Krka d d : Business development 1-9 2023, FY 2023 estimates and 2024 guidance

Krka Group

Investor Day 2023

Krka, d. d., Novo mesto (KRKG SV)

Business development 1-9 2023, FY 2023 estimates and 2024 guidance

Jože Colarič

President of the Management Board and CEO

OUR MISSION

Living a healthy life.

OUR VISION

We are consolidating our position as one the leading

generic pharmaceutical companies in the world.

OUR VALUES

Speed and flexibility

Partnership and trust

Creativity and efficiency

Well-diversified activities

Providing access to high quality affordable medicines

Krka's presence on 70+ markets in 6 sales regions

49 subsidiaries outside Slovenia:

45% of all Krka Group workforce

Sales regions

Region Slovenia

Region Central Europe

Region East Europe

Region South-East Europe

Region West Europe

Region Overseas markets

Manufacturing locations

Slovenia I Russian Federation

Poland I Germany I Croatia I China

55+ million patients daily use Krka's

medicines worldwide

17 bn FDF produced annually in various

therapeutic groups

Operating in many low to middle income countries, creating savings for patients & healthcare systems

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Krka Group sales by regions

Sales 1-9 2023: EUR 1 billion 334.9 million

of goods and services (EUR +98,4 million, +8%)

		Overseas Markets	Slovenia
		EUR 55.5 million
		EUR 86.7 million
	+13%	EUR +6.4 million
	EUR +9.5 million +12%
	West Euope	4.2%6.5%		South-East Europe
			EUR 187.2 million
	EUR 266.4 million			+8%
+10%		14.0%	EUR +14.4 million
EUR +24.0 million	20.0%

Central Europe	22.8%	32.5%	East Europe
	EUR 434.1 million
EUR 305.0 million
		EUR +19.9 million	+5%
+9% EUR +24.1 million
www.krka.biz		4	Nominal and relative change compared to same period year-over-year

Largest market - Russian Federation: sales of €260m, +3%

218 240 240 251 260

1-9 2019 1-9 2020 1-9 2021 1-9 2022 1-9 2023

Second largest - Poland: sales of €137m, +6%

119 124 126 128 137

								million
1-9 2019	1-9 2020	1-9 2021	1-9 2022	1-9 2023
	EUR
Third largest - Germany: sales of €72m, +12%
in
55	73	59	64	72		Sales
1-9 2019	1-9 2020	1-9 2021	1-9 2022	1-9 2023
Fourth largest - Ukraine: sales of €56m, -7%
55	60	70	60	56
1-9 2019	1-9 2020	1-9 2021	1-9 2022	1-9 2023

Krka Group sales by product and service groups

Sales 1-9 2023: EUR 1 billion 334.9 million

of goods and services (EUR +98,4 million, +8%)

• Prescription drugs remain the most important group of products sold by the Krka Group.

82.0%

Health-resort &
tourist services	2.8%
+15% EUR 36.9 million
EUR +4.9 million	6.2%
Animal health products	9.0%
EUR 82.9 million

+19% EUR +13.5 million

Non-prescription products

EUR 120.7 million

EUR -1.8 million

Prescription Pharmaceuticals		❖ The greatest absolute growth
	in sales (EUR +81.7 million)
EUR 1 billion 94.3 million	+8%
EUR +81.7 million	was	achieved		with
		prescription drugs,	while	the
		greatest	relative	growth
		(+19%)	was achieved	with
		animal health products.
-1%

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Nominal and relative change compared to same period year-over-year

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Research and development

In the first nine months of 2023, we registered 7 new products (5 prescription and 2 animal health products).

• On the European markets, we added dapagliflozin to the range of medicines for the treatment of diabetes in the form of film-coated tablets. Dapagliflozin is a representative of the most modern group of drugs, which, in addition to successfully lowering glycated hemoglobin, shows beneficial effects on the heart and blood vessels and kidney function.
• We increased the range of Krka products in China. We have registered a drug with tert-butylamineperindoprilat from the group of drugs for the treatment of cardiovascular diseases. We also obtained the registration of the modern antithrombotic drug rivaroxaban in the form of film-coated tablets and the drug with gliclazide in the form of modified-release tablets, which is used for the treatment of diabetes.
• Our range for companion animals was expanded to include the Arocenia (maropitant) solution for injection, for cats and dogs. The agent affects the central nervous system, reducing nausea and preventing vomiting after surgery and chemotherapy, thus improving post-operative recovery.
• Krka was the first producer of generic medicines in the European Union to complete the decentralised procedure for Robexera/Rogiola (robenacoxib) chewable tablets for dogs. It is available in four strengths. Robenacoxib is a nonsteroidal anti-inflammatory agent used in veterinary medicine for the relief of pain and treatment of chronic osteoarthritis inflammation, and for the control of inflammation and pain after soft tissue surgical procedures.
• We obtained a Certificate of Suitability to the monograph of the European Pharmacopoeia (CEP) for our antibacterial agent norfloxacin as incorporated into the Krka product Nolicin.
• We finalised 408 marketing authorisation procedures, obtaining approvals for 216 prescription pharmaceuticals and 3 non-prescription products, thus bringing medications closer to patients in numerous markets.

R&D costs amounted to EUR 127.3 million (9.5% of revenue, +7% compared to the same period last year).

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Investments

Investments in the Krka Group between January and September 2023 totalled €81.5 million, of which the controlling company allocated €69.0 million.

• Investments in the modernization and increase of capacity at the Notol plant, the OTO solid form production plant and the Ljutomer plant are underway. In Novo mesto, we are continuing the construction of the 6-storymulti-purpose building Paviljon 3. It will contain spaces for the expansion of the microbiology laboratory and additional spaces for several organizational units.
• In Slovenia, we completed investments in the modernization and increase of capacity at the Beta plant in Šentjernej, in the reorganization of the development and control centers, and in the increase of the capacity for filling tubes in the plant for the preparation of powder and liquid products in Bršljin.
• In the production and distribution center in Jastrebarsko, Croatia, we are installing a new secondary packaging line, which will increase the capacity for the production of veterinary products in solid pharmaceutical forms by a quarter. We are also upgrading other facilities and systems.
• New facilities for API development and production are planned in Krško, Slovenia. This is one of Krka's largest future projects. Based on project documentation and an IED OVD environmental impact assessment we have obtained the integral building permit for the Sinteza 2 plant and laboratories for chemical analyses. The environmental permit has also been granted, and construction works are scheduled to start after the permit becomes final. The investment is estimated at €163 million and pursues our strategy of vertical integration, from the development of a product to its production.

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FX impact for the period January - September 2023

The ruble exchange rate stabilized in the second half of 2023

NFR in million €		Year 2022			Year 2023
160		139	Annual NFR			NFR 1-9/2023		180
120			+ € 52 million			- € 34 million		160
80								140
40	Q1	Q2	Q3	Q4	Q1	Q2	Q3	120
0	100
-2						-4
-40		-15		-14	-16	80
-80				-71			RUBLE VALUE 60
							Index 1.1.2022 = 100

• The value of the ruble declined by 24% in the first nine months of 2023, with most of the depreciation occurring in the first half of the year.
• The Krka Group's net financial result (NFR) for the first nine months of 2023, which includes the currency result, income and expenses from financial investments, as well as other financial income and expenses, amounted to minus € 34 million.
• The main reason for the negative NFR was the negative foreign exchange result due to the depreciation of the ruble. The total impact of all other NFR components was positive.
• In the first nine months of 2023, the Krka group's NFR was € 156 million worse than in the same period last year, mainly due to the strong strengthening of the ruble in the first half of 2022.

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Profit and loss statement of the Krka Group

Costs by business function

					Change	Index
EUR thousands	1-9 2023	Share in %	1-9 2022	Share in %	2023-2022	2023/22
Revenues	1,340,536	100.0	1,242,203	100.0	98,333	108
Cost of Goods sold	569,320	42.5	561,071	45.2	8,249	101
Gross profit	771,216	57.5	681,132	54.8	90,084	113
Other operating income	4,423	0.3	5,197	0.4	-774	85
Selling and distribution expenses	250,794	18.7	266,742	21.5	-15,948	94
R&D expenses	127,344	9.5	119,481	9.6	7,863	107
General and administrative expenses	77,227	5.7	66,322	5.3	10,905	116
Operating profit	320,274	23.9	233,784	18.8	86,490	137
Net financial results	-33,664	-2.5	122,405	9.9	-156,069
Profit before tax	286,610	21.4	356,189	28.7	-69,579	80
Income tax	51,051	3.8	54,521	4.4	-3,470	94
Net profit	235,559	17.6	301,668	24.3	-66,109	78
Basic earnings per share - EPS (in EUR)	7.60		9.68		-2,08	78

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Krka Group business indicators

EUR thousands	1-9 2023	1-9 2022
Gross profit	771,216	681,132
EBITDA	398,235	314,192
Operating income (EBIT)	320,274	233,784
Net profit	235,559	301,668
Gross profit margin	57.5%	54.8%
EBITDA margin	29.7%	25.3%
EBIT margin	23.9%	18.8%
Net profit margin	17.6%	24.3%
Return on Equity (ROE)	14.8%	19.9%
Return on Assets (ROA)	11.8%	15.3%

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