Group's segment reporting is based on the Group's internal reporting system applied by the controlling company's
management in the decision-making process.
The segments include: the EU (all EU member countries), 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.
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 Group will apply the new and revised standards and interpretations when they become
effective. The 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 clarify that in a transaction involving an associate or joint venture, the extent of gain or loss recognition
depends on whether the assets sold or contributed constitute a business, such that:
• a full gain or loss is recognised when a transaction between an investor and its associate or joint venture involves
the transfer of an asset or assets which constitute a business (whether it is housed in a subsidiary or not), while
• a partial gain or loss is recognised when a transaction between an investor and its associates or joint venture
involves assets that do not constitute a business, even if these assets are housed in a subsidiary.
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.
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Amendments to IAS 1 – Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and
Non-Current Liabilities with Covenants
The amendments are effective for annual periods beginning on or after 1 January 2024 Early application is permitted.
Under existing IAS 1 requirements, companies classify a liability as current when they do not have an unconditional right
to defer settlement for at least 12 months after the reporting date. The amendments, as issued in 2020, has removed the
requirement for a right to be unconditional and instead requires that a right to defer settlement must exist at the reporting
date and have substance (the classification of liabilities is unaffected by management’s intentions or expectations about
whether the company will exercise its right to defer settlement or will choose to settle early).
The amendments, as issued in 2022, further clarify that when the right to defer settlement is subject to a company
complying with conditions (covenants) specified in a loan arrangement, only covenants with which the company must
comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which
the company must comply after the reporting date do not affect a liability’s classification at that date. However, the
amendments require companies to disclose information about these future covenants to help users understand the risk
that those liabilities could become repayable within 12 months after the reporting date. The amendments also clarify how
a company classifies a liability that can be settled in its own shares (e.g. convertible debt). 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 7 – Statement of Cash Flows and IFRS 7 – Financial Instruments: Disclosures: Supplier Finance
Arrangements
Effective for annual periods beginning on or after 1 January 2024. The amendments introduce additional disclosure
requirements for a company to provide information about its supplier finance arrangements that would enable users
(investors) to assess the effects of these arrangements on the company’s liabilities and cash flows, and the company’s
exposure to liquidity risk. The amendments apply to supplier finance arrangements (also referred to as supply chain
finance, payables finance or reverse factoring arrangements) that have all of the following characteristics:
• a finance provider (also referred to as the factor) pays amounts a company (the buyer) owes its suppliers;
• a company agrees to pay under the terms and conditions of the arrangements on the same date or at a later date
than its suppliers are paid;
• the company is provided with extended payment terms or suppliers benefit from early payment terms.
However, the amendments do not apply to arrangements for financing receivables or inventory. The management has
assessed the impact of the amendments and believes they will have no significant impact on the consolidated financial
statements of the Krka Group.
Amendments to IFRS 16 – Leases: Lease Liability in a Sale and Leaseback
Effective for annual periods beginning on or after 1 January 2024 and shall be applied retrospectively. Early application is
permitted. Amendments to IFRS 16 – Leases impact how a seller-lessee accounts for variable lease payments in a sale-
and-leaseback transaction. The amendments introduce a new accounting model for variable payments and will require
seller-lessees to reassess and potentially restate sale-and-leaseback transactions entered into since 2019.
The amendments confirm the following:
• on initial recognition, the seller-lessee includes variable lease payments when it measures a lease liability arising
from a sale-and-leaseback transaction;
• after initial recognition, the seller-lessee applies the general requirements for subsequent accounting of the lease
liability such that it recognises no gain or loss relating to the right of use it retains.
A seller-lessee may adopt different approaches that satisfy the new requirements on subsequent measurement.
These amendments do not change the accounting for leases other than those arising in a sale and leaseback transaction.
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.
2023 Annual Report – Consolidated financial statements of the Krka Group
223
Amendments to IAS 12 – Income taxes: International Tax Reform – Pillar Two Model Rules
Effective for annual periods beginning on or after 1 January 2024. ‘Pillar Two taxes’ are taxes arising from tax laws enacted
or substantively enacted to implement the Pillar Two model rules published by the Organisation for Economic Co-operation
and Development. The Pillar Two model rules aim to ensure that large multinational groups pay taxes at least at the
minimum rate of 15 percent on income arising in each jurisdiction in which they operate. There are three rules that countries
can adopt: the income inclusion rule, the undertaxed profit rule and a qualified domestic minimum top-up tax. They are
often referred to as ‘global minimum top-up tax’ or ‘top-up tax’. The amendments address stakeholders’ concerns about
deferred tax accounting in relation to the new top-up tax under IFRS by providing entities with a temporary mandatory
relief from deferred tax accounting for top-up tax; and requiring entities to provide new disclosures in relation to the top-up
tax and the relief.
Management has assessed the impact of the amendments on the financial statements of the Krka Group and, given the
current tax legislation and similar operating results, does not expect them to have a material impact.
Amendments to IAS 21 – The Effects of Changes in Foreign Exchange Rates: Lack of exchangeability
Effective for annual reporting periods beginning on or after 1 January 2025. Earlier application is permitted. Under IAS 21
The Effects of Changes in Foreign Exchange Rates, a company uses a spot exchange rate when translating a foreign
currency transaction. In some jurisdictions, no spot rate is available because a currency cannot be exchanged into another
currency.
IAS 21 was amended to clarify:
• when a currency is exchangeable into another currency; and
• how a company estimates a spot rate when a currency lacks exchangeability.
The amendments also include additional disclosure requirements to help users to assess the impact of using an estimated
exchange rate on the financial statements. 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.
2023 Annual Report – Consolidated financial statements of the Krka Group
224
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
EU
South-Eastern
Europe
Eastern Europe
Total segment
reporting
Other
Eliminations
Total
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Revenue from sales to
non-group customers
1,001,139
904,135
101,354
93,316
594,092
623,549
1,696,585
1,621,000
109,806
96,453
1,806,391
1,717,453
Revenue from sales to
intra-group customers
422,989
382,540
69,142
60,170
604,886
605,779
1,097,017
1,048,489
30,670
36,933
-1,127,687
-1,085,422
Total revenue
1,424,128
1,286,675
170,496
153,486
1,198,978
1,229,328
2,793,602
2,669,489
140,476
133,386
-1,127,687
-1,085,422
1,806,391
1,717,453
Other operating income
4,502
7,985
481
54
576
416
5,559
8,455
588
742
6,147
9,197
Operating expenses
-871,111
-754,190
-73,142
-64,222
-383,608
-454,408
-1,327,861
-1,272,820
-85,056
-72,619
-1,412,917
-1,345,439
Intra-group operating expenses,
including elimination of profits
-422,990
-382,541
-69,142
-60,170
-604,885
-605,778
-1,097,017
-1,048,489
-30,670
-36,933
1,127,687
1,085,422
0
0
Operating profit
134,529
157,929
28,693
29,148
211,061
169,558
374,283
356,635
25,338
24,576
0
0
399,621
381,211
Interest income
8,804
2,127
12
7
1,100
787
9,916
2,921
1,317
890
11,233
3,811
Intra-group interest income
4,123
995
0
0
0
0
4,123
995
0
0
-4,123
-995
Interest expenses
-335
-1,114
-15
-15
-114
-127
-464
-1,256
-10
-5
-474
-1,261
Intra-group interest expenses
-4,123
-995
0
0
0
0
-4,123
-995
-1
0
4,124
995
Net financial result
13,795
-1,249
255
47
-44,553
46,275
-30,503
45,073
-1,992
6,789
-32,495
51,862
Income tax expense
-19,827
-31,076
-3,163
-5,237
-27,852
-30,101
-50,842
-66,414
-2,552
-2,997
-53,394
-69,411
Net profit
128,497
125,604
25,785
23,958
138,656
185,732
292,938
335,294
20,794
28,368
0
0
313,732
363,662
Investments
123,016
90,600
1,492
579
6,603
14,627
131,111
105,806
821
168
131,932
105,974
Depreciation of property, plant and
equipment
67,146
70,443
2,161
2,073
21,053
21,454
90,360
93,970
3,239
2,964
93,599
96,934
Depreciation of the right-of-use assets
3,045
2,828
115
110
555
660
3,715
3,598
82
87
3,797
3,685
Amortisation of intangible assets
4,229
4,182
348
334
2,306
2,249
6,883
6,765
315
300
7,198
7,065
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
Total assets
2,072,570
2,069,151
71,279
64,802
519,234
463,008
2,663,083
2,596,961
101,208
90,539
2,764,291
2,687,500
Non-current assets exclusive of
deferred tax assets
886,473
922,872
6,670
5,357
81,973
99,916
975,116
1,028,145
36,423
43,110
1,011,539
1,071,255
Total liabilities
309,726
360,495
28,286
15,854
191,753
129,136
529,765
505,485
52,760
43,506
582,525
548,991
2023 Annual Report – Consolidated financial statements of the Krka Group
225
4. Revenue from contracts with customers
Itemisation of revenue from contracts with customers
€ thousand
2023
2022
Revenue from contracts with customers (products)
1,751,273
1,665,990
Revenue from contracts with customers (health resort and tourist services)
47,696
42,552
Revenue from contracts with customers (materials)
2,904
3,988
Total revenue from contracts with customers
1,801,873
1,712,530
Revenue from contracts with customers by region
€ thousand
2023
2022
Region Slovenia
66,081
60,495
Region South-East Europe
249,330
224,523
Region East Europe
593,951
623,377
Region Central Europe
397,079
364,154
Region West Europe
369,624
327,343
Region Overseas Markets
75,208
66,098
Total
1,751,273
1,665,990
We have sold €83,392 thousand of products in 2023 in Ukraine, our fourth largest market (2022: by €95,213 thousand),
which represents 4.6% of Krka Group's total sales.
We have sold €346,751 thousand of products in 2023 In the Russian Federation, which is Krka's largest single market
(2022: by €387,017 thousand), representing 19.3% of Krka's total sales. Demand for our products is adequate.
Revenue from contracts with customers by product groups
€ thousand
2023
2022
Prescription pharmaceuticals
1,469,381
1,390,972
Non-prescription products
177,252
181,977
Animal health products
104,640
93,041
Total
1,751,273
1,665,990
Revenue from contracts with customers of health resort 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 Group recognised assets from contracts with customers
in the amount of €210 thousand (2022: €420 thousand) and liabilities from contracts in the amount of €8,108 thousand
(2022: €10,857 thousand). 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 €154,065 thousand (2022: €146,853 thousand).
2023 Annual Report – Consolidated financial statements of the Krka Group
226
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 resort and tourist services. Revenue from
contracts with customers is recognised when control of the goods and services is transferred to the customer at an amount
that reflects the consideration to which Krka expects to be entitled in exchange for those goods or services, while
considering specific terms and conditions of an individual contract.
Transfer of control and rewards in the sale of products for human use, veterinary products and material depends on terms
and conditions of an individual contract. Generally, it occurs when the customer accepts the goods in accordance with
INCOTERMS 2022. The transfer of risks and rewards in the sale of health resort and tourist services occurs progressively
as the customer acquires and consumes the benefits of the obligation at the same time as the obligation is being 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
2023
2022
Reversal of non-current provisions
310
2,256
Reversal of deferred income
840
1,118
Gains on sale of property, plant and equipment and intangible assets
1,971
1,736
Other operating income
3,026
4,087
Total other operating income
6,147
9,197
Other operating income includes also government grants relating to the curbing of the COVID-19 pandemic in the amount
of €1 thousand (2022: €235 thousand) and emergency State aid to two subsidiaries to mitigate the effects of the energy
crisis caused by the situation in the Russian Federation and Ukraine of €887 thousand (2022: €656 thousand in 2022).
Under the terms of the legal conditions, a pro rata share of the funds received as a result of the increase in energy prices
will have to be repaid if they exceed the amounts of actual electricity consumption. We estimate that actual consumption
in 2023 was in line with the funds received and no repayment will be required.
Group's other operating income include also income from emission coupons obtained free of charge from the State in 2022
and transferred in 2023. See Note 12 – Intangible assets.
Other deferred income reversed relates to income from other government grants received which cover the depreciation
charged on property, plant and equipment in the proportion in which the funds were received.
2023 Annual Report – Consolidated financial statements of the Krka Group
227
6. Costs by nature
€ thousand
2023
2022
Cost of goods and materials
451,274
540,206
Cost of services
263,408
249,574
Employee benefits expense
529,400
469,576
Amortisation and depreciation
104,594
107,684
Net write-offs and allowances for inventories
11,420
20,321
Net impairments and write-offs of receivables
-3,712
1,875
Formation of provisions for lawsuits
15
20
Other operating expenses
41,747
34,923
Total costs
1,398,146
1,424,179
Change in the value of inventories of finished products and work in progress
14,771
-78,740
Total
1,412,917
1,345,439
7. Employee benefits expense
89
€ thousand
2023
2022
Gross wages and salaries and continued pay
410,174
364,441
Social security contributions
29,217
26,368
Pension insurance contributions
55,914
51,187
Payroll tax
773
705
Post-employment benefits and other non-current employee benefits
7,748
3,888
Other employee benefits expense
25,574
22,987
Total employee benefits expense
529,400
469,576
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
2023
2022
Grants and assistance for humanitarian and other purposes
3,166
1,752
Environmental protection expenditures
6,387
6,025
Other taxes and levies
26,214
21,933
Loss on sale and write-offs of property, plant and equipment and intangible assets
1,515
965
Other operating expenses
4,465
4,248
Total other operating expenses
41,747
34,923
Other levies include €21,604 thousand (2022: €18,125 thousand) of various taxes and levies paid on pharmaceuticals and
fees paid to associates in individual foreign countries for pursuing promotional activities.
89
GRI 201-1, 201-3
2023 Annual Report – Consolidated financial statements of the Krka Group
228
9. Financial income and financial expenses
€ thousand
2023
2022
Net foreign exchange gains
0
43,586
Interest income
11,233
3,811
Derivative income
4,277
9,096
– Realised revenue
4,277
8,847
– Fair value change
0
249
Income from other financial instruments
7,245
0
– Income generated
3,220
0
– Change in fair value
4,025
0
Income from dividends
808
702
Other financial income
4
473
Total financial income
23,567
57,668
Net foreign exchange differences
-38,319
0
Interest expenses
-474
-1,261
– Interest paid
-160
-960
– Interest expenses on lease liabilities
-314
-301
Derivative expenses
-4,782
0
– Realised expenses
-389
0
– Change in fair value
-4,393
0
Expenses for other financial instruments
0
–45
– Realised expenses
0
–45
Other financial expenses
-12,487
-4,500
Total financial expenses
-56,062
-5,806
Net financial result
-32,495
51,862
The net financial result in 2023 declined over the previous period by €84,357 thousand mostly on the account of net foreign
exchange differences. In 2023, Krka continued its policy of partial hedging against rouble-related risk and the US dollar
with financial instruments. The most significant impact was the exchange rate of the rouble (final exchange rate
on 31 December 2023 €1 = RUB 99.9723 and on 31 December 2022 €1 = RUB 78.4308).
The income from other financial instruments in the amount of €7,245 thousand represents capital gains on investments in
treasury bills.
The income from investments at amortised cost in the amount of €432 thousand (2022: €702 thousand) is income from
bonds and is shown under interest income. For more information on these investments see Note 14 – Investments.
Detailed information on the risk of changes in foreign exchange rates can be found in Note 29 – Financial Instruments and
Financial Risks.
2023 Annual Report – Consolidated financial statements of the Krka Group
229
10. Income tax expense
Adjustment to the effective tax rate
€ thousand
2023
2022
Current income tax
53,621
79,477
Deferred tax
-227
-10,066
Total income tax
53,394
69,411
Profit before tax
367,126
433,073
Income tax for both years calculated at the rate of 19%
69,754
82,284
Tax on reduced income
28
-3,252
Tax on non-deductible expenses
9,559
4,518
Income tax from tax incentives
-20,939
-19,336
Tax on increase/decrease of costs for taxable purposes
-1,143
2,855
Impact of the changed tax rate from 19% to 22% on deferred taxes
-4,163
0
Effect of different tax rates
1,531
1,631
Other
-1,233
711
Total income tax expense
53,394
69,411
Effective tax rate
14.5%
16.0%
Investments in R&D and investment relief represent the major share of tax incentives.
The impact of the global minimum tax (top-up tax) is disclosed in Significant Accounting Policies – Amendments to
Standards and Interpretations not yet effective (Income Tax: International Tax Reform – Pillar Two Model Rules).
11. Property, plant and equipment
€ thousand
31 Dec 2023
31 Dec 2022
Land
64,368
40,721
Buildings
353,495
356,784
Equipment
292,123
294,308
Property, plant and equipment being acquired
68,666
76,139
Right-of-use assets
11,693
11,384
Total property, plant and equipment
790,345
779,336
In 2023, most of the controlling company's investments were earmarked for renovating the Notol packaging plant in the
amount of €14,713 thousand (2022: €6,712 thousand), the construction of Pavilion 3 in the amount of €13,340 thousand
(2022: €3,389 thousand), and the capacity expansion at the Ljutomer plant in the amount of €12,254 thousand
(2022: €660 thousand). €9,742 thousand were invested in the field of information technology and telecommunications
(2022: €4,999 thousand) and €6,008 thousand (2022: €15,162 thousand) for increasing the capacity of the OTO plant.
Among investments in subsidiaries, the largest amount was €1,842 thousand (2022: €38 thousand) for upgrading facilities
and systems at the Krka Jastrebarsko plant in the Krka Farma subsidiary in Croatia. €1,580 thousand (2022: €13,218
thousand) was earmarked for expanding the production capacity in the Krka-Rus subsidiary in the Russian Federation.
The majority of the right-of-use asset refers to the right of using assets relating to buildings in the amount of €8,194
thousand (2022: €8,033 thousand).
2023 Annual Report – Consolidated financial statements of the Krka Group
230
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 2022*
40,590
859,556
1,242,434
48,833
19,416
2,210,829
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
884,052
1,273,113
76,139
21,814
2,295,839
Balance at 1 Jan 2023
40,721
884,052
1,273,113
76,139
21,814
2,295,839
Additions
0
0
0
122,747
0
122,747
Capitalisations – transfer from PPE
being acquired
23,756
33,401
69,071
-126,228
0
0
Capitalisations – IFRS 16 Leases
0
0
0
0
4,501
4,501
Disposals, impairments, deficit,
surplus
20
-1,126
-35,134
0
-1,100
-37,340
Translation reserve
-129
-14,233
-14,230
-3,992
-394
-32,978
Transfers, reclassifications
0
324
-406
0
0
-82
Balance at 31 Dec 2023
64,368
902,418
1,292,414
68,666
24,821
2,352,687
Accumulated depreciation
Balance at 1 Jan 2022
0
-500,312
-929,207
0
-7,653
-1,437,172
Depreciation
0
-26,874
-70,060
0
-3,685
-100,619
Disposals, impairments, deficit,
surplus
0
1,363
22,946
0
919
25,228
Translation reserve
0
-25
-40
0
0
-65
Transfers, reclassifications
0
-1,420
-2,444
0
-11
-3,875
Balance at 31 Dec 2022
0
-527,268
-978,805
0
-10,430
-1,516,503
Balance at 1 Jan 2023
0
-527,268
-978,805
0
-10,430
-1,516,503
Depreciation
0
-26,817
-66,782
0
-3,797
-97,396
Disposals, deficit, surplus
0
778
35,036
0
909
36,723
Translation reserve
0
-163
244
0
0
81
Transfers, reclassifications
0
4,547
10,016
0
190
14,753
Balance at 31 Dec 2023
0
-548,923
-1,000,291
0
-13,128
-1,562,342
Carrying amount
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
Balance at 1 Jan 2023
40,721
356,784
294,308
76,139
11,384
779,336
Balance at 31 Dec 2023
64,368
353,495
292,123
68,666
11,693
790,345
* Reclassified from cost to valuation allowance due to the transfer of impairments of fixed assets previously reported under other current liabilities –
other. The value of the reclassification amounts to €2 thousand for buildings and €638 thousand for equipment
No capitalised borrowing costs relate to the items of property, plant and equipment in 2023.
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.
2023 Annual Report – Consolidated financial statements of the Krka Group
231
The movements and lease liabilities recognised in profit or loss are presented in Notes 27 – Leases and 29 – Financial
Instruments and Risk.
Impairment testing of the cash-generating unit Russian Federation
The 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 CGU Russian
Federation is €67,618 thousand (2022: €86,527 thousand).
Due to the situation in Ukraine and the Russian Federation and the consequent higher level of uncertainty in these markets,
the weighted average cost of capital (discount rate) remains at a higher level. Consequently, management has assessed
the recoverable amount of the assets allocated to the CGU Russian Federation.
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 five-year financial plans of the CGU Russian Federation were used, which assume
a growth of earnings before interest, taxes, depreciation and amortisation of 6.3% (a five-year average growth of 6.1%
was projected for 2022). Business forecasts are based on past performance and a reasonable expectation of future
performance. A discount rate of 15.3% was applied (14.0% in 2022 for the 5-year forecast and 12.1% for the residual
value), which takes into account the valuation guidelines and was calculated on the basis of publicly available data
necessary for its calculation and available at the valuation date. A free cash flow growth rate of 4.0% p.a. in the residual
value (the same in 2022) was taken into account, based on publicly available long-term inflation estimates in the Russian
Federation.
The Group's current strategy does not foresee any sale of production capacity in the Russian Federation. Projections used
in the impairment test are prepared on a going concern basis with an indefinite useful life.
Based on the impairment review performed on the CGU Russian Federation, it was concluded that there was no need for
impairment.
12. Intangible assets
€ thousand
31 Dec 2023
31 Dec 2022
Goodwill
42,644
42,644
Trademark
33,176
34,047
Software
15,556
14,685
Other intangible assets
7,592
7,468
– Long-term deferred operating costs
252
715
– Development-related projects
4,478
5,738
– Emission coupons
2,862
1,015
Intangible assets being acquired
3,380
3,706
Total intangible assets
102,348
102,550
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 (€33,074 thousand).
The Group recognises emission coupons acquired free of charge from the State and purchased on the market as other
intangible assets. In 2023, the Group acquired 50,736 emission coupons, whereof 9,736 were free emission coupons
(2022: 9,736) to be transferred to the State in 2024 and 41,000 were purchased on the market at a value of €3,206
thousand. In 2023, it transferred 27,476 emission coupons, whereof 9,736 were acquired free of charge and 17,740 were
purchase on the market at the value of €1,359 thousand. The transferred emission coupons were acquired in 2022 and
2023 and the FIFO method was applied for the transfer of the coupons. As at 31 December 2023, the Group had 46,116
emission coupons in the total amount of €2,862 thousand (22,856 emission coupons with a value of €1,015 thousand as
2023 Annual Report – Consolidated financial statements of the Krka Group
232
at 31 December 2022). The Group transfers more emission coupons during the year than it receives free of charge from
the State and is therefore considered a net contributor.
Movement of intangible assets (IA)
€ thousand
Goodwill
Trademark
Concessions,
trademarks
and licences
Other IA
IA being
acquired
Total
Purchase cost
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
Balance at 1 Jan 2023
42,644
42,629
79,125
64,592
3,706
232,696
Additions
0
0
0
9,185
9,185
Transfer from IA being acquired
0
0
5,524
3,385
-8,909
0
Disposals, deficit, surplus
0
0
-3,063
-5,787
-596
-9,446
Transfers, reclassifications
0
0
841
-843
0
-2
Translation reserve
0
0
-38
-422
-6
-466
Balance at 31 Dec 2023
42,644
42,629
82,389
60,925
3,380
231,967
Accumulated amortisation
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
Balance at 1 Jan 2023
0
-8,582
-64,440
-57,124
0
-130,146
Amortisation
0
-871
-4,659
-1,668
0
-7,198
Disposals, deficit, surplus
0
0
3,059
4,272
0
7,331
Transfers, reclassifications
0
0
-821
825
0
4
Translation reserve
0
0
28
362
0
390
Balance at 31 Dec 2023
0
-9,453
-66,833
-53,333
0
-129,619
Carrying amount
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
Balance at 1 Jan 2023
42,644
34,047
14,685
7,468
3,706
102,550
Balance at 31 Dec 2023
42,644
33,176
15,556
7,592
3,380
102,348
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 €11,288 thousand and
to CGU Krka (controlling company) in the amount of €30,989 thousand.
CGU 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, projecting
the average five-year change in earnings before interest, taxes, amortisation of -0.1% (a five-year average growth rate of
2023 Annual Report – Consolidated financial statements of the Krka Group
233
1.7% was projected for 2022), a discount rate of 7.3% (2022: 6.6%) and an annual growth rate of 2.0% in the residual
value of free cash flow ( 2022: 2.0% as well). The annual growth rate of free cash flow was calculated based on long-term
inflation estimates. The values set for the key assumptions represent management's best estimate of future trends in the
industry and are based on historical data obtained from internal and external sources.
The estimated recoverable amount of the CGU exceeds its carrying amount and therefore there is no need to impair the
CGU.
CGU 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 4.7% (2022: 1.7%), the discount rate of 7.7%
(2022: 8.0%) and the annual growth rate of the free cash flow at residual value of 2.0% (2022: 2.0% as well). The annual
growth rate of free cash flow was determined on the basis of long-term inflation estimates. The values set for the key
assumptions represent management's best estimate of future trends in the industry and are based on historical data
obtained from internal and external sources.
The estimated recoverable amount of the CGU exceeds its carrying amount and therefore there is no need to impair the
CGU.
13. Loans
€ thousand
31 Dec 2023
31 Dec 2022
Non-current loans
70,098
77,539
– Loans to others
40,098
47,539
– Deposits granted to banks
30,000
30,000
Current loans
58,719
6,327
– Portion of non-current loans maturing next year
6,956
4,559
– Loans to others
13
23
– Deposits granted to banks
50,002
2
– Current interest receivables
1,748
1,743
Total loans
128,817
83,866
Non-current loans include a loans by a subsidiary in China for the construction of a production plant for an amount of
€28,659 thousand (2022: €35,335 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.
Non-current loans include a deposit of €30,000 thousand with a maturity of more than one year held at a Slovenian bank
with a high credit rating.
Current deposits to banks include a €50,000 thousand deposit with a maturity of over 90 days and less than one year held
at a foreign bank with a high credit rating. This deposit did not exist at the end of 2022 for it was concluded in 2023.
2023 Annual Report – Consolidated financial statements of the Krka Group
234
14. Investments
€ thousand
31 Dec 2023
31 Dec 2022
Non-current investments
47,674
110,770
– Investments at fair value through OCI (equity instruments)
26,901
15,989
– Investments at amortised cost (debt instruments)
20,773
94,781
Current investments including derivatives
306,769
52,437
– Investments at fair value through profit or loss
236,751
0
– Investments at amortised cost (debt instruments)
70,018
50,697
– Derivatives
0
1,740
Total investments
354,443
163,207
Investments at fair value through other comprehensive income comprised €954 thousand of investments in shares and
interests in companies in Slovenia (2022: €877 thousand), and €25,947 thousand of investments in shares of companies
located abroad (2022: €15,112 thousand).
Non-current investments at amortised cost (debt instruments) amounting to €20,773 thousand are bonds of EU member
countries with a maturity of more than one year and with a credit risk rating that meets the globally understood definition
of investment grade. The credit rating of all bonds falls within the so-called lower medium investment grade.
Current investments at amortised cost (debt instruments) amounting to €70,018 thousand are bonds with a maturity of
less than one year and with a credit risk rating that corresponds to a globally understood definition of investment grade.
35% of these belong to the upper medium investment grade and 65% to the lower medium investment grade.
Investments at fair value through profit or loss represent investments in treasury bills of EU countries with a high credit
rating that meets the globally understood definition of investment grade. 59% of the treasury bill portfolio is of high grade
and 41% belong to the prime investment grade.
Investments at amortised cost include investments in Slovenian government bonds which amounted to €6,033 thousand
(2022: €6,533 thousand), while investments in foreign government bonds amounted to €84,758 thousand (2022: €138,945
thousand). The decrease in financial investments at amortised cost in the amount of €53,311 thousand is due to the
maturity of government bonds. The increase in investments at fair value through profit or loss amounting to €571,826
thousand includes acquisitions of treasury bills and the decrease of €339,100 thousand includes disposals of treasury bills
due to their maturity.
Movement of investments
€ thousand
Financial assets
at fair value through
OCI
Investments
at amortised cost
Investments
at fair value through
profit or loss
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
Balance at 1 Jan 2023
15,989
145,478
0
Increase
0
2,103
571,826
Decrease
0
-53,311
-339,100
Foreign exchange differences
0
-3,479
0
Adjustment to market value
10,912
/
4,025
Balance at 31 Dec 2023
26,901
90,791
236,751
2023 Annual Report – Consolidated financial statements of the Krka Group
235
Increases in financial assets comprise new acquisitions and imputed interest, while decreases comprise coupons received,
imputed interest and disposals due to the investments’ maturity. Adjustments of non-current investments at fair value
through OCI were recognised in other comprehensive income in the amount of €10,912 thousand (2022: €128 thousand).
Exchange differences on investments at amortised cost of -€3,479 thousand (2022: €3,651 thousand) are recognised in
financial expenses.
15. Deferred tax assets and deferred tax liabilities
€ thousand
Assets
Labilities
2023
2022
2023
2022
Investments, property, plant and equipment and intangible assets
340
332
11,544
11,925
Investments at fair value through OCI
1,978
1,708
5,284
2,490
Inventories
29,139
34,540
0
0
Receivables
11,376
11,766
145
0
Dividends
1,800
33
0
0
Provisions for post-employment benefits and other non-current
employee benefits
9,117
8,704
0
0
Transfer of tax loss
225
344
0
0
Total
53,975
57,427
16,973
14,415
Offsetting
-6,247
-3,657
-6,247
-3,657
Net
47,728
53,770
10,726
10,758
€ thousand
Balance
at 1 Jan
2022
Recognised
in income
statement
Translation
reserve
Recognised
in OCI
Balance
at 31 Dec
2022
Recognised
in income
statement
Translation
reserve
Recognised
in OCI
Balance
at 31 Dec
2023
Investments, property,
plant and equipment
and intangible assets
-11,949
417
-61
0
-11,593
286
103
0
-11,204
Financial assets at fair
value through OCI
-739
-19
0
-24
-782
270
0
-2,794
-3,306
Inventories
24,415
10,218
-93
0
34,540
-3,862
-1,539
0
29,139
Receivables
10,242
967
557
0
11,766
1,582
-2,117
0
11,231
Dividends
19
14
0
0
33
1,767
0
0
1,800
Provisions for post-
employment
benefits and other
non-current
employee
benefits
13,398
-1,300
-1
-3,393
8,704
303
11
99
9,117
Transfer of tax loss
575
-231
0
0
344
-119
0
0
225
Total
35,961
10,066
402
-3,417
43,012
227
-3,542
-2,695
37,002
No unrecognised deferred tax on account of tax losses of subsidiaries existed in 2023 (2022: €484 thousand). The
unrecognised deferred tax liability for unpaid dividends from subsidiaries is recorded at €18,552 thousand (2022: €13,675
thousand).
The revised tax rate in Slovenia, which has changed from 19% to 22%, is used to recalculate deferred taxes. The impact
of the change amounts to €1,398 thousand.
2023 Annual Report – Consolidated financial statements of the Krka Group
236
16. Inventories
€ thousand
31 Dec 2023
31 Dec 2022
Materials
265,019
230,094
Work in progress
128,610
125,925
Finished products
177,247
169,510
Merchandise
11,476
8,297
Advances for inventories
22,269
19,506
Total inventories
604,621
553,332
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 €11,420 thousand (2022: €20,321 thousand).
The Group does not pledge inventories as collateral.
17. Trade and other receivables
€ thousand
31 Dec 2023
31 Dec 2022
Current trade receivables
509,070
402,730
Current receivables due from others
51,364
27,728
Total trade and other receivables
560,434
430,458
The net amount of the write-offs and impairment of receivables disclosed in operating expenses amounted in 2023 to
-€3,712 thousand (2022: €1,875 thousand).
95.3% of trade receivables were insured with a credit insurer, by taking into account 82.0% of the deductible (96.1% of
trade receivables were insured as at 31 December 2022, by taking into account 86.7% of the deductible).
Current trade receivables
€ thousand
Gross value
Allowances
for receivables
Net value
at 31 Dec 2023
Net values
at31 Dec 2022
Trade receivables due from domestic customers
12,615
30
12,585
11,566
Trade receivables due from foreign customers
532,722
35,607
497,115
393,660
Deferred income from contracts with foreign customers
-630
0
-630
-2,496
Total current trade receivables
544,707
35,637
509,070
402,730
Current receivables due from others
Current receivables due from others relate primarily to receivables due from the State. Income tax credits amounted to
€22,885 thousand (2022: €1,644 thousand), while the remaining €18,486 thousand relate to other receivables due by the
State (2022: €16,570 thousand).
Advances for services were recorded at €2,025 thousand (2022: €2,304 thousand) at the year-end of 2023.
2023 Annual Report – Consolidated financial statements of the Krka Group
237
18. Cash and cash equivalents
€ thousand
31 Dec 2023
31 Dec 2022
Cash in hand
71
64
Bank balances
173,940
518,870
Total cash and cash equivalents
174,011
518,934
Bank balances includes a deposit in the amount of €118,000 thousand and a maturity of up to 90 days (2022: €223,000
thousand).
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 29 Annual General Meeting on 6 July 2023, the Company’s 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 resolution’s adoption.
Krka is allowed to acquire treasury shares on the regulated securities market at respective market prices at any time. It
may also acquire treasury shares outside the regulated securities market. When purchasing treasury shares on the
regulated market, the purchase price must not be lower than the book value based on the respective latest publicly
published audited financial statements of the Krka Group. Furthermore, the purchase price of the shares must not exceed
25-fold the earnings per share held by the majority stakeholders as calculated based on the latest publicly published
audited consolidated income statement of the Krka Group.
Pursuant to Paragraphs 3 and 4, Article 381 of the 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 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
Repurchases in 2023
130,117
107.00
13,923
Balance at 31 Dec 2023
1,915,966
138,489
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 2023 in terms of days are outlined in Note 35 – Repurchase of treasury shares to
the financial statements of Krka, d. d., Novo mesto.
2023 Annual Report – Consolidated financial statements of the Krka Group
238
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 €138,489 thousand and increased by
€13,923 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 2023 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 2023, 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
2023 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 decreased by €3,181 thousand and amounted to -€511 thousand
as at 31 December 2023. The cumulative change is due to the increase in the fair value of financial assets through OCI
(equity instruments) by €10,912 thousand, to the increase of translation reserve when restating post-employment effects
by €35 thousand, to a decrease for the impact of deferred taxes amounting to €2,695 thousand and to the decrease due
to the restatement of post-employment benefits by €11,433 thousand.
Compared to the previous period, the value of the translation reserve decreased by €48,451 thousand and amounted to
-€ 134,370 thousand as at 31 December 2023. The decrease occurred as a result of translating individual items in financial
statements of foreign operations into the reporting currency.
Retained earnings
Retained earnings grew based on the majority shareholder's profit of €313,946 thousand. On the other hand, they declined
as a result of allocation of accumulated profit to dividend payment amounting to €204,378 thousand in accordance with
the resolution adopted by the 29th Annual General Meeting on 6 July 2023; an additional formation of reserves for treasury
shares in total of €13,923 thousand on account of the share repurchase by the controlling company in 2023 and changes
in provisions for termination benefits amounting to €574 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 €1 thousand of dividends paid in respect of previous
periods (2022: €19 thousand).
Dividend per share
In 2023, the declared gross dividend per share was €6.60 (2022: €5.63).
2023 Annual Report – Consolidated financial statements of the Krka Group
239
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 2023, the shareholders increased the share capital of the company in the amount of €3,303 thousand,
in proportion to their respective shareholdings.
€ thousand
2023
2022
Non-controlling interest
40.0%
40.0%
Non-current assets
33,573
40,521
Current assets
20,385
20,626
Non-current liabilities
-238
0
Current liabilities
-4,443
-11,416
Net assets
49,277
49,731
Net assets attributable to the non-controlling interest
19,711
19,893
Revenue
21,337
29,634
Net profit
-534
915
Other comprehensive income
0
0
Total comprehensive income
-534
915
Net profit, attributable to the non-controlling interest
-214
366
Other comprehensive income, attributable to the non-controlling interest
-1,289
-505
20. Earnings per share
Basic earnings per share amounted to €10.14 in 2023 and declined by 13% over the previous year, when it amounted to
€11.69. The calculation of earnings per share took into account the net profit for the period attributable to the controlling
interests in the amount of €313,946 thousand (2022: €363,296 thousand). The weighted average number of shares was
accounted for in the calculation for both years i.e. 30,954,055 shares for 2023, and 31,070,960 shares for 2022. 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.
21. Provisions
Movement of provisions in 2023
€ thousand
Balance
at 31 Dec 2022
Formation
Utilisation
Reversal
Translation
reserve
Balance
at 31 Dec 2023
Provisions for lawsuits
10,597
0
-1
-14
0
10,582
Provisions for post-
employment benefits
79,750
19,693
-4,448
-744
31
94,282
Provisions for other non-
current employee benefits
16,209
4,408
-1,415
-216
18
19,004
Other provisions
679
560
-620
-89
0
530
Total provisions
107,235
24,661
-6,484
-1,063
49
124,398
2023 Annual Report – Consolidated financial statements of the Krka Group
240
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
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.
90
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.
Krka and its subsidiaries were in 2023 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 €1,708 thousand. The Krka Group
has formed provisions of €582 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 Krka company, an
annual discount rate of 4.07% is used, which is the yield on 10-year Eurozone high quality corporate bonds at the
end of November 2023 (2022: 3.91%), for subsidiaries different annual discount rates are used, ranging between
1.82% and 6.69% (2022: from 3.14% and 6.75%);
• 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;
• long-term increase in salaries by 2.5% (2022: 2.0%) for Krka, whereas for subsidiaries from 1.0% and 3.5% (2022:
1.5% to 4.0%).
90
GRI 206-1
2023 Annual Report – Consolidated financial statements of the Krka Group
241
Liabilities for post-employment benefits
€ thousand
2023
2022
Balance at 1 January
79,750
104,429
Current service costs (CSC)
4,683
5,824
Interest cost (IC)
3,113
1,300
Post-employment benefits paid
-4,501
-3,897
Staff departures (reversal)
-735
-1,807
Actuarial surplus/deficit, whereof:
11,972
-26,099
– Change in financial assumptions
2,552
-28,492
– Experience
9,420
2,393
Balance at 31 December
94,282
79,750
Sensitivity analysis
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)
-6,009
6,606
6,677
-6,125
22. Deferred income
91
€ thousand
Balance at
31 Dec 2022
New deferred
income
received
Reversal of
deferred
income
Balance at
31 Dec 2023
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
843
0
-156
687
Grants received from the budget for the Dolenjske and Šmarješke
Toplice health resort and Golf Grad Otočec
3,231
288
-375
3,144
Grants received from the European Regional Development Fund
(Farma GRS)
1,855
0
-288
1,567
Subsidy for acquisition of electric drive vehicles
2
0
-1
1
Property, plant and equipment received free of charge
13
8
-7
14
Emission coupons
10
10
-10
10
Subsidy for the purchase of joinery
92
0
-2
90
Subsidy for acquisition of other equipment
2
0
-1
1
Subsidy to subsidise increased gas prices
0
33
0
33
Subsidy for implementing preventive measures to reduce injuries in
the undertaking
0
9
-9
0
Total deferred income
6,048
348
-849
5,547
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.
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 realised expenses.
91
GRI 201-4
2023 Annual Report – Consolidated financial statements of the Krka Group
242
23. Trade payables
€ thousand
31 Dec 2023
31 Dec 2022
Current trade payables
153,762
140,837
Payables to domestic suppliers
57,459
55,799
Payables to foreign suppliers
96,303
85,038
Total trade payables
153,762
140,837
24. Current contract liabilities
€ thousand
31 Dec 2023
31 Dec 2022
Refund liabilities
154,065
146,853
– Bonuses and volume rebates
152,347
145,924
– Rights of return
1,718
929
Contract liabilities
8,108
10,857
– Contract liabilities – deferred income
1,381
1,290
– Contract liabilities – advances from other customers
6,727
9,567
Total current contract liabilities
162,173
157,710
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. Bonuses and volume
rebates reduce revenue (generated sales) in the year to which they relate.
25. Other current liabilities
€ thousand
31 Dec 2023
31 Dec 2022
Payables to employees – gross salaries, other receipts and charges
88,803
69,812
Derivatives
2,653
0
Other
13,504
16,556
Total other current liabilities
104,960
86,368
The item ‘Other’ also includes current liabilities to the State on account of VAT payable in the amount of €6,657 thousand
(2022: €10,557 thousand) and other current liabilities to the State totalling to €4,786 thousand (2022: €4,268 thousand).
26. Contingent liabilities and commitments
€ thousand
31 Dec 2023
31 Dec 2022
Guarantees issued
17,823
17,291
Other
1,417
1,935
Total contingent liabilities
19,240
19,226
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. Both guarantees are valid until cancelled.
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 2023 to €76,482 thousand (2022:
€82,801 thousand).
2023 Annual Report – Consolidated financial statements of the Krka Group
243
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 Krka Group applied a practical
expedient provided by the Standard.
The carrying amounts of lease liabilities included under interest-bearing loans and borrowings and the
movements during the period
€ thousand
Carrying amounts of lease liabilities under
interest-bearing loans and borrowings and
movements during the period
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
Balance at 1 Jan 2023
11,841
Increase/Decrease
4,106
Interest
314
Lease payments
-4,184
Translation reserve
-78
Balance at 31 Dec 2023
11,999
– Current lease liabilities
3,452
– Non-current lease liabilities
8,547
The maturity analysis of lease liabilities is disclosed in Note 29 – Financial instruments and financial risks.
Amounts recognised in the income statement
€ thousand
2023
2022
Depreciation of right-of-use assets
3,797
3,685
Interest expenses on lease liabilities
314
301
Expenses relating to current leases
1,310
1,134
Total amount recognised in income statement
5,421
5,120
2023 Annual Report – Consolidated financial statements of the Krka Group
244
28. Financial liabilities
Movement of financial liabilities in 2023
€ thousand
Balance
at 31 Dec 2022
Monetary
changes
Non-monetary changes
Balance
at 31 Dec 2023
Additions/
disposals
Other
Dividends
1,303
-204,379
204,378
0
1,302
Leases
11,841
-4,184
4,028
314
11,999
Total
13,144
-208,563
208,406
314
13,301
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
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
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 700 of such customers at the end of 2023, they accounted for more than 95%
of total trade receivables. Receivables due from small customers accounted for less than 5% of total trade receivables.
Control over small customers is decentralised in the sales network and under the constant supervision of the controlling
company.
Credit control is a two-step process. The first step involves assessing the credit risk for each customer, determining
hedging instruments, and assigning relevant credit limits. We assess each new customer and review the credit ratings of
all customers twice a year. Each credit rating includes many different financial and non-financial indicators, which fall into
four categories (assessment of the profitability, payment habits and payment discipline of the customer, assessment of
the customer's financial statements, qualitative assessment of sales staff and country risk assessment), 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.
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
2023 Annual Report – Consolidated financial statements of the Krka Group
245
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.
A complex credit risk situation in 2023 derived from the tense situation in Ukraine, the Russian Federation, and Belarus.
These markets were at our focal point. We continued with our trade receivable management activities. The credit risk
management balance was favourable in 2023. At the end of 2023, the value of trade receivables increased by 26%
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 was lower than the amount of the reversed
allowance. Therefore, net impairments and write-offs of receivables had a positive impact on the Krka Group’s bottom line
in 2023.
Credit risk exposure
The carrying amount of financial assets represents the largest exposure to credit risk as illustrated below:
€ thousand
Notes
31 Dec 2023
31 Dec 2022
Loans
13
128,817
83,866
Investments at fair value through profit or loss
14
236,751
0
Investments at amortised cost (debt instruments)
14
90,791
145,478
Trade receivables
17
509,070
402,730
Cash and cash equivalents
18
174,011
518,934
Total
1,139,440
1,151,008
As for the financial assets exposed to credit risk, the loans, investments, trade receivables, as well as cash and cash
equivalents 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 and a €50,000 thousand deposit with a maturity of over 90 days and less than a year with a high credit rating foreign
bank. The loan in the amount of €28,695 thousand for production facilities in China and housing loans for Krka employees
represent a limited credit risk for the Krka Group.
Investments at fair value through profit or loss represent investments in treasury bills of Western European EU member
countries with a high credit rating (P-1 by Moody's).
Investments at amortised cost (debt instruments) represent investments in non-current and current bonds of EU countries.
They are classified as financial instruments with low credit risk because their credit rating is equivalent to the globally
understood definition of 'investment grade', which equals a credit rating of Baa2 or above by Moody's or BBB- or above
by S&P Global Ratings.
Group's cash and cash equivalents are represented by bank balances and deposits with a maturity of less than 90 days
with banks in the EU with a high credit rating (P-1 by Moody's).
2023 Annual Report – Consolidated financial statements of the Krka Group
246
Loans by region
€ thousand
31 Dec 2023
31 Dec 2022
Region Slovenia
43,854
43,817
Region South-East Europe
85
107
Region East Europe
137
163
Region Central Europe
175
199
Region West Europe
50,197
381
Region Overseas Markets
34,369
39,199
Total
128,817
83,866
Trade receivables by region
€ thousand
31 Dec 2023
31 Dec 2022
Region Slovenia
12,615
11,568
Region South-East Europe
97,211
78,859
Region East Europe
212,160
143,635
Region Central Europe
86,279
72,534
Region West Europe
95,266
90,545
Region Overseas Markets
5,539
5,589
Total
509,070
402,730
As at 31 December 2023, €3,037 thousand of receivables were outstanding from Ukrainian customers (2022:
€132 thousand).
The value of receivables from Russian customers as at 31 December 2023 amounted to €184,029 thousand
(2022: €120,137 thousand).
Age analysis of loans as at the reporting date
€ thousand
Gross value at
31 Dec 2023
Allowance at
31 Dec 2023
Gross value at
31 Dec 2022
Allowance at
31 Dec 2022
Not past due
128,810
0
83,861
0
Past due up to 20 days
0
0
-1
0
Past due from 21 to 50 days
2
0
1
0
Past due from 51 to 180 days
1
0
1
0
Past due more than 180 days
4
0
4
0
Total
128,817
0
83,866
0
Age analysis of trade receivables as at the reporting date
€ thousand
Gross value at
31 Dec 2023
Allowance at
31 Dec 2023
Net value at
31 Dec 2023
Gross value at
31 Dec 2022
Allowance at
31 Dec 2022
Net value at
31 Dec 2022
Not past due
481,775
861
480,914
394,575
685
393,890
Past due up to 20 days
21,574
138
21,436
6,618
45
6,573
Past due from 21 to 50 days
4,050
105
3,945
372
16
356
Past due from 51 to 180 days
1,501
118
1,383
862
58
804
Past due more than 180 days
35,807
34,415
1,392
38,862
37,755
1,107
Total
544,707
35,637
509,070
441,289
38,559
402,730
The Krka Group is extending payment deadlines to certain customers. If payment deadlines to some customers would not
be extended, the receivable maturity structure would be as follows at the reporting date: not past due €438,038 thousand
(2022: €364,673 thousand); past due up to 20 days €44,372 thousand (2022: €21,125 thousand); past
due between 21 and 50 days €21,549 thousand (2022: €10,136 thousand); past due between 51 and 180 days €3,071
thousand (2022: €2,806 thousand); and past due more than 180 days €1,391 thousand (2022: €3,458 thousand).
2023 Annual Report – Consolidated financial statements of the Krka Group
247
Age analysis of receivables due from customers in the Russian Federation as at the reporting date
€ thousand
Gross value at
31 Dec 2023
Allowance at
31 Dec 2023
Net value at
31 Dec 2023
Gross value at
31 Dec 2022
Allowance at
31 Dec 2022
Net value at
31 Dec 2022
Not past due
184,390
370
184,020
120,406
269
120,137
Past due up to 20 days
9
0
9
0
0
0
Total
184,399
370
184,029
120,406
269
120,137
The share of secured receivables in the Russian Federation was 94.9% (2022: 90.9%).
Movement of allowances for trade receivables
€ thousand
2023
2022
Balance at 1 Jan
38,559
37,549
Formation of allowance
879
2,054
Write-off of receivables
-528
-700
Impairment reversal
-4,140
-352
Collected written-off receivables
-496
-1
Effect of exchange rate differences
-72
9
Reallocation of compensations received
1,435
0
Balance at 31 Dec
35,637
38,559
Liquidity risk
Business partners value Krka for its excellent financial discipline and stable cash flows. We settled all financial liabilities
regularly in 2023 as well. 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 €10,050 thousand (in 2022, the Krka Group had agreements with two banks for a total amount of €5,688
thousand). As there were no negative balances on transaction accounts at 31 December 2023, the bank overdraft
remained fully unused.
As at 31 December 2023, Krka Group had an undrawn credit facility of €20,000 thousand (2022: €20,000 thousand as
well).
At the end of 2023, the Krka Group recorded cash and cash equivalents primarily as cash at bank or short-term deposits
with first-class commercial banks. Other current liquid assets were held in short-term treasury bills of western European
countries with first-class credit ratings.
The world’s most important central banks raised the key interest rates in 2023. The Krka Group recorded favourable returns
on cash, cash equivalents, and low-risk liquid investments, leading to higher interest income and income from other
financial instruments.
The Krka Group oversees liquid assets in line with internal investment diversification rules, taking into account factors such
as 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 excess cash is deposited with the controlling company. Excess cash
from all Group companies is transferred to the controlling company’s master account either automatically daily (cash
pooling) or manually through individual bank transfers. This allows for cash management optimisation, currency risk
mitigation, an overview of liquidity of all Group companies, and enhanced security of money transactions.
The Krka Group also reported favourable and stable liquidity ratios at the end of 2023.
2023 Annual Report – Consolidated financial statements of the Krka Group
248
Maturity of financial liabilities
Financial liabilities in terms of maturity are outlined in the tables below.
Maturity of financial liabilities as at 31 December 2023
€ 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
11,999
13,550
2,041
1,907
3,144
5,610
848
Trade payables excluding advances
153,762
153,762
153,762
0
0
0
0
Contract liabilities excluding advances
152,347
152,347
152,347
0
0
0
0
Other liabilities excluding amounts owed to
the State, to employees and advances
8,629
8,629
8,629
0
0
0
0
Total financial liabilities
326,737
328,288
316,779
1,907
3,144
5,610
848
Derivatives
2,653
2,653
2,653
0
0
0
0
Total derivative financial liabilities
2,653
2,653
2,653
0
0
0
0
Total
329,390
330,941
319,432
1,907
3,144
5,610
848
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
Foreign exchange risk
The Krka Group operates in diverse international environments and is exposed to foreign exchange risk in certain sales
and purchase markets.
Currency exposure arises from the difference in the value of assets and liabilities in a particular currency in the financial
position statement of the Group and from differences between operating income and expenses generated in individual
currencies.
The key accounting categories composing a currency position are trade receivables, trade payables, liquid financial assets
in foreign currencies, derivatives for currency risk hedging, financing of subsidiaries ensured by the controlling company
and recorded purchase orders.
At the end of 2023, the Russian rouble held the largest share of Krka's currency position at 45%. The position in roubles
has increased over the beginning of 2023. A key reason for this is the limited possibility to use derivatives to hedge rouble-
related risk. The rouble position arises from receivables from customers on the Russian market and partly from financing
provided by the controlling to subsidiaries in the Russian Federation.
The Russian rouble accounted for the major, 45%, share in the currency position of the Krka Group at the end of 2023.
The rouble’s currency position strengthened compared to the beginning of the year. The primary reason for this was a
2023 Annual Report – Consolidated financial statements of the Krka Group
249
limited possibility for hedging the rouble with derivative financial instruments. The position in the rouble 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 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 in 2023.
Unlike with other currencies, exposure to the US dollar arises from a surplus of liabilities over assets from regular business
operations, or in other words, the currency position is short. Exposure to the US dollar arises primarily from purchasing
raw and other materials. Considering liquid financial assets in US dollars and dollar forward contracts that together offset
the short financial position from operations, the 2023 year-end exposure to US dollars accounted for 7% of total Krka
Group currency exposure.
The exposure to the Romanian leu, accounting for 15% of the currency position at the end of 2023, arises from trade
receivables accrued due to extended payment terms in Romania. Exposure to the Polish zloty resulted from trade
receivables and manufacturing facilities held by the Group in Poland and accounted for 14% 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 19% of the Krka Group currency position.
The different dynamics of consumer price index in certain important Krka’s markets and various measures that monetary
authorities took against the rise in prices enhanced the volatility of important currency pairs in 2023.
The European Central Bank (ECB) aggressively hiked the key interest rate in the first half of 2023, then gradually slowed
the hike in the middle of the year, concluding its rate-hiking cycle at the end of the year. The US Federal Reserve adopted
a similar approach. The central banks of Poland, Hungary, Czechia, and Romania, which raised their interest rates already
in 2022 due to high inflation, did not implement any major changes during the year. However, except for the Romanian
central bank, they gradually lowered the key interest rates towards the end of 2023.
The decline in the rouble’s value started in the last quarter of 2022 already and continued until the end of the first half
of 2023. The downward trend was primarily driven by a reduced trade surplus, which resulted in rising inflation on the back
of relatively stable economic activity. Monetary authorities moderated the inflation and depreciation of the rouble in the
second half of the year with several key interest rate hikes and other measures to protect the value of domestic currency.
The value of the Russian rouble denominated in the euro dropped by 21.5% from the beginning to the end of the year and
was, on average, 20.6% lower than in 2022.
The value of the US dollar denominated in the euro declined by 3.5% over the course of 2023 and was, on average,
2.6% lower than the previous year. The euro/US dollar currency pair fluctuated between 1.05 and 1.13 in 2023. The impact
of the US dollar fluctuations on the Krka Group result was offset using financial instruments.
In 2023, the value of the Ukrainian hryvnia continued to be affected by the Russian invasion and uncertainty regarding the
future economic situation in the country.
For the majority of the year, the value of the Polish zloty experienced a gradual strengthening, with further increases
occurring after the parliamentary elections at the end of September. Over the course of 2023, the value of the zloty
increased by 7.9% and the average value was 3.2% higher than in 2022.
Throughout 2023, the Romanian leu remained highly stable. By mid-2023, the long-term trend of the Czech koruna’s
gradual appreciation against the euro shifted to a slow depreciation. Additionally, the Hungarian forint exhibited less
volatility in 2023 compared to 2022.
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.
2023 Annual Report – Consolidated financial statements of the Krka Group
250
In 2023, we continued to hedge the US dollar with financial instruments. We used natural hedging to mitigate the risk
exposure to the Russian rouble as there were no suitable financial instruments on the banking market. Due to the declining
value of the Russian rouble denominated in the euro, we generated net foreign exchange losses, primarily in the first half
of 2023.
The increasing exposure from operations and the favourable interest rate differential between the euro and the US dollar
for Krka are the key reasons why we continued to hedge part of our US dollar exposure with financial instruments in 2023.
To hedge the risk of changes in the currency parity between the euro and the US dollar, forward contracts with a principal
amount of $75,000 thousand and a maturity of less than three months were open at the end of 2023.
Exposure to the risk of foreign exchange rate fluctuations
€ thousand
31 Dec 2023
EUR
RUB
PLN
USD
RON
Loans
94,116
51
169
0
22
Trade receivables
135,047
198,075
59,091
11,100
52,899
Cash and cash equivalents
134,641
7,573
775
5,447
2,838
Current trade payables
-127,456
-150
-45
-11,987
-483
Financial position exposure (net)
236,348
205,549
59,991
4,560
55,276
* EUR is the functional currency and does not represent exposure to foreign currency risk.
€ 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.
Significant exchange rates
Average exchange rate*
Final exchange rate*
2023
2022
2023
2022
RUB
92.49
73.43
99.97
78.43
PLN
4.54
4.69
4.34
4.68
USD
1.08
1.05
1.11
1.07
RON
4.95
4.93
4.98
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 2023 or 31 December 2022 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 except for the exchange rate, 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.
2023 Annual Report – Consolidated financial statements of the Krka Group
251
Impact on profit or loss before tax
2023
2022
Currency fluctuations
+1%
-1%
+1%
-1%
RUB
2,055
-2,055
1,635
-1,635
PLN
600
-600
511
-511
USD
46
-46
37
-37
RON
553
-553
471
-471
Any additional 1% increase/decrease of the euro exchange rate in respect of currencies stated above, would increase or
decrease the profit or loss before tax in the above-stated amounts.
Interest rate risk
Interest rate risk is the risk of losses that result from a change in interest rates and is related to Krka’s non-current
borrowings and investments.
The interest rate risk with current borrowings and current investments is managed as part of the Group’s liquidity risk.
The Krka Group had no non-current borrowings in 2023.
Exposure to interest rate risk
€ thousand
31 Dec 2023
31 Dec 2022
Financial instruments at a fixed rate of interest
215,069
485,123
Financial assets
215,069
485,123
Financial liabilities
0
0
Financial instruments at a variable rate of interest
30,000
30,000
Financial assets
30,000
30,000
Financial liabilities
0
0
Cash flow sensitivity analysis for variable interest rate instruments
A 100 basis-point increase in the variable interest rate for 2023 would increase the profit or loss by €300 thousand (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 2022 profit by €300 thousand (a decrease of the interest rate
by 100 basis points would decrease the profit or loss by €300 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 managing the Group's capital is to ensure a high credit rating and adequate funding ratios so that
the Group can adequately develop its business and 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 Group’s approach to capital management in 2023 or 2022.
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, operating liabilities, current liabilities from contracts with customers
and other current payables less cash and cash equivalents.
2023 Annual Report – Consolidated financial statements of the Krka Group
252
Financial leverage ratio
€ thousand
31 Dec 2023
31 Dec 2022
Operating liabilities
153,762
140,837
Current liabilities from contracts with customers
162,173
157,710
Other current payables
104,960
86,368
Cash and cash equivalents
174,011
518,934
Net indebtedness
246,884
-134,019
Equity
2,181,766
2,138,509
Equity and net indebtedness
2,428,650
2,004,490
Financial leverage (debt/equity) ratio
10.2%
-6.7%
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 2023
31 Dec 2022
Carrying amount
Fair value
Carrying amount
Fair value
Non-current financial assets
Loans
70,098
77,539
Investments at fair value through OCI
(equity instruments)
26,901
26,901
15,989
15,989
Investments at amortised cost (debt instruments)
20,773
94,781
Current financial assets
Loans
58,719
6,327
Investments through profit or loss
236,751
236,751
0
0
Investments at amortised cost (debt instruments)
70,018
50,697
Derivatives
0
0
1,740
1,740
Trade receivables
509,070
402,730
Cash and cash equivalents
174,011
518,934
Non-current financial liabilities
Lease liabilities
-8,547
-8,089
Current financial liabilities
Lease liabilities
-3,452
-3,752
Trade payables excluding advances
-153,762
-140,837
Contract liabilities excluding advances
-152,347
-145,924
Other liabilities excluding amounts owed to the
State, to employees and advances
-8,629
-7,478
Total
839,604
263,652
862,657
17,729
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.
2023 Annual Report – Consolidated financial statements of the Krka Group
253
Fair value of assets
€ thousand
31 Dec 2023
31 Dec 2022
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets at fair value
Investments at fair value through OCI
(equity instruments)
25,514
0
1,387
26,901
14,602
0
1,387
15,989
Investments through profit or loss
236,751
0
0
236,751
0
0
0
0
Derivatives
0
0
0
0
0
0
1,740
1,740
Total assets at fair value
262,265
0
1,387
263,652
14,602
0
3,127
17,729
30. Related party transactions
Data on groups of persons
By the end of 2023, 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 2,847 shares
i.e. 0.0087% of total equity or 0.0092% of voting rights. Directors of subsidiaries held 4,169 shares or 0.0127% of the total
equity or 0.0135% 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 2023
31 Dec 2022
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
0.0729
22,500
0.0686
0.0726
Aleš Rotar
13,915
0.0424
0.0451
13,915
0.0424
0.0449
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
0.1200
37,040
0.1129
0.1195
Members of the Supervisory Board (owner
representatives)
Jože Mermal
0
/
/
0
/
/
Luka Cerar*
0
/
/
0
/
/
Borut Jamnik**
0
/
/
0
/
/
Matej Lahovnik
1,000
0.0030
0.0032
600
0.0018
0.0019
Julijana Kristl
230
0.0007
0.0007
230
0.0007
0.0007
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
500
0.0015
0.0016
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
2,847
0.0087
0.0092
3,347
0.0102
0.0108
Total
39,887
0.1216
0.1292
40,387
0.1232
0.1302
* Member of the Supervisory Board since 7 July 2023
** Member of the Supervisory Board until 6 July 2023
2023 Annual Report – Consolidated financial statements of the Krka Group
254
Treasury shares were eliminated from the calculation of voting rights (1,915,966 treasury shares as at 31 December 2023
and 1,785,849 as at 31 December 2022).
Remuneration paid to groups of persons (gross)
€ thousand
31 Dec 2023
31 Dec 2022
Members of the Management Board in the controlling company
4,317
4,163
Managers of subsidiaries
2,722
2,839
Members of the Supervisory Board in the controlling company
311
274
Members of the Supervisory and Management Boards in subsidiaries
1
1
Total gross remuneration paid to groups of persons
7,351
7,276
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
differ from the remuneration shown in the Report on Remuneration of the Members of the Management Board and
Supervisory Board of the Company for 2023, 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 2023 amounted to €14,533 thousand
(2022: €13,825 thousand).
Remuneration paid to Management Board members in the controlling company in 2023
€ thousand
Salary – fixed part
Salary – variable part
Total
Gross
Net payout
Net fringe
benefits
and other
earnings
Gross
Net
Gross
Net
Jože Colarič
526
191
33
858
335
1,384
559
Aleš Rotar
415
154
29
575
224
990
407
Vinko Zupančič
349
131
26
479
187
828
344
David Bratož
342
129
26
470
184
812
339
Milena Kastelic
209
82
19
94
37
303
138
Total remuneration paid to Members of
the Management Board
1,841
687
133
2,476
967
4,317
1,787
€ thousand
Net fringe benefits and other earnings
Executive
health
insurance
Supplemen-
tary pension
insurance
Anniver-
sary
bonuses
Other
bonuses
Refund of
work-
related
funds
Pay for
annual
leave
Total
Jože Colarič
27.15
2.90
0.00
1.10
0.06
2.15
33.36
Aleš Rotar
19.27
2.90
0.00
3.12
1.10
2.15
28.54
Vinko Zupančič
16.07
2.90
0.00
4.45
0.89
2.15
26.46
David Bratož
16.96
2.90
0.00
2.68
1.09
2.15
25.78
Milena Kastelic
12.34
2.90
0.00
0.08
1.16
2.15
18.63
Total remuneration paid to
Members of the Management
Board
91.79
14.50
0,00
11.43
4.30
10.75
132.77
2023 Annual Report – Consolidated financial statements of the Krka Group
255
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
Supplemen-
tary pension
insurance
Anniver-
sary
bonuses
Other
bonuses
Refund of
work-
related
funds
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
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.
2023 Annual Report – Consolidated financial statements of the Krka Group
256
Remuneration paid to Supervisory Board members in the controlling company in 2023
€ 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
34.35
24.99
1.55
1.12
0.00
0.00
35.90
26.11
Luka Cerar*
16.33
11.88
0.72
0.52
0.52
0.38
17.57
12.78
Borut Jamnik**
14.52
10.55
1.70
1.24
0.00
0.00
16.22
11.79
Matej Lahovnik
31.67
23.04
2.78
2.02
0.94
0.68
35.39
25.74
Julijana Kristl
29.88
21.73
2.55
1.85
0.55
0.40
32.98
23.98
Mojca Osolnik Videmšek
31.06
22.60
2.78
2.02
0.35
0.25
34.19
24.87
Boris Žnidarič
34.49
25.08
3.12
2.27
0.49
0.36
38.10
27.71
Members of the Supervisory
Board (employee representatives)
Franc Šašek
31.67
23.03
3.28
2.38
0.00
0.00
34.95
25.41
Tomaž Sever
29.88
21.73
2.55
1.85
0.52
0.38
32.95
23.96
Mateja Vrečer
29.88
21.73
2.55
1.85
0.00
0.00
32.43
23.58
Total remuneration paid to
Members of the Supervisory
Board
283.73
206.36
23.58
17.12
3.37
2.45
310.68
225.93
* Member of the Supervisory Board since 7 July 2023
** Member of the Supervisory Board until 6 July 2023
Pursuant to a resolution of the 29th Annual General Meeting of the controlling company held on 6 July 2023, the members
of its Supervisory Board receive attendance fees amounting to €360.00 gross per member for their attendance. The
members of the Supervisory Board Committee shall receive an attendance fee for attending a meeting of the Supervisory
Board Committee equal to 80% of the attendance fee for attending a meeting of the Supervisory Board. The attendance
fee for a correspondence meeting corresponds to 80% of the attendance fee otherwise payable. Notwithstanding the
above and irrespective of the number of meetings attended in a financial year, a Supervisory Board member shall be
entitled to payment of attendance fees until its total amount reaches 50% of the basic remuneration of the Supervisory
Board member for performing his/her duties on an annual basis. Notwithstanding the foregoing and irrespective of the
number of attendances at meetings of the Supervisory Board and the committees in each financial year, a Supervisory
Board member who is a member of a committee or Supervisory Board committees shall be entitled to payment of
attendance fees until its total amount reaches 75% of his/her basic remuneration for the performance of his/her duties as
a member of the Supervisory Board on an annual basis.
In addition to the attendance fees, a member of the Supervisory Board receives a basic remuneration for the performance
of his/her duties amounting to €21,000.00 gross per year. The President of the Supervisory Board shall also be entitled to
a payment of 50% of the basic remuneration for the performance of his/her duties as a member of the Supervisory Board,
and the Vice-President or Deputy President of the Supervisory Board shall be entitled to a payment of 10% of the basic
remuneration for the performance of his/her duties as a member of the Supervisory Board. Members of the Supervisory
Board Committee shall receive an additional payment of 25% of the basic remuneration for their duties as a member of
the Supervisory Board. The Chairperson of the Committee shall be entitled to a supplement of 37.5% of the basic
remuneration for the performance of his/her duties as a member of the Supervisory Board. Notwithstanding the above and
irrespective of the number of committees of which he/she is a member or which he/she chairs in any financial year, a
member of an Supervisory Board Committee shall be entitled to additional remuneration for the performance of his/her
duties until the total amount of such remuneration reaches 50% of the basic remuneration for performing the duties of a
member of the Supervisory Board on an annual basis. If the term of office of a member of the Supervisory Board is less
than one financial year, notwithstanding the above and irrespective of the number of committees of which he is a member
or which he chairs, a member of a Supervisory Board committee shall be entitled in each financial year to additional
remuneration for performing his/her duties until the total amount of such additional remuneration reaches 50% of the basic
remuneration for performing his/her duties as an Supervisory Board member in respect of the eligible remuneration for the
period of his/her term of office during the financial year.
2023 Annual Report – Consolidated financial statements of the Krka Group
257
Supervisory Board members are also entitled to an extra payment for special duties, which involve the performance of
unusual duties of above-average complexity over a prolonged period of time, normally lasting at least one month. The
Supervisory Board shall be empowered to decide, 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 special tasks allowance in accordance
with this decision of the Annual General Meeting. The Supervisory Board shall also be empowered to decide on the
payment of additional remuneration to Supervisory Board members for special assignments due to objective
circumstances in the Company. Additional payments for specific tasks shall be admissible only for the time when the
specific tasks are actually carried out. Exceptionally, the Supervisory Board may also decide to do so retrospectively (in
particular in case of special duties due to objective circumstances in the Company), but not more than for the previous
financial year. The additional remuneration that a member may receive in any one year in respect of special duties may
amount to a maximum of 50% of the member's basic remuneration for the performance of his/her duties as a member of
the Supervisory Board (irrespective of the number of special duties). In setting the amount of the additional remuneration,
account shall be taken of the complexity of the special duties and the increase in workload and responsibility involved. The
additional payment shall be calculated on the basis of the time actually spent on the specific task.
The Supervisory Board members shall receive the basic salary, the function allowance and the special duties allowance
in pro rata monthly payments to which they are entitled for as long as they hold office and/or perform the special duties.
The monthly payment shall be one-twelfth of the above annual amounts. In view of the circumstances, the extra payment
for special duties may also be made in a single lump sum when the special duty is completed.
The limitation of the amount of the total amount of the attendance fees and the payment of additional allowances to a
member of the Supervisory Board shall in no way affect the member's duty to actively participate in all meetings of the
Supervisory Board and of the committees’ meetings of which he/she is a member, nor his/her statutory responsibility.
Members of the Supervisory Board are entitled to reimbursement of the travelling and 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
commuting and accommodation on work-related travels). The amount due to the Supervisory Board member under the
above provision is increased by the relevant levies so that the net payment corresponds to the reimbursement of actual
travel expenses. For the purpose of determining the mileage allowance, account shall be taken of the distances between
places published on the AMZS web site. Overnight accommodation expenses may be reimbursed only if the permanent
or temporary residence of the Supervisory Board member or Supervisory Board Committee member is at least 100
kilometres from the place of work, if he/she was unable to return because no public transport was scheduled to run, or for
other objective reasons.
Loans to groups of persons
€ thousand
Balance
Repayments
31 Dec 2023
31 Dec 2022
2023
2022
Members of the Management Board in the
controlling company
0
0
0
0
Managers of subsidiaries
10
26
17
9
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
10
26
17
9
Loans to staff employed under individual employment contracts amounted to €143 thousand at 31 December 2023 (2022:
€152 thousand). In 2023, repayments of loans by staff employed under individual employment contracts reached €58
thousand (2022: €27 thousand).
2023 Annual Report – Consolidated financial statements of the Krka Group
258
31. Profile of the Krka Group
Ownership
share
Value of share
capital
at 31 Dec 2023
(in thousand of
local currency)
Value of share
capital
at 31 Dec 2023
(€ thousand)
Headcount
at 31 Dec
2023
Headcount
at 31 Dec
2022
Controlling company
KRKA, d. d., Novo mesto
100%
54,732 EUR
54,732
6,509
6,320
Subsidiaries
TERME KRKA, d. o. o., Novo mesto, Slovenia
100%
14,753 EUR
14,753
626
592
KRKA-FARMA d.o.o., Zagreb, Croatia
100%
18,983 EUR
18,983
210
204
KRKA ROMANIA S.R.L., Bucharest, Romania
100%
37 RON
7
159
160
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
100%
65 RSD
1
99
93
KRKA-FARMA DOOEL Skopje, Skopje, North
Macedonia
100%
49,021 MKD
796
46
45
KRKA Bulgaria EOOD, Sofia, Bulgaria
100%
20 BGN
10
75
74
KRKA HELLAS E.P.E., Athens, Greece
100%
10 EUR
10
15
17
KRKA FARMA, d.o.o., Sarajevo, Sarajevo, Bosnia
and Herzegovina
100%
20 BAM
10
1
1
Krka-Rus LLC, Istra, Russian Federation
100%
5,361,375 RUB
53,6
29
558
569
KRKA FARMA LLC, Istra, Russian Federation
100%
753,875 RUB
7,541
1,301
1,356
KRKA UKRAINE LLC, Kiev, Ukraine
100%
100 UAH
3
382
367
LLC ´KRKA Kazakhstan´, Almaty, Kazakhstan
100%
14 USD
12
102
97
KRKA – POLSKA Sp. z.o.o., Warsaw, Poland
100%
17,490 PLN
4,030
659
656
KRKA ČR, s. r. o., Prague, Czechia
100%
100 CZK
4
158
166
KRKA Magyarország Kft., Budapest, Hungary
100%
44,880 HUF
117
160
158
KRKA Slovensko, s.r.o., Bratislava, Slovakia
100%
10 EUR
10
116
121
UAB KRKA Lietuva, Vilnius, Lithuania
100%
10 EUR
10
55
53
SIA KRKA Latvija, Riga, Latvia
100%
10 EUR
10
38
37
TAD Pharma GmbH, Cuxhaven, Germany
100%
6,650 EUR
6,650
200
200
KRKA Sverige AB, Stockholm, Sweden
100%
150 SEK
14
7
6
KRKA Pharma GmbH, Wien, Vienna, Austria
100%
37 EUR
37
21
20
KRKA Farmacêutica, Unipessoal Lda., Estoril,
Portugal
100%
10 EUR
10
53
48
KRKA FARMACÉUTICA, S.L., Madrid, Spain
100%
10 EUR
10
66
64
KRKA FARMACEUTICI MILANO S.R.L, Milan, Italy
100%
10 EUR
10
57
62
Krka France Eurl, Paris, France
100%
10 EUR
10
20
35
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
100%
1 EUR
1
8
9
KRKA Belgium, SA, Brussels, Belgium
100%
300 EUR
300
21
17
KRKA Finland Oy, Espoo, Finland
100%
3 EUR
3
18
16
KRKA UK LTD, London, United Kingdom
100%
1 GBP
1
16
16
123 Acurae Pharma GmbH, Cuxhaven, Germany
100%
25 EUR
25
0
0
KRKA Netherlands B.V., Breskens, Netherlands
100%
10 EUR
10
0
0
Ningbo Krka Menovo Pharmaceutical Co. Ltd.,
Ningbo, China
60%
480,673 CNY
61,225
23
19
KRKA USA LLC, Wilmington, USA
100%
10 USD
9
0
0
KRKA GCC L.L.C., Dubai, United Arab Emirates
100%
37 AED
9
1
0
Total
11,780
11,598
The subsidiary Terme Krka, d.o.o. had a 100-percent equity interest in Golf Grad Otočec, d.o.o., at 31 December 2023;
the subsidiary KRKA France Eurl had a 100-percent equity interest 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 Co. Ltd.
2023 Annual Report – Consolidated financial statements of the Krka Group
259
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 Group, but had other assets of €1,383 thousand (2022: €1,658
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). We are not directly exposed to currency risks in Ukraine because we sell in euro. We estimate that the
stock of our products at distributors and pharmacies is sufficient for a few months. At the end of 2023, the number of
employees in the subsidiary in Ukraine was 382 and at the end of 2022 it was 367. 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). Krka assesses that the situation in Ukraine and the Russian Federation
has not changed the conditions for the controlling company's control of the two Russian subsidiaries, or that the controlling
company retains influence over the Russian companies' operations and voting rights, including the influence on variable
returns. The activities with the Russian subsidiaries are conducted in a similar manner as before February 2022, as the
pharmaceutical products are not subject to EU sanctions. The companies have various forms of tangible assets - business
and production premises, equipment, vehicles, inventories of raw materials and materials, inventories of finished products
and others. As there were indicators of impairment, an impairment test was performed on the assets (Note 11 – Property,
plant and equipment). The latter showed that the value of the assets did not need to be impaired. The Krka Group's assets
(excluding trade receivables) in the two Krka subsidiaries in the Russian Federation amounted to €155,560 thousand and
€172,461 thousand as at 31 December 2023 and 31 December 2022, 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 accounts receivable and closely monitor the liquidity of our
business partners so that we can immediately adjust our activities in the event of any payment delays (Note 29 – Credit
risk). In line with our business continuity plan, we carry out necessary activities to ensure uninterrupted production in the
future. The largest decrease compared to the previous year is in property, plant and equipment, cash and VAT-related
receivables to the State. At 31 December 2023 there were 1,859 employees in subsidiaries in the Russian Federation and
at the end of 2022 there were 1,925 employees. The exposure to foreign exchange risk is disclosed in Note 29 – Foreign
exchange risk.
In 2023, all payments between the subsidiaries in the Russian Federation and the controlling company were made without
specificity.
33. Educational structure of the Krka Group employees
2023
2022
Average
headcount
Share (%)
Average
headcount
Share (%)
PhD
203
1.8
204
1.8
MSc
400
3.4
390
3.4
University education
5,359
45.9
5,330
46.1
Higher professional education
1,836
15.7
1,773
15.3
Vocational college education
304
2.6
313
2.7
Secondary school education
2,625
22.5
2,591
22.4
Skilled workers
817
7.0
833
7.2
Unskilled workers
123
1.1
135
1.1
Total (average for the year)
11,667
100.0
11,569
100.0
2023 Annual Report – Consolidated financial statements of the Krka Group
260
34. Transactions with the audit firm
€ thousand
2023
2022
Contract value of auditing the annual consolidated and separate financial statements
performed by the audit firm KPMG Slovenija, d. o. o.
128
118
Contract value of auditing the subsidiaries' reporting for preparing the consolidated financial
statements, performed by companies within the KPMG network
93
80
Contract value of auditing the subsidiaries' local financial statements, performed by
companies within the KPMG network
45
43
Total contract value of audit services
266
241
Contract value of non-audit services rendered by the audit firm KPMG Slovenija, d. o. o.
12
9
Total contract value of services
278
250
The contract value of audit services provided by other audit firms (outside the KPMG network) in relation to the audit
of the consolidated financial statements amounted to €150 thousand (2022: €145 thousand).
35. Events after the reporting date
The 2023 financial statements were not impacted by the events after the end of the period.
Establishment of a joint venture in India
On 25 January 2024, Krka notified investors that it had reached an agreement with Indian company Laurus Labs Ltd. to
establish a joint venture, Krka Pharma Pvt. Ltd., in Hyderabad, India. Under the agreement, Krka holds a 51% stake and
Laurus a 49% stake in the new company.
Krka and Laurus have been contractual partners for years, with their respective businesses complementing one another.
After discussing opportunities to strengthen their cooperation and leveraging synergies by combining know-how and
resources, the two partners agreed to establish and develop the new company gradually. The joint venture will devise a
strategy to penetrate the Indian market and other markets beyond the European Union, where neither party currently offers
its finished products.
The newly established company's registered capital amounts to €50 million in Indian rupees. Depending on financing
needs, Krka and Laurus agreed to subscribe to the registered capital in stages. The joint venture will develop its business
activities step by step.
Repurchase of treasury shares
Krka repurchased 44,992 treasury shares between 1 January 2024 and 18 March 2024, and thus held 1,960,958 treasury
shares at the end of this period, accounting for 5.98% of total shares.
2023 Annual Report – Consolidated financial statements of the Krka Group
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Independent auditor’s report
2023 Annual Report – Consolidated financial statements of the Krka Group
262
2023 Annual Report – Consolidated financial statements of the Krka Group
263
2023 Annual Report – Consolidated financial statements of the Krka Group
264
2023 Annual Report – Consolidated financial statements of the Krka Group
265
2023 Annual Report – Consolidated financial statements of the Krka Group
266
2023 Annual Report – Consolidated financial statements of the Krka Group
267
2023 Annual Report – Consolidated financial statements of the Krka Group
268
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
269
Financial statement of Krka, d. d., Novo mesto
Statement of financial position
€ thousand
Notes
31 Dec 2023
31 Dec 2022
Index
2023/22
Assets
Property, plant and equipment
10
595,525
566,780
105
Intangible assets
11
26,043
24,960
104
Investments in subsidiaries
12
357,265
355,763
100
Loans
13
41,243
56,013
74
Investments
14
47,673
110,769
43
Deferred tax assets
15
7,846
8,666
91
Other non-current assets
640
643
100
Total non-current assets
1,076,235
1,123,594
96
Assets held for sale
41
41
100
Inventories
16
513,892
492,978
104
Trade receivables
17
463,126
357,889
129
Other receivables
17
47,116
12,639
373
Loans
13
65,699
6,669
985
Investments
14
306,769
52,437
585
Cash and cash equivalents
18
140,993
470,297
30
Total current assets
1,537,636
1,392,950
110
Total assets
2,613,871
2,516,544
104
Equity
Share capital
19
54,732
54,732
100
Treasury shares
19
-138,489
-124,566
111
Reserves
19
290,481
279,760
104
Retained earnings
19
1,926,534
1,850,866
104
Total equity
2,133,258
2,060,792
104
Liabilities
Provisions
22
113,999
96,608
118
Deferred income
23
2,366
2,816
84
Lease liabilities
2,565
2,909
88
Total non-current liabilities
118,930
102,333
116
Trade payables
24
175,847
194,143
91
Borrowings
21
88,061
53,524
165
Lease liabilities
1,022
1,033
99
Income tax payables
0
25,660
0
Contract liabilities
25
18,953
21,687
87
Other current liabilities
26
77,800
57,372
136
Total current liabilities
361,683
353,419
102
Total liabilities
480,613
455,752
105
Total equity and liabilities
2,613,871
2,516,544
104
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
270
Income statement
€ thousand
Notes
2023
2022
Index
2023/22
Revenue
1,674,572
1,553,514
108
– Revenue from contracts with customers
3
1,664,611
1,544,409
108
– Other revenue
9,961
9,105
109
Cost of goods sold
-786,145
-663,332
119
Gross profit
888,427
890,182
100
Other operating income
4
1,639
4,699
35
Selling and distribution expenses
-300,863
-301,319
100
– Whereof net impairments and write-offs of receivables
3,960
-1,548
R&D expenses
-173,783
-158,292
110
General and administrative expenses
-93,112
-77,400
120
Operating profit
322,308
357,870
90
Financial income
8
60,964
57,744
106
Financial expenses
8
-54,223
-3,356
1,616
Net financial result
6,741
54,388
12
Profit before tax
329,049
412,258
80
Income tax expense
9
-34,568
-64,043
54
Net profit
294,481
348,215
85
Basic earnings per share (€)
20
9.51
11.21
85
Diluted earnings per share (€)
20
9.51
11.21
85
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
2023
2022
Index
2023/22
Net profit
294,481
348,215
85
Other comprehensive income that will not be reclassified to
profit or loss at a future date
Change in fair value of financial assets
14
10,912
128
8,525
Restatement of post-employment benefits
22
-12,133
24,691
Deferred tax effect
15
-2,493
-3,334
75
Net other comprehensive income that will not be
reclassified to profit or loss at a future date
-3,714
21,485
Total other comprehensive income for the year (net of tax)
-3,714
21,485
Total comprehensive income for the year (net of tax)
290,767
369,700
79
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
271
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
from
previous
years
Profit for
the year
Balance at 1 Jan 2023
54,732
-124,566
124,566
105,897
14,990
30,000
4,307
1,442,702
69,974
338,190
2,060,792
Net profit
0
0
0
0
0
0
0
0
0
294,481
294,481
Total other comprehensive income for the year
(net of tax)
0
0
0
0
0
0
-3,202
0
-512
0
-3,714
Total comprehensive income for the year
(net of tax)
0
0
0
0
0
0
-3,202
0
-512
294,481
290,767
Transactions with owners, recognised in equity
Formation of other profit reserves under the resolution
of the AGM
0
0
0
0
0
0
0
101,893
-101,893
0
0
Transfer of previous periods' profit to retained
earnings
0
0
0
0
0
0
0
0
338,190
-338,190
0
Repurchase to treasury shares
0
-13,923
0
0
0
0
0
0
0
0
-13,923
Formation of reserves for treasury shares
0
0
13,923
0
0
0
0
0
0
-13,923
0
Dividends paid
0
0
0
0
0
0
0
0
-204,378
0
-204,378
Total transactions with owners, recognised in
equity
0
-13,923
13,923
0
0
0
0
101,893
31,919
-352,113
-218,301
Balance at 31 Dec 2023
54,732
-138,489
138,489
105,897
14,990
30,000
1,105
1,544,595
101,381
280,558
2,133,258
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
272
€ 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
from
previous
years
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 to 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.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
273
Statement of cash flows
€ thousand
Notes
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit
294,481
348,215
Adjustments for:
74,451
145,291
– Amortisation/Depreciation
10, 11
80,239
82,216
– Net foreign exchange differences
1,955
-6,490
– Net write-offs and allowances for inventories
9,808
14,194
– Net impairments and write-offs of receivables
-3,960
1,548
– Investment income
-61,729
-12,990
– Investment expenses
6,232
-60
– Income on financing activities
-1
0
– Interest expenses and other financial expenses
7,339
2,830
– Income tax expense
9
34,568
64,043
Operating profit before changes in net current assets
368,932
493,506
Change in trade receivables
-103,777
70,231
Change in inventories
16
-30,722
-112,849
Change in trade payables
24
-14,391
7,501
Change in provisions
22
1,871
-3,289
Change in deferred income
23
-450
-730
Change in other current liabilities
17,776
-4,386
Income tax paid
-83,840
-42,251
Net cash flow from operating activities
155,399
407,733
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
7,502
1,656
Dividends received
798
631
Proportionate profit of subsidiaries
29,890
0
Proceeds from sale of property, plant and equipment
1,380
2,971
Purchase of property, plant and equipment
10
-109,515
-61,771
Purchase of intangible assets
11
-8,875
-6,570
Acquisition of subsidiaries and a share of non-controlling interests
net of financial assets acquired
12
-2,001
-9,319
Refunds of subsequent contributions to subsidiaries
12
500
0
Proceeds from non-current loans
8,372
5,726
Payments for current loans
-1,288
-31,708
Net payments/proceeds from current loans
-50,984
190,432
Proceeds from sale of non-current investments
33,333
4,941
Payments for acquiring non-current investments
-22
-32,946
Proceeds from sale of current investments
359,100
153,804
Costs for acquiring current investments
-568,607
-121,621
Proceeds from derivatives
4,277
8,847
Payments for derivatives
-389
0
Net cash flow from investing activities
-296,529
105,073
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid
-3,022
-1,856
Net proceeds from/payments for current borrowings
29
34,290
-1,758
Lease liabilities paid
28
-1,125
-1,124
Dividends and other profit shares paid
29
-204,379
-175,044
Repurchase of treasury shares
35
-13,923
-10,025
Net cash flow from financing activities
-188,159
-189,807
Net decrease/increase in cash and cash equivalents
-329,289
322,999
Cash and cash equivalents at beginning of year
470,297
144,981
Effect of foreign exchange rate fluctuations on cash held
-15
2,317
Closing balance of cash and cash equivalents
140,993
470,297
The accompanying Notes are an integral part of the financial statements and should be read in conjunction with them.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
274
Notes to the financial statements
Krka, d. d., Novo mesto is the controlling company in the Krka Group with its registered seat at Šmarješka cesta 6, 8501 Novo
mesto, Slovenia. The Company was registered at the District Court of Novo mesto on 13 July 1989, registration number
1/00097/00. Company registration No.: 5043611000.
The financial statements of the Company refer to the year ended 31 December 2023.
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’) as adopted by the EU, interpretations issued by the International Financial Reporting Interpretations Committee of
the IASB (‘IFRIC’) adopted by the EU, and in compliance with additional provisions required by the Companies Act (ZGD-1).
The financial statements were approved by the Krka Management Board on 25 March 2024.
Basis of measurement
The financial statements have been prepared on the historical cost basis, with the exception of derivatives, financial
instruments at fair value through profit or loss and financial instruments at fair value through OCI for which fair value was
used. Methods applied in the measurement of fair value are presented in Note 2 – Fair Value.
Functional and reporting currency
The financial statements are presented in the euro, which is the Company’s functional currency. All financial information
presented in the euro has been rounded to the nearest thousand.
Use of estimates and judgements
The preparation of financial statements requires the Management Board of the controlling company to make judgements,
estimates and assumptions that affect the carrying amounts of assets and liabilities of Krka as well as the reported income
and expenses for the period.
These include, among others: determination of the useful life and residual value of property, plant and equipment, as well as
intangible assets; income from contracts with customers, allowances made for inventories and receivables; investment
impairment; assumptions material to the actuarial calculation of defined employee benefits; assumptions used in the
calculation of potential provisions for disputes, and an estimate of the duration of the lease and the interest rate used.
Regardless of the fact that the Company’s 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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275
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 2023.
• Note 17 – Impairment 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
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
276
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. Company’s 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 as the controlling 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.
In its statement of financial position, the Company classifies liabilities and assets according to their maturity i.e. as non-
current and current.
The Company classifies an asset as current if:
• it expects to realise it or intends to sell or use it in the normal course of business (12 months);
• it is held primarily for trading purposes;
• it expects to realise it within 12 months after the reporting period; or
• the asset is cash or a cash equivalent (pursuant to IAS 7) unless it is prohibited from being exchanged or used
to settle a liability for a period of at least 12 months after the reporting period.
All other assets are classified by the Company as non-current.
The Company classifies a liability as current if:
• it expects to settle it within the normal course of business (12 months);
• it is held primarily for trading purposes;
• it is to be settled within 12 months after the reporting period; or
• at the end of the reporting period, it does not have the right to defer settlement of the liability for at least 12
months after the reporting period.
All other liabilities are classified by the Company as non-current.
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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 value of individual groups of assets 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 other comprehensive income
(FVOCI) 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.
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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’).
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 the 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.
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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
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.
Items of property, plant and equipment that have substantially different useful lives but whose value is significant are
accounted for as individual assets.
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 as at the reporting date:
• 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 -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.
Emission coupons
The Company recognises emission coupons purchased or acquired free of charge in order to fulfil its obligation to the
State to surrender emission coupons under the Environmental Protection Act as intangible assets. Emission coupons
acquired free of charge are carried at €1 per emission coupon and those purchased are measured at cost on initial
recognition. The first-in-first-out (FIFO) method is used for the transfer of coupons. Intangible assets relating to emission
coupons are not amortised.
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 date of the statement of financial position. If the carrying amount of inventories exceeds their net realisable value,
inventories are impaired through profit or loss.
As of the reporting date, the Company also reviews whether inventories need to be impaired. Thus, impaired are:
• all types of inventories that are known or expected to be unusable in the production of semi-finished and finished
goods or that cannot be sold for any reason,
• all types of inventories that have expired,
• inventories that will expire within 90 days in an amount to be determined by the person responsible for the
inventories,
• all other inventories that for any other reason require impairment.
Possible impairments are reviewed and recorded by inventory type group 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, depreciation, cost of services, energy, maintenance, and quality. 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.
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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).
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 S&P Global
Ratings.
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 reported 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 the present value using a pre-tax
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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.
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, Krka is liable to pay to its employees’ anniversary bonuses and termination benefits upon
retirement and recognises relevant amount of provisions for these purposes. The Company has no other pension
obligations.
Provisions are determined by discounting, at the reporting date, the estimated future benefits in respect of retirement
benefits and anniversary bonuses paid to employees in those countries where this legal obligation exists. The obligation
is calculated by estimating the costs of retirement benefits upon retirement and the costs of all expected anniversary
bonuses until retirement. The calculation is performed using the projected unit credit method. Employee benefit costs, as
well as cost of interest, are recognised in profit or loss, whereas restatement of post-employment benefits or unrealised
actuarial profit or loss is recognised in other comprehensive income.
Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the estimated future cash flows to their present value using a pre-tax discount
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rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Provisions for disputes
The Company discloses provisions for lawsuits referring to alleged patent infringements. The eligibility of provisions
formed in terms of a favourable or unfavourable outcome of the lawsuit is assessed on an annual basis. The amounts of
provisions are defined on the basis of the noted amount of the indemnification claim, or on the basis of anticipated
potential amount, if the indemnification claim is not yet disclosed.
Revenue from contracts with customers
The Company is engaged in development, production, marketing and sale of human health products (prescription
pharmaceuticals, non-prescription products), animal health products, and material. Revenue from contracts with customers
is recognised when control of the goods and services is transferred to the customer at an amount that reflects the
consideration to which the Company expects to be entitled in exchange for those goods or services while considering
specific terms and conditions of an individual contract.
Transfer of control over those goods and services depends on terms and conditions of the contract. In general, control
is transferred when goods are accepted by the customer or services are rendered. The normal credit term ranges
from 30 to 120 days.
The Company assesses the performance obligations contained in each sales contract. The Company also 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 effects of variable
consideration are considered 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. Goods that, based on past experience and business practice in a given environment, are expected to
be returned instead of generating 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.
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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.
Contract balances
Contract assets
A contract asset is the right to an amount of consideration in exchange for goods or services transferred to the customer.
If the Company transfers goods or services to a customer before the customer pays consideration or payment is due,
a contract asset is recognised for the earned consideration that is conditional. Once the transaction is completed and
the customer is confirmed, the contract assets are reclassified as trade receivables.
Trade receivables
A receivable represents the Company’s right to an amount of consideration that is unconditional, i.e. only the passage of
time is required before payment of consideration is due (refer to the accounting policy ‘Recognition of financial
instruments’).
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the goods
or services are transferred to the customer, a contract liability is recognised when the payment is made, or the payment
is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the
contract.
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.
It is irrelevant to the Company’s assessment of the role it plays in individual customer contracts, as it usually acts as a
principal.
The Company does not normally have long-term sales contracts with customers.
Government grants
Revenue referring to government grants is initially recognised when there is reasonable assurance that they will be
received and that the Company will comply with the conditions associated with the grants. Revenue that compensates the
realised expenses is recognised in profit or loss on a systematic basis in the same periods in which the costs are
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
287
recognised. Revenue that compensates an entity for the cost of an asset is recognised in profit or loss on a systematic
basis over the useful life of the asset.
The Company recognises emission coupons received free of charge from the State within government grants received.
The emission coupons received free of charge are recorded as intangible assets at a value of €1 per emission coupon.
Upon their transfer, the Group reduces intangible assets and recognises other operating income.
Financial income and expenses
Financial income comprises interest income on funds invested, dividend income, gains on the disposal of financial assets,
changes in the fair value of financial assets at fair value through profit or loss, foreign exchange gains and gains on hedging
instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the
effective interest method. Dividend income is recognised on the date that the shareholder’s right to receive payment is
established, which in the case of quoted securities is the ex-dividend date.
Financial expenses comprise interest expense on borrowings, foreign exchange losses, changes in the fair value of
financial assets at fair value through profit or loss, impairment losses recognised on financial assets, and losses on hedging
instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective
interest method, except those that are attributable to property, plant and equipment under construction.
Income tax 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.
In 2023, Slovenia adopted the Minimum Tax Act, which introduces a minimum tax into the Slovenian tax-law system,
aimed at ensuring a global minimum taxation of the profits of large international and domestic groups at an effective tax
rate of 15% (the minimum tax rate). The Act was adopted on the basis of EU Directive 2022/2523 on the provision of a
global minimum tax rate for international and large domestic groups in the EU, which was drafted on the basis of the
GLOBE Model Rules prepared by the Organisation for Economic Co-operation and Development (OECD) in October 2021.
The minimum tax rules of the Act are applicable to the financial years starting from 1 January 2024.
Management has assessed the impact of the global minimum tax on the Company’s financial statements and based on
the assumptions of current tax legislation and similar operating results, estimates that it will not have a material impact on
the financial statements. While the assessment has not yet been finalised, management considers that the most significant
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
288
exposure to top-up tax would be in Slovenia, where, under the assumptions set out above, the estimated effective tax rate
would be 14%, resulting in a top-up tax of 1% on the excess profit, which takes into account the reduction for the
substantive exclusion of income. The largest share of the top-up for Slovenia would fall on the Company.
Earnings per share
The Company presents basic earnings per share (EPS) data. EPS is calculated by dividing the profit or loss attributable
to ordinary shareholders of the Company by the average number of ordinary shares issued during the financial year,
whereby treasury shares are excluded. Diluted earnings per share is equal to basic earnings per share 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 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 clarify that in a transaction involving an associate or joint venture, the extent of gain or loss recognition
depends on whether the assets sold or contributed constitute a business, such that:
• a full gain or loss is recognised when a transaction between an investor and its associate or joint venture involves
the transfer of an asset or assets which constitute a business (whether it is housed in a subsidiary or not), while
• a partial gain or loss is recognised when a transaction between an investor and its associates or joint venture
involves assets that do not constitute a business, even if these assets are housed in a subsidiary.
The management has assessed the impact of the amendments and believes they will have no significant impact on the
Company’s financial statements.
Amendments to IAS 1 – Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and
Non-Current Liabilities with Covenants
The amendments are effective for annual periods beginning on or after 1 January 2024. Early application is permitted.
Under existing IAS 1 requirements, companies classify a liability as current when they do not have an unconditional right
to defer settlement for at least 12 months after the reporting date. The amendments, as issued in 2020, has removed the
requirement for a right to be unconditional and instead requires that a right to defer settlement must exist at the reporting
date and have substance (the classification of liabilities is unaffected by management’s intentions or expectations about
whether the company will exercise its right to defer settlement or will choose to settle early).
The amendments, as issued in 2022, further clarify that when the right to defer settlement is subject to a company
complying with conditions (covenants) specified in a loan arrangement, only covenants with which the Company must
comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which
the Company must comply after the reporting date do not affect a liability’s classification at that date. However, the
amendments require companies to disclose information about these future covenants to help users understand the risk
that those liabilities could become repayable within 12 months after the reporting date. The amendments also clarify how
a company classifies a liability that can be settled in its own shares (e.g. convertible debt). The management has assessed
the impact of the amendments and believes they will have no significant impact on the Company’s financial statements.
Amendments to IAS 7 – Statement of Cash Flows and IFRS 7 – Financial Instruments: Disclosures: Supplier Finance
Arrangements
Effective for annual periods beginning on or after 1 January 2024. The amendments introduce additional disclosure
requirements for a company to provide information about its supplier finance arrangements that would enable users
(investors) to assess the effects of these arrangements on the Company’s liabilities and cash flows, and the Company’s
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
289
exposure to liquidity risk. The amendments apply to supplier finance arrangements (also referred to as supply chain
finance, payables finance or reverse factoring arrangements) that have all of the following characteristics:
• a finance provider (also referred to as the factor) pays amounts a company (the buyer) owes its suppliers;
• a company agrees to pay under the terms and conditions of the arrangements on the same date or at a later date
than its suppliers are paid;
• the Company is provided with extended payment terms or suppliers benefit from early payment terms, compared
with the related invoice payment due date.
However, the amendments do not apply to arrangements for financing receivables or inventory. The management has
assessed the impact of the amendments and believes they will have no significant impact on the Company’s financial
statements.
Amendments to IFRS 16 – Leases: Lease Liability in a Sale and Leaseback
Effective for annual periods beginning on or after 1 January 2024 and shall be applied retrospectively. Early application is
permitted. Amendments to IFRS 16 Leases impact how a seller-lessee accounts for variable lease payments in a sale-
and-leaseback transaction. The amendments introduce a new accounting model for variable payments and will require
seller-lessees to reassess and potentially restate sale-and-leaseback transactions entered into since 2019.
The amendments confirm the following:
• on initial recognition, the seller-lessee includes variable lease payments when it measures a lease liability arising
from a sale-and-leaseback transaction;
• after initial recognition, the seller-lessee applies the general requirements for subsequent accounting of the lease
liability such that it recognises no gain or loss relating to the right of use it retains.
A seller-lessee may adopt different approaches that satisfy the new requirements on subsequent measurement. These
amendments do not change the accounting for leases other than those arising in a sale and leaseback transaction.
The 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.
Amendments to IAS 12 – Income taxes: International Tax Reform – Pillar Two Model Rules
Effective for annual periods beginning on or after 1 January 2024. ‘Pillar Two taxes’ are taxes arising from tax laws enacted
or substantively enacted to implement the Pillar Two model rules published by the Organisation for Economic Co-operation
and Development. The Pillar Two model rules aim to ensure that large multinational groups pay taxes at least at the
minimum rate of 15 percent on income arising in each jurisdiction in which they operate. There are three rules that countries
can adopt: the income inclusion rule, the undertaxed payment rule and a qualified domestic minimum top-up tax. They are
often referred to as ‘global minimum top-up tax’ or ‘top-up tax’. The amendments address stakeholders’ concerns about
deferred tax accounting in relation to the new top-up tax under IFRSs by providing entities with a temporary mandatory
relief from deferred tax accounting for top-up tax; and requiring entities to provide new disclosures in relation to the top-up
tax and the relief.
Management has assessed the impact of the amendments on the Company’s financial statements and based on the
assumptions of the current tax legislation and similar operating results, does not expect them to have a material impact.
Amendments to IAS 21 – The Effects of Changes in Foreign Exchange Rates: Lack of exchangeability
Effective for annual reporting periods beginning on or after 1 January 2025. Earlier application is permitted. Under IAS 21
The Effects of Changes in Foreign Exchange Rates, a company uses a spot exchange rate when translating a foreign
currency transaction. In some jurisdictions, no spot rate is available because a currency cannot be exchanged into another
currency.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
290
IAS 21 was amended to clarify:
• when a currency is exchangeable into another currency; and
• how a company estimates a spot rate when a currency lacks exchangeability.
The amendments also include additional disclosure requirements to help users to assess the impact of using an estimated
exchange rate on the financial statements. The management has assessed the impact of the amendments and believes
they will have no significant impact on the Company’s financial statements.
3. Revenue from contracts with customers
Itemisation of revenue from contracts with customers
€ thousand
2023
2022
Revenue from contracts with customers (products)
1,449,739
1,356,075
Revenue from contracts with customers (materials)
214,872
188,334
Total revenue from contracts with customers
1,664,611
1,544,409
Revenue from contracts with customers by region
€ thousand
2023
2022
Region Slovenia
66,087
60,503
Region South-East Europe
246,512
220,624
Region East Europe
376,988
387,489
Region Central Europe
380,775
351,191
Region West Europe
319,539
284,593
Region Overseas Markets
59,838
51,675
Total
1,449,739
1,356,075
In Ukraine, our third largest market, we have sold €83,392 thousand of products in 2023 (2022: by €95,213 thousand),
which represents 5.8% of the Company’s total sales.
In the Russian Federation, which is Krka’s largest single market, we have sold €133,609 thousand of products in 2023
(2022: by €150,791 thousand), representing 9.2% of the Company’s total sales. Demand for our products is adequate.
Revenue from contracts with customers by product groups
€ thousand
2023
2022
Prescription pharmaceuticals
1,181,580
1,104,323
Non-prescription products
168,858
163,482
Animal health products
99,301
88,270
Total
1,449,739
1,356,075
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 in 2023 and 2022, while liabilities from contracts were recognised in the amount of
€5,053 thousand (2022: €8,593 thousand). Recognised assets and liabilities arising from contracts with customers are
reported in the statement of financial position.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
291
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 €13,900 thousand (2022: €13,094 thousand).
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.
Transfer of control and rewards in the sale of products for human use, veterinary products and material depends on terms
and conditions of an individual contract. Generally, it occurs when the customer accepts the goods in accordance with
INCOTERMS 2022. 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
2023
2022
Reversal of non-current provisions
0
1,827
Reversal of deferred income
462
755
Gains on sale of property, plant and equipment and intangible assets
779
352
Revaluation operating revenue – leases
2
0
Other operating income
396
1,765
Total other operating income
1,639
4,699
Other operating income includes also government grants relating to the curbing of the COVID-19 pandemic in the amount
of €1 thousand (2022: €156 thousand). All government grants under the COVID-19 intervention laws are presented at the
eligible amount based on the fulfilment of the legal conditions for their granting and recognition, hence that there is no risk
of repayment.
The Company did not receive any emergency State aid in 2023 to mitigate the consequences of the energy crisis caused
by the situation in the Russian Federation and Ukraine (2022: €180 thousand).
Company’s other operating income include also income from emission coupons obtained free of charge from the State in
2022 and transferred in 2023. See Note 11 – Intangible assets.
Other deferred income reversed relates to income from other government grants received which cover the depreciation
charged on property, plant and equipment in the proportion in which the funds were received.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
292
5. Costs by nature
€ thousand
2023
2022
Cost of goods and materials
504,285
487,124
Cost of services
339,398
331,940
Employee benefits expense
378,344
317,362
Amortisation and depreciation
80,239
82,216
Net write-offs and allowances for inventories
9,808
14,194
Net impairments and write-offs of receivables
-3,960
1,548
Other operating expenses
29,539
25,048
Total costs
1,337,653
1,259,432
Change in the value of inventories of finished products and work in progress
16,250
-59,089
Total
1,353,903
1,200,343
6. Employee benefits expense
€ thousand
2023
2022
Gross wages and salaries and continued pay
293,381
247,046
Social security contributions
21,340
16,763
Pension insurance contributions
37,019
33,189
Post-employment benefits and other non-current employee benefits
7,046
3,264
Other employee benefits expense
19,558
17,100
Total employee benefits expense
378,344
317,362
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 2023 to €69,015 thousand (2022: €61,399 thousand).
Supplementary pension insurance contributions amounted to €10,468 thousand (2022: €9,546 thousand).
7. Other operating expenses
€ thousand
2023
2022
Grants and assistance for humanitarian and other purposes
2,901
1,551
Environmental protection expenditures
4,639
4,414
Other taxes and levies
18,374
15,904
Loss on sale and write-offs of property, plant and equipment and intangible assets
1,054
818
Other operating expenses
2,571
2,361
Total other operating expenses
29,539
25,048
Other levies include €16,177 thousand (2022: €13,854 thousand) of various taxes and levies paid on pharmaceuticals and
fees paid to associates in individual foreign countries for pursuing promotional activities.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
293
8. Financial income and financial expenses
€ thousand
2023
2022
Net foreign exchange gains
0
45,105
Interest income
9,074
2,369
Derivative income
4,277
9,096
– Realised revenue
4,277
8,847
– Fair value change
0
249
Income from other financial instruments
7,245
0
– Income generated
3,220
0
– Change in fair value
4,025
0
Income from dividends and other profit shares
40,354
702
– Dividends
808
702
– Profits of subsidiaries
39,546
0
Other financial income
14
472
Total financial income
60,964
57,744
Net foreign exchange differences
-42,096
0
Interest expenses
-3,781
-1,718
– Interest paid
-3,705
-1,669
– Interest expenses on lease liabilities
-76
-49
Derivative expenses
-4,782
0
– Realised expenses
-389
0
– Change in fair value
-4,393
0
Expenses for other financial instruments
0
-45
– Realised expenses
0
-45
Other financial expenses
-3,564
-1,593
Total financial expenses
-54,223
-3,356
Net financial result
6,741
54,388
The net financial result in 2023 declined mostly due to a poor result from the net foreign exchange differences in the
amount of €47.647 thousand. In 2023, 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 2023 €1 = RUB 99.9723 and on 31 December 2022 €1 = RUB 78.4308).
The income from other financial instruments in the amount of €7,245 thousand represents capital gains on investments in
treasury bills.
The income from investments at amortised cost in the amount of €432 thousand (2022: €702 thousand) is income from
bonds and is shown under interest income. For more information on these investments see Note 14 – Investments.
Detailed information on the risk of changes in foreign exchange rates can be found in Note 30 – Financial Instruments and
Financial Risks.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
294
9. Income tax expense
Adjustment to effective tax rate
€ thousand
2023
2022
Current income tax
36,241
63,301
Deferred tax
-1,673
742
Total income tax
34,568
64,043
Profit before tax
329,049
412,258
Income tax for both years calculated at the rate of 19%
62,519
78,329
Tax on reduced income
-7,439
-133
Tax on non-deductible expenses
3,198
2,677
Income tax from tax incentives
-20,328
-17,588
Tax on increase/decrease of costs for taxable purposes
-1,922
758
Impact of the changed tax rate from 19% to 22% on deferred taxes
-1,460
0
Total income tax expense
34,568
64,043
Effective tax rate
10.5%
15.5%
Investments in R&D and investment relief represent the major share of tax incentives.
The impact of the global minimum tax (top-up tax) is disclosed in Significant Accounting Policies - Amendments to
Standards and Interpretations not yet effective (Income Tax: International Tax Reform – Pillar Two Model Rules).
10. Property, plant and equipment
€ thousand
31 Dec 2023
31 Dec 2022
Land
51,786
28,010
Buildings
242,811
243,918
Equipment
240,106
238,871
Property, plant and equipment being acquired
57,273
52,107
Right-of-use assets
3,549
3,874
Total property, plant and equipment
595,525
566,780
In 2023, most of the controlling company’s investments were earmarked for renovating the Notol packaging plant in the
amount of €14,713 thousand (2022: €6,712 thousand), the construction of Pavilion 3 in the amount of €13,340 thousand
(2022: €3,389 thousand), and the capacity expansion at the Ljutomer plant in the amount of €12,254 thousand (2022:
€660 thousand). €9,742 thousand were invested in the field of information technology and telecommunications, (2022:
€4,999 thousand) and €6,008 thousand (2022: €15,162 thousand) for increasing the capacity of the OTO plant.
The majority of the right-of-use asset refers to the right of using assets relating to buildings in the amount of €3,533
thousand (2022: €3,858 thousand).
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
295
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 2022*
28,010
624,215
1,058,928
34,621
5,111
1,750,885
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
-241
299
0
0
58
Balance at 31 Dec 2022
28,010
639,460
1,081,458
52,107
6,772
1,807,807
Balance at 1 Jan 2023
28,010
639,460
1,081,458
52,107
6,772
1,807,807
Additions
0
0
0
102,876
0
102,876
Capitalisations – transfer from PPE
being acquired
23,756
19,145
54,809
-97,710
0
0
Capitalisations – IFRS 16 Leases
0
0
0
0
765
765
Disposals, impairments, deficit,
surplus
20
-414
-31,420
0
-69
-31,883
Transfers, reclassifications
0
357
-357
0
0
0
Balance at 31 Dec 2023
51,786
658,548
1,104,490
57,273
7,468
1,879,565
Accumulated depreciation
Balance at 1 Jan 2022
0
-375,664
-803,764
0
-2,066
-1,181,494
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
-395,542
-842,587
0
-2,898
-1,241,027
Balance at 1 Jan 2023
0
-395,542
-842,587
0
-2,898
-1,241,027
Depreciation
-20,400
-53,064
0
-1,064
-74,528
Disposals, deficit, surplus
0
398
31,074
0
43
31,515
Transfers, reclassifications
0
-193
193
0
0
0
Balance at 31 Dec 2023
0
-415,737
-864,384
0
-3,919
-1,284,040
Carrying amount
Balance at 1 Jan 2022
28,010
248,551
255,164
34,621
3,045
569,391
Balance at 31 Dec 2022
28,010
243,918
238,871
52,107
3,874
566,780
Balance at 1 Jan 2023
28,010
243,918
238,871
52,107
3,874
566,780
Balance at 31 Dec 2023
51,786
242,811
240,106
57,273
3,549
595,525
* Reclassified from cost to valuation allowance due to the transfer of impairments of fixed assets previously reported under other current liabilities -
other. The value of the reclassification amounts to €2 thousand for buildings and €638 thousand for equipment
In 2022 and 2023, 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.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
296
11. Intangible assets
€ thousand
31 Dec 2023
31 Dec 2022
Software
15,138
14,334
Other intangible assets
7,556
7,007
– Long-term deferred operating costs
216
282
– Development-related projects
4,478
5,710
– Emission coupons
2,862
1,015
Intangible assets being acquired
3,349
3,619
Total intangible assets
26,043
24,960
The Company recognises emission coupons acquired free of charge from the State and purchased on the market as other
intangible assets. In 2023, the Company acquired 50,736 emission coupons, whereof 9,736 were free emission coupons
(2022: 9,736) to be transferred to the State in 2024 and 41,000 were purchased on the market at a value of €3,206
thousand. In 2023, it transferred 27,476 emission coupons, whereof 9,736 were acquired free of charge and 17,740 were
purchase on the market at the value of €1,359 thousand. The transferred emission coupons were acquired in 2022 and
2023 and the FIFO method was applied for the transfer of the coupons. As at 31 December 2023, the Company had
46,116 emission allowances in the total amount of €2,862 thousand (22,856 emission coupons with a value of €1,015
thousand as at 31 December 2022). The Company transfers more emission coupons during the year than it receives free
of charge from the State and is therefore considered a net contributor.
Movement of intangible assets (IA)
€ thousand
Concessions,
trademarks
and licences
Other IA
IA being
acquired
Total
Purchase cost
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 2023
90,263
29,455
3,619
123,337
Additions
0
0
8,875
8,875
Transfer from IA being acquired
5,182
3,366
-8,548
0
Disposals deficit, surplus
-2,650
-1,932
-597
-5,179
Balance at 31 Dec 2023
92,795
30,889
3,349
127,033
Accumulated amortisation
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
Balance at 1 Jan 2023
-75,929
-22,448
0
-98,377
Amortisation
-4,378
-1,333
0
-5,711
Disposals deficit, surplus
2,650
448
0
3,098
Balance at 31 Dec 2023
-77,657
-23,333
0
-100,990
Carrying amount
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
Balance at 1 Jan 2023
14,334
7,007
3,619
24,960
Balance at 31 Dec 2023
15,138
7,556
3,349
26,043
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
297
12. Investments in subsidiaries
Movement of investments in subsidiaries
€ thousand
Investments in subsidiaries
Purchase cost
Balance at 1 Jan 2022
355,435
Acquisition of equity interest
91
Subsequent payments
9,228
Balance at 31 Dec 2022
364,754
Balance at 1 Jan 2023
364,754
Establishment of new companies
20
Subsequent payments
1,982
Repayment of subsequent payments
-500
Balance at 31 Dec 2023
366,256
Accumulated depreciation
Balance at 1 Jan 2022
-8,991
Balance at 31 Dec 2022
-8,991
Balance at 1 Jan 2023
-8,991
Balance at 31 Dec 2023
-8,991
Carrying amount
Balance at 1 Jan 2022
346,444
Balance at 31 Dec 2022
355,763
Balance at 1 Jan 2023
355,763
Balance at 31 Dec 2023
357,265
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 February 2024.
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 (2022: €118,916 thousand), whereas the carrying
amount of the investment in Krka Farma is recorded at €15,170 thousand (2022: €15,170 thousand).
Due to the situation in Ukraine and the Russian Federation and the consequent higher level of uncertainty in these markets,
the weighted average cost of capital (discount rate) remains at a higher level. As a result, management has estimated the
value in use calculated by discounting the future cash flows of the subsidiaries for both investments in subsidiaries. Five-
year financial projections for each subsidiary in the Russian Federation were used, which assumed annual growth rates
of earnings before interest, taxes, depreciation and amortisation of 6.3% (the average five-year annual growth was planned
at 6.1%). Business forecasts are based on past performance and a reasonable expectation of future performance. A
discount rate of 15.3% was applied (in 2022 it was 14.0% for the five-year forecast period and 12.1% for the residual
value). An annual free cash flow growth rate in the residual value of 4.0% was considered (the same in 2022) and is based
on publicly available long-term inflation estimates in the Russian Federation. The values set for the key assumptions
represent management’s best estimate of future trends in the industry and are based on historical data obtained from
internal and external sources.
Krka's current strategy does not foresee the sale of subsidiaries in the Russian Federation. The projections used in the
impairment test are prepared on a going concern basis with an indefinite useful life.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
298
Based on the impairment assessment performed, it was concluded that there is no need to impair the investments in
subsidiaries.
Shareholdings in subsidiaries
€ thousand
Ownership
share
Share capital
Value of shares
in subsidiaries
31 Dec 2023
31 Dec 2023
31 Dec 2023
31 Dec 2022
KRKA-RUS LLC, Istra, Russian Federation
100%
53,629
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%
61,225
37,624
35,642
KRKA-FARMA d.o.o., Zagreb, Croatia
100%
18,983
19,738
19,738
KRKA – POLSKA Sp. z.o.o., Warsaw, Poland
100%
4,030
18,697
18,697
KRKA FARMA LLC, Istra, Russian Federation
100%
7,541
15,170
15,170
Krka France Eurl, Paris, France
100%
10
4,662
4,662
KRKA Pharma GmbH, Wien, 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
503
1,003
KRKA-FARMA DOOEL Skopje,Skopje, North Macedonia
100%
796
802
802
KRKA Belgium, SA, Brussels, Belgium
100%
300
376
376
KRKA Magyarország Kft., Budapest, Hungary
100%
117
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%
12
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 Latvia, 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, Czechia
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%
9
10
-
KRKA Netherlands B.V., Breskens, the Netherlands
100%
10
10
-
Total
168,259
357,265
355,763
The subsidiary Terme Krka, d.o.o. had a 100% interest in Golf Grad Otočec, d.o.o., at 31 December 2023; the subsidiary
KRKA France Eurl had a 100-percent interest in HCS bvba in Belgium. The Chinese company Ningbo Krka Menovo
Pharmaceutical Co. Ltd. has a 40-percent holding in the company Ningbo Krka Menovo Pharmaceutical Co. Ltd.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
299
13. Loans
€ thousand
31 Dec 2023
31 Dec 2022
Non-current loans
41,243
56,013
– Loans to subsidiaries
0
14,100
– Loans to others
11,243
11,913
– Deposits granted to banks
30,000
30,000
Current loans
65,699
6,669
– Portion of non-current loans maturing next year
12,827
5,140
– Loans to subsidiaries
1,697
888
– Loans to others
13
23
– Deposits granted to banks
50,000
0
– Current interest receivables
1,162
618
Total loans
106,942
62,682
The annual rate of interest agreed on conclusion of loan contracts within the Group companies, is the rate of interest set
by the Minister of Finance of the Republic of Slovenia in accordance with the Corporate Income Tax Act that defines the
interest rate for related parties. In 2023, the interest rate 0.870%.
Non-current loans include a deposit of €30,000 thousand with a maturity of more than one year held at a Slovenian bank
with a high credit rating.
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 housings. The interest rate fluctuated in 2023
between 4.096% and 5.008% (2022: between 0.281% and 3.652%). The maximum repayment period is 15 years.
Current deposits to banks include a €50,000 thousand deposit with a maturity of over 90 days and less than one year held
at a foreign bank with a high credit rating. This deposit did not exist at the end of 2022 for it was concluded in 2023.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
300
Loans to subsidiaries including related current interest receivable
€ thousand
31 Dec 2023
31 Dec 2022
Non-current loans to subsidiaries
0
14,100
TERME KRKA, d. o. o., Novo mesto, Slovenia
0
14,100
Current loans to subsidiaries inclusive of the non-current part of the loan
maturing next year
12,826
4,349
TERME KRKA, d. o. o., Novo mesto, Slovenia
11,106
2,502
KRKA Finland Oy, Espoo, Finland
1,330
1
SIA KRKA Latvia, Riga, Latvia
115
115
KRKA HELLAS E.P.E., Athens, Greece
100
100
HCS bvba*, Edegem, Belgium
78
74
KRKA Netherlands B.V., Breskens, the Netherlands
43
0
KRKA GCC L.L.C., Dubai, United Arab Emirates
36
0
TAD Pharma GmbH, Cuxhaven, Germany
12
9
KRKA Belgium, SA, Brussels, Belgium
2
1
Krka FARMACÉUTICA, S.L., Madrid, Spain
2
2
Krka France Eurl, Paris, France
1
601
KRKA Pharma GmbH, Wien, Vienna, Austria
1
1
KRKA Farmaceutici Milano S.r.l., Milano, Italy
0
890
KRKA Bulgaria EOOD, Sofia, Bulgaria
0
50
KRKA Sverige AB, Stockholm, Sweden
0
1
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
0
1
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
0
1
Total current trade receivables due from subsidiaries
12,826
18,449
* HCS bvba is owned (100%) by the subsidiary Krka France Eurl.
The repayment period of the non-current loan to Terme Krka was 6 months as at 31 December 2023.
14. Investments
€ thousand
31 Dec 2023
31 Dec 2022
Non-current investments
47,673
110,769
– Investments at fair value through OCI (equity instruments)
26,900
15,988
– Investments at amortised cost (debt instruments)
20,773
94,781
Current investments including derivatives
306,769
52,437
– Investments at fair value through profit or loss
236,751
0
– Investments at amortised cost (debt instruments)
70,018
50,697
– Derivatives
0
1,740
Total investments
354,442
163,206
Investments at fair value through other comprehensive income (OCI) comprised €953 thousand of investments in shares
and interests in companies in Slovenia (2022: €876 thousand), and €25,947 thousand of investments in shares of
companies located abroad (2022: €15,112 thousand).
Non-current investments at amortised cost (debt instruments) amounting to €20,773 thousand are bonds of EU member
countries with a maturity of more than one year and with a credit risk rating that meets the globally understood definition
of investment grade. The credit rating of all bonds falls within the so-called lower medium investment grade.
Current investments at amortised cost (debt instruments) amounting to €70,018 thousand are bonds with a maturity of
less than one year and with a credit risk rating that corresponds to a globally understood definition of investment grade.
35% of these are in the upper medium investment grade and 65% in the lower medium investment grade.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
301
Investments at fair value through profit or loss represent investments in treasury bills of EU countries with a high credit
rating that meets the globally understood definition of investment grade. 59% of the treasury bill portfolio is of high grade
and 41% belong to the prime investment grade.
Investments at amortised cost include investments in Slovenian government bonds which amounted to €6,033 thousand
(2022: €6,533 thousand), while investments in foreign government bonds amounted to €84,758 thousand (2022: €138,945
thousand). The decrease in financial investments at amortised cost in the amount of €53,311 thousand is due to the
maturity of government bonds. The increase in investments at fair value through profit or loss amounting to €571,826
thousand includes acquisitions of treasury bills and the decrease of €339,100 thousand includes disposals of treasury bills
due to their maturity.
Movement of investments
€ thousand
Financial assets
at fair value through
OCI
Investments
at amortised cost
Investments
at fair value through
profit or loss
Balance at 1 Jan 2022
15,860
207,009
33,970
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
Balance at 1 Jan 2023
15,988
145,478
0
Purchases
0
2,103
571,826
Disposals/maturities
0
-53,311
-339,100
Foreign exchange differences
0
-3,479
0
Adjustment to market value
10,912
/
4,025
Balance at 31 Dec 2023
26,900
90,791
236,751
Increases in financial assets comprise new acquisitions and imputed interest, while decreases comprise coupons received,
imputed interest and disposals due to the investments’ maturity. Adjustments of non-current investments at fair value
through OCI are recognised in other comprehensive income in the amount of €10,912 thousand in the reporting period
(2022: €128 thousand). Foreign exchange differences on investments at amortised cost amounting to -€3,479 thousand
(2022: €3,651 thousand) are recognised in financial expenses.
15. Deferred tax assets and deferred tax liabilities
€ thousand
Assets
Liabilities
2023
2022
2023
2022
Investments at fair value through OCI
1,978
1,708
5,284
2,490
Receivables
1,055
1,687
0
0
Dividends
1,800
33
0
0
Provisions for post-employment benefits and other non-current
employee benefits
8,297
7,728
0
0
Total
13,130
11,156
5,284
2,490
Offsetting
-5,284
-2,490
-5,284
-2,490
Net
7,846
8,666
0
0
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
302
€ thousand
Balance
at
1 Jan 2022
Recognised
in income
statement
Recognised
in OCI
Balance
at
31 Dec 2022
Recognised
in income
statement
Recognised
in OCI
Balance
at
31 Dec 2023
Investments at fair value through
OCI
-739
-19
-24
-782
270
-2,794
-3,306
Receivables
1,484
203
0
1,687
-632
0
1,055
Dividends
19
14
0
33
1,767
0
1,800
Provisions for post- employment
benefits and other non-current
employee benefits
11,978
-940
-3,310
7,728
268
301
8,297
Total
12,742
-742
-3,334
8,666
1,673
-2,493
7,846
Deferred taxes were calculated using the changed tax rate, which increased from 19% to 22%. The relevant impact thereof
amounted to €1,368 thousand.
16. Inventories
€ thousand
31 Dec 2023
31 Dec 2022
Materials
249,217
215,961
Work in progress
113,596
122,864
Finished products
110,199
122,144
Merchandise
18,705
12,711
Advances for inventories
22,175
19,298
Total inventories
513,892
492,978
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-offs and value adjustments of inventories are presented within operating expenses and amounted in the
reporting period to €9,808 thousand (2022: €14,194 thousand).
The Company does not pledge inventories as security for a liability.
17. Trade and other receivables
€ thousand
31 Dec 2023
31 Dec 2022
Current trade receivables
463,126
357,889
– Receivables due from subsidiaries
268,438
196,166
– Receivables due from customers other than Group companies
194,688
161,723
Current receivables for other dividends
9,837
171
Current receivables due from others
37,279
12,468
Total trade and other receivables
510,242
370,528
97.9% of receivables due from customers other the Group companies were insured with a credit insurer and 93.4% if taking
into account the deductible (97.3% of such receivables were insured as at 31 December 2022 and 87.6% if taking into account
the deductible).
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
303
Current trade receivables
Current trade receivables due from subsidiaries
€ thousand
31 Dec 2023
31 Dec 2022
KRKA-RUS LLC, Istra, Russian Federation
106,356
76,254
KRKA FARMA LLC, Istra, Russian Federation
58,515
36,260
KRKA Sverige AB, Stockholm, Sweden
21,500
16,395
TAD Pharma GmbH, Cuxhaven, Germany
12,346
2,403
KRKA - POLSKA, Sp. z o. o., Warsaw, Poland
11,693
10,128
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
11,457
8,406
KRKA UK LTD, London, United Kingdom
10,665
4,307
KRKA-FARMA DOOEL Skopje, Skopje, North Macedonia
8,758
9,792
LLC ‘Krka Kazakhstan’, Almaty, Kazakhstan
7,561
9,981
KRKA Farmaceutici Milano S.r.l., Milano, Italy
5,233
5,701
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
2,742
1,301
KRKA Finland Oy, Espoo, Finland
2,420
4,080
KRKA-FARMA d.o.o., Zagreb, Croatia
2,282
2,516
KRKA Belgium, SA, Brussels, Belgium
2,181
3,120
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
1,163
334
Krka France Eurl, Paris, France
1,162
1,948
Krka FARMACÉUTICA, S.L., Madrid, Spain
1,037
1,456
Ningbo Krka Menovo Pharmaceutical Co. Ltd., Ningbo, China
817
417
KRKA Pharma GmbH, Wien, Vienna, Austria
182
861
Receivables due from other Group companies
368
506
Total current trade receivables due from subsidiaries
268,438
196,166
Current trade receivables due from customers other than Group companies
€ thousand
Gross value
Allowances
for
receivables
Net value
at
31 Dec 2023
Net value
at
31 Dec 2022
Trade receivables due from domestic customers other than Group
companies
10,725
13
10,712
9,310
Trade receivables due from foreign customers other than Group
companies
215,586
30,999
184,587
154,898
Deferred income from contracts with foreign customers
-611
0
-611
-2,485
Total current trade receivables due from customers other than
Group companies
225,700
31,012
194,688
161,723
The net amount of the receivable write-offs and impairment disclosed in operating expenses amounted in 2023 to
-€3,960 thousand (2022: €1,548 thousand).
Current receivables due from others
Most of current receivables due from others in the total amount of €37,279 thousand (2022: €12,468 thousand) include
primarily receivables due from the State, whereof receivables due from tax on profit amounted to €21,938 thousand
(no such receivables existed as at 31 December 2022) and VAT receivables amounted to €5,438 thousand (2021:
€4,346 thousand).
Advances for services were recorded at €322 thousand (2022: €859 thousand).
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
304
18. Cash and cash equivalents
€ thousand
31 Dec 2023
31 Dec 2022
Bank balances
140,993
470,297
Total cash and cash equivalents
140,993
470,297
Bank balances includes a deposit in the amount of €118,000 thousand and a maturity of up to 90 days (2022: €223,000
thousand).
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 29th Annual General Meeting on 6 July 2023, the Company’s 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 resolution’s adoption.
The Company is allowed to acquire treasury shares on the regulated securities market at respective market prices at any
time. It may also acquire treasury shares outside the regulated securities market. When purchasing treasury shares on
the regulated market, the purchase price must not be lower than the book value based on the respective latest publicly
published audited financial statements of the Krka Group. Furthermore, the purchase price of the shares must not exceed
25-fold the earnings per share held by the majority stakeholders as calculated based on the latest publicly published
audited consolidated income statement of the Krka Group.
Pursuant to paragraphs 3 and 4, Article 381 of the 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 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
Repurchases in 2023
130,117
107.00
13,923
Balance at 31 Dec 2023
1,915,966
138,489
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 2023 in terms of days are outlined in Note 35 – Repurchase of treasury shares.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
305
Reserves
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 €138,489 thousand and increased by
€13,923 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 2023 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 2023, 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 2023 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 decreased by €3,202 thousand and amounted to €1,105 thousand
as at 31 December 2023. The cumulative change is due to a €10,912 thousand increase in the fair value of financial assets
through OCI (equity instruments) and a decrease due to the restatement of post-employment benefits of €11,621 thousand
by the impact of deferred taxes of €2,493 thousand.
Retained earnings
Retained earnings grew based on the profit of €294,481 thousand. On the other hand, they declined as a result of allocation
of accumulated profit to dividend payment (€204,378 thousand) in accordance with the resolution adopted by the 29th
Annual General Meeting on 6 July 2023; an additional formation of reserves for treasury shares in total of
€13,923 thousand on account of the treasury share repurchase and changes in provisions for termination benefits
amounting to €512 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 €1 thousand of dividends paid in respect of previous
periods (2022: €19 thousand).
Dividend per share
In 2023, the declared gross dividend per share was €6.60 (2022: €5.63).
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
306
Accumulated profit
The table below is presented in €, unlike all other tables in the financial report hereof, where data is expressed in
€ thousand.
€
2023
2022
Compulsory appropriation of profit
Net profit
294,481,380.06
348,215,048.50
– 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
-13,922,553.48
-10,025,534.49
– Allocation to statutory reserves
0.00
0.00
Profit after compulsory appropriation
280,558,826.58
338,189,514.01
– Formation of other profit reserves under the resolution of the Management and
Supervisory Boards
0.00
0.00
Surplus of profit
280,558,826.58
338,189,514.01
Identification of distributable profit
– Surplus of profit
280,558,826.58
338,189,514.01
– Profit brough forward
101,381,119.42
69,973,616.13
Distributable profit
381,939,946.00
408,163,130.14
20. Earnings per share
Basic earnings per share amounted to €9.51 in 2023 showing a decline of 15% over the previous year, when it amounted
to €11.21. The calculation of earnings per share took into account the net profit in the amount of €294,481 thousand
(2022: €348,215 thousand). The weighted average number of shares was accounted for in the calculation for both years
i.e. 30,954,055 shares for 2023, and 31,070,960 shares for 2022. 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 2023
31 Dec 2022
Current borrowings
88,061
53,524
– Borrowings from subsidiaries
87,655
53,375
– Current interest payable
406
149
Total borrowings
88,061
53,524
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
307
Borrowings from subsidiaries, including current interest payable
€ thousand
31 Dec 2023
31 Dec 2022
Current borrowings from subsidiaries
88,061
53,524
TAD Pharma GmbH, Cuxhaven, Germany
85,603
48,467
KRKA Pharma GmbH, Wien, Vienna, Austria
1,382
144
KRKA FARMACÉUTICA, S.L., Madrid, Spain
463
1,365
TERME KRKA, d. o. o., Novo mesto, Slovenia
264
424
KRKA Belgium, SA, Brussels, Belgium
208
927
123 Acurae Pharma GmbH, Cuxhaven, Germany
123
1
KRKA Sverige AB, Stockholm, Sweden
10
2,174
Krka France Eurl, Paris, France
5
1
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
3
18
KRKA Finland Oy, Espoo, Finland
0
3
Total
88,061
53,524
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 2023
€ thousand
Balance
at 31 Dec 2022
Formation
Utilisation
Reversal
Balance
at 31 Dec 2023
Provisions for lawsuits
10,543
0
0
0
10,543
Provisions for post-employment
benefits
70,898
19,082
-3,837
-579
85,564
Provisions for other non-current
employee benefits
15,167
4,228
-1,339
-164
17,892
Total provisions
96,608
23,310
-5,176
-743
113,999
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
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.
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.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
308
The Company was in 2023 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 €984 thousand. The Company has formed
provisions of €543 thousand for this purpose; no provisions were reversed by the Company in 2023 and hence no income
recorded in this relation.
Provisions for obligations to employees arising from post-employment and other non-current benefits are based on
actuarial calculation using the following assumptions:
• 4.07% annual discount rate, which is the yield on 10-year high-yield corporate bonds in the euro area at end-
November 2023 (3.91% discount rate used in 2022); 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 2.5% increase in salaries (2022: 2.0%)
Liabilities for post-employment benefits
€ thousand
2023
2022
Balance at 1 January
70,898
93,963
Current service costs (CSC)
4,176
5,364
Interest costs (IC)
2,772
1,204
Post-employment benefits paid
-3,836
-3,344
Staff departures (reversal)
-579
-1,598
Actuarial surplus/deficit, whereof:
12,133
-24,691
– Change in financial assumptions
3,114
-27,006
– Experience
9,019
2,315
Balance at 31 December
85,564
70,898
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)
-5,811
6,390
6,460
-5,924
23. Deferred income
€ thousand
Balance at
31 Dec 2022
New deferred
income
received
Reversal of
deferred
income
Balance at
31 Dec 2023
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
843
0
-156
687
Subsidy for acquisition of electric drive vehicles
2
0
-1
1
Property, plant and equipment received free of charge
12
2
-4
10
Emission coupons
10
10
-10
10
Subsidy for the purchase of joinery
92
0
-2
90
Subsidy for acquisition of other equipment
2
0
-1
1
Grants received from the European Regional Development Fund
(Farma GRS)
1,855
0
-288
1,567
Total deferred income
2,816
12
-462
2,366
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
309
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 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 realised expenses.
24. Trade payables
€ thousand
31 Dec 2023
31 Dec 2022
Current trade payables
175,847
194,143
Payables to subsidiaries
53,490
87,559
Payables to domestic suppliers
53,639
52,271
Payables to foreign suppliers
68,718
54,313
Total trade payables
175,847
194,143
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
310
Payables to subsidiaries
€ thousand
31 Dec 2023
31 Dec 2022
KRKA FARMA LLC, Istra, Russian Federation
9,091
17,555
KRKA-FARMA d.o.o., Zagreb, Croatia
6,975
24,912
KRKA - POLSKA, Sp. z o. o., Warsaw, Poland
5,702
5,009
KRKA ROMANIA S.R.L., Bucharest, Romania
4,874
4,689
KRKA-RUS LLC, Istra, Russian Federation
3,893
3,761
KRKA UKRAINE LLC, Kiev, Ukraine
3,536
3,199
KRKA Magyarország Kft., Budapest, Hungary
3,378
2,779
KRKA ČR, s. r. o., Prague, Czechia
2,922
3,686
KRKA Slovensko, s.r.o., Bratislava, Slovakia
2,332
2,124
KRKA Farmaceutici Milano S.r.l., Milano, Italy
1,523
1,799
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
1,467
1,060
TAD Pharma GmbH, Cuxhaven, Germany
1,195
3,507
SIA KRKA Latvia, Riga, Latvia
824
772
KRKA Bulgaria EOOD, Sofia, Bulgaria
803
740
Krka France Eurl, Paris, France
624
1,331
UAB KRKA Lietuva, Vilnius, Lithuania
605
1,556
KRKA Sverige AB, Stockholm, Sweden
590
154
LLC KRKA Kazakhstan, Almaty, Kazakhstan
538
506
KRKA-FARMA DOOEL Skopje, Skopje, North Macedonia
469
512
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
452
512
KRKA Pharma GmbH, Wien, Vienna, Austria
347
602
KRKA HELLAS E.P.E., Athens, Greece
327
293
Krka FARMACÉUTICA, S.L., Madrid, Spain
237
531
KRKA Finland Oy, Espoo, Finland
207
286
KRKA Belgium, SA, Brussels, Belgium
196
115
KRKA UK LTD, London, United Kingdom
97
95
123 Acurae Pharma GmbH, Germany
85
0
HCS bvba, Edegem, Belgium*
69
70
KRKA FARMA d.o.o., Sarajevo, Sarajevo, Bosnia and Herzegovina
56
48
TERME KRKA, d. o. o., Novo mesto, Slovenia
45
31
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
18
18
KRKA GCC L.L.C., Dubai, United Arab Emirates
12
0
KRKA USA LLC, Wilmington, USA
1
1
Ningbo Krka Menovo Pharmaceutical Co. Ltd., Ningbo, China
0
5,306
Total liabilities to subsidiaries
53,490
87,559
* HCS bvba is owned (100%) by the subsidiary Krka France Eurl
25. Current contract liabilities
€ thousand
31 Dec 2023
31 Dec 2022
Refund liabilities
13,900
13,094
– Bonuses and volume rebates
13,900
13,094
Contract liabilities
5,053
8,593
– Contract liabilities – advances from other customers
5,053
8,593
Total current contract liabilities
18,953
21,687
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. Bonuses and volume
rebates reduce revenue (generated sales) in the year to which they relate.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
311
26. Other current liabilities
€ thousand
31 Dec 2023
31 Dec 2022
Payables to employees – gross salaries, other receipts and charges
72,498
55,304
Derivatives
2,653
0
Other
2,649
2,068
Total other current liabilities
77,800
57,372
The item ‘Other’ also includes current liabilities to the State on account of VAT payable in the amount of €1,317 thousand
(2022: €739 thousand).
27. Contingent liabilities and commitments
€ thousand
31 Dec 2023
31 Dec 2022
Guarantees issued
15,238
15,195
Other
1,417
1,935
Total contingent liabilities
16,655
17,130
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. Both guarantees are valid until cancelled.
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 2023 to €67,391 thousand
(2022: €74,610 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.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
312
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 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
Balance at 1 Jan 2023
3,942
Increase/Decrease
693
Interest
76
Lease payments
-1,125
Balance at 31 Dec 2023
3,586
– Current lease liabilities
1,022
– Non-current lease liabilities
2,565
The maturity analysis of lease liabilities is disclosed in Note 30 – Financial instruments and financial risks.
Amounts recognised in the income statement
€ thousand
2023
2022
Depreciation of right-of-use assets
1,064
1,062
Interest expenses on lease liabilities
76
49
Expenses relating to current leases
81
1
Expenses relating to leases of low-value assets
7
12
Total amount recognised in income statement
1,228
1,124
29. Financial liabilities
Movement of financial liabilities in 2023
€ thousand
Balance
at 31 Dec 2022
Monetary
changes
Non-monetary changes
Balance
at 31 Dec 2023
Additions/
disposals
Other
Borrowings
53,375
34,290
0
-10
87,655
Interest on borrowings
149
-3,022
3,279
0
406
Dividends
1,303
-204,379
204,377
0
1,301
Leases
3,942
-1,125
693
76
3,586
Total
58,769
-174,236
208,349
66
92,948
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
313
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
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 four 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, 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.
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 and is 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.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
314
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 in 2023 challenging due to the heightened situation in Ukraine, the Russian Federation
and Belarus. We paid particular attention to these markets and maintained our activities to manage trade receivables. The
credit risk management performance in 2023 was favourable. At the year-end, the value of trade receivables was 20%
higher 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, which were mostly exposed to credit risk, was as follows at the reporting date:
€ thousand
Notes
31 Dec 2023
31 Dec 2022
Loans
13
106,942
62,682
Investments at fair value through profit or loss
14
236,751
0
Investments at amortised cost (debt instruments)
14
90,791
145,478
Trade receivables including those due from subsidiaries
17
463,126
357,889
Cash and cash equivalents
18
140,993
470,297
Total
1,038,603
1,036,346
As for the financial assets exposed to credit risk, the loans, investments, trade receivables and receivables due from
subsidiaries, cash and cash equivalents 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 and a €50,000 thousand deposit with a maturity of over 90 days and less than a year with a high credit rating foreign
bank. The residual part of refers to loans granted to Group companies and to housing loans extended to employees.
Investments at fair value through profit or loss represent investments in treasury bills of Western European EU member
countries with a high credit rating (P-1 by Moody’s).
Investments at amortised cost (debt instruments) represent investments in non-current and current bonds of EU member
countries. They are classified as financial instruments with low credit risk because their credit rating is equivalent to the
globally understood definition of ‘investment grade’, which equals a credit rating of Baa2 or above by Moody’s or BBB- or
above by S&P Global Ratings.
Krka’s cash and cash equivalents are represented by bank balances and deposits with a maturity of less than 90 days
with banks in the EU with a high credit rating (P-1 by Moody’s).
Loans by regions
€ thousand
31 Dec 2023
31 Dec 2022
Region Slovenia
54,960
60,419
Region South-East Europe
100
150
Region East Europe
65
40
Region Central Europe
115
121
Region West Europe
51,666
1,952
Region Overseas Markets
36
0
Total
106,942
62,682
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
315
Trade receivables by region
€ thousand
31 Dec 2023
31 Dec 2022
Region Slovenia
10,774
9,359
Region South-East Europe
100,154
81,760
Region East Europe
195,507
141,775
Region Central Europe
81,372
68,088
Region West Europe
68,984
50,955
Region Overseas Markets
6,335
5,952
Total
463,126
357,889
Age analysis of loans as at the reporting date
€ thousand
Gross value at
31 Dec 2023
Allowance at
31 Dec 2023
Gross value at
31 Dec 2022
Allowance at
31 Dec 2022
Not past due
106,935
0
62,673
0
Past due up to 20 days
0
0
0
0
Past due from 21 to 50 days
2
0
2
0
Past due from 51 to 180 days
1
0
2
0
Past due more than 180 days
4
0
5
0
Total
106,942
0
62,682
0
Age analysis of subsidiaries’ trade receivables as at the reporting date
€ thousand
Gross value at
31 Dec 2023
Allowance at
31 Dec 2023
Net value at
31 Dec 2023
Gross value at
31 Dec 2022
Allowance at
31 Dec 2022
Net value at
31 Dec 2022
Not past due
436,088
207
435,881
346,743
182
346,561
Past due up to 20 days
15,746
33
15,713
3,000
16
2,984
Past due from 21 to 50 days
8,893
78
8,815
2,782
8
2,774
Past due from 51 to 180 days
2,155
58
2,097
4,789
27
4,762
Past due more than 180 days
31,256
30,636
620
36,016
35,208
808
Total
494,138
31,012
463,126
393,330
35,441
357,889
The Company is extending payment deadlines to certain 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
€430,348 thousand (2022: €343,445 thousand); past due up to 20 days €16,363 thousand (2022: €2,892 thousand); past
due between 21 and 50 days €13,698 thousand (2022: €5,634 thousand); past due between 51 and 180 days
€2,096 thousand (2022: €2,759 thousand); and past due more than 180 days €620 thousand (2022: €3,158 thousand).
Age analysis of receivables due from customers outside the Group in the Russian Federation as at the reporting
date
€ thousand
Gross value at
31 Dec 2023
Allowance at
31 Dec 2023
Net value at
31 Dec 2023
Gross value at
31 Dec 2022
Allowance at
31 Dec 2022
Net value at
31 Dec 2022
Not past due
0
0
0
331
0
331
Total
0
0
0
331
0
331
Liquidity risk
Business partners value Krka for its excellent financial discipline and stable cash flows. In 2023, we settled all financial
liabilities regularly and 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 €10,050 thousand (in 2022, the Company had agreements with two banks for a total amount of €5,688 thousand). As there
were no negative balances on transaction accounts at 31 December 2023, the bank overdraft remained fully unused.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
316
As at 31 December 2023, the Company had an undrawn credit facility of €20,000 thousand (2022: €20,000 thousand as
well).
At the end of 2023, Krka recorded cash and cash equivalents primarily as cash at bank or short-term deposits with first-
class commercial banks. Other current liquid assets were held in short-term treasury bills of western European countries
with first-class credit ratings.
The world’s most important central banks raised the key interest rates in 2023. Krka recorded favourable returns on cash,
cash equivalents, and low-risk liquid investments, leading to higher interest income and income from other financial
instruments.
The Krka Group oversees liquid assets in line with internal investment diversification rules, taking into account factors such
as interest rate, liquidity, credit, and currency risks.
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 Group companies
is transferred to the controlling company’s master account either automatically daily (cash pooling) or manually through
individual bank transfers. This allows for cash management optimisation, currency risk mitigation, an overview of liquidity
of all Group companies, and enhanced security of cash transactions.
Krka's liquidity ratios remain favourable and stable also at the end of 2023.
Maturity of financial liabilities
Financial liabilities in terms of maturity are outlined in the tables below.
Maturity of financial liabilities as at 31 December 2023
€ thousand
Carrying
amount
Contractual cash flows
Total
Up to
6 months
6–12
months
1–2 years
2–5 years
5-0 years
Financial liabilities
Other borrowings
88,061
88,061
88,061
0
0
0
0
Lease liabilities
3,587
3,752
550
547
980
1,620
55
Trade payables excluding advances
175,847
175,847
175,847
0
0
0
0
Contract liabilities excluding advances
13,900
13,900
13,900
0
0
0
0
Other liabilities excluding amounts owed to
the State, to employees and advances
1,333
1,333
1,333
0
0
0
0
Total financial liabilities
282,728
282,893
279,691
547
980
1,620
55
Derivatives
2,653
2,653
2,653
0
0
0
0
Total derivative financial liabilities
2,653
2,653
2,653
0
0
0
0
Total
285,381
285,546
282,344
547
980
1,620
55
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
5-0 years
Financial liabilities
Other borrowings
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
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
317
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 Company’s
financial position statement 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, financing of subsidiaries provided by the Company and
recorded purchase orders.
The decline in the rouble’s value started in the last quarter of 2022 already and continued until the end of the first half
of 2023. The downward trend was primarily driven by a reduced trade surplus, which resulted in rising inflation on the back
of relatively stable economic activity. Monetary authorities moderated the inflation and depreciation of the rouble in the
second half of the year with several key interest rate hikes and other measures to protect the value of domestic currency.
The value of the Russian rouble denominated in the euro dropped by 21.5% from the beginning to the end of the year and
was, on average, 20.6% lower than in 2022.
The value of the US dollar denominated in the euro declined by 3.5% over the course of 2023 and was, on average,
2.6% lower than the previous year. The euro/US dollar currency pair fluctuated between 1.05 and 1.13 in 2023. The impact
of the US dollar fluctuations on the Krka Group result was offset using financial instruments.
In 2023, the value of the Ukrainian hryvnia continued to be affected by the Russian invasion and uncertainty regarding the
future economic situation in the country.
For the majority of the year, the value of the Polish zloty experienced a gradual strengthening, with further increases
occurring after the parliamentary elections at the end of September. Over the course of 2023, the value of the zloty
increased by 7.9% and the average value was 3.2% higher than in 2022.
Throughout 2023, the Romanian leu remained highly stable. By mid-2023, the long-term trend of the Czech koruna’s
gradual appreciation against the euro shifted to a slow depreciation. Additionally, the Hungarian forint exhibited less
volatility in 2023 compared to 2022.
The Company generally mitigates currency risks by natural hedging, primarily by increasing purchases and liabilities in
currencies in which sales invoices are issued. When this is impossible, we use derivatives or do not hedge the risk.
Generally, only forward contracts are used for hedging.
In 2023, we continued to hedge the US dollar with financial instruments. We used natural hedging to mitigate the risk
exposure to the Russian rouble as there were no suitable financial instruments on the banking market. Due to the declining
value of the Russian rouble denominated in the euro, we generated net foreign exchange losses, primarily in the first half
of 2023.
The increasing exposure from operations and the favourable interest rate differential between the euro and the US dollar
for Krka are the key reasons why we continued to hedge part of our US dollar exposure with financial instruments in 2023.
To hedge the risk of changes in the currency parity between the euro and the US dollar, forward contracts with a principal
amount of $75,000 thousand and a maturity of less than three months were open at the end of 2023.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
318
Exposure to the risk of foreign exchange rate fluctuations
€ thousand
31 Dec 2023
EUR*
RUB
PLN
USD
RON
Loans
106,942
0
0
0
0
Trade receivables
146,120
178,631
53,995
10,485
52,899
Cash and cash equivalents
128,027
8
317
5,417
2,743
Borrowings
-88,059
0
0
-2
0
Current trade payables
-142,611
-3,276
-5,858
-11,643
-4,848
Financial position exposure (net)
150,420
175,363
48,454
4,257
50,794
* EUR is the functional currency and does not represent exposure to foreign currency risk.
€ 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.
Significant exchange rates
Average exchange rate*
Final exchange rate*
2023
2022
2023
2022
RUB
92.49
73.43
99.97
78.43
PLN
4.54
4.69
4.34
4.68
USD
1.08
1.05
1.11
1.07
RON
4.95
4.93
4.98
4.95
* Number of national currency units for one €
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 2023 or 31 December 2022 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 except for the exchange rate, 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
2023
2022
Currency fluctuations for
+1%
-1%
+1%
-1%
RUB
1,754
-1,754
1,235
-1,235
PLN
485
-485
414
-414
USD
43
-43
40
-40
RON
508
-508
429
-429
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.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
319
Interest rate risk
Interest rate risk is the risk of losses that result from a change in interest rates and is related to Krka’s non-current
borrowings and investments.
The interest rate risk with current borrowings and current investments is managed as part of the Group’s liquidity risk.
In 2023, the Company raised non-current borrowings only from subsidiaries.
Exposure to interest rate risk
€ thousand
31 Dec 2023
31 Dec 2022
Financial instruments at fixed rate of interest
192,411
464,464
Financial assets
192,411
464,464
Financial liabilities
0
0
Financial instruments at variable rate of interest
-56,286
-22,775
Financial assets
31,369
30,600
Financial liabilities
-87,655
-53,375
Cash flow sensitivity analysis for variable interest rate instruments
A 100 basis-point increase in the variable interest rate for 2023 would decrease the profit or loss by €563 (a decrease in
the interest rate by 100 basis points would increase the profit or loss by €563 thousand). An increase of 100 basis points
in the variable interest rate would decrease the 2022 profit or loss by €228 thousand (a decrease of the interest rate by
100 basis points would increase the profit or loss by €228 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 2023
31 Dec 2022
Current borrowings inclusive of current portion of non-current borrowings
87,655
53,375
– Other borrowings
87,655
53,375
Current borrowings exclusive of current portion of non-current borrowings
87,655
53,375
Average balance of current borrowings
70,515
54,222
Interest paid in the financial year
3,699
720
Average effective costs of current borrowings
5.25%
1.33%
Currency structure of current borrowings
– €
100%
100%
Structure of current borrowings in terms of interest rates
– Variable
100%
100%
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
320
Capital management
The primary objective of managing the Company’s capital is to ensure a high credit rating and adequate funding ratios so
that the Group can adequately develop its business and maximise 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 2023 or 2022.
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, operating liabilities, current liabilities from contracts with
customers and other current payables less cash and cash equivalents.
Financial leverage ratio
€ thousand
31 Dec 2023
31 Dec 2022
Borrowings
88,061
53,524
Operating liabilities
175,847
194,143
Current liabilities from contracts with customers
18,953
21,687
Other current payables
77,800
57,372
Cash and cash equivalents
140,993
470,297
Net indebtedness
219,668
-143,571
Equity
2,133,258
2,060,792
Equity and net indebtedness
2,352,926
1,917,221
Financial leverage (debt/equity) ratio
9.3%
-7.5%
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
321
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 2023
31 Dec 2022
Carrying amount
Fair value
Carrying amount
Fair value
Non-current financial assets
Loans
41,243
56,013
Investments at fair value through OCI
(equity instruments)
26,900
26,900
15,988
15,988
Investments at amortised cost (debt instruments)
20,773
94,781
Current financial assets
Loans
65,699
6,669
Investments at fair value through profit or loss
236,751
236,751
0
0
Investments at amortised cost (debt instruments)
70,018
50,697
Derivatives
0
0
1,740
1,740
Trade receivables
463,126
357,889
Cash and cash equivalents
140,993
470,297
Non-current financial liabilities
Lease liabilities
-2,565
-2,909
Current financial liabilities
Borrowings
-88,061
-53,524
Derivatives
-2,653
-2,653
0
0
Lease liabilities
-1,022
-1,033
Trade payables excluding advances
-175,847
-194,143
Contract liabilities excluding advances
-13,900
-13,094
Other current liabilities excluding amounts owed to
the State, to employees and advances
-1,333
-1,328
Total
780,122
260,998
788,043
17,728
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 2023.
Fair value of assets
€ thousand
31 Dec 2023
31 Dec 2022
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets at fair value
Investments at fair value through OCI
(equity instruments)
25,514
0
1,386
26,900
14,602
0
1,386
15,988
Investments at fair value through
profit or loss
236,751
0
0
236,751
0
0
0
0
Derivatives
0
0
0
0
0
0
1,740
1,740
Total assets at fair value
262,265
0
1,386
263,651
14,602
0
3,126
17,728
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
322
31. Related party transactions
Intra-group transactions
Transactions (turnover) with subsidiaries in 2023 are presented below.
€ thousand
Sales
Purchases
Borrowings
Loans
TERME KRKA, d. o. o., Novo mesto, Slovenia*
355
712
0
0
KRKA-FARMA d.o.o., Zagreb, Croatia
8,722
28,577
0
0
KRKA ROMANIA S.R.L., Bucharest, Romania
145
21,538
0
0
KRKA-FARMA DOO BEOGRAD, Belgrade, Serbia
36,979
5,153
0
0
KRKA-FARMA DOOEL Skopje, Skopje, North Macedonia
24,827
2,012
0
0
KRKA Bulgaria EOOD, Sofia, Bulgaria
62
3,664
0
0
KRKA HELLAS E.P.E., Athens, Greece
18
1,625
0
0
KRKA FARMA d.o.o., Sarajevo, Sarajevo, Bosnia and Herzegovina
4
411
0
0
KRKA-RUS LLC, Istra, Russian Federation
192,828
12,259
0
0
KRKA FARMA LLC, Istra, Russian Federation
133,482
48,665
0
0
KRKA UKRAINE LLC, Kiev, Ukraine
140
13,667
0
0
LLC ‘Krka Kazakhstan’, Almaty, Kazakhstan
18,255
3,322
0
0
KRKA - POLSKA, Sp. z o. o., Warsaw, Poland
32,608
31,514
0
0
KRKA ČR, s. r. o., Prague, Czechia
141
12,004
0
0
KRKA Magyarország Kft., Budapest, Hungary
81
11,996
0
0
KRKA Slovensko, s.r.o., Bratislava, Slovakia
299
8,666
0
0
UAB KRKA Lietuva, Vilnius, Lithuania
33
4,278
0
0
SIA KRKA Latvia, Riga, Latvia
19
3,098
0
0
KRKA Finland Oy, Espoo, Finland
14,371
1,904
0
0
TAD Pharma GmbH, Cuxhaven, Germany
82,265
9,522
0
0
KRKA Sverige AB, Stockholm, Sweden
45,379
1,959
0
0
KRKA Pharma GmbH, Wien, Vienna, Austria
8,134
1,784
0
0
KRKA Farmacêutica, Unipessoal Lda., Estoril, Portugal
23,036
2,226
0
0
Krka FARMACÉUTICA, S.L., Madrid, Spain
12,523
2,551
0
0
KRKA Farmaceutici Milano S.r.l., Milano, Italy
16,727
7,168
0
0
Krka France Eurl, Paris, France**
4,846
4,303
0
25
KRKA PHARMA DUBLIN LIMITED, Dublin, Ireland
10,952
86
0
0
KRKA Belgium, SA, Brussels, Belgium
14,817
907
0
0
KRKA UK LTD, London, United Kingdom
17,470
840
0
0
123 Acurae Pharma GmbH, Cuxhaven, Germany
94
85
0
0
Ningbo Krka Menovo Pharmaceutical Co. Ltd., Ningbo, China
1,690
15,933
0
0
KRKA USA LLC, Wilmington, USA
0
7
0
0
KRKA GCC L.L.C., Dubai, United Arab Emirates
0
61
0
35
KRKA Netherlands B.V., Breskens, the Netherlands
0
0
0
25
Total
701,302
262,497
0
85
* Including the subsidiary Golf Grad Otočec, d.o.o.
** Including the subsidiary HCS bvba
The transactions between the Company and the above-mentioned subsidiaries were based on sales contracts, which
included rendering products and services at market prices.
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 and
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
323
other 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 0.1200% of voting rights.
Members of the Supervisory Board of the Company held 2,847 shares i.e. 0.0087% of total equity or 0.0092% of voting
rights at the end of 2023.
Equity stakes held by Management and the Supervisory Board members of the controlling company and their
shares of voting rights
31 Dec 2023
31 Dec 2022
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
0.0729
22,500
0.0686
0.0726
Aleš Rotar
13,915
0.0424
0.0451
13,915
0.0424
0.0449
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
0.1200
37,040
0.1129
0.1195
Members of the Supervisory Board (owner
representatives)
Jože Mermal
0
/
/
0
/
/
Luka Cerar*
0
/
/
0
/
/
Borut Jamnik**
0
/
/
0
/
/
Matej Lahovnik
1,000
0.0030
0.0032
600
0.0018
0.0019
Julijana Kristl
230
0.0007
0.0007
230
0.0007
0.0007
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
500
0.0015
0.0016
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
2,847
0.0087
0.0092
3,347
0.0102
0.0108
Total
39,887
0.1216
0.1292
40,387
0.1232
0.1302
* Member of the Supervisory Board since 7 July 2023
** Member of the Supervisory Board until 6 July 2023
Treasury shares were eliminated from the calculation of voting rights (1,915,966 treasury shares as at 31 December 2023
and 1,785,849 as at 31 December 2022).
Remuneration paid to groups of persons (gross)
€ thousand
31 Dec 2023
31 Dec 2022
Members of the Management Board
4,317
4,163
Members of the Supervisory Board
311
274
Total gross remuneration paid to groups of persons
4,628
4,437
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
324
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 Krka for 2023, where
they are shown by payments in each year.
Gross earnings paid to persons employed under individual employment contracts in 2023 amounted to €13,310 thousand
(2022: €12,571 thousand).
Remuneration paid to Management Board members in 2023
€ thousand
Salary – fixed part
Salary – variable part
Total
Gross
Net payout
Net fringe
benefits
and other
earnings
Gross
Net
Gross
Neto
Jože Colarič
526
191
33
858
335
1,384
559
Aleš Rotar
415
154
29
575
224
990
407
Vinko Zupančič
349
131
26
479
187
828
344
David Bratož
342
129
26
470
184
812
339
Milena Kastelic
209
82
19
94
37
303
138
Total remuneration paid to Members of
the Management Board
1,841
687
133
2,476
967
4,317
1,787
€ thousand
Net fringe benefits and other earnings
Executive
health
insurance
Supplemen-
tary pension
insurance
Anni-
versary
bonuses
Other
bonuses
Refund of
work-
related
funds
Pay for
annual
leave
Total
Jože Colarič
27.15
2.90
0.00
1.10
0.06
2.15
33.36
Aleš Rotar
19.27
2.90
0.00
3.12
1.10
2.15
28.54
Vinko Zupančič
16.07
2.90
0.00
4.45
0.89
2.15
26.46
David Bratož
16.96
2.90
0.00
2.68
1.09
2.15
25.78
Milena Kastelic
12.34
2.90
0.00
0.08
1.16
2.15
18.63
Total remuneration paid to
Members of the Management
Board
91.79
14.50
0.00
11.43
4.30
10.75
132.77
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
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
325
€ thousand
Net fringe benefits and other earnings
Executive
health
insurance
Supplemen-
tary pension
insurance
Anni-
versary
bonuses
Other
bonuses
Refund of
work-
related
funds
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
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 2023
€ 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
34.35
24.99
1.55
1.12
0.00
0.00
35.90
26.11
Luka Cerar*
16.33
11.88
0.72
0.52
0.52
0.38
17.57
12.78
Borut Jamnik**
14.52
10.55
1.70
1.24
0.00
0.00
16.22
11.79
Matej Lahovnik
31.67
23.04
2.78
2.02
0.94
0.68
35.39
25.74
Julijana Kristl
29.88
21.73
2.55
1.85
0.55
0.40
32.98
23.98
Mojca Osolnik Videmšek
31.06
22.60
2.78
2.02
0.35
0.25
34.19
24.87
Boris Žnidarič
34.49
25.08
3.12
2.27
0.49
0.36
38.10
27.71
Members of the Supervisory
Board (employee representatives)
Franc Šašek
31.67
23.03
3.28
2.38
0.00
0.00
34.95
25.41
Tomaž Sever
29.88
21.73
2.55
1.85
0.52
0.38
32.95
23.96
Mateja Vrečer
29.88
21.73
2.55
1.85
0.00
0.00
32.43
23.58
Total remuneration paid to
Members of the Supervisory
Board
283.73
206.36
23.58
17.12
3.37
2.45
310.68
225.93
* Member of the Supervisory Board since 7 July 2023
** Member of the Supervisory Board until 6 July 2023
Pursuant to a resolution of the 29th Annual General Meeting of the Company held on 6 July 2023, the members of its
Supervisory Board receive attendance fees amounting to €360.00 gross per member for their attendance. The members
of the Supervisory Board Committee shall receive an attendance fee for attending a meeting of the Supervisory Board
Committee equal to 80% of the attendance fee for attending a meeting of the Supervisory Board. The attendance fee for
a correspondence meeting corresponds to 80% of the attendance fee otherwise payable. Notwithstanding the above and
irrespective of the number of meetings attended in a financial year, a Supervisory Board member shall be entitled to
payment of attendance fees until its total amount reaches 50% of the basic remuneration of the Supervisory Board member
for performing his/her duties on an annual basis. Notwithstanding the foregoing and irrespective of the number of
attendances at meetings of the Supervisory Board and the committees in each financial year, a Supervisory Board member
who is a member of a committee or Supervisory Board committees shall be entitled to payment of attendance fees until
its total amount reaches 75% of his/her basic remuneration for the performance of his/her duties as a member of the
Supervisory Board on an annual basis.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
326
In addition to the attendance fees, a member of the Supervisory Board receives a basic remuneration for the performance
of his/her duties amounting to €21,000.00 gross per year. The President of the Supervisory Board shall also be entitled to
a payment of 50% of the basic remuneration for the performance of his/her duties as a member of the Supervisory Board,
and the Vice-President or Deputy President of the Supervisory Board shall be entitled to a payment of 10% of the basic
remuneration for the performance of his/her duties as a member of the Supervisory Board. Members of the Supervisory
Board Committee shall receive an additional payment of 25% of the basic remuneration for their duties as a member of
the Supervisory Board. The Chairperson of the Committee shall be entitled to a supplement of 37.5% of the basic
remuneration for the performance of his/her duties as a member of the Supervisory Board. Notwithstanding the above and
irrespective of the number of committees of which he/she is a member or which he/she chairs in any financial year, a
member of an Supervisory Board Committee shall be entitled to additional remuneration for the performance of his/her
duties until the total amount of such remuneration reaches 50% of the basic remuneration for performing the duties of a
member of the Supervisory Board on an annual basis. If the term of office of a member of the Supervisory Board is less
than one financial year, notwithstanding the above and irrespective of the number of committees of which he is a member
or which he chairs, a member of a Supervisory Board committee shall be entitled in each financial year to additional
remuneration for performing his/her duties until the total amount of such additional remuneration reaches 50% of the basic
remuneration for performing his/her duties as an Supervisory Board member in respect of the eligible remuneration for the
period of his/her term of office during the financial year.
Supervisory Board members are also entitled to an extra payment for special duties, which involve the performance of
unusual duties of above-average complexity over a prolonged period of time, normally lasting at least one month. The
Supervisory Board shall be empowered to decide, 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 special tasks allowance in accordance
with this decision of the Annual General Meeting. The Supervisory Board shall also be empowered to decide on the
payment of additional remuneration to Supervisory Board members for special assignments due to objective
circumstances in the Company. Additional payments for specific tasks shall be admissible only for the time when the
specific tasks are actually carried out. Exceptionally, the Supervisory Board may also decide to do so retrospectively (in
particular in case of special duties due to objective circumstances in the Company), but not more than for the previous
financial year. The additional remuneration that a member may receive in any one year in respect of special duties may
amount to a maximum of 50% of the member’s basic remuneration for the performance of his/her duties as a member of
the Supervisory Board (irrespective of the number of special duties). In setting the amount of the additional remuneration,
account shall be taken of the complexity of the special duties and the increase in workload and responsibility involved. The
additional payment shall be calculated on the basis of the time actually spent on the specific task.
The Supervisory Board members shall receive the basic salary, the function allowance and the special duties allowance
in pro rata monthly payments to which they are entitled for as long as they hold office and/or perform the special duties.
The monthly payment shall be one-twelfth of the above annual amounts. In view of the circumstances, the extra payment
for special duties may also be made in a single lump sum when the special duty is completed.
The limitation of the amount of the total amount of the attendance fees and the payment of additional allowances to a
member of the Supervisory Board shall in no way affect the member’s duty to actively participate in all meetings of the
Supervisory Board and of the committees’ meetings of which he/she is a member, nor his/her statutory responsibility.
Members of the Supervisory Board are entitled to reimbursement of the travelling and 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
commuting and accommodation on work-related travels). The amount due to the Supervisory Board member under the
above provision is increased by the relevant levies so that the net payment corresponds to the reimbursement of actual
travel expenses. For the purpose of determining the mileage allowance, account shall be taken of the distances between
places published on the AMZS web site. Overnight accommodation expenses may be reimbursed only if the permanent
or temporary residence of the Supervisory Board member or Supervisory Board Committee member is at least 100
kilometres from the place of work, if he/she was unable to return because no public transport was scheduled to run, or for
other objective reasons.
In 2022 and 2023, members of the Management Board and the Supervisory Board, the employee representatives, did not
receive any loans from the Company.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
327
Loans to staff employed under individual employment contracts amounted to €143 thousand at 31 December 2023
(2022: €152 thousand). In the reporting period, repayments of loans by staff employed under individual employment
contracts reached €58 thousand (2022: €27 thousand). The loans to the above-mentioned persons were earmarked for
housing purposes.
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 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 Group, but had other assets of €1,383 thousand
(2022: €1,658 thousand), the largest item whereof are property, plant and equipment (office premises and vehicles). Krka
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 2023, the number of employees in the Ukrainian subsidiary was 382, and
at the end of 2022 it was 367. Ukraine is one of Krka’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. The largest increases compared to the previous year are
in inventories and trade receivables outside the Group. As at 31 December 2023, the number of employees in the Russian
Federation subsidiaries was 1,859 compared to 1,925 at the end of 2022. The exposure to foreign exchange rate risk is
disclosed in Note 30 – Foreign exchange risk). The Russian Federation is Krka’s largest single market (Note 3 – Revenue
from contracts with customers).
Krka's investment in the subsidiary in Ukraine amounted as at 31 December 2023 to €9.1 thousand and the investment in
the subsidiary in the Russian Federation totalled to €134,086 thousand. Krka did not increase its investments in its
subsidiaries in Ukraine and the Russian Federation in 2023. Due to the situation in these countries and consequently
higher level of uncertainty in these markets, the weighted average cost of capital (discount rate) remains at a higher level.
Management considers this to be an indicator of potential impairment. Following an impairment test, it was concluded that
no impairment was necessary (Note 12 – Investments in subsidiaries).
As at 31 December 2023, the Company recorded €3,075 thousand of receivables due from customers and subsidiaries in
Ukraine (2022: €162 thousand), whereof €39 thousand due from the subsidiary (2022: €30 thousand) and €3,037 thousand
due from customers outside the Krka Group (2022: €132 thousand). As for the Russian Federation, the Company recorded
€164,870 thousand of receivables due from customers and subsidiaries (2022: €143,005 thousand), whereof €164,870
thousand to subsidiaries (2022: €142,674 thousand) and €0 due from customers outside the Krka Group
(2022: €331 thousand) (Note 30 – Credit risk). The exposure to exchange rate risk is outlined in Note 30 – Foreign
exchange rate risk.
In 2023, all payments between the subsidiaries in the Russian Federation and the controlling company were made without
specificity.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
328
33. Educational structure of employees
2023
2022
Average
headcount
Share (%)
Average
headcount
Share (%)
PhD
173
2.7
170
2.7
MSc
269
4.2
264
4.2
University education
2,128
33.2
2,015
32.2
Higher professional education
915
14.3
871
13.9
Vocational college education
255
4.0
263
4.2
Secondary school education
1,926
30.0
1,900
30.4
Skilled workers
685
10.7
697
11.2
Unskilled workers
60
0.9
74
1.2
Total (average for the year)
6,411
100.0
6,254
100.0
34. Transactions with the audit firm
€ thousand
2023
2022
Contract value of auditing the annual consolidated and separate financial statements
performed by the audit firm KPMG Slovenija, d. o. o.
128
118
Contract value of auditing the subsidiaries’ reporting for the purpose of preparing the
consolidated financial statements, performed by companies within the KPMG network
93
80
Contract value of auditing the subsidiaries’ local financial statements, performed by
companies within the KPMG network
45
43
Total contract value of audit services
266
241
Contract value of non-audit services rendered by the audit firm KPMG Slovenija, d. o. o.
12
9
Total contract value of services
278
250
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
329
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)
27 Jan 2023
637
99.09
63
10 Mar 2023
307
104.84
32
25 Jul 2023
996
111.68
111
30 Jan 2023
688
99.21
68
13 Mar 2023
441
105.43
46
26 Jul 2023
792
111.43
88
31 Jan 2023
436
100.51
44
14 Mar 2023
842
105.17
89
27 Jul 2023
972
112.29
109
2 Feb 2023
716
106.01
76
15 Mar 2023
500
104.67
52
16 Aug 2023
1,302
108.80
142
3 Feb 2023
500
106.17
53
16 Mar 2023
873
104.76
91
17 Aug 2023
1,299
104.69
136
6 Feb 2023
593
106.43
63
17 Mar 2023
877
105.78
93
18 Aug 2023
1,348
106.99
144
7 Feb 2023
837
103.11
86
20 Mar 2023
857
104.87
90
21 Aug 2023
1,389
105.17
146
9 Feb 2023
291
105.17
31
21 Mar 2023
575
105.66
61
22 Aug 2023
1,199
104.17
125
10 Feb 2023
862
106.30
92
22 Mar 2023
950
107.23
102
23 Aug 2023
1,421
101.96
145
13 Feb 2023
933
106.43
99
23 Mar 2023
600
105.26
63
24 Aug 2023
1,472
100.63
148
14 Feb 2023
790
107.09
85
24 Mar 2023
810
106.17
86
25 Aug 2023
946
104.05
98
15 Feb 2023
957
106.84
102
27 Mar 2023
1,024
105.41
108
28 Aug 2023
1,615
104.60
169
16 Feb 2023
969
106.17
103
28 Mar 2023
500
105.97
53
29 Aug 2023
1,645
104.29
172
17 Feb 2023
574
107.13
61
29 Mar 2023
1,010
107.05
108
30 Aug 2023
1,100
104.08
114
20 Feb 2023
993
106.75
106
30 Mar 2023
722
106.74
77
31 Aug 2023
1,655
104.09
172
21 Feb 2023
865
106.49
92
31 Mar 2023
506
108.24
55
1 Sep 2023
1,696
104.05
176
22 Feb 2023
843
106.17
90
3 Apr 2023
1,048
107.42
113
4 Sep 2023
1,160
103.99
121
23 Feb 2023
510
107.17
55
4 Apr 2023
1,082
107.17
116
5 Sep 2023
1,761
103.67
183
24 Feb 2023
1,022
106.50
109
5 Apr 2023
1,010
108.37
109
6 Sep 2023
1,829
104.67
191
27 Feb 2023
821
105.79
87
6 Apr 2023
1,008
109.05
110
7 Sep 2023
801
108.33
87
28 Feb 2023
983
106.04
104
11 Apr 2023
1,091
110.23
120
8 Sep 2023
984
109.71
108
1 Mar 2023
950
106.55
101
12 Apr 2023
631
114.05
72
11 Sep 2023
890
110.19
98
2 Mar 2023
500
106.67
53
13 Apr 2023
1,181
110.82
131
12 Sep 2023
795
109.18
87
3 Mar 2023
470
107.19
50
14 Apr 2023
1,179
111.18
131
13 Sep 2023
1,700
106.98
182
6 Mar 2023
873
107.48
94
17 Apr 2023
500
111.48
56
14 Sep 2023
1,677
105.55
177
7 Mar 2023
800
106.11
85
20 Jul 2023
817
113.85
93
15 Sep 2023
1,096
105.43
116
8 Mar 2023
831
105.04
87
21 Jul 2023
869
113.07
98
18 Sep 2023
1,566
106.16
166
9 Mar 2023
911
105.28
96
24 Jul 2023
928
112.30
104
19 Sep 2023
689
105.67
73
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
330
Date
No. of
shares
Average
share price
(€)
Value of
treasury
shares
(€ thousand)
Date
No. of
shares
Average
share price
(€)
Value of
treasury
shares
(€ thousand)
Date
No. of
shares
Average
share price
(€)
Value of
treasury
shares
(€ thousand)
20 Sep 2023
765
107.17
82
23 Oct 2023
406
107.25
44
24 Nov 2023
1,109
106.05
118
21 Sep 2023
180
107.21
19
24 Oct 2023
686
108.18
74
27 Nov 2023
924
106.63
99
22 Sep 2023
1,111
107.29
119
25 Oct 2023
685
107.88
74
28 Nov 2023
1,142
107.35
123
25 Sep 2023
400
108.80
44
26 Oct 2023
705
106.80
75
29 Nov 2023
1,134
108.50
123
26 Sep 2023
42
108.00
5
27 Oct 2023
834
106.00
88
30 Nov 2023
850
107.17
91
27 Sep 2023
257
108.54
28
2 Nov 2023
875
105.67
92
1 Dec 2023
1,182
107.46
127
28 Sep 2023
717
109.61
79
3 Nov 2023
955
107.21
102
4 Dec 2023
893
107.84
96
29 Sep 2023
50
108.18
5
6 Nov 2023
800
108.05
86
5 Dec 2023
1,211
108.01
131
2 Oct 2023
610
109.01
66
7 Nov 2023
700
108.17
76
6 Dec 2023
101
108.17
11
3 Oct 2023
683
108.69
74
8 Nov 2023
887
107.92
96
7 Dec 2023
1,270
109.30
139
4 Oct 2023
708
107.39
76
9 Nov 2023
440
109.35
48
8 Dec 2023
1,034
109.35
113
5 Oct 2023
665
107.34
71
10 Nov 2023
888
108.17
96
11 Dec 2023
1,310
108.67
142
6 Oct 2023
636
106.90
68
13 Nov 2023
897
109.40
98
12 Dec 2023
1,351
108.93
147
9 Oct 2023
651
106.44
69
14 Nov 2023
545
109.22
60
13 Dec 2023
1,140
108.83
124
10 Oct 2023
657
106.55
70
15 Nov 2023
884
108.17
96
14 Dec 2023
1,254
109.99
138
11 Oct 2023
663
106.67
71
16 Nov 2023
677
106.79
72
15 Dec 2023
1,261
109.55
138
12 Oct 2023
646
106.36
69
17 Nov 2023
590
107.84
64
18 Dec 2023
495
108.68
54
13 Oct 2023
647
106.44
69
20 Nov 2023
917
107.17
98
19 Dec 2023
1,234
108.67
134
16 Oct 2023
520
107.29
56
21 Nov 2023
896
107.38
96
20 Dec 2023
927
109.18
101
17 Oct 2023
616
107.38
66
22 Nov 2023
965
106.94
103
21 Dec 2023
800
109.30
87
18 Oct 2023
490
107.68
53
23 Nov 2023
1,012
105.95
107
22 Dec 2023
1,135
109.90
125
19 Oct 2023
714
108.90
78
Total
purchases in
2023
130,117
107.00
13,923
The average share price includes also the commission paid.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
331
36. Events after the reporting date
The 2023 financial statements were not impacted by the events after the end of the period.
Establishment of a joint venture in India
On 25 January 2024, Krka notified investors that it had reached an agreement with Indian company Laurus Labs Ltd. to
establish a joint venture, Krka Pharma Pvt. Ltd., in Hyderabad, India. Under the agreement, Krka holds a 51% stake and
Laurus a 49% stake in the new company.
Krka and Laurus have been contractual partners for years, with their respective businesses complementing one another.
After discussing opportunities to strengthen their cooperation and leveraging synergies by combining know-how and
resources, the two partners agreed to establish and develop the new company gradually. The joint venture will devise a
strategy to penetrate the Indian market and other markets beyond the European Union, where neither party currently offers
its finished products.
The newly established company’s registered capital amounts to €50 million in Indian rupees. Depending on financing
needs, Krka and Laurus agreed to subscribe to the registered capital in stages. The joint venture will develop its business
activities step by step.
Repurchase of treasury shares
Krka repurchased 44,992 treasury shares between 1 January 2024 and 18 March 2024, and thus held 1,960,958 treasury
shares at the end of this period, accounting for 5.98% of total shares.
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
332
Independent auditor’s report
2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
333
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334
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2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
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2023 Annual Report – Financial statement of Krka, d. d., Novo mesto
338
2023 Annual Report – Signing of 2023 annual report and its constituent oarts
339
SIGNING OF THE 2023 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 2023 Annual
Report of Krka and the Krka Group, and hence the 2023 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