Krka

Environmental & Social Information • Nov 16, 2023

Environmental, Social and Governance (ESG) Policy

The Supervisory Board of Krka, tovarna zdravil, d. d., Novo mesto at their 22th regular meeting of 15 November 2023 and the Management Board of Krka, tovarna zdravil, d. d., Novo mesto at their 14th regular meeting of 6 November 2023 adopted the policy as follows:

ENVIRONMENTAL, SOCIAL ANO GOVERNANCE (ESG) POLICY OF KRKA, D. D., NOVO MESTO

The Environmental, Social and Governance (ESG) Policy {hereafter the ESG Poficy) applies to the parent company Krka, tovarna zdravil, d. d., Novo mesto (hereafter Krka, the parent company, or the company) and its subsidiaries, composing the Krka Group together with the parent company (hereafter the Krka Group). The ESG Policy pursues the commitment to apply sustainability princi plesa nd encourage their use in business throughout the value creation chain.

1. THE KRKA GROUP

The Krka Group consists of the pa rent company, Krka, d. d., Novo mesto, a subsidiary in Slovenia (Terme Krka, d. o. o., Novo mesto), and subsidiaries outside Slovenia. The composition of the Krka Group is published in annual reports. 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 parent company in Slovenia and in subsidiaries in the Russian Federation, Poland, Croatia, and Germany. In addition to production, these subsidiaries, except Krka-Rus in the Russian Federation, also deal with marketing and sales. In China, production ta kes place in production facilities taken out on a long-term lease by the joint venture. Other subsidiaries outside Slovenia carry out marketing and/or sales of Krka products, but do not have production capacities. Terme Krka, d. o. o., Novo mesto is our subsidiary that deals with health resorts and tourist services. This industry is not our core business, and accounts for under 3% of total revenue of the Krka Group.

Sustainable development addresses environmental, social and corporate governance issues and is materia I for Krka's potential for long term value creation and successful implementation of the business strategy. We are aware that Krka's stakeholders find sustainability issues, achieving the related goals, and transparent sustainability reporting increasingly important. We therefore integrate sustainability in our strategy and everyday business operations. We encourage apptication of sustainability principles throughout the va lue creation chain, constantly upgrade sustainability governance, and build sustainability culture. We carefully plan the production and all processes that impact living in the environment where we operate. We earn trust of our patients and partners through knowledge, professional and ethical approaches, and high quality at all levels of our operations. We endeavour for constant improvement in protection of nature, health and safety, and participate in development of our social environment in line with sustainable development principles. We endeavour to respect human rights and freedoms, exercise labour rights, prevent discrimination, and encourage diversity and equal opportunities.

Our core business rests on principles of ensuring innovative, high-quality, effective, safe, and affordable generic medicines, which we supply on average to over 50 million of patients in over 70 countries across the world every day. We are aware of our great social responsibility, economic impact on wider environment, and stakeholders' great expectations, which we satisfy with exemplary corporate

governance, responsible management, and investing in sustainable activities. We endeavour to increase our positive economic and social impact, create value for our stakeholders, and at the same tirne reduce natural and social environment burdens in exchange for the approva I referred to as the 'social licence to operate' (SLO).

Since the foundation of our company, sustainability has been thoroughly integrated in our operations and it facilitates our competitive edge, success and developrnent. It enables us to achieve stable business results and at the same tirne protect healthy and clean environment far present and future generations. We endeavour for integral and transparent reporting in cornpliance with legislation and international sustainability reporting standards. We accomplish this in particular by publishing interim and annual business reports.

Our business operations, products and services have material impact on our interna! and external stakeholders. Their present and planned activities impact, ar even significantly impact, our potential to successfully pursue our strategy and achieve the strategic business goals. The dentification and engagement of key stakeholders are therefore essential for sustainable long-term business operations of the Krka Group. This process is therefore strategic, planned, and ongoing. We maintain a constant and proactive dialogue in order to understand the needs of the stakeholders and social environment. We regularly conduct materiality assessment of sustainabilitytopics (hereafter the ESG topics), update reviews of key stakeholders, and engage them in identification and specification of the material ESG topics of the Krka Group.

lntegrated, strategic and efficient sustainability governance of the Krka Group is essential far managing sustainability risks, identification of sustainability impacts, and detection of sustainability trends and opportunities for responsible management of natural and social environments and compliant and transparent corporate governance. This dictates strategic assessment of suitability of the Krka Group business model, and provides for long-term sustainable business operations, growth, and development.

We at the Krka Group are committed to high standards of ethics and integrity. The Krka Group's Code of Conduct is a collection of principles and rules of ethical conduct, good business practices, and standards of conduct in the Krka Group, which are binding for all Krka employees. The Code is also the basis for all other interna! rules. The basic principle is acting in accordance with the highest moral standa rds, princip les governing integrity, loyalty, and professionalism, and consistent compliance with regulations and guidelines provided by international organisations far the pharmaceutical industry, and with Krka's interna! rules. The Code is made public on our website. AII our business partners are informed on the Code, and we expect thern to comply with it when conducting business with us.

Another fundamental document is the Quality Monual. It regards various aspects of operations (e.g. quality, the environment, health and safety at work, foodstuffs safety, information security, and business continuity) in an integrated management system owing to similarity of principles. The established quality system demonstrates to the interested public that we manage and regularly improve all said areas.

The rnain purpose of the Quafity Manuol isto:

• Describe the describe the management and quality control systern of processes and products;
• Set up, document, implement and maintain the integrated rnanagement systems and constantly improve them in accordance with the requirements of ISO 9001, ISO 14001, FAO/WHO Food Standards (Codex Alimentorius), CAC/RCP 1-1969 (hereafter HACCP), ISO 45001, 1S0/IEC 27001

(hereafter ISO 27001), 1S0 22301 and Regulation (EU) 2017/745 (Medica/ Device Regu/ation, MDR);

• Consider the requirements of all the prescribed good pharmaceutical practices (GxPs);
• Fulfil the customers' requirements;
• Consider ali legal and other responsibilities;
• Describe processes and their mutual impacts;
• Ensure the continuity of implementation of the quality policy, environmental policy, food safety policy, health and safety at work policy, business continuity management policy and information protection policy;
• lnform and train the employees so that they understand their role and responsibilities at the Krka Group, and their duties in the integrated ma nagement system;
• lnform business partners (Le. buyers, suppliers, service providers), supervisory bodies, and other stakeholders about the policy principles and the quality system at the Krka Group.

Engagement modality
• Responsible, professional communication about products through various media, including social networks and digital channels
• Long-term partnerships Annual online survey on satisfaction with core aspects of business • operations (general satisfaction, satisfaction with products, sales personnel, order processing and fulfilment, and complaint procedures) Suggestions for improvement • Regular information on products provided in print and electronic • forms • Direct contacts through medical representatives in 40 countries Organisation and support for professional and educational • meetings Advanced digital content for the professional community • • Feedback and opinion obtained through daily contact and market
research lnternational conferences for employees (various topics) • • Measuring organisational climate • Works Council • Worker assemblies • Krka's appraisal interview
Long-term cooperation and provision of reliable documents •
Cooperation with secondary schools, universities and science • institutes Cooperation under the Krka Prizes Fund tor young researchers •
• Meetings with investors at the Krka headquarters • Participation in investor conferences Roadshows in financial centres around the world • Conference calls with investors following the release of business • results • Regular annual general meetings • Communication with financial media

Key stakeholder groups and stakeholder engagement

Strategic partners and suppliers	• Participation in tenders and competitions
	• Working meetings
	• Auditing
Local communities and non governmental organisations	ldentification of needs of local and social environments through • various activities related to donations and sponsorships, annual meetings 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 • • lnformation on websites
Professional associations and interest groups	• Work with specialised development institutions and companies lnvolvement in the development of professional, scientific and • regulatory environments by participating in various professional and industry associations in Slovenia, the European Union, and other countries

We also identify major sustainable development goals (SDG) of the United Nations specified in the 2030 Agenda that the Krka Group actively helps achieve through its operations. Krka contributes through its business operations to eight of total seventeen goals. The number 3 ('Geod health and well-being') is the most important goal and we can help attain it with our cere business and through our mission 'living a healthy life'. We also consider goals set by the United Nations in our strategy and main sustainable development goals.

Main sustainable development goals (SDGs) from the perspective ofthe Krka Group

Reference: www.un.org

2. VISION, MISSION, AND VALUES

MISSION

Living a healthy lije.

VISION

We are continually consolidating our position as one oj the leading generic pharmaceutica/ companies in the world.

We base our achievements on sustainable development, remammg independent and strengthening long-term business connections and partnerships in development, product supply, and marketing.

VALUES

• Speed and /Jexibility
• Partnership and trust
• Creativity and efficiency

Krka's mission isto enable healthy and high quality living. We can achieve this only through long-term balanced sustainable development while keeping the environment clean and healthy for present and future generations. In achieving our mission, we focus on central ESG topics, most of all product quality and patient safety, as well as accessible healthcare. Our mission, vision and values serve as the foundation of our governance processes and business decisions and allow us to implement our business strategy, achieve our long-term strategic goals and value creation for stakeholders.

3. SUSTAINABILITY IN THE KRKA GROUP

The Krka Group considers all three sustainability pillars, i.e. the natura! and social environments and corporate governance, in alt its operations and includes sustainability principles in its strategic directions and the business model. We are aware that our economic responsibility and impact matter. We strategically and systematically identify and manage sustainability risks and opportunities.

The specified material ESG topics are evaluated in a wide and open process of materiality assessment that involves all business functions. Relevant departments analyse our stakeholders' interests with direct and indirect communication (e.g. interpersonal relationships, questionnaires, public announcements). We periodically hold in-depth interviews with representatives of major stakeholder groups in connection with the ESG to check their understanding and prioritization of the ESG topics and the extent of expected disclosures.

Key stakeholders and 33 material ESG topics of the Krka Group divided in six groups are identified in the materiality assessment process. Material ESG topics and their management are detailed in the annexes to the ESG Poficy. The Management Board of Krka considers and approves all the above-mentioned aspects.

The concept of double materiality applies in identification of materiality or relevance. We apply the double materiality principle to specify central ESG topics with reference to: (i) the impact of the Krka Group operations on stakeholders (the impact on the environment, society and economy is 'impact materiality¹ ) , and (ii) the impact ofthe natural and social environments on the business operations and value ofthe Krka Group (the impact on business operations and position is 'financial materiality'), which agrees with the specification given by the European Commission in 2019. The business strategy of the Krka Group, which includes the integral sustainability strategy, specifies sustainability goals for each ESG topic and relevant indicators (KPls) for monitoring their implementation, as well as the schedule for achieving them. The Sustainability Committee collects information about strategic ESG objectives, which are integrated into the Krka Group's strategy. The Management and Supervisory Boards of Krka approve them when adopting the business strategy. The Supervisory Board discusses various sustainability topics at regular meetings and regularly receives information on material sustainability activities at the Krka Group.

The process of stakeholders engagement and continued interaction with them form a constant and important base for adequate identification of material ESG topics and any respective upcoming changes. Any potential changes to ESG topics are subjected to approval by the Management Board of Krka.

Materiality matrix of the Krka Group

The first graph shows t he Krka Group's key groups of ESG topics and their impact on the group business operations and materiality of individual impacts of the ESG topic groups on the environment, society, or stakeholders. The second graph shows individual topics with most significant impact on the Krka Group's operations and on stakeholders. They are ranked according to thelr materiality or the degree of impact, from high to very high. Colours indicate which ofthe six topic groups each topic belongs to.

The annexes to the ESG Policy indude specification of material ESG topics and description of relevant ma nagement a pproaches.

4. PURPOSE, OBJECTIVES AND IMPLEMENTATION OF ESG PDLICY

The basic objective of integrating sustaina bility principles and sustainability governance of the Krka G roup in management processes and business decisions isto increase recognition of sustainability risks and opportunities that could in the long term help to improve their management and increase the success of our business operations. We at the same tirne optimise long-term value creation far ali stakeholders and achieve sustainable growth. We know that all material ESG topics can result in financial consequences far Krka's business operations.

Sustainability is the long-term driver of company's growth and development and the basis far achieving the competitive edge, business objectives and implementation of strategic guidelines.

Sustainability governance will allow the Krka Group to:

• Use natural resources and materials more effectively lncrease productivity and cost effective ness;
• lncrease innovation lncrease productivity, cost effectiveness, competitiveness, and accessibility of medicines;
• lncrease reputation, recognition and quality of our products and services Grow and strengthen the competitive position;
• Make new investments in research and development Reduce our impact on the environment, add new forms of treatment, new products and grow;
• Keep the Krka Group attractive for employees and potential recruits Facilitate long-term success;
• Reduce business operation, regulatory, and other risks lmprove risk management;
• Manage the vertically integrated business process and supply chain effectively Ensure a flexible business model, high quality products, and improved market supplies;
• lncrease attractiveness of the Krka Group for current and new shareholders lncrease the value of the Krka Group;
• Decrease the environmental impact lncrease the environmental responsibility and reduce the environmental burden.

The ESG Policy is the basic building block of ESG governance and outlines the fundamental principles and efforts that the entire Krka Group follows throughout its business operations. It also forms the base tor our business strategy, above ali for determining explicit management approaches to material sustainability areas and setting the related sustainability objectives and relevant key periormance indicators (KPls). We pursue a business strategy in consideration of sustainable development in order to increase our contribution to attaining sustainable development goals and targets of the 2030 Agenda of the United Nations.

We aim for transparent and open communication about sustainability with interna! and externa1 stakeholders and wider public. We undertake to report on milestones, achievements, activities and indicators related to sustainable development in the Krka Group public releases. We intend to disclose in our annual reports detailed sustainability indicators, activities, and processes related to sustainability governance, considering in the process the Globo/ Reporting lnitiative Standards (GRi Standards) and EU legislation composed of Corporate Sustoinability Reporting Directive (CSRD}; and the European

Sustainability Reporting Standards (ESRS), Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (the EU Taxonomy), draft Directive of the European Parliament and of t he Council on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937 (Directive CS3D), other legal acts, and the established sustainability reporting best practices. We plan to communicate with internal stakeholders through various communication channels, including regular bulletins the Utrip and Bilten, the interna! corporate website Krkanet, and many other forms of communication. We plan to present material ESG topics and our achievements on our corporate website and by various social media. We aim to raise awareness through wide communication of how important sustainability approach is for all everyday activities of Krka and our stakeholders, and communicate in an open and transparent manner that Krka is aware of its impact on the environment, society and corporate governance, which we manage comprehensively.

The ESG Policy is the commitment to promote and implement sustainability principles in business operations. AII subsidiaries ofthe Krka Group must conduct business in compliance with it, and at the same tirne also consider the prevailing nature of national legislation of the country where they operate.

The ESG Policy outlines sustainability commitments of the Krka Group companies for present and future and represents the grounds far upgrading sustainability governance in relation to the environment, society and corporate governance, which we at Krka have been considering far decades. The Corporate Governonce Policy of Krka, d. d., Novo Mesto, adopted by the Supervisory and Management Boards, is another important document on corporate governance of Krka that- in addition to all rules, codices, standard operating procedures and other documents regulating business operations of Krka - also considers sustainability.

We undertake to strive for promot ion of sustainability principles and sustainability culture, and their implementation throughout all our activities and business functions, and to spread sustainability culture among interna! stakeholders and support their education. We intend to encourage sustainability approaches and introduce them throughout the entire value creation chain, from suppliers to end users, and share them with other external stakeholders as welL In compliance with the draft Directive on Corporate Sustainability Due Diligence (Directive CS3D), we intend to upgrade the value chain due diligence and endeavour t o correctly identify actual or potential negative impacts, assess them, prevent and mitigate ar eliminate actual negative impacts, and reduce their extent as much as possible, especially with respect to the environment and human rights. We plan to regularly review adopted policies for suitability and efficiency. We are aware of the impact, expectations and responsibilities we have, and would therefore like to set a good example for others as regards sustainable operations, spread our positive impact, contribute to and attain the desired positive effects. We would like to create new business opportunities, develop together with our partners and attract to long-term cooperation investors and stakeholders who highly regard sustainability principles. Patients, customers, and other users of our products and services, employees, strategic partners and other stakeholders and investors, who provide capital for Krka's business operations, are our main concern. Another extremely important area is the natura! environment. We aim to reduce our environmental impact and attain t he goals of the European green agenda, for example to reduce our carbon footprint and become carbon neutral by 2050. Also, we intend to achieve the highest possible degree of alignment of our business operations that generate revenue, investments, and expenses with stipulations and technical criteria of the EU Taxonomy Regu/ation (Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment) in order to help attain the six environmental goals from the Taxonomy Regulation.

We plan to verify our sustainability orientation and compliance through independent institutions and agencies to score relevant ESG ratings and work on their further improvement.

5. SUSTAINABILITY GOVERNANCE OF THE KRKA GROUP

The Supervisory and Management Boards of Krka play the leading role in supervision of sustainability governance. In compliance with the Articfes of Association of Krka, the Supervisory Board has the authority to confirm the strategy of the Krka Group that includes sustainable development. The Supervisory Board also confirms the ESG Policy and any related potential amendments. Senior management bodies are responsible for strategic supervision of the sustainability. The Management Board is responsible tor integration of the sustainability strategy and establishing sustainability culture, values and operative processes that allow tor the Krka Group's long-term existence and value creation. The board approves ali material and relevant resolutions on sustainability (i.e. specification of stakeholders and ESG topics; materiality assessment; sustainability risks from the Risk Register; etc.) and is responsible for establishing effective mechanisms tor internat controls and risk management and transparent sustainability reporting in compliance with regulations and good practices. The board also specifies and approves strategic priorities, goals, indicators, and mechanisms tor monitoring the achievement of goals (i.e. KPls) and monitors their implementation. Acting in line with the Rules of Procedure of the Management Board, the Management Board has appointed one of its members to be specifically in charge of sustainability and upgrading sustainability governance system at the Krka Group.

Sustainability governance involves clear definition of responsibilities and powers in relation to sustainability at the Krka Group level. The orga nisational structures and individua ls at the Krka Group level are accountable far implementation and extension of sustainability principles as tollows:

a) The Management Board member in charge of sustainability

The Management Board member in charge of sustainability manages and supervises performance of the sustainability project team and leads the Sustainability Committee.

b) Sustainability Committee

The Sustainability Committee was established by the resolution adopted by the Management Board at their 15th regular meeting of 22 December 2022.

List ofthe Sustainability Committee members:

• President of the Management Board and CEO
• The Management Board member in charge of sustainability (presides the committee)
• Other Management Board members
• Sustainability Coordinator
• Assistant Chief Executive
• Director of Marketing
• Director of Sales
• Director of Quality Management
• Director of Corporate Performance Management
• Director of Human Resources
• Head of Public Relations

• Head of Health and Safety at Work
• Director of Pharmaceutical R&D
• Director of Purchasing
• Technical Director
• Head of Environmental Protection

Deputies or assistants to the officers listed above can represent individual organisational units ar departments if so agreed with managements of the respective organisational units or departments. Other employees and potential independent external members with relevant sustainability-related skills can also participate in the board meetings if so proposed by the Management Board member in charge of sustainability.

The Sustainability Committee meets at least once a year. The body has the authority to review implementation of the ESG Poficy and sustainability-related strategy. It also monitors implementation of key activities and reviews attainment of sustainability goals, relevant KPls, and other important sustaina bility indicators. It discusses proposed amendments and upgrades to the ESG Policy and proposed strategic sustainability goals, KPls, and the related potential changes. It examines proposals for changes to the key strategic sustainability areas and materiality assessments. It also discusses sustainability initiatives and determines key activities and duties in the sustainability area for the upcoming period.

c) ESG Coordinator

The ESG coordinator is a Sustainability Committee member and serves asa link between the Sustainability Committee, member of the Management Board in charge of sustainability, and ESG managers. The ESG coordinator supervises, facilitates and encourages implementation of the ESG Policy and other resolutions adopted by the Sustainability Committee. The officer reports to the Sustainability Committee on sustainability achievements, attainment of sustainability objectives and activities, assesses the adequacy ofthe ESG Policy, proposes modifications, and participates in sustainability reporting. The officer follows trends, legislation and good sustainability governance practices. The coordinator actively contributes to increasing sustainability awareness and exploiting sustainability-related opportunities and participates in educating and informing employees. The person is the main promoter of sustainability culture besides the Management Board and Sustainability Committee members and ESG managers. The coordinator participates in inclusion of stakeholders and sustainability-related communication with investors, media, expert community, and other relevant stakeholders. The person coordinates and controls the performance of ESG managers in cooperation with the Management Board member in charge of sustainability. The coordinator also collaborates with potential external experts and consultants far sustainability.

d) ESG Managers

ESG managers are appointed to key business areas relevant to sustainable operations. Their duty isto promote strategic sustainability activities and sustainability culture in order to enhance attainment ofthe strategic sustainability goats in their respective areas. They report to the Sustainability Committee and the ESG coordinator on performance and achievement of goals. They participate in stakeholder engagement in their respective areas, and asses and monitor sustainability risks and opportunities. They also asses adequacy of the ESG Policy and propose changes to the coordinator. They follow trends, legislation and geod practices far sustainable approach in their respective business areas, and based on this propose the

related activities and participate in sustaina bility reporting. They actively contribute to increasing sustainability awareness and exploiting sustainability-related opportunities and participate in educating and informing employees.

e) Other boards are: (i) Director's Committee; (ir) Sales Committee; (iii) Development Committee; (iv) Quality Committee; (v) lnvestments Committee; (vi) Human Resource Committee; (vii) lnformation Technology Committee; (viii) Economics and Finance Committee; and (ix) Corporate ldentity Committee.

Other relevant boards, which assist Krka's Management Board, discuss specific ESG topics in more detail. They specialise in individual business areas. They are composed of Management Board members, managerial staff, and experts in respective areas. They prepare business policies and strategic guidelines tor their respective areas and hold certain decision-making authorities relating to the implementation of annual plan s. Certain committees also have authorities relating to ris k management.

6. FINAL PROVISIONS

The ESG Policy enters in force on the day when adopted by Krka's Supervisory and Management Boards. When adopted, it becomes binding far all Krka Group subsidiaries; however, national legislation of the country where a subsidiary operates prevails. Shareholders and the interested public are informed on adoption of the ESG Policy by a public release in the Ljubljana Stock Exchange etectronic information dissemination system (SEOnet), the Polish Financial Supervision Authority electronic information dissemination system (ESPI), and on Krka websites.

The ESG Policy is a pubtic document and is published on the company's website in Slovene and English. Adequacy of the policy is generally reviewed once a year. Complexity, constantly changing regulatory and business environment, and the importance of the sustainability for the Krka Group call tor systematic and regular supervision of the policy's implementation and adequacy. The ESG Policy can be amended when proposed so by the Sustainability Committee members or ESG managers. The Management and Supervisory Boards approve the amendments. The Management Board also gives approvals to any changes made to the material ESG topics from Annex 1. The new ESG Poficy must be properly made pubtic.

Date of approval by the Supervisory Board	Description
16 November 2022	Adoption of the ESG Policy
15 November 2023	ESG Policy renewal

Previous editions of the ESG Policy

Jože Colarič

President ofthe Management Board

Jože Mermal

President _,. ofthe upervisory Board

ANNEX 1: IDENTIFIED MATERIAL ESG TOPICS AND GOVERNANCE APPROACHES

1. PRODUCT QUALITY AND PATIENT SAFETY

a) Qualitv. safety and efflcacy of medicines and APls

Medicines on the market must satisfy quality, safety and efficacy requirements. We examine quality of finished products, semi-products, and intermediate products and incoming materials with many laboratory tests under state-of-the-art, validated analytical methods, equipment and procedures. AII our prescription pharmaceuticals and non-prescription products are tested and comply with all relevant regulations. We also monitor ongoing stability of products and active ingredients and guarantee for high quality, safety and efficacy throughout their shelf lives. Product quality is determined d uring the development stage of a product and specified in the marketing authorisation documents. We follow standard procedures and requirements throughout the production process, from the purchase of incoming and other materials and services to manufacture of finished products, quality control, warehousing, and distribution. This ensures that our products comply with relevant quality standards and the marketing authorisation documents.

We promptly incorporate legislative changes in our work processes to follow good practices from the development phase onwards. As regards medicines used in clinical trials, we apply new tools and extensive expertise to ensure the level of patient and volunteer safety required by law. The system for following new developments allows us to receive information on tirne and timely introduce it into the processes, which ensure compliance of product manufacturing with legislation and guidelines.

Preclinical research and clinical tria 1s serve to examine efficacy and safety of medicines already at their development stages. Medicines made by Krka are equivalent to the originators' products. Pharmaceutical equivalence is demonstrated by in vitro dissolution testing, and therapeutic equivalence by in vivo bioequivalence studies, respectively. In both cases we compare our medicine with that of the originator's. We regularly test and prove efficacy a nd safety of our products in clinical practice. Clinical research often includes preregistration (phase 111), post-authorisation (phase IV), and pharmacovigilance studies.

We test quality of active ingredients by many laboratory tests, in which we use most sensitive, reliable and validated analytical methods and devices. Owing to improved synthesis procedures and analyses, quality of the generic active ingredient can be even higher than that of the originator's.

The Ce rtificate of Suita bi lity ( CoS) issued by the Eu ro pea n Directorate fo r the Qual ity of Medici nes ( EDQM), is the highest quality standard in Europe. It confirms that an active ingredient complies with the standard s laid down in the monograph of the European Pharmacopoeia. Krka has received it far many active ingredients.

b} lnteqrated guality manaqement system

Our basic strategic objective isto ensure quality by continuously improving our products, processes and services. We achieve this by effective performance ofthe quality system in compliance with the principles of good pharmaceutical practices (GxP) and regulations governing the quality in pharmaceutical industry. We meet requirements of various clients a nd demonstrate on-going suitability of processes for achieving the set goals through flexibility, quick adaptation to new developments, market needs and legal requirements, improvements to our processes, investments, advanced work systems, and proper control

methods. We therefore systematically address quality-related risks and opportunities in all processes. Our aim isto achieve sustainable development. Careful planning, quality culture of employees and constant development of our processes and services enable us to satisfy the requirements of our interna! and external clients and create opportunities for further improvements.

We manage various aspects of our operations in a uniform way which facilitates effective process performance. This determines our attitude to quality, environment, health and safety at work, food safety, medical device safety, information security, and business continuity. The system structure complies with 150 9001 standard, GxP and HACCP principles, Regulation (EU) 2017/745 (Medica/ Device Regulation, MOR), and 150 14001, ISO 45001, 1S0/IEC 27001, and ISO 22301 standards. To ensure credibility and increase the trust of our partners, we have the system regularly certified by SIQ (Slovenian Institute of Quality and Metrology) and demonstrate its compliance with regulatory and legal requirements in inspections and audits.

The baselines for establishing and developing the quality system are laid out in the umbrella document on quality Krka Group's Quality Policy in agreement with the legislation, good practices and standards. We follow all new developments in that regard and systematically introduce them in all processes and management systems. The document outlines a uniform quality policy for all Krka Group subsidiaries. Quality management processes are integrated into corporate management processes and facilitate implementation of the basic rules for all processes. We are cornmitted to continuously upgrading the quality system in order to increase process efficiency, quality, and competitiveness of products and services. It is therefore vital that our employees are aware of the importance of the quality system, undergo continuous training, and constantly upgrade their knowledge in quality management. We identify opportunities for improvement and introduce new developments into processes in collaboration with experts from various areas. We promote a high level of awareness of the importance of quality in all processes. We encourage and solicit new innovative approaches in various publications and on our corporate interna! web site, and incorporate them into work procedures. Vertical integration of quality allows us to manage product and process quality risks effectively. Quality is vertically integrated through know-how, experience, and understanding of the entire product life cycle (from an active ingredient to the finished product), in planning, development, quality assurance throughout the manufacturing process, and the company's organisational structure, which supports the integration of quality into alt processes.

c) Fair dlsclosure of adverse reactions, product labellinq and anti-counterfeitinq

We have the pharmacovigilance system in place to monitor an individual medicina! product throughout its shelf life. We carefully record and medically review all received information on adverse reactions. We consider information on all suspected adverse reactions related to our medicines from ali countries where we hold marketing authorisations and also those from clinical research. We analyse the data, evaluate any potential new safety information, and assess risks and benefits in relation to individual medicina! products. We consider latest scientific discoveries important for safe administration of medicines and include them in patient information leaflets, and carry out everything necessary to reduce risks related to a medicina! product. Our pharmacovigilance system complies with legal requirements and EU guidelines as follows: Commission lmplementing Regulations (EU) No 520/2012 and (EU) 2021/1281 on the performance of pharmacovigilance activities, and guidelines on good pharmacovigilance practices (GVP). We constantly upgrade and improve the system also in the countries outside the EU where we market our products. We examine its credibility in regular interna! and external quality audits. In addition to this, certified regulatory

bodies that also inspect our partners, verify compliance of the systems with legislation and other regulations.

Labelling of the medicina! products is one of the basic requirements specified in Good Manufacturing Practice (GMP) guidelines. It ensures that each product batch is traceable from the start of production until expiry of its shelf life. Our quality system ensures that every unit and each batch are labelled in compliance with the guidelines and registration documents.

Respect tor the intellectual property rights is one of the fundamental principles of the Krka Group operations. We undertake everything necessary to prevent falsification of our products. The EU and the Russian Federation and the majority of other countries adopted laws on the prevention of the entry of falsified medicina! products into the legal supply chain in consideration of good manufacturing practices. According to the Commission Delegated Regulation (EU) 2016/161 (EU FMD), the EU requires that the safety features consisting of a unique identifier (serialisation) and an anti-tampering device (ATD) are placed on the packaging of medicina! products for human use, and that the unique identifiers are reported to the European Medicines Verification System via the European Hub (EU Hub). This enables identification and verification of the a uthenticity of medicina! products throughout the supply chain. In addition to the unique identifiers, the Russia n Federation laws require records of individuat packaging units in a transport box or aggregation, introduction ofthe 'Crypto Code', and reporting serialisation and aggregation data to the Russian governmental information system ('Markirovka'). The Krka Group successfully implemented all legislative requirements regarding safety features on 9 February 2019 in the EU and on 1 January 2020 in the Russian Federation. We supply correctly labelled medicina! products to buyers and patients and provide for releva nt data reporting to specific systems.

d} Animal welfare

We sustainably contribute to improving the health and welfare of animals by carefully planning the selection and development of new animal health products and following animal health care guidelines. We manufacture a wide range of safe, quality, effective, and value-added generic animal health products for companion and farm animals. We therefore offer veterinarians appropriate solutions for treating animals. Our versatile animal health portfolio can add to animal health and welfare at each stage of their lives. Antiparasitics account for more than fifty percent of sales of our companion animal portfolio. We market animal health products that are easy for vets and pet owners to give and animals to take. We consider guidelines far safe, effective and responsible treatment of various diseases in poultry, cattle and pigs, and other farm animals as well. We cooperate with veterinarians and animal owners in approximately 40 countries around the globe. We constantly look for solutions that are up to animals' needs and at the same tirne promote good practices in animal health care. We encourage preventive, which greatly reduces risks of disease and prevents animals from any suffering. In this way transfer of infectious ar parasitic diseases to other animals is prevented, which also reduces risk oftheirtransmission to humans. Health of humans, animals and the ecosystem blend closely. Our animal health products therefore impact the development of sustainable farming, which helps maintain balance of the ecosystem. We contribute to healthy and safe foodstuffs and protection of humans against foodborne diseases and zoonoses by preventing and managing disease outbreaks in farm animals.

2. TALENT ATTRACTION ANO RETENTION

o) Recruitment, development and talent manaqement; employee diversity, inclusion and participation

Responsible attitude to employees is key to attracting and retaining talent. We understand that our responsibility is trustworthy a nd professional employee management throughout their employment at the Krka Group. Basic employee-related activities include quality recruitment, employment, induction training, education, development, and retention of talent, management, succession development, rewarding achievement, and establishing the culture of collaboration and teamwork.

Our success is founded on employee know-how, experience, and commitment, sound relations and collaboration. We endeavour for our overall operations to reflect responsibility to employees, the environment, and stakeholders. Krka's values lead us in setting the objectives, reaching the results, and cooperating with employees, as well as in their management and development of their potential. Together, we are building a culture of mutual trust, respect, cooperation and teamwork, lifelong learning, and responsible, efficient, and sustainable work. We are distinguished by loyalty, innovations, flexibility, commitment, focusing on attainment of business goals and the Krka Group results.

We foster knowledge-wise, personal, and professional development of our employees by methodical and systematic training. We provide for opportunities for promotion and career development to reta in talent and design the succession system. Timely talent identification and appropriate management are of key importance, so we pay special attention to development of managerial skills.

We manage risks related to the lack of experts by being actively present in the labour market, bolstering Krka Group's image as a reputable employer, working with faculties and schools, and awarding scholarships. In this way we attract potential employees with whom we intend to achieve our strategic, development, and operative goals.

We are committed to high ethical standards. The Krka's Code of Conduct lays out principles and rules of ethical conduct, good business practices, and standards of conduct, which are binding for all employees. An important part of the strategy is continuous awareness raising through education, management communications with employees, and interna! media.

Zero tolerance to fraud According to corporate rules, the Krka Group employees undergo periodic training on corporate integrity and compliance. The Krka Group shows zero tolerance to fraud. Every employee can report any potential fraud via several communication channels.

Providing far equal opportunities Equal opportuflities for all employees, regardless of their gender, race, religion, nationality or cultural differences, respect for legal norms and rules, and an ethical approach to other people and the wider social community represent the foundations of our work. The principles of non-discrimination and equal opportunities apply to all our employment procedures, work with employees, their inclusion in working processes, personal devetopment, promotion, and remuneration.

Respect of human rights and legislation We respect human rights in line with the internationally recognised principles and guidelines, including the United Nations' Universal Declaration of Human Rights. We abide by all legal regulations and standards related to human rights in all countries where we operate. We reject all forms offorced labour, unethical practices, and violation of basic labour rights. We respect

national legislation, on which safe, healthy and decent work and quality of lite of employees are based. In addition to that, we comply with guidelines of the lnternational Labo ur Orga nisation (ILO), World Health Organisation (WHO), and the European Union information agency for occupational safety and health (EU-OSHA).

Dealing wit h inappropriate conduct in interpersonal relations We quickly respond to any identified inappropriate conduct in interpersonal relations in accordance with clear rules and procedures and prevent any forms of mobbing. Any form of harassment and ill-treatment in the workplace is prohibited. We provide for adequate working conditions and an open and creative working environment. We provide for working environment free from any psychological pressure, sexual or other harassment, or ill-treatment by other employees, superiors orthird parties. AII employees are obliged to refrain from any inappropriate conduct that could discredit dignity of another person. Anybody, who notices such unwanted conduct, can make a report to a relevant authorised person.

Employee inclusion and diversity We work in diverse cultural environments and foster partner approach to attain common objectives ofthe Krka Group. Partnership and trust are two of our key values. We strive for diversity and inclusion of alf our employees, including the balanced gender structure of senior and executive officers. We build a culture of mutual trust, respect, cooperation, teamwork, lifelong learning, and responsible and efficient work. We take special care of the vulnerable groups of employees, i.e. people with disabitities, health issues, in social distress, etc. We provide for equal opportunities, regardless of employee's gender, race, colour, age, medica! condition or disability, religious, political or any other belief, trade union stewardship, national or social origin, family status, financial condition, sexual orientation, or other personal particulars.

Employee participation We appreciate commitment and respect each employee's contribution to achieving the Krka Group objectives. We foster awareness that every employee helps create a healthy and successful working environment. We give employees the opportunity to express their opinions by monitoring organisational culture and employee commitment. We analyse the findings to make improvements, which contribute to healthy, efficient and creative environment. We encourage open and regular dialogue between the Management Board, Worker Council, and trade unions to ensure employee inclusion and participation in management of areas connected with responsibility to employees.

Establishing t ies between science and industry Our employees actively engage in research and education at various universities and participate in joint projects, transferring experience from the industry to the academia. We make education possible for young scientists and researchers, and recognise and award their achievements.

Employee education and devetopment and talent retention We encourage all employees to undergo lifelong education for successful work, career promotion, professional development and personal growth, and also facilitate this. We provide quality and systematic induction of new employees t o work and working environment. We place special emphasis on attracting, identifying, developing, and retaining young talent. This ensures that the Krka Group will remain successful also in the future. Employee education and development are centred on responsible management, mutual respect, inclusive dialogue, and collaboration. We recognise, distinguish and reward examples of geod management and performance at the Krka Group level by using various methods of motivating employees, announcing the best managers and the best employees, etc.

b) Safety, health and wellbeinq of employees

Safety and health of all our employees, visitors and contractors at work in Krka is our top priority. The Krka Group provides safe and healthy workplace environment. We follow latest trends, findings and standards of occupational health and safety and fire safety, and promptly incorporate them in all business processes, projects, and technologies. The pa rent company constantly upgrades and improves the system, which is implemented and certified in compfiance with the ISO 45001 standard and fully incorporated into the quality system. Interna! and external auditors examine its efficiency. We systematically identify and evaluate all risks and undertake relevant measures to prevent or mitigate them. Our success in safety at work a nd environmental protection is awarded every year by the right to use the 'Responsible Care¹loga.

We assess risks at workplaces and undertake relevant safety measures to reduce them to acceptable levels and ensure constant long-term improvements in working conditions. We also assess risks arising from technological procedures in research and development. We identify all hazards for each technological phase separately and consider the employee exposure tirne and hazard levels to determine safety measures far preventing exposure of employees who perform a certain technological procedure.

When there is a risk of infection {epidemic, pandemic), we implement a series of sanitary, health, and organisational measures to prevent introduction and spreading of a potential infection and ensure uninterrupted work processes. We also have an efficient fire safety system in place, which incorporates systematic preventive measures far reducing hazards. We employ a professional fire brigade, which is qualified to intervene in case of emergency.

We provide for workplace safety and health at work by arranging regular training courses. We carry out many tire safety drills to check how effectively employees respond to potential emergencies and asses their impacts on stability and business continuity. Training and drills are carried out by our in-house experts and external contractors. We assess risk management for effectiveness by external and interna! audits, self-inspections, audits, inspections, and management reviews. Our aim isto control and maintain risks at acceptable levels.

We promote healthy lifestyles for our employees and raise awareness of the importance of health and safety at work. The Management Board supports the employees, raises their awareness, and makes various activities possible for them. Caring far health is a joint responsibility of all employees, managers, and professional services. The Works Council and the two trade unions are also incorporated into the system. We implement the health promotion plan to raise the awareness of how important it is for the quality of life to maintain health. We regularly update the plan in consideration of suggestions and initiatives given by our employees, agency workers and students.

Our occupational health a nd safety policy binds us to ensure safe and healthy working environment, and sowe:

• Prevent risk of injury or health deterioration far employees and contractors, specify safety measures, train and raise awareness of importance of health and safety at work;
• Maintain good interpersonal relations;
• Consistently ca rry out safety measures in order to reduce risk of injury or health damage;
• Carry out preventive medica! check-ups far employees and delegate them to job positions suitable far their health;

• Follow legislation, technical guidelines and other requests in all areas related to occupational safety and health, and introduce them into practice on tirne and adequately;
• Promote health at work and cooperate with employees in the decision-making process as regards occupational safety and health system;
• Extend our pledge to occupational health and safety policy to all our subsidiaries.

Quality of work and living Asa socially responsible company, the Krka Group follows its mission 'Living a healthy life', in many areas. We ensure safe and healthy working environment and promote a healthy lifestyle. Caring for health is a joint responsibility of all employees. We raise awareness of its importance for healthy living by health campaigns far our employees. Also, healthy diet based on foods from the local environment is a part of this. Flexible work arrangements enable our employees to balance work and private life. We comply with all legislative and collective bargain requirements relating to work hours, taking a rest or a leave. To provide for well-being and good interpersonal relationship of our employees, we arrange many sports, cultural and humanitarian events that bring employees together and benefit a lso the wider social environment. We also make available high quality daily meals and holiday accommodation for our employees.

3. ACCESSIBLE HEAlTHCARE

a) Patient-tailored product portfolio

Cardiovascular agents account for more than 500;6 of our portfolio, which agrees with the 2030 Agendafor Sustainabfe Devefopment aiming to reduce deaths caused by noncommunicable diseases by one third by 2030. Cardiovascular diseases are the leading cause of death due to noncommunicable diseases. We contribute to the goal not only with agents for the treatment of hypertension, hyperlipidemia and diabetes, but also by organisation of educational programmes tor healthcare professionals, providing them with access to latest medical knowledge and information for use in their everyday practice. In this way we pursue our goal, which is to provide the best possible treatment options for patients. We foster transparent and traceable relationships with medical professionals.

Our comprehensive range of products for the treatment of most common civilisation diseases ensures that each patient can get affordable and best possible therapy. Doctors can choose from many innovative generic medicines that combine several active ingredients and prescribe the most suitable therapy for each patient for the best treatment outcome. We plan to increase our portfolio of medicines for treating common chronic noncommunicable diseases and add to it especially agents in innovative combinations tor the treatment of high blood pressure, blood-clotting disorders, diabetes, and cancer. This will further contribute to attaining the objective, which is part of sustainable development goals (SDG) set by the U nited Nations.

b) Affordab/e medicines

Generic medicines are equivalent to the originators' products for which product patent protection has expired or has never been granted. They contain the same active ingredients and their quality, safety, and efficacy are equivalent to the originators' products. In addition to registration documents and bioequivalence studies, also clinical practice supports the fact. Generic medicina! products are gaining importance worldwide, because they are of high quality and an affordable alternative to originators' medicines.

As one of the leading generic manufacturers, we deliver on the objective to produce high quality, state-of-the-art and affordable generic medicines for the most common diseases of our tirne. More than 50 million patients from a II over the world use Krka medicines every day. Our business focuses on caring for their health. Our medicines add up to great savings for patients and public health care budgets, making us an important partner of national healthcare systems and patients. We will put effort into increasing our portfolio of generic medicines in our traditional markets and entering new ones also in the future.

We focus on understanding needs of our established and new markets. We are present in over 70 countries. Our largest markets include the Russian Federation, Polanci, Germany, Ukraine, and Romania. We are also present in countries with medium and low GDP per capita, which generally encounter great macroeconomic risks. We are also one of the leading medicine suppliers in most countries of Central Asia, including Tajikistan, Kyrgyzstan, Uzbekistan, Turkmenistan, and Mongolia, and also in Iran, lraq, Kuwait, Egypt, the Republic of South Africa, Vietnam, Ghana, Sudan, Libya, and Lebanon.

c) R&D and cu/ture of innovation

Krka allocates on average 10% of annual revenue to research and development. Scientific and technological progress is rapid and markets are increasingly complex. We can only remain competitive in the generic market through continuous investment in know-how and state-of-the-art eq uipment. We are committed to developing quality, effective and safe medicina! products for the patients, so we have an extensive product portfolio. We constantly develop and obtain marketing authorisations for value-added, new or revised products to extend our key therapeutic classes.

Product development is based on our innovative technological solutions and we do not infringe any competitors' patent rights. We can deliver our products to patients on tirne in this way, immediately after the patent expiry and obtaining market authorisations. We guarantee permanent availability, top quality and safety of our products at competitive prices by introducing new and innovative API syntheses and physical processing procedures, state-of-the art technologies, and optimisations of technological procedures.

We also develop- in addition to innovative technological approaches- innovative products in complex pharmaceutical forms with added value for patients, including modified-release pharmaceutical forms, bi-layer tablets, and dispersible tablets. We file several patent applications every year for new technologica I sotutions to protect the m from com petitors. Ach ievements of o ur scientists are noticed a lso in the wider environment, and we have received severa! innovation awards by the Slovenian Chamber of Commerce and lndustry.

To develop value added medicines and place them on markets on tirne, we adopt pragmatic approaches to research and development and set optimal patent strategies. The vertically integrated model is the foundation for managing patent, development, legislative, production, and marketing requirements and risks. By managing the entire process, we can research, develop, evaluate, authorise, and manufacture in-house active pharmaceutical ingredients (APls), and finished products. The adopted development strategy and project approach help us manage products in all phases oftheir life cycles, and we pursue in the process scientific objectives and control timeliness and costs. We apply R&D results and thorough knowledge of legislative requirements to prepare complex registration documentation and obtain marketing authorisations for products on tirne.

Quality, safety and efficacy are of key importance already at early stages of development. Dur know-how and management of synthesis and technological procedures enable us to provide APls and final products of highest purity. We follow international guidelines presented by ICH for medicines for human use and VICH for products for veterinary use.

We confirm safety and efficacy of new products already at their development phases in preclinical and clinical research. We always conduct clinical research in line with the applicable legal requirements, good practice guidelines, the Helsinki Declaration, and Regulation (EU) 2016/679 (General Dota Protection Regufation). We ensure safety of the participants, transparency, ethics and high quality of research, which is also confirmed by regular inspections conducted by regulatory authorities.

We endeavour to use simple and energy-efficient technological procedures that contribute to affordable prices of our products. We develop our products in compliance with our environmental policy and the 150 14001 standard. We ensure that technological procedures have minimal impact on the environment as we aim to reduce our carbon footprint, water consumption and organic solvent volumes, and are coming close to running circular economy.

Krka fosters innovation which is not limited only to development of new products and technologies. The inventive work system leads to continuous improvement of the quality system and generates savings through useful proposals and improvements. The corporate campaign Your Effectiveness Counts encourages our employeesto strive continuously to improve the quality of their work. We encourage them to resolve issues related to economy, production, logistics, technology, engineering, administration, environment, business, information science, quality, and health and safety at work. Useful proposals that are easy to implement and complex improvements with notable sustainable effects matter.

We encourage inventive work by quarterly awards, a token award with a thank you letter from the President of the Management Board and CEO, presentation of proposers on Krkanet and in our bulletin Bilten, interviews in the Utrip internat magazine, annual meetings of proposers, and awards and recognitions that the best employees receive far inventive work on Krka Awards Day.

d) Ef[ective reqistration procedures

Effective development processes and registration procedures are our competitive advantages. They enable us to be among the first suppliers on the market after the patent protection expires, in the shortest tirne possible after obtaining relevant marketing authorisations.

We manage regulatory risk associated with changes in legislation and their interpretation from early stages of developing a new product and throughout its life cycle. We constantlyfollow latest scientific discoveries and new regulatory requirements far APls and finished products and consider them in the development, when drawing up registration documents and registration strategies, and in managing product registration procedures. The Development Committee or subsidiaries' supervisory bodies discuss and approve the acceptability of any increased risks related to registration procedures. We verify our development solutions for individual products and content of marketing authorisation documents at official consultative meetings with regulatory bodies. We also participate in working groups of various industry associations, for example the international association Medicines for Europe and Access VetMed, and actively engage in drafting legislation in this way.

Our registration procedures are tirne- and cost-efficient. We ensure that our products comply with the

latest scientific findings and are of high quality throughout their life cycles. We constantly improve our products and upgrade them in compliance with new guidelines and requirements. Relevant regulatory bodies examine and approve changes.

e) Expert support for healthcare professionals

lndirect customers or healthcare professionals are doctors, veterinarians and pharmacists, who prescribe, recommend, and dispense our products ona daily basis, so they constitute an important link with patients and other end users. We give them latest, clear, accurate and balanced information on therapeutk classes, therapies, and our products, so that they can take professional decisions as regards best possible therapies far their patients and users. We are in direct contact with them, and give them information also in electronic formats or prints. We communicate responsibly with the expert community, in accordance with laws and regulations on business operations, including product marketing regulations, good business practice, Medicines far Europe's recommendations and the Code, and personal data protection regulations. Two directives, the Directive 2001/83/EC on medicina! products far human use and its subsequent amendments; and Directive 2001/82/EC on veterinary medicina! products and its subsequent amendments; and the applicable national legislation ofthe countries where we do business, represent the broadest legal framework. AII Krka employees must act in accordance with the Krka's Code of Conduct, while all employees of Marketing and Sales must also comply with Krka's Code of Promotion detailing promotional activities.

We contribute to the professional development of doctors, pharmacists and veterinarians. We organise and support professional and educational meetings where they can upgrade their knowledge, learn about new guidelines, exchange opinions and experience, and establish contacts. Meetings take place in various countries where we are present with our products.

Asa response to our stakeholder needs, we intensified educational activities and creation of added-value tools and contents that contribute to effective disease detection and facilitate communication with patients during their treatment. Doctors and pharmacists can access educational information on our thematic web pages, which we constantly upgrade.

Our medical representatives regularly undergo professional training so that they can inform health professionals about latest treatment guidelines and give them accurate and current information about therapeutic classes and our products. We also make sure that they have appropriate communication skills, are familiar with legal and other regulations and standards of work, and also comply with them. We especially emphasise the importance of complying with ethical standards. We use e-tests to regularly verify their level of knowledge.

/) lnitiatives far raisinq awareness ofhealthy lifestyles and identi[ication of widespread diseases

Our mission is 'Living a healthy life', and to implement it we carry out many activities for our employees and lay public that bring in focus problems related to healthcare and the importance of risk factor identification far individual chronic diseases, above all cardiovascular and mental, and promote activities that contribute to a healthy lifestyle.

We use various kinds of communication in the process, including personal and digital. We raise awareness of the importance of a healthy lifestyle and identification of widespread diseases through professional associations. Our websites therefore provide information, e.g. What Does Your Heart Beat For? about

dangers of high blood pressure and cholesterol levels and Neuropathic Pain about neuropathic pain. We have designed the first Krka's mobile app for monitoring health, Flebi, in cooperation with a group of experts. The app in addition to specialist knowledge relies on artificial intelligence. It is used to asses the risk of developing varicose veins. It brings users' attention to chronic venous insufficiency, encourages them to act early by doing leg exercises, and offers customised advice on how to keep veins healthy.

An important source of information about health-related topics is also our eHealth portal, which is one of most important portals of the kind in Slovenia. That they can trust the source is very important for the patients looking for on line health information.

g} Uninterrupted supply ofmedicines

In consideration of international business operations, we have established a uniform system which ensures ready availability of our products for patients. We regard local needs and healthcare system specifics to adapt our international strategy to the requirements of individual markets. When doing business, we comply with the Universal Decfaration of Human Rights, and according to it we ensure uninterrupted treatment tor patients with our high-quality products. Providing access to medicines is also one of the cornerstones of our social responsibility, which significantly helps us maintain the reputation of a reliable partner in the eyes of patients and direct customers. The two vital factors are understanding the distribution cycle in individua I markets and developing a sales-and-logistics strategy that allows far ready and constant availability of our medicines.

We guarantee the timely supply of finished products by keeping every phase of product supply under control. Plans of production material inventories are based on as accurate sales farecasts as possible. We check inventories regularly, keep safety stocks of strategically important raw materials, and have several independent resources. We carefully plan optimal utilisation of production capacities and measure production efficiency. We constantly improve processes accordingly. We meet sales requirements, increase our production capacities, and expand contractual collaboration through new equipment and investments. We pursue good manufacturing practices and provide far adequate production environment. In case of major emergencies, we can arrange production of key products at several plants. We systematically monitor secondary sales and base detailed plans of sales requirements on the data to provide far availability of our products.

Dur direct customers, with whom we establish and keep good business relationships, also have an important role in providing for availability of our products. We carry out a survey annually in order to understand their requirements better and identify our advantages and opportunities for improvement. We aim to increase trust of our direct customers and our cooperation with them.

4. GOOD LEADERSHIP ANO GOVERNANCE PRACTICES

a) Resilient and f/exible vertical/y integrated business model

Vertical integration and connection of development and production know-how and processes are the essential advantages of our development strategy. We manage the entire process, so we can introduce quality, safe, effective, and competitive products into the markets, continuously maintain their market position, and ensure their long-term and stable availability far end-users. We use the vertically integrated model to manage patent, development, legislative, production, and marketing requirements and risks. As we manage the entire process, we can do research, develop, evaluate, authorise, and manufacture

in-house active pharmaceutical ingredients (APls) and finished products, arrange their distribution, sales a nd marketing, and besides a 11 that also survey customer satisfaction. This guarantees flexibility and resilience of our business model, especially in critical and unpredictable situations, when business continuity is important.

We streamline the major part of investments to production offinished products, increasing and upgrading facilities far development, research, and analysis, which sustain quality of our products. This provides far coordinated functioning of our research and development, production and control, which embody the essential advantages of our vertically integrated business model.

We maintain the vertically integrated development model through investments, annual achievements, and research-and-development results as regards:

• Medicines and therapeutic areas by providing for opportunities far research, development and evaluation of medicines with which we enter into new therapeutic areas and produce new combinations of APls;
• Active ingredients by introducing innovative preparation procedures for active ingredients and new routes of synthesis;
• Pharmaceutical forms by preparing advanced pharmaceutical forms that allow for easier dosage and administration;
• Research and development by introducing state-of-the-art development and technological processes, and invest in research-and-development capacities.

Business continuity, guaranteed by our business model of vertical integration, involves the risk management process and incorporates regular risk identification, analyses, and evaluation, and operational strategy upgrades. We amended procedures, strategies and risk assessments by new actions to ensure business continuity despite increased risks, e.g. the COVJD-19 pandemic, crisis situation in certain countries, and interrupted supply chains.

We analyse their impact on operations to estimate the criticality of processes and risks to operations. Business fmpact Analysis; Risk Assessment; and Business Continuity Management 5trategy resulted from our efforts. The documents are authored by the Business Continuity Officer in cooperation with persons engaging in critical processes, and then discussed and approved by our Management Board. We take effective measures to protect our employees, property a nd other key resources, and prevent emergencies and disasters. We adopted action plans and disaster relief measures in case of emergencies, actions far mitigating direct damage, and plans for emergency operations until restoration to normal operations, and test them periodica11y. We prepare business continuity plans for each critical process ar service based on the Business Continuity Management Strategy. The Quality Committee discusses the adequacy of the implementation of these plans annually. In 2020, Krka's Management Board also included into the Business Continuity Management Strategy measures in the event of a pandemic, because it ca n incur risks in several areas, e.g. supply chain interruptions, increase in employee absences, impediments in services by external contractors. We provide for suitable availability of critical resources and hence uninterrupted production and sales of key products by identifying and implementing appropriate preventive and other measures. The purpose of the business continuity management system (BCMS) isto provide far relevant measures and procedures far uninterrupted production and salesof our key products in the event of major incidents and disasters. We implement BCMS according to the adopted strategy and policy, and update it constantly according to the ISO 22301, The Business Continuity Management Standard.

b} Leqislative and requlatory compliance

AII employees are instructed to respect ethical principles of honesty, loyalty, professionalism, applicable regulations, and Krka's interna! rules at their work and tasks. We constantly increase employee awareness of any potential fraud, non-compliance and other violations, and ways of managing them, accountability in their detection, and reporting. We comply with our reference codex, the Corporate Governance Code, adopted by the Ljubljana Stock Exchange and Slovenian Directors' Association. Although we have not implemented all the recommendations in full, we have always worked towards realising them and providing for appropriate ways to implement them. We publish relevant disclosures in the annual repo rt each year. We also comply with most regulations from the Corporate Governance Code for State-Owned Enterprises adopted by the management of the Slovenian Sovereign Holding under the approval by the supervisory body of the holding, a nd more than two thirds of stipulations from the Best Practice for GPW Listed Companies 2021 relating to the companies listed on the Warsaw Stock Exchange.

The umbrella documents governing corporate compliance throughout the Krka Group are as follows: the Krka's Code of Conduct; the Rules on Fraud Prevention, Detection and lnvestigation; and the lntegrity Plan. The Krka's Code of Conduct lays out principles and rules of ethical conduct, good business practices and standards of conduct in the Group, which are binding for all Krka employees. It regulates areas such as respect of labour legislation, protection of confidential information, personal data protection, transparent reporting, management of risks related to frauds and abuses, conflict of interests, promotion, cooperation with business partners, fair competition, environmental protection, research and development, and social responsibility. It is available on our corporate website or websites of our subsidiaries. The Krka's Code of Conduct and the Rules on Fraud Prevention, Detection and lnvestigation are available in 29 languages. Our subsidiaries consider specifics of their relevant national legislation. The Rules on Fraud Prevention, Detection and lnvestigation determine key objectives, principles and rules for fraud management, duties and responsibilities of Krka employees with that respect.

In 2020, we drew up the lntegrity Plan based on good practice (the Corporate Governance Code for State-Owned Enterprises) that describes risk and interna! controls with respect to integrity, ethics, and compliance in business operations and proposes improvements. We update the plan every year. The plan represents our commitment that we will make constant improvements to corporate compliance. The probability of occurrence of adverse events and their consequences is estimated as low, medium, and high. lndividual risk assessment is made in consideration of potential harm and probability of its occurrence. Further corrective actions are taken if necessary with respect to the ris k level and established interna! controls.

The Jnteqrity Plan comprises as follows: (i) lnvestment; (ii) Acquisition of fixed assets; (iii) Execution of major maintenance works; (iv) Raw material purchases; (v) lnsider trading; (vi) Shareholder relations; {vii} Recruitment and human resource management; (viii} Personal data processing; {ix) Documentary-andfinancial control; (x) Accounting processes; (xi) lndependence of interna! and external auditors; (xii) Fraud risk or non-compliance with corporate instructions in subsidiaries; (xiii) Marketing of prescription pharmaceuticals, non-prescription products, and animal health products; (xiv) Sales of Krka products; (xv) Sponsorships and donations; (xvi) Gift receiving and giving; (xvii) Environmental management; (xviii) Use of information technologies; (xix) Product quality; (xx) Health and safety at work; (xxi) Systemic risks related to integrity and compliance.

Standard operating procedures and internal rules specify compliance with legislative and regulatory requirements with respect to business operations.

We provide for regular education of the employees at the Krka Group level on the importance of corporate compliance and corporate integrity. They take refresher courses every two years. New employees are informed accordingly at induction seminars. Krka's various departments review customers, suppliers and business partners. Chief Compliance Officer is appointed at the Krka Group level. The officer informs the Supervisory Board on planned activities by presenting the lntegrity Plan and reports once a year to the Management Board. Our subsidiaries with at least 250 employees or more appoint their compliance officers. In accordance with relevant national legislation, certa in subsidiaries with more than 50 employees have their compliance officers as well.

We make sure that the persons who have access to inside information are aware of the confidentiality levels and sensitivity of such information. We prevent any potential abuses and insider trading by implementation of internal rules on trading in Krka's financial instruments and control mechanisms for employees and third parties that handle such information. A tirne period is specified far all persons with access to interna! information, within which they are forbidden from trading in Krka's financial instruments.

Interna] auditors discharge their duties in the Krka Group based on medium-term and annual work plans in accordance with the applica ble rules (lnternational Standards for the Professional Practice of Interna/ Auditing, Code of Ethics}. Interna! auditors work with the Krka Supervisory Board and its Audit Committee and external auditors. With respect to standards, Interna! Audit operations are subject to independent external quality audits. An external auditor reviews the financial statements of the parent company and consolidated financial statements of the Krka Group. The auditor reports on findings to the Management Board, Supervisory Board, a nd Audit Committee of the Supervisory Board.

c) Manoqement diversity, independence and competence

The Supervisory and Management Boards adopted the Diversity Policy. Key areas are: gender, age, and qualification profile diversity of the management and supervisory bodies. The policy provides for a balanced gender structure, suitable interdisciplina rity and age structure to pass on experiences and knowledge. We aim to implement the 40-33-2026 model by 2026 (i.e. 40% ofthe underrepresented sex on the Supervisory Board, and 33% on the Management and Supervisory Boards combined) in accordance with Directive on improving the gender balance omong directors of listed companies. The following bodies are involved in drawing up, monitoring, and implementation of the diversity policy: (i) Human Resource Committee of the Supervisory Board; (ii) Supervisory Board; (iii) Management Board; (iv) Works Council; (v) Any committees involved in procedures for selecting members to management and supervisory bodies; and (vi) Human Resources of Krka.

The Management Board is a five-member body, composed of the President of the Management Board, members and a worker director. Their term of office is six years and members can be reappointed. According to the Articles of Association, a Management Board member can be anybody who in addition to the legal requirements meets at least another two conditions, i.e. holds a university degree and has at least five yea rs working experience in top managerial positions in la rge companies. The Supervisory Board details further requirements. The Supervisory Board and Works Council together specify requirements for a worker director. Members' independence is assessed upon their appointment. Procedures for

appointing the Management Board follow the recommended good practices, in particular the Corporate Governance Code for Listed Companies adopted by the Ljubljana Stock Exchange and the Slovenian Directors' Association

The Articles of Association specify the composition of the Supervisory Board. It is composed of nine members: six are elected by the AGM, while the three employee representatives are elected by the company's Works Council. The President of the Supervisory Board is always elected from the AGMappointed members. Members are appointed for a five-year term and can be reappointed. The election procedures are conducted in compliance with the recommended good practices, in particular the Corporate Governance Code for Listed Companies.

AII members are asked to complete the questionnaire on conflicts of interest. The questionnaire is available on the Krka website. The Rules of Procedure o/ the Supervisory Board specify members' conduct in case of a conflict of interest. Supervisory Boa rd m embers the mselves eva luate pe rforma nce of the board by dosely following the methods outlined in the Supervisory Board Assessment Monual by the Slovenian Directors' Association.

d) Sustainabi/ity-linked renumeration

Securities of Krka, d. d., Novo mesto {Krka) are traded on the regulated market. We therefore drafted a remuneration policy for management and supervisory bodies in line with Article 294 (a) of the Companies Act (ZGD-1). The policy will be further upgraded.

The remuneration policy is based on Krka's long-term development strategy and encourages the Management Board to achieve Krka's strategic objectives, pursue long-term development and sustainable business operations. Emoluments, reimbursements, and other benefits far Management Board members are specified in work contracts drawn up between the Supervisory Board and individual Management Board members. Fixed remuneration is determined asa multiple of the average salary of Krka employees. The multiples are determined by the Supervisory Board upon the appointment ofthe Management Board and they differ with respect to the extent of areas covered by a member of the Management Board. In accordance with interna! acts, members of the Management Board are also entitled to bonuses, compensations, and other payments to which Krka employees are also entitled (years ofservice, continuity of service, anniversary bonuses, Christmas bonus, annual leave pay, other bonuses, compensations, and payments in accordance with interna! acts, except perforrnance bonus).

The Supervisory Board takes a decision on the variable part in accordance with the opinion given by the authorised committee of the Supervisory Board and the valid remuneration policy approved by the AGM. Performance is evaluated based on the Krka Group consolidated financial data, except when specified otherwise by performance criteria.

The Supervisory Board measures the Management Board's performance by financial and non-financial criteria. These encourage the Management Board to achieve the objectives specified in Krka's long-term development strategy and to be focused on long-term development and sustainable operations.

Financial criteria prompt Krka to launch and sell products of maximal customer value in as many markets as possible. Effective and efficient production and performance of other business functions are very important, as well as geod working capital management and risk management. Non-financial criteria that focus on achieving sustainable goals in six sustainability areas material for the Krka Group, aim at the same

goals in the long term. Both types of criteria, especially the non-financial ones, contribute to adequate sustainable business operations. AII performance criteria contribute to achieving Krka's primary objective, i.e. to engage in gainful activities maximising the company's value, profits, and at the same tirne act to benefit the company, employees, shareholders, and social community. The variable part of remuneration is determined with respect to long-term results and their sustainability, by pondering the past and current business operations.

The remuneration, reimbursement, and other benefits of Supervisory Board members do not directly depend on Krka's performance. In addition to attendance fees, members receive fixed amounts for exercising their functions and additional compensation, i.e. for membership on committees, presiding the supervisory Board or acting as a deputy to its president, presiding committees, and far special undertakings. Amounts of ali remuneration types are determined by the resolutions ofthe AGM.

e) Jnformation security

Data privacy, integrity and protection, and cyber security are important for business operations of the entire Krka Group. We apply the CIA triad (CIA stands far confidentiality, integrity and availability) that requires companies to implement the policy of data protection. Confidentiality prevents sensitive information from unauthorized access attempts. lntegrity involves consistency, accuracy and trustworthiness of data over the entire life cycle. Data must not be changed in transit, or altered by unauthorized persons. Availability means that information and data must be consistently drawn up tor authorized access. This involves proper management of hardware, technical infrastructure, and systems that hold and display the information. We also apply ALCOA+ set of principles, which guarantee that data are attributable, legible, contemporaneous, original, and accurate.

lnformation security management system of Krka adheres to at least the following !atest valid standards, recommendations, laws and subordinate acts:

• Regulation (EU) 2016/679 Protection of natura! persons with regard to the processing of personal data and on the free movement of such data (General Dota Protection Regulation, GDPR)
• Regulation ofthe European Parliament and ofthe Council concerning the respect for private life and the protection of personal data in electronic communications (ePrivacy Regulation, ePR)
• Directive 2000/31/EC of the European Parliament and of the Council on certain legal aspects of information society services, in particular electronic commerce, in the Interna! Market (Directive on electronic commerce)
• Basel fl, the second of three Basel Accords
• Model Requirements for the Management of Electronic Records, MoReq
• FDA 21 CFR, Part 11
• The Rules Governing Medicina! Products in the European Union, Volume 4 Good Manufacturing Practice Medicina! Products far Human and Veterinary, Annex 11 Computerised Systems

Managing cyber security is governed by standards 1SO/IEC 27001:2013, 1SO/IEC 27002 and The Open Web App/ication Security Project standard, OWASP.

Krka has been certified according to the international standard 1SO/IEC 27001. The standard sets out requirements that a company must meet in order to be granted the certificate. The standard comprehensively covers information security, which means that it does not apply only to information

technology and information in electronic format, but also to information in all possible formats and media. It lays out many controls, which are exclusively organisational in nature, not relating to technology at all.

We manage information security risks by ISMS, the ISO 27001-certified information security management system. The ISMS is a separate business process within Krka's quality system. The Management Board appointed the lnformation Security Officer to lead the ISMS process, which includes key organisational units and business processes in the controlling company. The officer reports on ISMS to a Management Board member four times a year. A comprehensive report on the Krka Group information security is discussed annually by the lnformation 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. The criticality level of business services is considered in all information systems, including infrastructure systems. Given the criticality in planning, construction, and use of information systems, we implement ali 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). We have duplicated computer capacities for all critical information resources to mitigate risks during major emergencies.

We also mitigate information security risks using modem tools such as advanced threat protection (ATP), security information and event management (SIEM) system, and vulnerability management.

We devote great attention to data integrity by ensuring compliance with regulatory requirements far data completeness, persistence, availability, legibility, accuracy, origin and descriptiveness throughout the prescribed data retention period. We pursue the principle of data integrity in development, production, control, distribution, product quality assurance, and pharmacovigilance. Special 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 the management of any process deviations.

Personal data protection is of vital importance, and as an international group we are required to manage them in conformity with national legislation of alt countries where our subsidiaries and representative offices operate. The Management Board appointed Data Protection Officer at the company and the Krka Group levels, who ensures that personal data are protected in accordance with EU regulations or national legislation insofar it lays down different or stricter rules.

fl Prosperous business operations and financial strenqth

Our business strategy aims at achieving long-term business objectives and stability of business operations. We endeavour to achieve growth in terms of value and volume, as well as relevant business profitability, because this enables us to create adequate economic and added value in the long term. Stable cash flows from operating activities allow far uninterrupted settling of operating liabilities, financing research, development and investments, and give opportunities for potential acquisitions that could be financed with our equity capital. They help us maintain a stable capital structure, high liquidity, and adequate allocation of capital through investments, long-term stable dividend pollcy, and treasure share repurchase program me.

We allocate at least 50% of net profit of majority shareholders for dividends each year, which - in addition to increasing value of the company - ensures extra profita bility for investors, our important stakeholders, in exchange for equity financing and accepting and risk related to ownership of Krka's shares.

Good business performance and financial stability give the Krka Group resilience in the changing business environment and against external shocks and strengthen our position of a reliable partner in the value chain that through high economic impact enables wider society, suppliers, customers, and other stakeholders to grow together with us. Krka is primarily financed by equity and -should the necessity far debt financing arise - intends to maintain any potential debt at a low and sustainable level and not jeopardise long-term business operations.

g) Supply chain and business continuity

We have a complex and a broadly subdivided vertically integrated business model, which requires responsible and sustainable purchasing of raw materials, materials, and services entering into our value creation chain. We strive for responsible and long-term partner relations with our suppliers. We develop good business relations and encourage growth and development of all involved parties and their environments in order to ensure timely and high-quality supplies. We periodically check our suppliers' quality systems by audits, individually assessing risk of our cooperation every year, at work meetings, and by assessing the quality of each supply. We draw up annual assessments of our suppliers, in which we evaluate the quality of our cooperation and in this way identify key suppliers. We conduct supplier audits in accordance with quality standards and Krka guidelines, taking into consideration the price, quality, delivery terms, reliability, regulatory compliance, compliance with our guidelines and the company's social responsibility. We implement the policy and practice of involving local suppliers and contractors when responsiveness, flexibility and frequent or constant involvement of suppliers and contractors in investment and service processes matter in addition to acceptable prices.

We ensure constant alternative resources of raw materials to reduce dependency on individual suppliers and provide for uninterrupted supply chain operations. We work with more than 100 suppliers holding valid 150 45001 certifications and more than 200 suppliers holding valid ISO 14001 certifications. In 2023, we prepared the General Purchase Terms, which are published on Krka's website.

Purchase contracts oblige suppliers to comply with all relevant laws and regulations in production, including environmental, safety, and healthcare legislation applicable in the countries where the suppliers' production plants are situated. Contracts include the anti-corruption clause resulting in null-and-void sanction. We use performance indicators to monitor the adherence to the clause. AII employees in Purchasing are qualified in accordance with corporate rules, i.e. the (i) Krka's Code of Conduct; (ii) Rules on Fraud Prevention, Detection and lnvestigation; and (iii) Rules on Defining and Preserving Business Secrets. We are a member of the Purchasing Association of Slovenia and participate in their annual conferences. We aim for responsible and sustainable purchasing built on trustworthy and transparent collaboration with our suppliers. We undertake to constantly promote honouring ethical, environmental, and social aspects throughout the supply chain. We intenci to further integrate sustainability princi ples in line with the Proposa/ for a Directive on Corporate Sustainability Due Diligence.

h} Contribution to /ocal community development

Social responsibility is one of our basic princi ples. We consider social needs in our daily business, because we know that this impacts the Krka Group's business operations and development as well.

The Krka Group Devefopment Strategy is the umbrella document regulating sponsorships and donations. The Krka Group Sponsorship Manual governs performance of activities related to sponsorships and donations. In accordance with our mission 'Living a healthy life', we allocate most of our sponsorships and donations to projects related to health and quality of life, which also agrees with United Nations' sustainable development target number three (good health and well-being), to which we contribute the most by our cere business.

We aim to establish long-term partnerships that foster an integrated and responsible socia I development, scientific research, multigenerational and interdisciplinary cooperation, adherence to diversity princip les, and healthy lifestyles. We are aware of our impacts on different sustainability areas, as we are an international pharmaceutical group and one of the largest companies in Slovenia. Our strategic guidelines require us to conduct our day-to-day business in line with social responsibility principles and consider social needs.

We have been building partnerships far years through sports, culture, healthcare, science, education, and humanitarian actions, and improving protection of the natural environment in line with the adopted criteria. We identify our partners' needs through regular contacts and by following their development, long-term sponsorships, and annual meetings. Our sponsorship and donation committee examines all sponsorship and donation applications. We strengthen brand awareness, and maintain and consolidate relationships with various stakeholders.

Partners in science We have been awarding Krka Prizes since 1971 to attract young researchers, whom we encourage to undertake resea rch and development. The Krka Prizes Council has played a key role in making research work recognised by students, pupils and mentors. We also support projects of various educational and scientific institutions designed to upgrade the infrastructure and to provide scholarships, above-standard education far pupils, secondary school and university students, research and development, and participation in national and international competitions.

Charity and volunteering We have encouraged volunteering since Krka was established, and have since 2012 been joining charity and volunteering actions in the traditional Krka's Week of Charity and Volunteering. We support seve ral non-profit, non-governmental and non-political organisations by regular donations. We collaborate with humanitarian organisations to extend emergency aid in case of natural disasters and other kinds of need to people in Slovenia and abroad.

Support far health care institutions Associations and societies from various healthcare a reas contribute to better quality of life and safety far patients. We therefore support many associations and societies that raise awareness and educate chronic patients about disease prevention and the importance of quality of life. Our goal isto provide far available treatment and best possible outcome, so we make donations to healthcare providers far purchasing state-of-the-art medica! devices and instruments that make work easier far healthcare professionals, ensure high level of services, and extend healthcare to a greater number of people.

Through sports to health We promote many sporting activities which contribute to a healthy lifestyle. We donate the greatest portion of funds to clubs and associations in the local environment. We encourage especially those organisations that give young people the opportunity to take up recreational or professional sports in addition to mass participation.

Krka clubs and societies We have been the main sponsor of seventeen sports and cultural clubs and

associations that bear Krka's name and the general of main sponsor of another seven other clubs and associations. Our support aims to encourage young people to lead a healthy lifestyle, take care of their physical and personal development, build team spirit and friendship, be persistent, and develop a healthy winning attitude. This is the only way far us to jointly strengthen values of partnership, trust, creativity and efficiency that are of key importance for the development of the Krka Group as well.

Committed to culture is an important segment of our employees' lives. Our Culture and Arts Society has been functioning for over 50 years. We support and follow various cultural genres and activities that make an irnportant contribution to the society. We support many art projects in orderto bring arts near to wide and close social milieus.

Social responsibility is reflected in alf areas of our operations. Our long-term cooperation with the local community and encouraging contribution to its development, not only through sponsorships and grants given by the Krka Group, but also by actions of many Krka employees, are a part of the Krka tradition. Responsibility to social environment in investment in the future, because responsible management of natural and social resources facilitates sustainable development.

5. COMPLIANCE, INTEGRITY AND TRANSPARENCV

a) Ethics in clinical tria/s and R&D

We at Krka respect intellectual property rights ofthird parties and develop our products in consideration of the patent situation. We closely follow all patent applications and valid patents throughout their development and in case of relevant changes adjust our development strategy accordingly. We protect our know-how and therefore prevent competitors from violating our intellectual property rights.

We ensure credibility of data at all stages of development in cornpliance with the CIA model and ALCOA+ principles and requirements of The Rules Governing Medicina/ Products in the European Union (EU GMP, Annex 11), FDA 21 CFR, Part 11; and ISO 27001. We follow the rules and procedures far data protection and handle all confidential data of our partners with great care.

We recognise major importance of clinically tested medicines and therefore monitor their efficacy, safety and quality before and during registration procedures and after obtaining relevant marketing authorisations. We therefore conduct bioequivalence studies, pre-authorisation research, and support post-authorisation clinical research.

like other generic pharmaceutical manufacturers, we must unequivoca lly demonstrate that our medicines are of high quality, safe, and effective by including the results of preclinical and clinical research in the registration documentation. Clinical research is conducted in line with the latest professional and regulatory guidelines.

Krka also supports research on medicines in regular clinical practice that monitor the efficacy and safety of our medicines in daily use. The studies are conducted with medicines from various therapeutic classes.

We do business in ali countries in compliance with national regulations and requirements and promptly apply relevant changes. We collaborate with regulatory bodies in a transparent manner in ali registration and inspection procedures.

AII clinical research (on healthy volunteers and patients) is conducted in line with the applicable legal requirements, good practice guidelines, the Helsinki Declaration, and Regulation (EU) 2016/679 on the protection of natural persons with regard to persona I data processing. Patients and healthy volunteers are included in research only if they sign the informed consent form. lnvestigators inform them about its course and any risks involved. Regular inspections, conducted by regulatory authorities, confirm that safety of the participants, transparency, ethics and high quality of resea rch are ensured. We apply geod pharmacovigilance practices in monitoring and reporting on adverse events. We publish results of interventional dinical research in the EU Clinical Tria/s Register to provide far transparency. Over 350,000 patients from 27 countries have participated in over 150 clinical studies with our key medicina! products from the main therapeutic classes.

Doctors as investigators conduct post-authorisation clinical research and we are one of the few generic pharmaceutical companies that supports them. They demonstrate efficacy of our products, so we importantly contribute to better understanding and upgraded therapies far patients.

AII our employees are familiar with the Krka's Code of Conduct and bound to act in compliance with it. Also in research, we cooperate with reliable and trusted partners who do not pursue ethically questionable practices.

We have set up systems far ensuring quality of clinical research and safety ofthe involved patients, and the pharmacovigilance system for prevention of any harm due to adverse reactions in a II end users of our medicines. We ensure quality through: (i) Highly qualified personnel who comply with all applicable laws and guidelines; (ii) lnternal rules; (iii) Use of adequate equipment and computer systems; (iv) Risk management; (v) Careful selection of contractual partners; (vi) Clinical study performance monitoring; (vii) Reporting on patient safety and safety of all other participants in clinical trials; and (viii) The deviation investigation system. Organisational units of the parent company manage the globa! system of clinical research and pharmacovigilance, while subsidiaries and representative offices manage activities in their particular countries.

b} Anti-corruption

Fraud and corruption prevention is governed by Rules on Fraud Prevention, Detection and Jnvestigation. The document is based on specific legislation, standards, and good practices. Updates are made bi-annually. It is available in 29 languages on our corporate websites.

Krka applies the principle of zero tolerance as regards prevention of fraud and corruption, and corporate compliance. This means that no unethical, unprofessional, or unlawful conduct of employees and business partners is allowed. We do not exploit business opportunities, assets, and information to gain personal and economic advantages tor ourselves or any third parties. We do not promise any benefits or give presents to influence decision-making ofthe administrative bodies, officials, business partners or anybody else. We likewise do not accept any gifts ar other benefits that could influence our decisions for work.

The employees can make reports at compliance.officer@krka.biz on any alleged irregularity. Our subsidiaries with more than 250 employees, and in countries where so required by national legislation those with more than 50 employees, have followed our example and set up their own channels. The compliance officer investigates the reports and generally appoints a working team tor each case separately by engaging experts qualified in the respective area. We guarantee anonymity to reporters and provide

far their protection against any potential retaliatory measures. When a case is closed, we adopt corrective measures if necessary.

When involved in marketing activities, subsidiaries fallow their national legislation and Krko's Code of Promotion, which is available on corporate websites. Activities far marketing prescription pharmaceuticals are further detailed in Krka's Code of Promotion, and in operational instructions for employees visiting healthcare professionals, and holding professional meetings, education, training, and company visits. Cooperation with the healthcare community relates in particular to healthcare workers, healthcare organisations, patients, and patient organisations.

In 2022 and over the past five years, Krka did not fund any political campaigns, political organisations, lobbyists, or lobbying organisations.

The Krka Group companies are members ofthose advocacy groups, where their membership is obligatory or considered a common practice in the industry.

We publicly disclose any transfer of assets to healthcare professionals, healthcare organisations, and patient organisations on our websites not later than by 30 June every year for the past calendar year.

The Krka Group Development Strategy, which must be approved by the Supervisory Board in accordance with Article 6.18 of the Articles of Associotion, serves as the umbrella document regulating sponsorships and donations. Activities are carried out in accordance with The Krka Group Sponsorship Monual governing sponsorships and donations. In accordance with our basic mission, 'Living a healthy life', we allocate most of our sponsorships and donations to projects related to health and quality of life.

c) Comprehensive and accessible reportinq

We are a public listed company whose shares are listed on the Ljubljana Stock Exchange (USE) and the Wa rsaw Stock Excha nge (WS E). The Reporting Rules specifies proced u res relati ng to ou r obligation to make pub lic a II pieces of controlled information and communicate them in accordance with the regulations. We cornply with national laws and EU legislation (e.g. Regulotion No 596/2014 on market abuse, MAR} a nd act in accordance with other regulations on interna! and controlled information reporting, financial statements, and business reports, which we regularly make public in SEOnet, the Ljubljana Stock Exchange electronic information dissemination system and Polish ESPI, (Electronic lnformation Transmission System) managed by the Polish commission far financial control (KNF). We also publish reports and information on business performance on corporate websites and in interna! media. This makes them available to ali interna! and external stakeholders and general public. We also regularly draw up the annual financial calendar of public comrnunications and release all materials in Slovene and English.

Our codes of reference are: (i) the S/ovenian Corporate Governance Code for Listed Companies, adopted by the Ljubljana Stock Exchange and the Slovenian Directors' Association, (ii) Ljubljana Stock Exchange Rules, and (iii) Guidelines on Disclosure for listed Companies of the Ljubljano Stock Exchange. We have not implemented ali recommendations in full. However, we have always worked towards realising these recommendations and providing far appropriate ways to implement them. We publish relevant disclosures in the annual report the every year. We also comply with most provisions from the Corporate Governance Code for State-Owned Enterprises adopted by the management of the Slovenian Sovereign Holding with approval by the supervisory body of the holding, and more than half of stipulations from Best Practice for GPW Listed Companies 2021 relating to the companies listed on the Warsaw Stock Exchange.

We draw up consolidated financial statements of the Krka Group and financial statements of Krka, d. d., Novo mesto. In accordance with the resolution adopted by the 11th AGM of 6 July 2006, all financial staternents comply with the lnternational Financial Reporting Standards (IFRS) adopted by the EU and are included in annual, interim and quarterly business reports. Annual reports are audited.

We draw up business reports that include a section on sustainability in compliance with the global standards for sustainability reporting, the GRi Standards. We intend to adjust our sustainability reporting with the upcoming legislation, especially with the Corporate Sustainability Reporting Directive (CSRD), the European Union Sustainabifity Reporting Standards (ESRS), and other global standards on sustainability reporting. We also plan to subject our sustainability reports to external inspections and/or audits in compliance with the legislation.

We also intenci to upgrade q uality and transpa rency of sustainability reporting and communications about the ESG topics and achievernents that we would like to make known to the interested public in a timely rnanner. Comprehensive and accessible reporting is of key importance for various stakeholders and general public in order to recognise Krka asa sustainable company and is also important for maintaining our reputation of a recognised sustainable company and therefore increasing attractiveness far investors a nd other stakeholders. To this end we constantly endeavour to maintain correct and open relations with investors and other stakeholders.

d) Fair marketing and sales practices

When involved in marketing activities, our subsidiaries follow their national legislation and Krka's Code of Promotion, which is available on corporate websites. Directive 2001/83/EC and the Code of Conduct by the international association Medicines far Europe constitute the broadest legal frame we comply with. Activities pursued by employees when marketing prescription pharrnaceuticals are further detailed in Krka's Code of Promotion, and operational instructions far visits to healthcare professionals and professional meetlngs, education training, and company visits. We give healthcare professionals integral, accurate, up-to-date and balanced information on our medicines and the treatrnent doctrine. Our relationships with the expert community are transparent and traceable, and we strictly follow all laws and regulations in that field. AII employees collaborating with the expert community must be familiar with Krka's Code of Promotion, and we regularly check their knowledge with e-tests.

We cater for proper advertising of our medicines and give special attention to organising and supervising the work of employees in the marketing network. Our employees regularly undergo training, and we test their level of knowledge, skills, and how familiar they are with instructions far work, legislation, and applicable regulations. When marketing our products, we consistently comply with legislation, recommendations of Medicines tor Europe, and ethical norms related to advertising pharmaceuticals. We include these in employee education and the ensuing knowledge assessment. We place particular facus on business compliance, so marketing is also included in the company's lntegrity Plan, discussed by the Management Board. We also comply with the personal data protection legislation in marketing and sales.

We systematically monitor the satisfaction level of direct and indirect customers. The 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 at the tertiary leve! (sales to end-users in pharmacies). We en sure that inventories are optimised and balanced throughout the distribution chain. We duly monitor pharmacy chains and any

changes by individual markets, and adjust our actions accordingly. Everything stated above is regularly discussed at the Sales Committee meetings.

We regularly monitor and analyse compliance of marketing activities. Sales Committee and also the Management Board of Krka discuss the analysis results at the group level. The Krka Group Code of Conduct and Quality Manual define the princi ples of e m p loyee ethics a nd respo n si bi lities, whi le interna I rules deta il collaboration with customers.

We are aware of the importance of our customers, so we carefully collect market and market segment information. We generally conclude purchase agreements when doing business with buyers. lf this is not possible, the defined general sales terms apply in lieu of the contract.

In order to ensure the responsibility of direct customers and proper handling of our products, we have concluded with each direct customer an appropriate quality assurance contract, which sets out proper handling of our products based on the standard of Good Distribution Practice (GDP).

We manage receivables to ensure transparency of sales and fulfil our responsibility to shareholders. lnstructions on managing receivables and receivable insurance policy commit us to managing receivables correctly.

Our marketing activities address the professional community (prescription pharmaceuticals) and lay public (non-prescription products and food supplements). We give professional community and lay public relevant, professional, up-to-date, and balanced information on our products via various channels, e.g. personal contacts, professional meetings and digital tools. Responsible persons examine all promotional materials with due care before giving their approval, and guarantee that the materials are professionally, ethically and legally suitable. Ali employees who work with the professional community, are properly qualified, and we regularly test their knowledge. We carry out marketing activities in compliance with legislation and the adopted ethical principles. The Krka's Code of Conduct is binding for ali employees, while the Krka's Code of Promotion specifies in detail implementation of marketing activities. It is translated into official languages and adapted to the laws of countries where our subsidiaries operate. It is used to train all employees who have contacts with the professional community. We regularly examine their knowledge by e-tests.

We provide the lay pub lic with information about non-prescription products and products far companion animals increasingly often via digital channels. The list of our website pages includes a total of 84 product website pages in 20 countries, in seven countries also thematic websites far raising pub lic awareness of individual diseases and the healthy lifestyle. The professional community can access our passwordprotected educational portal in ten countries.

We intend to continue our efforts far responsible and ethical sales and marketing of our products. We plan to include the principles of the upcoming EU directive on diligent review of corporate sustainability in marketing-and-sales practices.

e) Human riqhts

Equal opportunities far all, respect of legal norms and an ethical approach to people and the wider social community represent the foundations of our work.

We respect human rights set out in internationally recognised principJes and guidelines. We operate in line with all regulatory requirements and standards relating to human rights in all countries where Krka is present. 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. AII forms of unfair and unauthorised work are prohibited. Any discrimination aga inst employees is prohibited. We treat all employees equa lly, regardless of their nationality, race or ethnicity, national or social origin, gender, colo ur, medical condition, disability, religion or belief, age, sexual orientation, family status, trade union membership, financial standing, or any other persanal circumstance.

Our company signed the Commitment to Respect Human Rights in Business instigated by the Ministry for Foreign Affairs ofthe Republic of Slovenia. The document was signed by 18 major Slovene campanies.

We follow ali legal regulations and standard s related to human rights in all countries where we operate.

We provide far equal apportunities, regardless af employee's gender, race, colour, age, medica! condition or disability, religiaus, palitical ar any other belief, trade union stewardship, national ar social origin, family status, financial conditian, sexual orientation, or other personal particulars.

The nan-discrimination principles are set out in Krka's Code of Conduct.

/) Tax policy and transparency

The Management Board has adopted the Krka Group Tax Strategy and Krka Group Tax Code of Conduct. The two dacuments set outthe policy, objectives, guidelines, and principles oftax management, including transfer pricing, based on principles and rules of ethical conduct and good business practices and standards af conduct, which are defined in Krka's Code of Conduct.

The princip les that the Krka Group follows in the tax field are to: {i) Act in accordance with the legislation of the country in which we operate; (ii) Settle tax liabilities voluntarily and on tirne; {iii) Avoid risky tax decisions; (iv) Consider tax perspective when changes occur or when introducing new business models; (v) Monitor changes in tax legislation and continuously train employees involved in the tax process; (vi) Work with tax authorities and ensure open, fair and constructive cooperation; and (vii) Maintain partnerships. We ensure this through the appropriate organisation and aperation of the Krka Group's tax function and clearly defined responsibilities.

We have been granted a special tax status, which we maintain and carry out horizontal tax monitoring. This earns Krka special reputation and trust as regards taxes and builds awareness among stakeholders and the interested puhlic that Krka accounts for and pays its tax liabilities regularly and on tirne and applies a transparent model of operations.

6. PLANET ANO CLIMATE CHANGE

Management of carbon emissions; Waste management; Efficient use of energy and natura! resources; Hazardous material management; Product life-cycle management

We take care of the environment, respect environmental regulations, and caaperate with the local community and beyond. The responsibility to the natural environment is outlined in our environmental and energy policies whereby we undertake to take care of the environment in accordance with the

requirements of the ISO 14001:2015 standard. Ali employees are included in the complex environmental management system which is specified in detail in the document Environmental Management System.

Krka established its comprehensive environmental management system under the ISO 14001 standard 20 years ago. The Environmental Management System (EMS) certificate binds us to reduce all our impacts on the environment constantly. We also follow the revised edition of the ISO 14001:2015 standard. We have therefore integrated environmental care in the earliest development stages and projects. Successful audits confirm that we have made improvements in ali areas that impact the environment. We are also granted the right to use the responsible ca re loga every year due to our efficient work in the area.

Our operations impact employees, natura! environment and local and wider communities, so we seek to reduce the environmental impact. We maintain the related risk at acceptable levels.

In order to achieve the set goal, we undertake to:

• Consider the sustainability aspect to the largest extent possible throughout the life cycle of a product;
• Constantly reduce our impact on the environment, and improve the situation as regards our environmental impact in every way;
• Given the availability of new technologies and carbon-neutral energy sources (RES, hydrogen, etc.), follow the goals of the European Fit for 55 package, the European Green Deaf, climate neutrality by 2050, the Reso/ution of the Repub/ic of Sfovenia on Long-Term C/imate Strategy until 2050, and the taxonomy regulation (Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment), and national legislation of ali countries where we operate;
• Draw up the decarbonisation plan far the Krka Group and endeavour to reduce greenhouse gas emissions in line with the plan;
• Reduce climate change impact in accordance with the best available techniques, guidelines, and legislation;
• lncorporate care for efficient use of energy, water, and other natural resources in our current operations, development strategy, and investments;
• lncrease the proportion of alternative and renewable resources in consideration of their availability;
• Apply the circular economy system in the waste management process;
• Upgrade the hazardous materials management system and reduce the environmental risk;
• Regularly monitor emissions far compliance with the legislation and environmental protection permits;
• Monitor emissions of greenhouse gasses in compliance with the Greenhouse Gos Protoco/ (GHG Protocol);
• lnclude the responsibility towards the natura! environment to the largest extent possible in the activities of subsidiaries outside Slovenia;
• lncrease employees' responsibility for sustainable development through education and growing awareness about the environmental issues and promote the environmental policy also throughout the value chain;
• Ensure the preservation ofthe ecological, biotic and landscape features ofthe natural world;
• Encourage the use of alternative, for the environment less harming, means of transport to commute to work and act towards sustainable mobility;

• Reduce our carbon footprint and other impacts transport has on the environment by upgrading our car pool, purchasing electric vehicles, replacing air transport by sea transport, double-deck loading, and selecting suitable contractors;
• Report as transparently as possible on environmental impact and indicators, and in accordance with the established international standards, laws and regulations (GRi, CSRD);
• Ma intain good relationships with the stakeholders in the social environment, in particular with our local communities;
• Set s usta i nabil ity goa 1s a nd re leva nt KPls in complia nce with ou r principles, p rompt ly monitor their pursuit, update goals, and report in a transparent manner on achieved results.

We intenci to implement the sustainable environmental policy in line with the availability of new technologies, scientific achievements in environmentaJ protection, legislative and other requirements, while maintaining growth and competitiveness of the Krka Group in the global markets.