1. 3. 2017

Krka’s business performance in 2016

8 min. read

The Management Board of Krka, d. d., held a press conference presenting to the public the unaudited performance results of the Krka Group and the Krka Company for 2016. President of the Management Board Jože Colarič told the press the Group had sold €1,174.4 million worth of products and services in the reported period. The volume of sales increased by 11%, and the value of sales by 1%. Unaudited Group net profit totalled €108.5 million. Krka Company sales amounted to €1,071.7 million, unaudited net profit totalling €102.9 million. Operating results agree with the forecast published by the Management Board in November 2016.

Krka Group sales by Region
The largest sales region was East Europe, where sales totalled €332.3 million, which is 28.3% of overall sales and represents a year-on-year increase by 1%. Sales volume in this region was up 12%. The Russian Federation remains Krka’s key and largest individual market; sales value there amounted to €225.9 million, up 1%. Sales were substantially influenced by the unfavourable exchange rate of the rouble because in 2016 rouble averaged more than 8% lower than in 2015. Sales value in roubles was up 13%, and the volume of sales increased by 11%.

The second largest region was Central Europe, where Krka generated 24.4% of overall sales. The volume of sales increased by 6% and sales value totalled €286.7 million, up 2% compared to 2015. Sales growth was recorded in all markets of the region, apart from Lithuania and Hungary. In Poland, the Region’s key and largest market, product sales were €140.6 million, up 3%. Sales value denominated in the złoty and sales volume both increased by more than 7%.

The third region in terms of sales value was West Europe, where Krka generated 24.1% of overall sales. Sales revenues there totalled €282.4 million. The volume of sales was up almost one fifth compared to 2015; however, due to price cuts, sales value decreased by 8%. The highest sales were recorded in the markets of Germany, Spain and France. In Germany, Krka’s most important Western European market, product sales totalled €92.6 million, a year-on-year increase by 8%; the volume of sales was up 42%.

In the markets of Region South-East Europe product sales in 2016 amounted to €152.4 million (13% of overall Krka Group sales), an increase by 9%, or €12.8 million, compared to 2015. This is the highest absolute sales growth rate among all Krka sales regions. Sales increased in all markets of the Region, apart from Bosnia and Herzegovina, and Montenegro. In Romania, the largest market in the Region and one of Krka key markets, product sales were €54.4 million, up 17% from 2015.

In Slovenia Krka sold €85.1 million worth of products and services (of which €33.7 million were health resort and tourist services), representing 7.2% of overall Group sales. The value of product sales was up 4%. With a 9.2% market share, Krka preserved the leading position among all pharmaceutical companies in Slovenia.

In Region Overseas Markets Krka sold €35.5 million of products in 2016 (3% of Group sales). Sales in this Region increased by 12% in relative terms, the most among all Krka sales regions.

Krka Group sales by product and service group
The most important group of products in terms of sales value remains prescription pharmaceuticals, which contributed €963.7 million or 82.1% of revenues in the reported period, down 1% from the previous year.

Atoris (atorvastatin) remained the leading prescription pharmaceutical in terms of sales value in 2016. Also in the group of the leading ten prescription pharmaceuticals were Lorista (losartan), including in combination with a diuretic; Nolpaza (pantoprazole); Prenessa (perindopril), including in combination with a diuretic; Valsacor (valsartan), including in combination with a diuretic; Enap (enalapril), including in combination with a diuretic; Emanera (esomeprazole); Roswera (rosuvastatin); Zyllt (clopidogrel) and Karbis (candesartan), including in combination with a diuretic. Certain pharmaceuticals are marketed under different brand names in individual markets.

Non-prescription product sales amounted to €111.2 million (9.5% share in overall Krka Group sales), a year-on-year increase by 3% in terms of value, and the volume of sales was also up 3%. Products with highest sales were: Septolete, Herbion and Bilobil. The sales of animal health products amounted to €62.8 million (5.3% share in overall Krka Group sales), up 20% from 2015. Sales volume increased by 24%. Products with highest sales were: Milprazon, Floron  and Fypryst. The sales of health resort and tourist services were up 9% to €33.7 million, which is 2.9% of Krka Group sales. Other sales revenues amounted to €3.0 million (0.2% of Krka Group sales).

Research and development
In 2016 the Krka Group obtained marketing authorisations for 19 new products (16 prescription pharmaceuticals, one non-prescription product and two animal health products) in 41 pharmaceutical dosage forms and strengths. Applying different marketing authorisation procedures in different countries Krka obtained 546 new approvals for prescription pharmaceuticals, non-prescription products and animal health products.

Krka submitted patent applications for three inventions and two international patent applications on the basis of prioritised applications from 2015. They registered 84 trademarks in Slovenia, and submitted 38 international and 61 national trademark applications.

In 2016 the Krka Group allocated €131.8 million to investments, of which the controlling company invested €80.7 million and subsidiaries, €51.1 million. Investments have primarily increased and modernised their production capacities, and research and development capacities.

At the end of 2016 the Krka Group had 10,889 employees, of which 4,955 (45.5%) worked in Slovenia and 5,934 (54.5%) abroad. From 2015, the number of employees increased by 325 (3%), with 277 hired abroad and 48 in Slovenia.

Krka Group staff with a university level education or higher represent 57% of the entire team, which is 6,159 employees; 169 of them have a doctoral degree and 396 have master’s degrees or have completed postgraduate specialisations.

Plans for 2017
Krka Group sales are planned to total €1.220 billion in 2017, with profit expected to exceed the profit reported for 2016.

They maintained main business guidelines, such as vertical integration, predominant organic growth, maintaining high share of sales from new products and volume sales increase. They will strive to complete their product offerings in their key therapeutic groups such as medicines for the cardiovascular system, alimentary tract & metabolism and central nervous system. The competitive advantage of the product portfolio, especially for medicines for cardiovascular system and analgesics, will be strengthened with fixed dose combinations that represent an attractive market niche. They will continue to supplement their product portfolio with oncology medicines that will be supported by new production capacities in Croatia.

Improvement of profitability will be achieved with further sales growth, improved product mix and costs reduction. They should achieve growth with both existing and newly-launched products. Special cost savings team is preparing innovative cost reduction initiatives. Compared to traditional cost reducing measures they have been implementing for years, these new approaches are affecting certain corporate standards in R&D, manufacturing and IT as well as cooperation with suppliers of goods and services.

They have earmarked approximately €174 million for investment projects, primarily aimed at increasing and modernising production capacities and development infrastructure. In addition to organic growth, they will intensify activities in the area of acquisitions and joint ventures in 2017.

They will increase the number of employees both in Slovenia and abroad, together by 4%, with the total number of employees planned to exceed 11,400.