“May you live in interesting times,” says a somewhat ironic Chinese saying. The interesting times we live in also affect the pharmaceutical industry. The war in Ukraine has brought disruption to the market and provoked both an energy and economic crisis. The spin-off of Sandoz from the Novartis group is also having consequences for the Slovenian pharma industry: Slovenian Lek is officially a part of Sandoz yet is incorporated in chains of both Sandoz and mother company Novartis.
Yet despite the split, investments in Lek have intensified. Sandoz is investing over 360 million euros (400 million US dollars) in a state-of-the-art production centre in Lendava in the northeast of Slovenia. It is not only the largest single investment in Lek’s history, but also one of the largest FDI’s in Slovenia ever. The choice of Slovenia is not a coincidence: Sandoz is to some extent capitalizing of the country’s advantageous position. An even more important motivator for the decision is the local know-how: Slovenian scientists were among the pioneers in the development of biopharmaceuticals and later “made an important contribution to Sandoz’s global leadership in the biosimilars segment”. In 2022, more than one half of Sandoz R&D Awards – including two of the highest awards for scientific excellence - went to researchers from Slovenia.
Last fall Novartis announced it will invest 110 million euros in the biotech park in Mengeš near Ljubljana. The Life Sciences Park in Mengeš could develop into a biotech R&D hub, attracting other companies as well. Novartis has already leased some of its premises in the park to Chinese Proton Pharma Solutions. The Chinese company will invest 50 million euros in a biotech R&D lab and manufacturing facilities – it will be Proton’s first development centre in Europe.
In 2022 Novartis also invested a record sum of 346 million euros into the expansion of its production facilities. So far, Novartis has invested over 3.4 billion euros in its operations in Slovenia. The Alpine republic also hosts one of Novartis’ key operational centers with the group’s largest warehouse in Europe.
Lek remains Slovenia’s second largest pharmaceutical company with close to 1.3 billion euros of sales, behind only Krka with 1.6 billion euros of sales in 2021. Despite the war in its key market Krka managed to increase its revenues to 1.7 billion in 2022 with 363 million euros of net profit. 94 percent of sales were generated outside Slovenia. In 2022, Krka invested 106 million euros in production and R&D facilities. The company also plans to invest 163 million euros in its plant to develop and produce active pharmaceutical ingredients in Krško in south-eastern Slovenia.
Eastern Europe, with Russia and Ukraine, is one of Krka’s main markets with 36 percent share of company’s sales. Unsurprisingly, the Slovenian generic drug company is looking for new opportunities. According to India’s Economic Times Krka may acquire a stake in Mumbai based Unichem Laboratories.