Unaudited Interim Report for the Krka Group and the Krka Company for January–September 2016

Novo mesto, November 2016

INTRODUCTION 3
Operational highlights January–September 2016 3
Krka Group and Krka Company financial highlights 4
Krka Group ID card 5
Krka Group business model 5
Krka Group companies 6
Krka Group development strategy 7
BUSINESS REPORT 9
Financial risk 9
Investor and share information 10
Business operations analysis 12
Marketing and sales 14
Research and development 25
Investments 28
Employees 29
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE KRKA GROUP, WITH NOTES 30
Consolidated statement of financial position of the Krka Group 30
Consolidated income statement of the Krka Group 31
Consolidated statement of other comprehensive income of the Krka Group 32
Consolidated statement of changes in equity of the Krka Group 33
Consolidated statement of cash flows of the Krka Group 35
Segment reporting of the Krka Group 36
Notes to the consolidated financial statements of the Krka Group 37
CONDENSED FINANCIAL STATEMENTS OF KRKA, D. D., NOVO MESTO, WITH NOTES 44
Statement of financial position of Krka, d. d., Novo mesto 44
Income statement of Krka, d. d., Novo mesto 45
Statement of other comprehensive income of Krka, d. d., Novo mesto 45
Statement of changes in equity of Krka, d. d., Novo mesto 46
Statement of cash flows of Krka, d. d., Novo mesto 48
Segment reporting of Krka, d. d., Novo mesto 49
Notes to the financial statements of Krka, d. d., Novo mesto 50
MANAGEMENT BOARD STATEMENT OF RESPONSIBILITIES 57

INTRODUCTION

The condensed consolidated financial statements of the Krka Group and the condensed financial statements of Krka, d. d., Novo mesto (Krka Company) for January–September 2016 and for January–September 2015 are unaudited, while the statements for the full 2015 business year present audited figures. The Krka Company has no authorised capital and has not made a conditional share capital increase.

The Krka Company promptly announces all significant changes of the data in its listing prospectus in the Ljubljana Stock Exchange

Operational highlights January–September 2016

The Krka Group sold €852.4 million worth of products and services, and Krka Company product sales amounted to €782.5 million.
The volume of sales increased by 11% at Group level, considerably exceeding the strategic goal »to attain at least a 5% average annual sales growth in terms of volume«. Had the average prices of Krka's products and the exchange rates of the currencies key for Krka's operations in the past nine months remained on the same levels as in last year's comparable period, Krka Group sales would have amounted to €952.1 million, up 10.3% or €99.7 million. However, euro-denominated Krka Group sales, considering current prices, were down 1% compared to the same period last year, and Krka Company sales were down 5%.
In absolute terms sales were up the most in Region South-East Europe, where they increased by €16.1 million, while the highest relative growth was in Region Overseas Markets, up 20%.
Contributing 27.0% of Krka Group sales, Krka's largest sales region is East Europe.
In markets outside Slovenia the Group generated 93%, and the Company 95% of its sales revenues.
The Krka Group generated €99.7 million of operating profit in the reported period, a year-onyear decrease by 37%. The Krka Company

electronic information dissemination system SEOnet, in the Polish Financial Supervision Authority electronic information dissemination system (ESPI), and/or in the Delo daily newspaper. This interim report for the Krka Group and the Krka Company is available on the Krka website www.krka.si.

The Supervisory Board discussed the January– September 2016 Report for the Krka Group and the Krka Company at its regular meeting on 16 November 2016.

reported €75.3 million of operating profit, down 48% from the same period last year. The decrease is attributable to lower sales caused by continued significant price drops in individual markets and less favourable average exchange rates of certain currencies as compared to the same period last year.

The Krka Group reported a net profit of €80.3 million, down 40% compared to the same period last year, and the Krka Company generated €72.4 million of net profit, down 46%. This was a result of lower operating profit and the net financial result.
Consistent with its strategy regarding the dividend-increase policy, Krka paid shareholders a gross dividend of €2.65 per share out of the 2015 distributable profit, which is a 6% increase compared to last year's dividend.
As at 30 September 2016 Krka's share traded at €61.90 on the Ljubljana Stock Exchange, down 5% from the year-end of 2015. Krka Company's market capitalisation totalled €2.0 billion.
The Krka Group allocated €88.5 million to investments in the reported period, of which the Krka Company invested €45.9 million and subsidiaries €42.6 million.
At the end of September 2016 the Krka Group had 10,886 employees, which is 322 or 3% more than at the beginning of the year.

Krka Group and Krka Company financial highlights

	Krka Group		Krka Company
In € thousand	1–9/2016	1–9/2015	1–9/2016	1–9/2015
Revenues	852,385	863,302	782,538	827,008
EBIT1	99,674	157,775	75,307	144,045
EBITDA	178,824	237,505	136,757	205,458
Net profit	80,316	133,339	72,412	134,874
R&D expenses	85,300	84,243	89,385	87,554
Investments	88,516	69,692	45,939	54,324
	30 Sep 2016	31 Dec 2015	30 Sep 2016	31 Dec 2015
Non-current assets	1,012,257	986,598	1,018,998	999,975
Current assets	807,446	822,606	731,823	761,737
Equity	1,411,397	1,405,984	1,416,129	1,433,211
Non-current liabilities	110,041	110,982	76,462	76,753
Current liabilities	298,265	292,238	258,230	251,748
RATIOS	1–9/2016	1–9/2015	1–9/2016	1–9/2015
EBIT margin	11.7%	18.3%	9.6%	17.4%
EBITDA margin	21.0%	27.5%	17.5%	24.8%
Profit margin (ROS)	9.4%	15.4%	9.3%	16.3%
ROE2	7.6%	12.9%	6.8%	12.8%
ROA3	5.9%	9.9%	5.5%	10.1%
Liabilities/Equity	0.289	0.277	0.236	0.253
R&D costs/Revenues	10.0%	9.8%	11.4%	10.6%
NUMBER OF EMPLOYEES (as at)	30 Sep 2016	31 Dec 2015	30 Sep 2016	31 Dec 2015
	10,886	10,564	4,866	4,798

SHARE INFORMATION	1–9/2016	1–9/2015
Total number of shares issued	32,793,448	32,793,448
Earnings per share in €4	3.30	5.46
Closing price at end of period in €5	61.90	60.50
Price/Earnings ratio (P/E)	18.74	11.08
Book value in €6	43.04	42.57
Price/Book ratio (P/B)	1.44	1.42
Market capitalisation in € thousand (end of period)	2,029,914	1,984,004

¹Difference between operating income and expenses

²Net profit, annualised/Average shareholders' equity in the period

3 Net profit, annualised/Average total assets in the period

⁴ Net profit attributable to equity holders of the Group, annualised/Average number of shares issued in the period exclusive of treasury shares

5 Share price on the Ljubljana Stock Exchange

⁶ Equity at the end of the period/Total shares issued

Krka Group ID card

The controlling company in the Krka Group is Krka, tovarna zdravil, d. d., Novo mesto (Krka d. d. or the Krka Company).

Registered office Šmarješka cesta 6, 8501 Novo mesto, Slovenia Telephone ++386 7 331 21 11 Fax ++386 7 332 15 37 E-mail [email protected] Website www.krka.si Core business Production of pharmaceutical preparations Business clarification code 21.200 Year established 1954 Registration entry 1/00097/00, District Court of Novo mesto, Slovenia Tax number 82646716 VAT number SI82646716 Company ID number 5043611 Share capital €54,732,264.71 Number of issued shares 32,793,448 ordinary registered no-par value shares with the symbol KRKG. Krka's shares have been listed on the Ljubljana Stock Exchange under symbol KRKG since 1997, and since April 2012

additionally on the Warsaw Stock Exchange under symbol KRK.

Krka Group business model

Krka is one of the world's leading generic pharmaceutical companies. Its registered office is in Slovenia and it has over 60 years of experience in the industry.

Krka is the leader in the Slovenian market, and it has a significant presence in the generic pharmaceutical markets of Eastern, Central and South-Eastern Europe, having been increasingly gaining visibility in Western European markets in recent years as well. We have been strengthening our presence in overseas markets, aiming to further exploit the sales potential of the Middle East, Far East, Africa, and the Americas. Our production and distribution facilities are in Slovenia, the Russian Federation, Poland, Croatia and Germany.

Our modern pharmaceutical production and vertically integrated business model allow us to provide patients in over 70 countries with a wide range of safe, high quality and effective prescription pharmaceuticals, non-prescription products and animal health products. Krka's product assortment primarily consists of solid dosage pharmaceutical forms. The product assortment is supplemented by the health resort and tourist services of Terme Krka.

We focus on generic prescription pharmaceuticals marketed under Krka's own brands. We offer numerous medicinal products for the treatment of conditions from key therapeutic areas, including pharmaceuticals for cardiovascular diseases, for alimentary and metabolic diseases, and for diseases of the central nervous system. We have also been entering new therapeutic areas (oncology and antiviral medicines), selected areas also with non-prescription products.

By establishing subsidiaries in selected markets we have been expanding our marketing and sales network, thereby gaining market shares. Our objective is to strengthen the Krka Group's market position in European and Central Asian markets, and to enter new high-potential markets.

Wishing to increase the competitive advantage of our product assortment we have been allocating a substantial proportion of our sales revenues to research and development, with more than 170 new products currently in the pipeline. A substantial proportion of our revenues is generated by the sales of new products launched on different markets in the past five years.

Krka Group companies

The controlling company, Krka, d. d., Novo mesto, holds 100% ownership stakes in all of the above subsidiaries apart from Farma GRS (99.7%) and Krka Belgium (95%); the remaining 5% in the latter is held by the subsidiary Krka France Eurl a capital variable.

Krka Group development strategy

The Krka Group updates its development strategy on a bi-annual basis. In November 2015 the Krka Company Management Board adopted the Group's Development Strategy for the period 2016–2020, and presented it to the Supervisory Board.

The success of implementing strategic objectives is measured against performance criteria set at the level of the Group, at the level of product groups and at the level of business functions. Performance

Key strategic objectives to 2020

To attain at least a 5% average annual sales growth in terms of volume.
To ensure, in addition to organic growth, growth with acquisitions and long-term partnerships (including joint ventures).
To allocate a few hundred million euros in the five-year strategic period for take-overs of interesting and available companies.
To ensure that new products account for at least one third of sales.
To launch selected products in target markets as the first generic pharmaceutical company.

Key strategies to 2020

To focus primarily on European and Central Asian markets.
To maximise the sales potential in all sales regions (Slovenia, South-East Europe, East Europe, Central Europe, West Europe, Overseas Markets).
To strengthen our presence in key markets (Slovenia, Croatia, Romania, Ukraine, Russian Federation, Poland, Hungary, Czech Republic, Slovakia, West Europe), and focus on key customers and key products.
To establish and strengthen our presence in Western European markets by operating through our own marketing-and-sales companies and with products of our own brands.
To strengthen the pharmaceutical and chemical industries and increase the range of prescription products in three key therapeutic areas (medicines for the treatment of cardiovascular diseases, the alimentary tract

at the level of the Group is monitored by the Management Board, while performance at the level of product and service groups as well as business functions is monitored by the relevant committees. The key principle in managing performance criteria is increasing competitiveness of the entire Group and of each company individually.

The key Krka Group objectives and strategies to 2020 are set out below.

To strengthen the competitive advantage of our product portfolio.
To maintain the largest possible share of vertically integrated products.
To improve the cost-effective use of all assets.
To increase cost-effectiveness in products.
To improve all business functions in innovative ways.
To maintain independence.

and metabolism, and the central nervous system) while entering new therapeutic areas (oncology, anti-virus medicines) and, in addition, expanding the range of nonprescription products in selected therapeutic areas.

To enhance vertical integration from development through to product manufacture.
To ensure a permanent supply of incoming materials, and optimise purchasing by continually reducing purchase prices.
To develop generic medicines and prepare marketing authorisation documents before the expiry of the patent on the original medicine.
To strengthen all kinds of connections with external institutions and companies in the field of development.
To continue increasing investments in production and development capacities and infrastructure.

To seek possibilities of acquiring local pharmaceutical companies, plan take-overs and mergers and various kinds of long-term business arrangements (joint ventures) in selected markets with the primary objective of attaining market shares and entering new therapeutic fields.
To reduce the impact of financial and economic risks on the Krka Group operations.
To pursue a dividend-increase policy, whereby up to 50% of the consolidated profit of majority shareholders generated the year before is allocated to dividends if this be feasible considering the Group's financial requirements for investments and mergers each year.
To be open to high potential new business connections (networking) on relevant projects.
To strengthen the professional and cost synergy of the Krka Group, and maximise the utilisation of competitive advantages in the business environments in which Krka companies operate abroad.
To enhance the internationalisation of all business functions by maintaining English and Russian as the key languages of communication throughout the Group.
To engage enterprise- and goal-oriented internal human resources.
To meet our economic, social and environmental responsibilities to the environments in which we operate.
To operate in accordance with the principles of business excellence and thereby strengthen the identity and positive public image of the Krka Group.

Estimated realisation of Krka Group business objectives for 2016

The projected annual product and service sales will match those in 2015. Critical factors influencing the projected sales result are substantial decreases in the prices of pharmaceuticals in most markets, and the depreciation of certain Eastern European currencies, especially the Russian rouble, together with the consequently lower euro-denominated sales. We are trying to mitigate negative influences as far as possible by increasing sales volume in all markets and by engaging in intensive marketing and sales activities. The volume of Krka Group sales will increase by one tenth.

Krka's largest sales region will be East Europe, and the Russian Federation will remain the largest individual market. Sales in foreign markets are projected to account for 93% of Krka Group sales. Prescription pharmaceuticals remain the most important product group, accounting for over 82% of Krka Group sales.

The 2016 profit is projected to be a solid one third lower than in 2015. We are dedicating a projected €136 million for investments in research and production capacities and infrastructure, as foreseen in the 2016 plan.

At the year-end of 2016 the Krka Group will have 11,100 employees according to projections, 55% of them abroad.

BUSINESS REPORT

Financial risk

Foreign exchange risk

Due to Krka's widespread international operations, certain sales markets present exposure to foreign exchange risk for the Group, most notably to changes in the rate of the Russian rouble.

In the nine months to September our rouble exposure was occasionally hedged with forward contracts. As the rouble appreciated we generated foreign exchange gains, and we incurred expenses arising out of occasional forward contract hedges.

The rouble's value was more stable in the third quarter, a result of more stable oil prices, the Russian central bank's monetary policy and the inactivity of the US Federal Reserve Bank, which did not raise the key interest rate in that period.

Exposure to the rouble exchange rate in the nine months to September resulted in –€8.0 million of net financial expenses.

Foreign exchange risks associated with other currencies, which have resulted in €3.9 million of foreign exchange losses this year, were not hedged in the reported period.

The Group's overall net financial result, taking account of foreign exchange rate differences of all currencies and other financial income and expenses, totalled –€11.2 million.

Our policy of managing foreign exchange risk has remained unchanged. Foreign exchange risks will be hedged with derivatives only in exceptional circumstances and occasionally.

Interest rate risk

The Krka Group was not exposed to reference interest rate risk in the nine months to September

Credit risk

The credit control process involves obtaining credit ratings for customers to whom the controlling company and subsidiaries make product sales worth an annual €100,000 or more, and regular dynamic monitoring of their payment discipline.

The policy of credit insurance did not change in the reported period. More than 400 buyers and more than 90% of the Group's trade receivables were included in the credit control process at the end of September 2016.

At the end of the third quarter, total trade receivables were down compared to the half-year. This was due to the seasonal decline in sales in the third quarter, which is the period with the lowest

sales in the year.

as all non-current borrowings had been paid back in previous years and no new ones were taken out.

Approximately one half of the Group's total trade receivables have credit insurance coverage or are hedged with financial instruments.

The amount of past due and outstanding receivables at the end of the third quarter was at a level that Krka considers normal and acceptable. Customer payment discipline is estimated to have remained unchanged.

We did not write off any major trade receivables in the first three quarters of the year.

Liquidity risk

In the first three quarters of 2016 we managed risks related to the Group's liquidity with effective shortterm cash flow planning. Liquidity risk is estimated as low. Short-term liquidity was ensured through a stable cash flow, pre-agreed lines of credit, and daily, rolling weekly, monthly and longer-term planning and monitoring of cash inflows and outflows. We optimised the amounts of cash on subsidiaries' bank accounts, and regularly provided them with the required funding.

Investor and share information

In the nine months of 2016 the price of Krka's share on the Ljubljana Stock Exchange fell by 5%. The holdings of domestic legal entities and funds were slightly up in this period, by 0.2 of a percentage point. Treasury shares increased by the same. International investors decreased their shareholdings in the reported period, and the holdings of individual investors remained unchanged. At the end of September 2016 Krka had 56,465 shareholders.

Shareholder structure (holdings in %)

	30 Sep 2016	31 Dec 2015
Individual Slovenian investors	39.8	39.8
Slovenian Sovereign Holding	16.2	16.2
KAD fund and PPS	11.0	11.0
Slovenian companies and funds	8.4	8.2
International investors	23.4	23.8
Treasury shares	1.2	1.0
Total	100.0	100.0

In the first nine months of 2016 Krka repurchased 82,196 treasury shares, worth a total of €4,963,670.

As at 30 September 2016 Krka held 408,473 treasury shares, which represents 1.246% of its share capital.

Krka's ten largest shareholders as at 30 September 2016

				Share of
		No. of	Share in	voting rights
	Country	shares	equity (%)	(%)
Slovenski državni holding, d. d. (Slovenian Sovereign Holding)	Slovenia	5,312,070	16.20	16.40
Kapitalska družba, d.d.	Slovenia	3,493,030	10.65	10.79
Societe Generale-Splitska banka d.d.	Croatia	2,230,172	6.80	6.89
Addiko Bank d.d.	Croatia	1,171,597	3.57	3.62
KDPW – fiduciary account	Poland	470,497	1.43	1.45
Luka Koper d.d.	Slovenia	433,970	1.32	1.34
New World Fund, Inc.	USA	400,000	1.22	1.24
Zavarovalnica Triglav, d. d.	Slovenia	388,300	1.18	1.20
The Bank of New York Mellon	USA	285,433	0.87	0.88
Clearstream Banking SA	Luxembourg	272,641	0.83	0.84
Total		14,457,710	44.09	44.64

Krka's ten largest shareholders held a total of 14,457,710 shares as at 30 September 2016, which is 44.09% of all issued shares.

As at 30 September 2016, members of the Krka Management Board and Supervisory Board held a total of 39,043 Krka shares, which is 0.12% of all issued shares.

Shares in equity and shares of voting rights held by members of the Krka Management Board and Supervisory Board as at 30 September 2016

	No. of	Share in	Share of
	shares	equity (%)	voting rights (%)
Management Board members
Jože Colarič	22,500	0.0686	0.0694
Aleš Rotar	13,788	0.0420	0.0425
Vinko Zupančič	120	0.0004	0.0004
David Bratož	0	0.0000	0.0000
Milena Kastelic	505	0.0015	0.0016
Total Management Board	36,913	0.1126	0.1138
Supervisory Board members
Jože Mermal	0	0.0000	0.0000
Julijana Kristl	230	0.0007	0.0007
Simona Razvornik Škofič	0	0.0000	0.0000
Andrej Slapar	0	0.0000	0.0000
Anja Strojin Štampar	0	0.0000	0.0000
Tomaž Sever	500	0.0015	0.0015
Boris Žnidarič	0	0.0000	0.0000
Franc Šašek	1,400	0.0043	0.0043
Mateja Vrečer	0	0.0000	0.0000
Total Supervisory Board	2,130	0.0065	0.0065

Share trading January–September 2016

In the nine months to September Krka's share price on the Ljubljana Stock Exchange peaked at €64.50 at the beginning of the year and reached its low in mid-July, when it stood at €56.00. The closing price of Krka's share on 30 September 2016 was €61.90. Krka's market capitalisation on the Ljubljana Stock

Exchange as at the same day totalled €2.0 billion. Average daily trading volume with Krka's shares in the reported period was €0.4 million.

Since April 2012 Krka's shares have also been listed on the Warsaw Stock Exchange.

Business operations analysis

The business operations analysis includes data for the Krka Group and the Krka Company, whereas the comments relate primarily to the Group.

Revenues

Compared to the same period last year, Krka's sales revenues at Group level decreased by 1% and by 5% at Company level. The Company sold €782.5 million worth of prescription

Expenses

Total Krka Group expenses amounted to €815.6 million, up 9% from the same period last year. The increase was mainly due to the significant increase in the volume of sales and the consequently higher costs of goods sold.

The Krka Group incurred €758.0 million of operating expenses, a 4% year-on-year increase, among which the costs of goods sold were €392.7 million, selling and distribution expenses €222.5 million, R&D expenses €85.3 million, and general and administrative expenses €57.5 million.

pharmaceuticals, non-prescription products and animal health products, while the Krka Group generated €852.4 million of sales revenues from these products plus the health resort and tourist services. The Krka Group generated 93% of sales in markets outside Slovenia.

Considering also other operating and financial income, the Krka Group generated a total of €904.1 million of revenues, of which the Krka Company generated €843.9 million.

A more detailed analysis of sales results by individual markets, and groups of products and services is given in the chapter Marketing and Sales below.

The Krka Group's costs of goods sold increased by 7% on a cost-to-sales ratio of 46.1%. Selling and distribution expenses remained on the same level year-on-year on a cost-to-sales ratio of 26.1%. R&D expenses increased by 1% on a cost-to-sales ratio of 10.0%. R&D expenses are recognised as expenses for the period in full as the Krka Group does not capitalise them. General and administrative expenses increased by 5% on a costto-sales ratio of 6.7%.

Operating result

Assets

Krka Group assets were worth €1,819.7 million at the end of September 2016, an increase by 1% compared to the end of 2015.

Non-current assets represent 55.6% of total assets, up 1.1 of a percentage point since the beginning of the year. The largest item under non-current assets, which totalled €1,012.3 million, was property, plant and equipment on €849.0 million (3% increase from the end of 2015). Property, plant and equipment

Equity and liabilities

Krka Group equity is at the year-end 2015 level; totalling €1,411.4 million it represents 77.6% of total equity and liabilities.

Amounting to €110.0 million, non-current liabilities represent 6.0% of the Group's total assets. Provisions amounted to €85.1 million at the end of the period and were thus at the same level as at the end of 2015.

The Krka Group recorded €99.7 million of operating profit, down 37% compared to the same period last year.

Profit before tax amounted to €88.5 million, a 43% year-on-year decrease. Income tax totalled €8.2 million, and the effective tax rate was 9.3%.

The Krka Group recorded €80.3 million of net profit, down 40% compared to the same period last year, with the Krka Company net profit totalling €72.4 million, down 46%.

represent 46.7% of the Group's total assets. Intangible assets amounted to €113.4 million, down 3% from the end of 2015.

Current assets were down 2% in the nine months of 2016, to €807.4 million. Inventories increased by 2% to €278.8 million, and receivables also increased by 2%, to €472.0 million (of which trade receivables amounted to €441.1 million, up 2% from the beginning of the year).

Current liabilities increased by 2% from the end of 2015 and totalled €298.3 million, which is 16.4% of the Group's total assets. Among current liabilities, trade payables amounted to €113.5 million, up 9% compared to the year-end of 2015, with other current liabilities up 1% to €182.4 million.

Performance ratios

The Krka Group profit margin for the period January–September 2016 was 9.4% (Krka Company 9.3%), its EBIT margin 11.7% (Krka Company 9.6%) and its EBITDA margin 21.0% (Krka Company 17.5%).

ROE at the level of the Group was 7.6% (Krka Company 6.8%), with ROA at 5.9% (Krka Company 5.5%).

Marketing and sales

The Krka Group product and service sales in the nine months to September were €852.4 million, down 1% from the same period last year. Sales volume increased by 11% compared to last year's

Sales by Region

The bulk of sales value, €230.0 million, which is 27.0% of total Group sales, was generated in Region East Europe. The second best result was reported for Region West Europe, with €211.0 million of sales generated there, which represents 24.8% of total sales.

The third largest area in terms of sales was Region Central Europe, where Krka sold €209.1 million nine-month period. Sales at the level of the Company in the reported period totalled €782.5 million.

worth of products in the reported period, which is 24.5% of overall sales. In Region South-East Europe product sales amounted to €111.5 million, which represents 13.1% of Group sales. In the domestic market sales totalled €63.9 million, which is 7.5% of total sales, while in the Overseas Markets sales amounted to €26.9 million, which is 3.1% of Group sales.

	Krka Group			Krka Company
In € thousand	1–9/2016	1–9/2015	Index	1–9/2016	1–9/2015	Index
Slovenia	63,895	58,964	108	39,814	37,309	107
South-East Europe	111,470	95,412	117	116,043	102,983	113
East Europe	229,996	242,279	95	210,094	255,069	82
Central Europe	209,074	206,998	101	211,654	209,868	101
West Europe	211,036	237,270	89	180,351	201,228	90
Overseas Markets	26,914	22,379	120	24,582	20,551	120
Total	852,385	863,302	99	782,538	827,008	95

Krka Group sales by Region, January–September 2016

Krka Group sales by Region, January–September 2015 and 2016

Slovenia

We sold €63.9 million worth of products and services in the domestic market. Overall product sales totalled €36.5 million, their value up 6%. The largest share, 79% or €28.9 million, was generated in prescription pharmaceuticals. Non-prescription product sales represented 17%, totalling €6.3 million, and animal health products contributed the remaining 4% share of overall product sales, which is €1.4 million. Krka is the leading provider of pharmaceuticals in the Slovenian market, holding a 9.3% market share. Health resort and tourist service sales in the period were €25.2 million.

Krka's leading prescription pharmaceuticals in terms of sales were Prenessa and Prenewel (perindopril and its combination with a diuretic), Nolpaza (pantoprazole), Sorvasta (rosuvastatin), Doreta (tramadol and paracetamol) and Atoris (atorvastatin). The leading non-prescription products were Nalgesin S (naproxen), product groups Daleron (paracetamol), Septolete and Septabene (benzydamine and cetylpyridinium), and B-Complex. The main sales drivers among animal health products were Fypryst (fipronil), Enroxil (enrofloxacin) and Grovit.

Marketing and sales activities focused in a major part on products treating cardiovascular diseases, the central nervous system, and the alimentary tract and metabolism. Among products controlling blood pressure, we are highlighting Prenessa (perindopril) and the fixed-dose combinations Prenewel (perindopril in combination with a diuretic), Amlessa (perindopril and amlodipine) and Amlewel (perindopril and indapamide with a diuretic). Special attention was also devoted to Sorvasta (rosuvastatin), a treatment improving cholesterol levels, and to Rosmela (rosuvastatin and amlodipine), a fixed-dose combination controlling blood pressure and cholesterol. In the area of antidepressants our marketing focus was on the brand Dulsevia (duloxetine), and in the area of antipsychotics on Aryzalera (aripiprazole). Our assortment of analgesics was expanded with the launch of a new and innovative sustained-release pharmaceutical form – the bilayer Doreta SR (tramadol and paracetamol) tablet. As to stomach acid pharmaceuticals, most attention was devoted to Nolpaza (pantoprazole) and Emozul (esomeprazole).

Among products from other indication areas, we are highlighting the antimicrobial pharmaceuticals Moloxin (moxifloxacin) in the form of tablets and infusion, and Linezolid Krka (linezolid) in the form of tablets.

As to the remaining two product groups – nonprescription products and animal health products – our focus in the former was on accelerating sales for Nalgesin S (naproxen) and Bilobil (ginkgo biloba), and, in the latter group, on the recently launched ectoparasiticide Ataxxa (permethrin and imidacloprid).

South-East Europe

Product sales in the markets of South-Eastern Europe amounted to €111.5 million. This is an increase by 17% from the same period last year when we had witnessed major drops in the prices of pharmaceuticals in this region, mainly in its most important markets. Sales value in the nine months to September 2016 was mainly driven by the region's key markets, Romania and Croatia, as well as by Bosnia and Herzegovina, Macedonia and Serbia. Sales increased in all markets in the region, apart from Bosnia and Herzegovina, and Montenegro.

Romania remains the region's leading market, sales there totalling €39.0 million. With a 37% yearon-year sales increase it is also one of the fastest growing individual markets.

The bulk of sales came from prescription pharmaceuticals, among them Atoris (atorvastatin), Dulsevia (duloxetine), Karbis and Karbicombi (candesartan and its combination with a diuretic, Oprymea (pramipexole), Prenessa and Co-Prenessa (perindopril and its combination with a diuretic), and Roswera (rosuvastatin). As to nonprescription products, we focused on the marketing and sales of cold and flu products, especially Septolete Omni (benzydamine and cetylpyridinium), and of analgesics. The leading animal health products in terms of sales were products for companion animals, especially those offering protection from external and internal parasites.

Product sales in Croatia, the second largest market in the region, totalled €20.9 million, up 9% compared to the same period last year. This has preserved our position as the fourth-ranked provider of generic pharmaceuticals in the country and the second-ranked provider of animal health products.

Prescription pharmaceuticals were the leading group of products in terms of sales, the bestsellers among them Atoris (atorvastatin), Co-Perineva (perindopril in combination with a diuretic), Dalneva (perindopril and amlodipine), Doreta (tramadol and paracetamol), Emanera (esomeprazole), Helex (alprazolam), Nolpaza (pantoprazole), Perineva (perindopril), Roswera (rosuvastatin), and Valsacor and Valsacombi (valsartan and its combination with a diuretic). Among treatments for diseases of the central nervous system we are highlighting Elicea (escitalopram) and Dulsevia (duloxetine); the former for its high market share and the latter for its being the fastest growing product in the group.

As to non-prescription products the best-selling one was Nalgesin (naproxen), and we are also pointing out the fast growth of a new form or the oral antiseptic Septolete Duo (benzydamine and cetylpyridinium). Among veterinary products we are highlighting the bestseller, Fypryst (fipronil), and the fast growing Ataxxa (permethrin and imidacloprid), both treatments for companion animals.

In Bosnia and Herzegovina product sales totalled €13.1 million. The 6% year-on-year sales decrease is a result of developments associated with reimbursement lists, domestic producers having been granted privileged positions in certain cantons. Our leading group of products was prescription pharmaceuticals, among which the best-selling ones were Enap (enalapril), including the combination with a diuretic, Roswera (rosuvastatin), Naklofen (diclofenac), Lorista (losartan), including the combination with a diuretic, Lexaurin (bromazepam), Atoris (atorvastatin), and Ampril (ramipril), including the combination with a diuretic. In September we launched the sales of Furocef (cephuroxime).

Sales increased for products available without prescription, particularly Nalgesin (naproxen), B-Complex and Septolete. Animal health product sales were also up, and a new product for the treatment of companion animals was launched, Attaxa (permethrin and imidacloprid).

In Macedonia sales amounted to €12.3 million, up 9% year-on-year. This preserved Krka's position as the leading foreign provider of pharmaceuticals. Despite lower reference prices, the main sales drivers were prescription pharmaceuticals, especially Enap (enalapril), including the combination with a diuretic, Roswera (rosuvastatin), Tanyz (tamsulosin), Atoris (atorvastatin), and Lorista (losartan), including the combination with a diuretic. The assortment of prescription pharmaceuticals was expanded with Dulsevia (duloxetine) and Furocef (cephuroxime). Among non-prescription products the sales leaders were Bilobil (ginkgo biloba), Daleron (paracetamol), B-Complex and SeptaNazal (xylometazoline and dexpanthenol). The leading animal health products in terms of sales were Fypryst (fipronil) and Enroxil (enrofloxacin).

The 47% year-on-year sales growth in Serbia was the highest in the region. This was due to the substantial decline in sales we had witnessed in 2015 on account of overall price reductions in the country. The bulk of the €9.4 million of sales came from prescription pharmaceuticals, among them Nolpaza (pantoprazole), Roxera (rosuvastatin), Atoris (atorvastatin), Valsacor and Valsacombi (valsartan and its combination with a diuretic), and Ampril (ramipril), including its combination with a diuretic. The main sales drivers among nonprescription products were Bilobil (ginkgo biloba), B-Complex and Septolete, and the leading animal health products were Fypryst (fipronil) and Calfoset.

In Bulgaria sales amounted to €8.5 million, an increase by 4% compared to the same period last year. In the leading group of products, prescription pharmaceuticals, sales were the highest for Co-Valsacor (combination of valsartan and a diuretic), Lorista (losartan), including the combination with a diuretic, and Roswera

East Europe

In the region that comprises areas of Eastern Europe and Central Asia our sales totalled €230.0 million, a 5% year-on-year decrease, with the volume of sales up 9%.

Product sales in the Russian Federation, Krka's key and largest individual market, totalled €154.3 million, a 9% year-on-year decrease. The euro-denominated sales result is attributable to the lower exchange rate of the local currency, with rouble-denominated sales having increased by 6% and sales volume being up 7%.

The bulk of sales continues to be generated in human health products, among which the main sales drivers in the reported period were Lorista (losartan), including the combination with a diuretic, Atoris (atorvastatin), Enap (enalapril) and its combination with a diuretic, Perineva and Co-Perineva (perindopril and its combination with a diuretic), Nolpaza (pantoprazole), Herbion cough syrup, Zyllt (clopidogrel), Valsacor (valsartan), including the combination with a diuretic, and Roxera (rosuvastatin). Sales value growth increased the most for Lorista and Valsacor. We expect the following new products, which we have started successfully launching on the market, to become relevant sales contributors: Septolete Total (benzydamine and cetylpyridinium), Bravadin (ivabradine), Vamloset (valsartan and amlodipine), (rosuvastatin), while the fastest sales growth was recorded for Nolpaza (pantoprazole), Emanera (esomeprazole), Doreta (tramadol and paracetamol) and Co-Amlessa (amlodipine and perindopril in combination with a diuretic). High sales growth was recorded in the animal health products section.

Nine-month sales in Kosovo, where Krka remains one of the leading suppliers of pharmaceuticals, totalled €4.6 million, up 8% compared to the same period last year. In Albania sales amounted to €3.0 million, an 5% year-on-year increase. The leading prescription pharmaceuticals in terms of sales were Atoris (atorvastatin), Enap (enalapril), including the combination with a diuretic, Lorista (losartan), including the combination with a diuretic, and Valsacor and Valsacombi (valsartan and its combination with a diuretic). New additions to our product assortment in the reported period were Helex (alprazolam), Tolura (telmisartan) and Elernap (enalapril and lercanidipine). Product sales in Montenegro totalled €0.7 million.

Dalneva and Co-Dalneva (perindopril and amlodipine, and their combination with a diuretic), Lortenza (valsartan and amlodipine), Vizarsin (sildenafil), Dilaxa (celecoxib) and Ulkavis (bismuth). According to the independent source IMS, Krka's sales in the Russian Federation are exceeding the average pharmaceuticals market growth, and therefore Krka's market share is increasing.

Animal health product sales in the Russian Federation totalled €9.6 million in the reported period, up 4% year-on-year. The best-selling product was Floron (florfenicol).

Local products manufactured in the Krka-Rus 2 factory are a vital contribution to the sales result, representing over a half of overall sales. This is strengthening Krka's important status of a domestic producer in the Russian Federation.

The pharmaceuticals market in Ukraine witnessed a 4% decline in the reported period, its restructuring to the benefit of cheaper domestic products continuing. Nevertheless, sales in this Krka key market totalled €27.4 million, up 23% compared to the same period last year. Although the sales of non-prescription products doubled, the bulk of Krka's overall sales still comes from prescription pharmaceuticals, among them Enap (enalapril), including the combination with a diuretic, Prenessa

and Co-Prenessa (perindopril in combination with a diuretic), Atoris (atorvastatin) and Dexamethason (dexamethasone). The best-selling products available without prescription were Herbion and Bilobil (ginkgo biloba). Animal health product sales increased by 16%, the leading product being Fypryst (fipronil) from the growing group of products for companion animals.

In Uzbekistan sales amounted to €10.8 million, a 19% year-on-year decrease. The negative overall market dynamics were chiefly driven by the depreciation of the local currency and consequently the population's lower purchasing power. Nonetheless, Krka remains the leading EU generic pharmaceutical company in this market. The best sales results were recorded for prescription pharmaceuticals such as Lorista (losartan), including the combination with a diuretic, Enap (enalapril), including the combination with a diuretic, and Amlessa and Co-Amlessa (perindopril and amlodipine, and their combination with a diuretic), and for products available without prescription, among which we are highlighting Pikovit and Duovit. Among newly introduced products in this market we are highlighting Lortenza (losartan and amlodipine) and Septolete Total (benzydamine and cetylpyridinium), and we are also planning to launch the sales of Prenessa (perindopril).

The business environment in Kazakhstan has remained demanding at the end of the third quarter, still struggling after last year's depreciation of the local currency by two thirds and the consequent deterioration of the population's purchasing power. The value of Krka's sales was thus down 1% to €9.9 million despite the volume of sales having increased by 22%. The best-selling prescription pharmaceuticals were Enap (enalapril), including the combination with a diuretic, Prenessa and Co-Prenessa (perindopril in combination with a diuretic) and Candecor (candesartan), and the leading non-prescription products were Herbion and Duovit. Two products received a new introduction to the market in the reported period, Pikovit Unique and Septolete Total (benzydamine and cetylpyridinium).

In Belarus sales were down 20% year-on-year, and totalled €6.5 million. We nevertheless remain the third-ranked foreign generic pharmaceuticals provider in this market. The main overall sales drivers were prescription pharmaceuticals, especially Lorista (losartan), including the combination with a diuretic, Amlessa and Co-Amlessa (perindopril and amlodipine, and their combination with a diuretic) and Nolpaza (pantoprazole). The leading non-prescription products were Septolete and Pikovit. Against pressures driving down imports of pharmaceuticals we are strengthening cooperation with a domestic manufacturer of pharmaceuticals.

In Moldova sales totalled €4.7 million, which is up 24% in terms of volume and 1% in terms of value. Holding a 4.9% market share, we remain one of the leading providers of pharmaceuticals in this market. The best-selling products were the prescription pharmaceuticals Ampril (ramipril) and Rawel (indapamide), followed by the non-prescription products Septolete, SeptaNazal (xylometazoline and dexpanthenol) and Nalgesin (naproxen). Plans for the future relate to the newly launched products on this market, Septolete Total (benzydamine and cetylpyridinium) and Valsacor (valsartan).

Amidst deteriorated economic conditions in Mongolia, reflected in decreased demand for nonprescription products and increased sales of cheaper pharmaceuticals subsidised by the government, our sales totalled €4.1 million, up 17% compared to the same period last year. Krka thus remains the leading exporter of pharmaceuticals to Mongolia. The highest sales growth rate, of 19%, was recorded for prescription pharmaceuticals.

Sales in Turkmenistan were up 9% to €3.4 million. The leading products were Nolpaza (pantoprazole) and Herbion. After the bill regulating pharmaceuticals prices was passed in Azerbaijan, the pharmaceuticals market there shrank by a third. We nevertheless increased our sales by 3% to €2.6 million, and now hold a 2.5% market share. Product sales in Georgia totalled €2.3 million, which is similar to the result for the same period last year. Krka remains the second-ranked foreign generic pharmaceutical company in this market. Product sales in Kyrgyzstan increased by 45% to €2.0 million. In Armenia sales totalled €1.6 million, up 19%, and in Tajikistan, still the region's smallest market, we sold €0.5 million worth of products.

Central Europe

In the majority of Central European markets, including the largest one, Poland, our year-on-year sales increased by the end of the third quarter. Sales in the region were up 1% and amounted to €209.1 million Sales volume increased by 5%.

Product sales in Poland, Krka's key market, totalled €104.9 million, up 2% compared to the same period last year. The bulk of sales was generated in prescription pharmaceuticals, the most important ones being Atoris (atorvastatin), Roswera (rosuvastatin), Valsacor and Co-Valsacor (valsartan and its combination with a diuretic), Doreta (tramadol and paracetamol), Lorista (losartan) and its combination with a diuretic, Nolpaza (pantoprazole), Tolura (telmisartan) and Karbis (candesartan), the last two both in combination with a diuretic. In the group of non-prescription products, the leaders in terms of sales were Bilobil (ginkgo biloba) and Septolete, followed by Naklofen TOP (diclofenac) and SeptaNazal (xylometazoline and dexpanthenol). The leading animal health products in terms of sales were Fypryst (fipronil) and Floron (florfenicol).

In Hungary, another one of Krka's key markets, our operations remain affected by changes to their healthcare system, which drove sales down 14% compared to the same period last year to €30.6 million. The most important products in terms of sales were prescription pharmaceuticals, among them the well-established Prenessa (perindopril), including in combination with a diuretic, Atoris (atorvastatin), Roxera (rosuvastatin), Dalnessa (perindopril and amlodipine), including in combination with a diuretic, Zyllt (clopidogrel) and Nolpaza (pantoprazole). The leading nonprescription and veterinary products remained Bilobil (ginkgo biloba) and Fypryst (fipronil), respectively.

Sales in Slovakia amounted to €25.7 million, a 13% year-on-year increase. As expected, vital sales drivers were prescription pharmaceuticals, especially Prenessa (perindopril) and Valsacor (valsartan), both also in combination with a diuretic, Atoris (atorvastatin), Nolpaza (pantoprazole) and Amlessa (perindopril and amlodipine), also in combination with a diuretic. The leading nonprescription products in terms of sales were Nalgesin (naproxen) and Septolete, and in the group of animal health products the bestsellers were Enroxil (enrofloxacin) and Fypryst (fipronil).

After operating conditions had gotten more stringent in the Czech Republic and changes had been introduced to the country's healthcare system, the situation in this third key market in the region settled down, so that we managed to increase product sales by 7% and thus generate €23.6 million of revenue. The central role in the key group of prescription pharmaceuticals was assumed by Lexaurin (bromazepam), followed by Tonarssa and Tonanda (perindopril and amlodipine, and their combination with a diuretic), Atoris (atorvastatin), Tanyz (tamsulosin), Prenessa and Prenewel (perindopril in combination with a diuretic), Pragiola (pregabalin) and Emanera (esomeprazole). As to products available without prescription, Nalgesin (naproxen) and Septolete were the ones that contributed the most to the overall sales result. The leading animal health products in terms of sales were Fypryst (fipronil) and Dehinel (febantel).

Sales in Lithuania decreased by 5% compared to the same period last year, totalling €11.7 million. Krka's best-selling prescription pharmaceuticals were Valsacor and Valsacombi (valsartan), Prenessa and Prenewel (perindopril), and Amlessa and Co-Amlessa (perindopril and amlodipine), all including combinations with a diuretic. Septolete and Daleron COLD3 (paracetamol, pseudoephedrine and dextromethorphan) were at the forefront in terms of sales in the group of nonprescription products. The key veterinary products remain Fypryst (fipronil) and Enroxil (enrofloxacin).

In Latvia sales amounted to €7.8 million, a 10% year-on-year increase. The main sales drivers were prescription pharmaceuticals, especially Prenessa (perindopril), including in combination with a diuretic, Atoris (atorvastatin), and Amlessa and Co-Amlessa (perindopril and amlodipine, and their combination with a diuretic). As to non-prescription products, the best-sellers were SeptaNazal (xylometazoline and dexpanthenol) and Daleron (paracetamol).

In Estonia sales totalled €4.8 million, an increase by 12%. The best-selling products in the leading group of prescription pharmaceuticals were Prenessa and Co-Prenessa (perindopril in combination with a diuretic), Roswera (rosuvastatin) and Valsacor and Valsacombi (valsartan and its combination with a diuretic). As to products available without prescription, the best sales results were recorded for

Septolete, Herbion and Nalgesin (naproxen).

West Europe

The volume of sales in Region West Europe, one of our key markets, was up 16%. However, the fall of the prices of pharmaceuticals caused the value of sales to drop 11% compared to the same period last year. Total sales amounted to €211.0 million, mainly driven by sales via subsidiaries, which currently generate 64% of overall sales in the region.

The majority of sales, i.e. 88%, came from prescription pharmaceuticals, which generated €185.0 million. The most sales value among them was generated in the generic esomeprazole, pantoprazole, duloxetine, clopidogrel and candesartan. In terms of volume, the best-selling products were those with the generic pantoprazole, esomeprazole, clopidogrel, perindopril, galantamine, ropinirole, duloxetine and aripiprazole.

For animal health products sales increased by 59% and totalled €23.0 million. Among them the sales leaders are products combining milbemycin oxime and praziquantel in the form of tablets, used to prevent and treat internal parasite infestations in companion animals; 37% of veterinary health sales is generated in these products. Sales growth was also recorded for other antihelmintics, which account for as much as 45% of product sales in this group. The region's largest individual market for animal health products remains France, while we recorded the highest sales growth rates in the Scandinavian countries, Portugal and Germany. Despite the proportion of sales via subsidiaries having climbed from 17 to 34% in comparison to the same period last year, the majority of veterinary product sales in Region West Europe is still generated via partner companies.

The sales of non-prescription products contributed just over 1% of overall sales in the region, them having increased by 4% compared to the same period last year. The chief markets for these products were Germany and Portugal.

Germany remains Krka's most important market in the region. The value of nine-month sales there totalled €67.7 million, a slight year-on-year increase, with the volume of sales up 41%. The largest proportion of sales, 85%, was generated by the subsidiary TAD Pharma. The best-selling products were Pregabador (pregabalin), Duloxalta (duloxetine), Pantoprazol TAD (pantoprazole) and Candecor (candesartan). In addition to launching BisoDipin, a fixed-dose combination of bisoprolol and amlodipine, used to treat high blood pressure, we were the first and only company in the market in July to launch the fixed-dose combination of losartan and amlodipine with the brand name LosAmlo. More combination products will follow, stepping up Krka's sales in Germany.

Spain has ranked second in terms of sales value in the region, with €27.4 million of revenue generated there. The 16% year-on-year sales decline is attributed to the expiration of certain public tenders in Andalusia. Just over 80% of sales were generated by the subsidiary Krka Farmacéutica. The best sales results were recorded for generic products containing donepezil, bisoprolol, duloxetine and candesartan.

In France sales were up 5% compared to the same period last year, to €26.3 million. Sales growth was chiefly driven by the new animal health products and stepped up sales via the subsidiary Krka France, which now generates more than a quarter of Krka's sales in this market. Sales in the Scandinavian countries totalled €19.8 million, a year-on-year decrease by 40%. The decline in sales is the result of lower prices of products with duloxetine and aripiprazole in Sweden and Denmark; sales in Finland and Norway, on the other hand, increased by 16% and 14%, respectively. Product sales in Italy totalled €15.9 million, down 1% compared to the same period last year. The sales of products under Krka's own brands increased by 44% and now represents more than a half of overall sales in this market. The subsidiary Krka Farmaceutici recorded the best sales results for products with the generic pantoprazole, gliclazide, clopidogrel and lansoprazole. Sales in the UK totalled €15.1 million. The 35% year-on-year decline is the result of a major price erosion. In Portugal we sold €13.5 million worth of products, down 10% compared to the same period last year. Despite substantial price pressures and, in consequence, lower sales, Krka is increasing its market share and remains the fastest growing provider of pharmaceuticals in Portugal. Sales activities were conducted via unaffiliated companies in the Benelux as well. Sales there totalled €7.0 million, down 27% compared to the same period last year. The sales of Krka's products in

Ireland rose by 28% year-on-year, and amounted to €5.8 million. The subsidiary Krka Pharma Dublin generates four fifths of Krka's sales in this market and has reported an 18% growth rate relative to the same period last year. Sales value in Austria was up 38% to €5.2 million. The Vienna-based subsidiary Krka Pharma has successfully

Overseas Markets

With €26.9 million of sales Region Overseas Markets remains Krka's smallest yet one of the more dynamic regions. Sales there were up 20% from the same period last year. The majority of sales in all three sales offices came from prescription pharmaceuticals, which are sold under our own brands in the majority of the region's markets.

Despite the situation there, we sold €14.0 million worth of products in the area covered by the sales office the Middle East. This is a 43% increase compared to the same period last year. Our most important markets remain Iran, Iraq and Lebanon, and our best-selling products there are Nolpaza (pantoprazole), Asentra (sertraline), Letizen (cetirizine), Vizarsin (sildenafil), Zyllt (clopidogrel) and Valsacor (valsartan).

maintained the position of the leading provider of the generic pregabalin, duloxetine and aripiprazole in the Austrian market, having recorded a 52% yearon-year increase in sales. In the other European countries product sales were mainly generated via unaffiliated companies and totalled €7.4 million, up 14% compared to the same period last year.

The sales office the Far East and Africa recorded 1% higher sales, which totalled €12.3 million; the best results were reported for the Republic of South Africa, Vietnam, China, Ghana and Malaysia. Our best-selling products were Lanzul (lansoprazole), Enap (enalapril), including the combination with a diuretic, Sabal (Serenoa repens), Tenox (amlodipine), Kamiren (doxazosin) and Atoris (atorvastatin).

Product sales in the sales office the Americas totalled €0.7 million in the nine months of 2016, up 39% compared to the same period last year, the majority generated in the markets of Central America. The best-selling products were Valsacor and Valsaden (valsartan and its combination with a diuretic), Tolura and Tolucombi (telmisartan and its combination with a diuretic) and Vizarsin (sildenafil).

Sales by product and service groups

The Krka Group generated 90.9% of overall sales during the nine months to September 2016 in human health products, making this Krka's most important product group. Prescription pharmaceuticals accounted for the largest proportion of sales, 82.0%, followed by nonprescription products with a 8.9% share and animal health products with a 5.9% share in Krka Group sales. Health resort and tourist services represent 2.9% of Krka Group sales, and 0.3% is other sales revenues.

	Krka Group			Krka Company
In € thousand	1–9/2016	1–9/2015	Index	1–9/2016	1–9/2015	Index
Human health products	774,607	799,717	97	729,627	785,140	93
– Prescription pharmaceuticals	699,093	725,261	96	664,212	718,187	92
– Non-prescription products	75,514	74,456	101	65,415	66,953	98
Animal health products	50,404	39,143	129	49,642	39,081	127
Health resort and tourist services	25,177	23,083	109
Other	2,197	1,359	162	3,269	2,787	117
Total	852,385	863,302	99	782,538	827,008	95

Krka Group sales by product and service groups, January–September 2016

Prescription pharmaceuticals

The Krka Group sold €699.1 million worth of prescription pharmaceuticals, down 4% compared to the same period last year. Sales increased in regions South-East Europe (up 20%), Overseas Markets (up 21%) and Slovenia (up 4%). In Region Central Europe sales remained on a similar level as in the same period last year, while in regions East Europe and West Europe they decreased.

With respect to large markets for Krka's prescription pharmaceuticals, sales increased in Poland (by 1%) but decreased in the Russian Federation, which was due to a less favourable rouble exchange rate, and in Germany, where they were driven down by major price erosions. In both these markets sales declined by 8%.

As to other large markets, year-on-year sales of prescription pharmaceuticals were up the most in Romania (50%), Ukraine (14%) and Slovakia (13%).

With respect to mid-size markets, the highest sales growth rates were recorded in Serbia (up 60%), Macedonia (up 11%) and Croatia (9%), and among small markets in Kyrgyzstan (up 62%), Austria (up 38%), Ireland (up 21%), Mongolia (up 19%) and Armenia (up 17%).

We have been strengthening our position in the markets of Western Europe via Krka's subsidiaries, their year-on-year sales results up considerably, the most in France (87%), Austria (52%), Italy (40%) and Finland (16%).

The ten leading prescription pharmaceuticals in terms of sales are Atoris (atorvastatin), Lorista* (losartan), Nolpaza* (pantoprazole), Prenessa* (perindopril), Valsacor (valsartan), Enap (enalapril), Emanera* (esomeprazole), Roswera* (rosuvastatin), Zyllt* (clopidogrel) and Karbis* (candesartan).

The highest year-on-year sales growth rates in absolute terms were recorded for Nolpaza* (pantoprazole), Roswera* (rosuvastatin), Doreta (tramadol and paracetamol) and Amlessa* (perindopril and amlodipine), and for Ralago* (rasagiline), this year's new launch on the majority of markets.

In 2016 we were the first provider in Europe to launch the fixed-dose combination of rosuvastatin and amlodipine, Rosudapin*, in Poland, Slovenia and Latvia. We were among the first generic providers to launch Ralago* (rasagiline), a treatment for Parkinson's disease, on several markets, including Central European markets (Hungary, Slovakia, Lithuania, Latvia and Estonia), Western European markets (Portugal, Finland, Ireland, Spain, Austria and the Benelux) and Romania. Hungary was the first EU market on which we launched Bravadin* (ivabradine).

Non-prescription products

We sold €75.5 million worth of non-prescription products, a year-on-year increase by 1%.

Sales were up in regions Slovenia (22%), Central Europe (18%) and West Europe (4%). In Region South-East Europe they remained on a similar level as in the same period last year, while in Region East Europe they were down.

We also launched numerous other products on new markets:

candesartan and hydrochlorothiazide in Belgium;
Bisodipin* (bisoprolol and amlodipine) and bisoprolol in Germany;
Vamloset* (valsartan and amlodipine) in Azerbaijan, Uzbekistan and Armenia;
Prenessa (perindopril) in Moldova;
Co-Amlessa* (perindopril, indapamide and amlodipine) in Belarus, Azerbaijan, Ukraine and Serbia;
carvedilol in Spain;
Losamlo* (losartan and amlodipine) in Germany, Georgia and Uzbekistan;
Bloxazoc* (metoprolol) in sustained-release dosage form in the Czech Republic, Poland, Finland, Spain, Lithuania, Latvia, Estonia and the Scandinavian countries;
Doreta* (tramadol and paracetamol) in sustained-release dosage form in Poland, Slovakia, Portugal, Slovenia and Bulgaria;
pregabalin in France;
Dulsevia (duloxetine) in Macedonia and Georgia;
aripiprazole in France;
Oprymea* (pramipexole) sustained release tablets in Poland;
Levalox* (levofloxacin) in Lithuania, Ireland, France and Austria;
Furocef* (cephuroxime) in Lithuania, Latvia, Spain, Bosnia and Herzegovina and Macedonia;
linezolid in Germany, Slovenia, Austria, Scandinavia, Estonia, Finland, Ireland and Slovakia;
Dilaxa* (celecoxib) in the Russian Federation;
Ulcavis (bismuth) in the Russian Federation;
the oncology assortment imatinib and letrozole in Serbia, and Ecansya (capecitabine) in Latvia.

In the largest market, the Russian Federation, sales decreased, while among other large markets they increased the most in Ukraine, where they doubled, in the Czech Republic (up 68%), Hungary (up 43%), Kazakhstan (up 32%), Croatia (up 22%), Slovakia (up 18%) and Serbia (up 13%).

The successful sales of the newly launched products Septolete total/Septabene* and

Septanazal also continued, and the sales of Nalgesin* (naproxen) were also up.

Animal health products

Animal health product sales totalled €50.4 million, up 29% from the same period last year. Sales growth was recorded in all markets apart from Slovenia, increasing the most in regions West Europe (up 59%), Central Europe (up 20%), South-East Europe (up 7%) and East Europe (up 6%).

Among the largest markets, sales increased most notably in Germany (fourfold) and the UK (twofold), but also in France (up 45%), Poland (up 13%) and the Russian Federation (up 4%). As to the other large markets, high sales growth rates were

Health resort and tourist services

In the nine months to September 2016 the Terme Krka Group generated €25.2 million of sales, an increase by 9% compared to the same period last year.

reported in the Czech Republic (up 63%), Hungary (up 16%), Lithuania (up 20%) and Ukraine (up 16%).

The top five sales leaders are Milprazon* (milbemycin oxime and praziquantel), Fypryst* (fipronil), Floron* (florfenicol), Enroxil* (enrofloxacin) and Dehinel plus (febantel, pyrantel embonate and praziquantel). This year's new launch was Ataxxa* (imidacloprid and permethrin), a spot-on solution for dogs, which we launched on certain markets of Central and South-Eastern Europe and in Slovenia.

The largest business unit in terms of sales was Talaso Strunjan, where sales were up 8%, followed by Terme Dolenjske Toplice, where sales increased by 14%, and Terme Šmarješke Toplice with a 9% growth. The Hoteli Otočec business unit reported sales similar to those of the same period last year.

* Products marked with the asterisk are marketed under different brand names in individual markets.

Research and development

In the first nine months of 2016 we obtained marketing authorisations for eight new products (Ravalsyo/Valarox/Valsaros/Ravalsya, Bixebra/Bravadin, Roticox/Etoxib/Etoriax/Itoroxx, Dexamethason Krka, Moloxin 400 mg/250 ml solution for injection, Lorista 150 mg film-coated