Over the past month, Krka has found itself at the center of market chatter – its share price swing, Russian exposure, and the implications of Putin’s decree on the nationalization of foreign assets have all dominated investor discussions. While the situation remains fluid and far from definitive, let’s put the recent developments into context.
The selloff began, perhaps not coincidentally, after Russian President Vladimir Putin signed a decree enabling the accelerated nationalization of foreign-owned assets operating in Russia. While it is possible that other, less visible factors prompted investors to hit the bid, the timing was hard to ignore. Officially, the move was justified as a response to the “unfriendly and unlawful actions” of Western nations that imposed sanctions on Russian entities. Basically, a clear retaliation to the EU’s proposal to use frozen Russian assets to finance Ukraine’s reconstruction.
This decree effectively revived concerns that the Kremlin could again target strategic Western companies, as it did in 2023 with Unipro, Fortum, Danone, and Carlsberg, by transferring control of their Russian operations to local managers. More recently, Putin extended this approach to the pharmaceutical industry, appointing Pharmius, a little-known domestic distributor, to take “temporary management” of Nizhpharm, a company spun off by Germany’s Stada in 2023 as part of its effort to offload Russian exposure. Although not a brand-new threat, the announcement triggered several days of heavy selling in Krka’s stock.
Krka’s share price development (2025 YTD, EUR)
Source: LJSE, InterCapital Research
Over the past month, Krka’s sharers have fallen from an all-time high of EUR 225 to as low as EUR 174 on 10 October, a correction of more than 20%. The market’s reaction was rooted in the Company’s exposure to Russia, which accounts for roughly 20% of Krka’s revenue. Of that, 75% of products sold in Russia are locally manufactured at the Krka-Rus facility near Moscow, while the remained are exported from to other plants across the Group. Moreover, at year-end 2024, Krka’s two Russian subsidiaries (Krka-Rus and Krka Farma) together held around EUR 143m in assets, excluding trade receivables.
Also, Krka remains Russia’s leading foreign provider of generic pharmaceuticals, dominating the market for prescription drugs in cardiovascular treatment and other key therapeutic segments.
Krka’s total and Russia-based revenue (EUR)
Source: Krka Group, InterCapital Research
Clearly, the Russian market is significant for Krka, both in revenue and asset terms. Any disruption, from operational restrictions to a potential “temporary management” appointment, could materially affect results. Such a move would likely mirror past Kremlin tactics, where state-appointed managers assumed control of foreign subsidiaries under the guise of national interest.
However, Krka’s position within Russia also provides a certain degree of insulation. The Company’s deep integration into the local pharmaceutical ecosystem, coupled with its importance to public healthcare, makes a full nationalization less probable. A sudden takeover could jeopardize local drug supply chains, something Russian authorities are definitely aware of. In essence, Krka might be too embedded and too essential to be easily replaced, though this does not mean that the risk could be fully disregarded.
The risks tied to Krka’s Russian operations, including currency, operational, and credit risk, are real and should not be dismissed. Yet, the scale and speed of the recent share price decline suggest that fear, not fundamentals, drove the market reaction. Indeed, the stock has already rebounded and closed at EUR 200 last Friday. Meanwhile, other European companies with comparable exposure have not experienced comparable drawdowns, reinforcing the idea that the selloff was a localized panic rather than a rational repricing of risk.
In conclusion, Krka’s exposure to Russia warrants attention but not alarmism. The Company has managed its operational risks prudently and remains strategically significant to the Russian healthcare system. In the short term, volatility will likely persist as geopolitical rhetoric intensifies. But absent concrete evidence of state interference in Krka’s subsidiaries, the recent correction looks less like the start of the crisis and more like a case study in market inefficiency – where perception temporarily outpaced reality.