The Management Board of Krka, d. d. held a press conference presenting to the public the unaudited financial statements of the Krka Group and the Krka Company for 2017. President of the Management Board Jože Colarič told the press the Group had sold €1,266.4 million worth of products and services in the reported period, and increased sales by 8% from 2016. Unaudited Group net profit totalled €152.6 million, an increase of €44.1 million or 41% compared to 2016. Krka Company sales amounted to €1,197.8 million, generating an unaudited net profit of €153.7 million. Krka’s 2017 annual report will be released on Thursday, 19 April 2018.
Krka Group sales by Region
The largest sales region was East Europe, where sales totalled €388.2 million, which is 30.7% of overall sales and represents a year-on-year increase by 17%. This was the highest growth recorded among all Krka’s sales regions. The Russian Federation remains Krka’s key and largest individual market; sales value there amounted to €270.9 million, up 20%. Prescription pharmaceuticals recorded a 21% increase and contributed the most to increasing Krka’s market share. Double-digit sales growth was also reached in Tajikistan (30%), Armenia (27%), Kazakhstan (22%), Azerbaijan (22%), Ukraine (14%), Belarus (13%), and Georgia (12%).
The second largest region was Central Europe, where sales value totalled €303.6 million, up 6% compared to 2016, representing a 24% of overall Group sales. In Poland, the Regions’ key and largest market, product sales were €145.0 million, up 3%. Sales growth was also recorded in the Czech Republic (21%), Latvia (16%), Estonia (9%), Slovakia (5%), and Hungary (3%).
The third region in terms of sales value was West Europe, where Krka Group generated 22.6% of overall sales. Sales revenues there totalled €286.1 million, up 1% compared to 2016. The highest sales were recorded in the markets of Germany, France, and Spain. Double-digit market growth was recorded in the United Kingdom (36%), Portugal (19%), Ireland (18%), Italy (16%), Scandinavian countries (13%), and France (11%).
In the markets of Region South-East Europe, product sales amounted to €160.9 million, an increase by 6% compared to the same period last year, representing 12.7% of overall Krka Group sales. In Romania, the largest market in the Region and Krka’s key market, product sales were €54.2 million, which is at the 2016 level. Sales increased in all markets of the Region, apart from Romania and Bosnia and Herzegovina.
In Slovenia Krka sold €88.0 million worth of products and services (of which €35.7 million were health resort and tourist services with 6% sales growth), representing 6.9% of overall Group sales. The value of product sales was up 3%. With a 9% market share, Krka preserved the leading position among all pharmaceutical companies in Slovenia.
In Region Overseas Markets, Krka sold €39.5 million worth of products in 2017 (3.1% of Group sales) and recorded an 11% increase. The biggest contribution was made by individual markets of the Middle East, the Far East, and Africa, especially Iran and the Republic of South Africa.
Krka Group sales by product and service group
The most important group of products in terms of sales value remains prescription pharmaceuticals, which contributed €1,046.1 million or 82.6% of the Krka Group sales in the reported period, up 9% from the previous year. Sales of prescription pharmaceuticals exceeded €1 billion for the first time in Krka’s history.
As far as sales of prescription pharmaceuticals are concerned, medicines for the treatment of cardiovascular diseases remained the key therapeutic group in 2017, followed by pharmaceuticals for diseases of the central nervous system, and medicines for alimentary and metabolic diseases.
In 2017, sales of new products, i.e. products launched in individual markets in the past five years, accounted for 33% of the Krka Group overall sales. The most important new products were Pragiola* (pregabalin), launched at the end of 2014, and Dulsevia* (duloxetine), launched in 2015. They ranked among the 20 leading Krka’s products in terms of sales.
Medicines containing perindopril (Prenessa*, Co-Prenessa*, Amlessa*, Co-Amlessa*) remained the leading group in terms of sales in 2017. They were followed by medicines containing losartan (Lorista*, Lorista H*, Tenloris*), atorvastatin (Atoris, Atordapin*), pantoprazole (Nolpaza*), and valsartan (Valsacor, Valsacombi*, Vamloset*). Among the ten leading Krka’s prescription pharmaceuticals in terms of sales were medicines containing esomeprazole (Emanera*), rosuvastatin (Roswera*, Rosudapin*), enalapril (Enap, Enap-H*, Elernap*), tramadol (Doreta*, Tadol), and clopidogrel (Zyllt*).
Non-prescription product sales amounted to €119.2 million (9.4% share in overall Krka Group sales), a year-on-year increase by 7%. Sales of animal health product totalled €63.2 million (5% share in overall Krka Group sales), up 1% from 2016.
Sales of health resort and tourist services increased by 6% to €35.7 million and accounts for 2.8% of overall Krka Group sales. Other sales revenues amounted to €2.2 million.
Research and Development
In 2017, the Krka Group acquired marketing authorisations for 23 new products (17 prescription pharmaceuticals, three non-prescription products, and three animal health product) in 46 pharmaceutical forms and strengths. In the same period, a total of 555 new marketing authorisations were obtained for 119 products in various markets.
Krka submitted patent applications for four inventions and three international patent applications on the basis of prioritised applications from 2016. They registered 57 trademarks in Slovenia, and submitted 73 international and 32 national trademark applications.
In 2017, the Krka Group allocated €105.1 million to investments, of which the controlling company invested €85.3 million and subsidiaries €19.8 million. Investments have primarily increased and modernised their production capacities, and research and development capacities. In Slovenia, Croatia, and the Russian Federation, approximately thirty investment projects, which will increase the production capacities, are in progress.
At the end of 2017, the Krka Group had 10,832 employees, of which 5134 (47.4%) worked in Slovenia and 5698 (52.6%) abroad. The share of employees with at least university-level qualifications is 55%, or 6,011 employees. They include 175 employees with a doctoral degree and 364 employees with a master’s degree or specialisation.
Krka Group development strategy 2018–2022
In the new five-year strategic period, sales are projected to grow by at least 5% per annum on average in terms of volume/value.
Carefully thought-out investments and an increased scope of contract manufacturing will drive down the value of the Group’s investments, which will amount to an average of €136 million per year in the coming five-year period. In addition to organic growth, Krka intends to expand by means of acquisitions and long-term business combinations, including joint ventures in case of commercially appealing and available acquisition targets. The primary objectives are to acquire new products and enter to new markets.
In addition to the existing product range, which represents the so-called gold standard, Krka will maintain the largest possible share of new products in overall sales and of vertically integrated products. It will continue launching products on selected markets as one of the first generic pharmaceutical companies. It will strengthen the pharmaceutical and chemical industry and in this respect expand its range of prescription pharmaceuticals for key therapeutic areas – particularly medicines for cardiovascular diseases, medicines for diseases of the central nervous system, and medicines for diseases of the alimentary tract and metabolism – as well as those for high-potential areas – such as analgesics and oncology medications, antidiabetics, anti-virus medicines and antibiotics – while also entering new areas. Innovative generic products will be introduced in key therapeutic areas, such as fixed-dose combinations of two or three substances, new strengths, pharmaceutical forms, and new delivery systems. Krka will also embark on the area of similar biological medicines, placing priority focus on treatments for autoimmune diseases and diabetes. Krka will also strengthen selected therapeutic areas of non-prescription products and animal health products, particularly products for companion animals. R&D expenditure will account for up to 10% of sales in the strategic period.
Krka will focus on European markets, the Chinese market and the markets of Central Asia, striving to better utilise the sales potential of all sales regions. It will strengthen the professional and cost synergies within the Krka Group, maximising the utilisation of competitive advantages of the business environments of Krka companies abroad. Particular focus will be placed on the Chinese market in the coming five-year period, where major opportunities are arising in view of the increasing use of modern generic medicines and changes in the regulatory environment.
Plans for 2018
Krka Group sales are planned to total €1.3 billion in 2018 with profit of €153 million. The Management Board will strive to exceed Krka’s planned goals in case of favourable business conditions. Krka intends to allocate €135 million for investment projects to increase and upgrade production capacities and the infrastructure. In 2018, Krka plans to increase the number of employees in Slovenia and abroad by 2%; the total number of regular employees is projected to exceed 11,200.
* Products marketed under different brand names in individual markets are marked with an asterisk. Products may be marketed also under the Krka trademark in individual markets.