Krka Equity View Remains Neutral Over The Medium Term

BMI View: Our equity view of Slovenian company Krka remains neutral, but with some upside potential since our previous analysis. Despite the company's exposure to high-growth pharmaceutical markets, Krka has so far not achieved the pace of expansion expected. Despite limited expectations for 2011, BMI nevertheless believes exposure to the pharmaceutical markets of Central and Eastern Europe (CEE) will benefit Krka in the long term. The Slovenian company is well placed to take advantage of the region's strong growth potential, while avoiding some of the austerity measures and price controls currently characteristic of Western European markets. Furthermore, the company will benefit from the increasing uptake of generic medicines, partly driven by governments mandating their use as a substitute for more expensive medicines.

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